UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________
FORM N-CSRS
________
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)
________
1350 Avenue of the Americas
2nd Floor
New York, New York, 10019
(Address of principal executive offices) (Zip code)
Jonathan Krane
KraneShares Trust
1350 Avenue of the Americas
2nd Floor
New York, New York, 10019
(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, 2016
Date of reporting period: September 30, 2015
Item 1. Reports to Stockholders.
KraneShares Bosera MSCI China A Share ETF
KraneShares CSI New China ETF
KraneShares CSI China Internet ETF
KraneShares E Fund China Commercial Paper ETF
KraneShares FTSE Emerging Markets Plus ETF
Semi-Annual Report
September 30, 2015
Table of Contents
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 on Form N-Q within sixty days after the end of the period. The Funds’ Forms N-Q 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 use 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 period ended June 30, will be available (i) without charge, upon request, by calling 1-855-8KRANE8; and (ii) on the Commission’s website at http://www.sec.gov.
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Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
† | Percentages are based on total investments. More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes. |
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Shares | Value | |||||||
COMMON STOCK — 98.9%‡ | ||||||||
CHINA — 98.9% | ||||||||
Consumer Discretionary — 9.7% | ||||||||
Anhui Jianghuai Automobile, Cl A | 3,900 | $ | 8,147 | |||||
Anhui Zhongding Sealing Parts, Cl A(A)(B) | 8,600 | 30,141 | ||||||
Beijing Gehua CATV Network, Cl A | 3,100 | 8,758 | ||||||
Beiqi Foton Motor, Cl A | 8,800 | 8,001 | ||||||
Byd, Cl A* | 3,452 | 32,586 | ||||||
China High-Speed Railway Technology, Cl A* | 5,400 | 7,050 | ||||||
China International Travel Service, Cl A | 2,570 | 21,135 | ||||||
China South Publishing & Media Group, Cl A | 4,725 | 16,158 | ||||||
Chinese Universe Publishing and Media, Cl A | 3,700 | 12,193 | ||||||
Chongqing Changan Automobile, Cl A | 10,000 | 23,218 | ||||||
CITIC Guoan Information Industry, Cl A(A)(B) | 13,500 | 45,042 | ||||||
FAW CAR, Cl A | 4,300 | 9,842 | ||||||
Fuyao Glass Industry Group, Cl A | 5,300 | 9,880 | ||||||
Great Wall Motor, Cl A | 3,500 | 18,020 | ||||||
Guangdong Advertising Group, Cl A | 2,913 | 8,367 | ||||||
Guangdong Alpha Animation and Culture, Cl A | 3,368 | 15,502 | ||||||
Haining China Leather Market, Cl A | 3,000 | 5,743 | ||||||
Hisense Electric, Cl A | 3,500 | 7,372 | ||||||
Huawen Media Investment, Cl A | 5,463 | 8,276 | ||||||
Huayu Automotive Systems, Cl A | 6,800 | 14,697 | ||||||
Hunan TV & Broadcast Intermediary, Cl A(A)(B) | 13,826 | 83,951 | ||||||
Jiangling Motors, Cl A | 1,400 | 5,691 |
The accompanying notes are an integral part of the financial statements.
1
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Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
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Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Consumer Discretionary — continued | ||||||||
Jiangsu Broadcasting Cable Information Network, Cl A* | 5,300 | $ | 13,798 | |||||
Jiangsu Phoenix Publishing & Media, Cl A | 5,600 | 10,932 | ||||||
Jishi Media, Cl A | 3,909 | 6,672 | ||||||
Liaoning Cheng Da, Cl A(A)(B) | 11,800 | 26,451 | ||||||
Midea Group, Cl A | 11,200 | 44,451 | ||||||
NavInfo, Cl A | 1,800 | 7,121 | ||||||
Pang Da Automobile Trade, Cl A* | 17,200 | 9,930 | ||||||
Qingdao Haier, Cl A | 16,100 | 22,945 | ||||||
SAIC Motor, Cl A | 19,500 | 51,533 | ||||||
Shanghai Oriental Pearl Media, Cl A | 6,954 | 33,943 | ||||||
Shanghai Yuyuan Tourist Mart, Cl A | 3,800 | 9,259 | ||||||
Shenzhen Overseas Chinese Town, Cl A | 19,300 | 21,586 | ||||||
Sichuan Changhong Electric, Cl A* | 12,200 | 11,304 | ||||||
Sichuan Chengfei Integration Technology, Cl A | 900 | 4,413 | ||||||
Suning Commerce Group, Cl A | 19,600 | 37,368 | ||||||
TCL, Cl A | 32,300 | 19,155 | ||||||
Visual China Group, Cl A* | 1,800 | 7,498 | ||||||
Wanxiang Qianchao, Cl A | 6,100 | 18,596 | ||||||
Weifu High-Technology Group, Cl A | 2,200 | 7,347 | ||||||
Wenfeng Great World Chain Development, Cl A | 4,100 | 4,282 | ||||||
Youngor Group, Cl A | 5,900 | 11,304 | ||||||
Zhejiang Daily Media Group, Cl A(A)(B) | 5,800 | 14,799 | ||||||
Zhejiang Yasha Decoration, Cl A | 3,550 | 6,813 | ||||||
801,270 | ||||||||
Consumer Staples — 5.2% | ||||||||
Beijing Dabeinong Technology Group, Cl A | 6,600 | 10,527 | ||||||
Beijing Yanjing Brewery, Cl A | 7,400 | 8,823 | ||||||
Beingmate Baby & Child Food, Cl A* | 2,700 | 5,657 | ||||||
Bright Dairy & Food, Cl A | 3,220 | 7,400 | ||||||
COFCO Tunhe, Cl A | 5,400 | 11,536 | ||||||
Gansu Yasheng Industrial Group, Cl A | 5,200 | 5,898 | ||||||
Henan Shuanghui Investment & Development, Cl A | 8,700 | 24,087 | ||||||
Hunan Dakang Pasture Farming, Cl A* | 6,400 | 5,688 | ||||||
Inner Mongolia Yili Industrial Group, Cl A | 16,200 | 39,193 | ||||||
Jiangsu Yanghe Brewery Joint-Stock, Cl A | 2,680 | 22,972 | ||||||
Jointown Pharmaceutical Group, Cl A* | 2,900 | 7,285 | ||||||
Kweichow Moutai, Cl A | 3,360 | 100,587 | ||||||
Luzhou Laojiao, Cl A | 3,700 | 11,955 | ||||||
MeiHua Holdings Group, Cl A | 8,200 | 8,926 | ||||||
New Hope Liuhe, Cl A(A)(B) | 10,200 | 27,421 | ||||||
Shanghai Bailian Group, Cl A | 4,100 | 11,377 | ||||||
Shanghai Jahwa United, Cl A(A)(B) | 1,800 | 9,494 | ||||||
Shanxi Xinghuacun Fen Wine Factory, Cl A | 2,300 | 5,521 |
The accompanying notes are an integral part of the financial statements.
2
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Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
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Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Consumer Staples — continued | ||||||||
Shenzhen Agricultural Products, Cl A | 4,500 | $ | 10,144 | |||||
Tsingtao Brewery, Cl A | 1,800 | 9,100 | ||||||
Wuliangye Yibin, Cl A(A)(B) | 18,500 | 67,399 | ||||||
Yonghui Superstores, Cl A | 10,800 | 17,244 | ||||||
Yuan Longping High-tech Agriculture, Cl A | 2,600 | 7,485 | ||||||
435,719 | ||||||||
Energy — 3.6% | ||||||||
China Coal Energy, Cl A | 16,133 | 15,201 | ||||||
China Merchants Energy Shipping, Cl A | 14,000 | 14,138 | ||||||
China Oilfield Services, Cl A | 5,200 | 12,875 | ||||||
China Petroleum & Chemical, Cl A | 42,200 | 31,465 | ||||||
China Shenhua Energy, Cl A | 16,000 | 36,419 | ||||||
Guanghui Energy, Cl A | 13,871 | 13,965 | ||||||
Jizhong Energy Resources, Cl A | 9,397 | 7,243 | ||||||
Offshore Oil Engineering, Cl A | 11,700 | 16,656 | ||||||
Oriental Energy, Cl A | 1,800 | 6,997 | ||||||
PetroChina, Cl A | 28,600 | 37,026 | ||||||
SDIC Xinji Energy, Cl A | 6,900 | 9,921 | ||||||
Shanxi Lu’an Environmental Energy Development, Cl A | 7,970 | 7,422 | ||||||
Shanxi Xishan Coal & Electricity Power, Cl A | 8,400 | 7,109 | ||||||
Wintime Energy, Cl A | 24,670 | 16,027 | ||||||
Yang Quan Coal Industry Group, Cl A | 6,400 | 6,222 | ||||||
Yantai Jereh Oilfield Services Group, Cl A | 9,325 | 58,557 | ||||||
297,243 | ||||||||
Financials — 30.8% | ||||||||
Agricultural Bank of China, Cl A | 207,800 | 99,044 | ||||||
Avic Capital, Cl A | 9,900 | 23,687 | ||||||
Bank of Beijing, Cl A | 33,580 | 45,480 | ||||||
Bank of China, Cl A | 186,185 | 108,950 | ||||||
Bank of Communications, Cl A | 104,000 | 99,467 | ||||||
Bank of Nanjing, Cl A | 8,900 | 20,314 | ||||||
Bank of Ningbo, Cl A | 10,360 | 18,318 | ||||||
Beijing Capital Development, Cl A | 5,900 | 8,594 | ||||||
Beijing Urban Construction Investment & Development, Cl A | 4,200 | 7,657 | ||||||
Bohai Leasing, Cl A | 9,450 | 10,153 | ||||||
Changjiang Securities, Cl A | 12,600 | 18,374 | ||||||
China CITIC Bank, Cl A* | 22,500 | 20,776 | ||||||
China Construction Bank, Cl A | 25,400 | 20,697 | ||||||
China Everbright Bank, Cl A | 140,100 | 85,509 | ||||||
China Fortune Land Development, Cl A | 7,000 | 24,115 | ||||||
China Life Insurance, Cl A | 12,900 | 51,806 | ||||||
China Merchants Bank, Cl A | 65,300 | 182,533 | ||||||
China Merchants Property Development, Cl A | 18,359 | 82,278 |
The accompanying notes are an integral part of the financial statements.
3
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Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
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Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Financials — continued | ||||||||
China Merchants Securities, Cl A | 15,400 | $ | 38,833 | |||||
China Minsheng Banking, Cl A | 78,300 | 104,078 | ||||||
China Pacific Insurance Group, Cl A | 16,700 | 58,293 | ||||||
China Vanke, Cl A | 25,700 | 51,464 | ||||||
CITIC Securities, Cl A | 26,100 | 55,755 | ||||||
Dongxing Securities, Cl A | 4,400 | 10,874 | ||||||
Everbright Securities, Cl A | 10,400 | 25,357 | ||||||
Financial Street Holdings, Cl A | 7,900 | 10,203 | ||||||
Founder Securities, Cl A* | 21,800 | 21,776 | ||||||
Gemdale, Cl A | 11,900 | 22,332 | ||||||
Geo-Jade Petroleum, Cl A(A)(B) | 6,020 | 7,339 | ||||||
GF Securities, Cl A | 15,700 | 32,353 | ||||||
Guosen Securities, Cl A | 10,900 | 25,359 | ||||||
Guotai Junan Securities, Cl A* | 13,500 | 39,499 | ||||||
Guoyuan Securities, Cl A | 5,200 | 13,120 | ||||||
Haitong Securities, Cl A | 21,400 | 42,921 | ||||||
Huatai Securities, Cl A | 14,500 | 31,750 | ||||||
Huaxia Bank, Cl A | 28,300 | 45,007 | ||||||
Industrial & Commercial Bank of China, Cl A | 142,900 | 97,108 | ||||||
Industrial Bank, Cl A | 50,500 | 115,663 | ||||||
Industrial Securities, Cl A | 13,800 | 16,997 | ||||||
Jinke Properties Group, Cl A | 11,000 | 7,890 | ||||||
New China Life Insurance, Cl A | 3,700 | 20,854 | ||||||
Northeast Securities, Cl A | 5,200 | 8,998 | ||||||
Oceanwide Holdings, Cl A | 10,100 | 15,491 | ||||||
Orient Securities, Cl A | 9,300 | 23,948 | ||||||
Pacific Securities, Cl A | 9,400 | 9,863 | ||||||
Ping An Bank, Cl A | 37,900 | 62,540 | ||||||
Ping An Insurance Group of China, Cl A | 34,286 | 161,045 | ||||||
Poly Real Estate Group, Cl A | 28,400 | 35,695 | ||||||
RiseSun Real Estate Development, Cl A | 10,100 | 11,900 | ||||||
Sealand Securities, Cl A | 7,412 | 10,552 | ||||||
Shanghai Lujiazui Finance & Trade Zone Development, Cl A | 3,000 | 21,859 | ||||||
Shanghai Pudong Development Bank, Cl A | 59,100 | 154,604 | ||||||
Shanghai SMI Holding, Cl A | 7,875 | 15,844 | ||||||
Shanghai Zhangjiang High-Tech Park Development, Cl A | 4,100 | 12,267 | ||||||
Shanxi Securities, Cl A | 6,700 | 12,141 | ||||||
Shenwan Hongyuan Group, Cl A* | 32,800 | 44,269 | ||||||
Shenzhen World Union Properties Consultancy, Cl A | 3,800 | 7,400 | ||||||
Sinolink Securities, Cl A | 8,000 | 15,227 | ||||||
SooChow Securities, Cl A | 7,178 | 12,341 | ||||||
Southwest Securities, Cl A | 15,000 | 17,366 | ||||||
Sunshine City Group, Cl A | 8,500 | 7,621 |
The accompanying notes are an integral part of the financial statements.
4
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Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
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Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Financials — continued | ||||||||
Thaihot Group, Cl A | 2,200 | $ | 6,939 | |||||
Western Securities, Cl A | 7,400 | 18,846 | ||||||
Xinhu Zhongbao, Cl A | 18,000 | 14,299 | ||||||
Zhejiang China Commodities City Group, Cl A | 14,400 | 17,079 | ||||||
Zhongtian Urban Development Group, Cl A(A)(B) | 15,200 | 17,861 | ||||||
2,558,572 | ||||||||
Health Care — 5.6% | ||||||||
Beijing SL Pharmaceutical, Cl A | 1,800 | 7,271 | ||||||
Beijing Tongrentang, Cl A | 3,600 | 12,725 | ||||||
China National Accord Medicines, Cl A | 800 | 7,100 | ||||||
China Resources Sanjiu Medical & Pharmaceutical, Cl A | 2,600 | 9,529 | ||||||
Da An Gene of Sun Yat-Sen University, Cl A(A)(B) | 3,240 | 20,137 | ||||||
Dong-E-E-Jiao, Cl A | 1,700 | 11,146 | ||||||
Guangxi Wuzhou Zhongheng Group, Cl A(A)(B) | 9,300 | 7,344 | ||||||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A | 2,800 | 11,064 | ||||||
Guizhou Bailing Group Pharmaceutical, Cl A | 1,200 | 10,297 | ||||||
Guizhou Yibai Pharmaceutical, Cl A | 2,100 | 5,242 | ||||||
Harbin Gloria Pharmaceuticals, Cl A | 1,900 | 7,239 | ||||||
Harbin Pharmaceutical Group, Cl A* | 5,100 | 8,247 | ||||||
Hengkang Medical Group, Cl A*(A)(B) | 5,900 | 32,456 | ||||||
Huadong Medicine, Cl A | 1,200 | 13,185 | ||||||
Hualan Biological Engineering, Cl A | 1,500 | 8,285 | ||||||
Huapont Life Sciences, Cl A | 5,000 | 7,338 | ||||||
Humanwell Healthcare Group, Cl A | 3,400 | 8,071 | ||||||
Jiangsu Hengrui Medicine, Cl A | 5,200 | 37,783 | ||||||
Jiangsu Yuyue Medical Equipment & Supply, Cl A | 1,500 | 7,926 | ||||||
Jilin Aodong Pharmaceutical Group, Cl A | 2,400 | 8,744 | ||||||
Joincare Pharmaceutical Group Industry, Cl A | 4,100 | 6,540 | ||||||
Kangmei Pharmaceutical, Cl A | 11,700 | 24,883 | ||||||
Searainbow Holding, Cl A* | 2,400 | 9,087 | ||||||
Shanghai Fosun Pharmaceutical Group, Cl A | 5,100 | 17,585 | ||||||
Shanghai Pharmaceuticals Holding, Cl A | 5,100 | 13,992 | ||||||
Shanghai RAAS Blood Products, Cl A | 4,800 | 31,335 | ||||||
Shenzhen Hepalink Pharmaceutical, Cl A | 5,200 | 19,836 | ||||||
Shenzhen Salubris Pharmaceuticals, Cl A | 2,300 | 9,139 | ||||||
Shijiazhuang Yiling Pharmaceutical, Cl A | 3,000 | 6,607 | ||||||
Sichuan Kelun Pharmaceutical, Cl A | 3,800 | 8,901 | ||||||
Tasly Pharmaceutical Group, Cl A | 2,900 | 15,127 | ||||||
Tonghua Dongbao Pharmaceutical, Cl A | 3,000 | 10,576 | ||||||
Xizang Haisco Pharmaceutical Group, Cl A | 1,900 | 6,303 | ||||||
Yunnan Baiyao Group, Cl A | 2,800 | 28,189 | ||||||
Zhangzhou Pientzehuang Pharmaceutical, Cl A | 1,100 | 8,292 |
The accompanying notes are an integral part of the financial statements.
5
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Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
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Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Health Care — continued | ||||||||
Zhejiang Hisun Pharmaceutical, Cl A | 2,600 | $ | 4,658 | |||||
Zhejiang NHU, Cl A | 2,900 | 6,117 | ||||||
468,296 | ||||||||
Industrials — 22.9% | ||||||||
Air China, Cl A | 15,100 | 17,910 | ||||||
AVIC Aero-Engine Controls, Cl A(A)(B) | 3,000 | 10,661 | ||||||
AVIC Aircraft, Cl A | 7,000 | 24,698 | ||||||
Avic Aviation Engine, Cl A(A)(B) | 4,300 | 27,638 | ||||||
Avic Heavy Machinery, Cl A | 2,100 | 5,233 | ||||||
AVIC Helicopter, Cl A | 1,541 | 10,290 | ||||||
Beijing Orient Landscape & Ecology, Cl A(A)(B) | 9,833 | 53,395 | ||||||
CCS Supply Chain Management, Cl A | 2,200 | 7,070 | ||||||
China Aerospace Times Electronics, Cl A* | 3,300 | 8,264 | ||||||
China Avionics Systems, Cl A | 3,900 | 13,613 | ||||||
China Baoan Group, Cl A | 4,200 | 6,997 | ||||||
China CAMC Engineering, Cl A | 2,100 | 5,682 | ||||||
China Communications Construction, Cl A | 10,400 | 19,419 | ||||||
China COSCO Holdings, Cl A*(A)(B) | 37,200 | 61,268 | ||||||
China CSSC Holdings, Cl A | 3,700 | 20,580 | ||||||
China Eastern Airlines, Cl A* | 20,300 | 23,279 | ||||||
China First Heavy Industries, Cl A | 17,300 | 23,621 | ||||||
China Gezhouba Group, Cl A | 12,200 | 13,741 | ||||||
China International Marine Containers Group, Cl A | 3,300 | 8,913 | ||||||
China National Chemical Engineering, Cl A | 13,100 | 12,797 | ||||||
China Railway Construction, Cl A | 25,400 | 54,139 | ||||||
China Railway Erju, Cl A(A)(B) | 5,100 | 9,170 | ||||||
China Railway Group, Cl A | 59,000 | 101,534 | ||||||
China Shipbuilding Industry, Cl A | 48,643 | 76,594 | ||||||
China Shipping Container Lines, Cl A*(A)(B) | 38,600 | 47,725 | ||||||
China Shipping Development, Cl A(A)(B) | 13,300 | 20,859 | ||||||
China Southern Airlines, Cl A | 18,600 | 21,915 | ||||||
China Spacesat, Cl A | 3,100 | 17,448 | ||||||
China State Construction Engineering, Cl A | 79,500 | 72,283 | ||||||
China XD Electric, Cl A | 13,544 | 12,932 | ||||||
CMST Development, Cl A | 4,900 | 7,723 | ||||||
CRRC, Cl A* | 72,558 | 148,036 | ||||||
Dalian Port PDA, Cl A | 8,900 | 7,238 | ||||||
Daqin Railway, Cl A | 39,400 | 54,727 | ||||||
Dongfang Electric, Cl A | 5,302 | 10,425 | ||||||
Eternal Asia Supply Chain Management, Cl A*(A)(B) | 8,500 | 88,034 | ||||||
Fangda Carbon New Material, Cl A* | 4,590 | 5,827 | ||||||
Fujian Longking, Cl A | 2,850 | 5,922 | ||||||
Guangshen Railway, Cl A | 15,000 | 9,981 |
The accompanying notes are an integral part of the financial statements.
6
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Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
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Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Industrials — continued | ||||||||
Hainan Airlines, Cl A | 31,300 | $ | 18,660 | |||||
Han’s Laser Technology Industry Group, Cl A | 2,800 | 8,580 | ||||||
Hefei Meiya Optoelectronic Technology, Cl A | 1,800 | 7,724 | ||||||
Henan Pinggao Electric, Cl A(A)(B) | 9,800 | 31,325 | ||||||
Jiangxi Hongdu Aviation Industry, Cl A | 1,900 | 5,849 | ||||||
Jihua Group, Cl A | 10,200 | 19,334 | ||||||
Luxshare Precision Industry, Cl A | 3,300 | 15,350 | ||||||
Meidu Energy, Cl A | 6,500 | 4,765 | ||||||
Metallurgical Corp of China, Cl A(A)(B) | 65,800 | 72,558 | ||||||
Minmetals Development, Cl A(A)(B) | 7,300 | 38,561 | ||||||
NARI Technology, Cl A | 6,400 | 14,286 | ||||||
Ningbo Port, Cl A(A)(B) | 41,550 | 47,974 | ||||||
North Navigation Control Technology, Cl A | 2,000 | 8,689 | ||||||
Power Construction Corp of China, Cl A | 25,400 | 29,447 | ||||||
Sany Heavy Industry, Cl A | 20,200 | 20,209 | ||||||
Shanghai Construction Group, Cl A | 13,100 | 16,465 | ||||||
Shanghai Electric Group, Cl A | 17,400 | 30,737 | ||||||
Shanghai International Airport, Cl A | 2,600 | 11,337 | ||||||
Shanghai International Port Group, Cl A | 18,100 | 19,845 | ||||||
Shanghai Mechanical and Electrical Industry, Cl A | 2,100 | 7,690 | ||||||
Shanghai Tunnel Engineering, Cl A | 8,300 | 15,119 | ||||||
Shanghai Waigaoqiao Free Trade Zone Group, Cl A | 2,100 | 8,123 | ||||||
Shanghai Zhenhua Heavy Industries, Cl A* | 7,300 | 6,672 | ||||||
Shenzhen Yan Tian Port Holding, Cl A | 5,100 | 5,824 | ||||||
Sichuan Road & Bridge, Cl A | 8,000 | 5,612 | ||||||
Sinochem International, Cl A | 5,500 | 8,868 | ||||||
Sinotrans Air Transportation Development, Cl A | 2,400 | 7,464 | ||||||
Spring Airlines, Cl A | 900 | 15,885 | ||||||
Suzhou Gold Mantis Construction Decoration, Cl A | 4,650 | 9,619 | ||||||
Taiyuan Heavy Industry, Cl A* | 6,400 | 5,155 | ||||||
TangShan Port Group, Cl A | 6,000 | 6,919 | ||||||
TBEA, Cl A | 8,600 | 14,259 | ||||||
Tian Di Science & Technology, Cl A | 4,600 | 7,945 | ||||||
Tianjin Port, Cl A | 4,400 | 6,617 | ||||||
Weichai Power, Cl A | 8,000 | 10,709 | ||||||
XCMG Construction Machinery, Cl A | 18,681 | 11,990 | ||||||
Xiamen C & D, Cl A(A)(B) | 24,500 | 60,738 | ||||||
Xiamen ITG Group, Cl A | 4,400 | 4,935 | ||||||
Xinjiang Goldwind Science & Technology, Cl A | 5,800 | 12,326 | ||||||
XJ Electric, Cl A | 2,700 | 6,885 | ||||||
Yingkou Port Liability, Cl A | 14,300 | 10,370 | ||||||
Zhefu Holding Group, Cl A | 5,240 | 6,108 | ||||||
Zhejiang Chint Electrics, Cl A(A)(B) | 10,691 | 46,702 |
The accompanying notes are an integral part of the financial statements.
7
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Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Industrials — continued | ||||||||
Zhengzhou Yutong Bus, Cl A | 5,838 | $ | 17,265 | |||||
Zoomlion Heavy Industry Science and Technology, Cl A | 16,635 | 13,058 | ||||||
1,902,133 | ||||||||
Information Technology — 5.6% | ||||||||
Addsino, Cl A* | 3,800 | 8,189 | ||||||
Aisino, Cl A | 2,400 | 20,270 | ||||||
Beijing Shiji Information Technology, Cl A | 800 | 10,518 | ||||||
Beijing Zhong Ke San Huan High-Tech, Cl A | 2,800 | 5,475 | ||||||
BOE Technology Group, Cl A* | 89,992 | 39,496 | ||||||
China National Software & Service, Cl A | 1,300 | 5,977 | ||||||
Datang Telecom Technology, Cl A* | 2,300 | 6,618 | ||||||
Dawning Information Industry, Cl A | 700 | 6,493 | ||||||
DHC Software, Cl A | 4,000 | 11,036 | ||||||
Dongxu Optoelectronic Technology, Cl A | 6,400 | 7,369 | ||||||
Fiberhome Telecommunication Technologies, Cl A | 2,600 | 8,699 | ||||||
Glodon Software, Cl A | 3,000 | 6,512 | ||||||
GoerTek, Cl A | 4,000 | 14,881 | ||||||
GRG Banking Equipment, Cl A | 2,400 | 9,853 | ||||||
Guangzhou Haige Communications Group, Cl A | 5,600 | 11,249 | ||||||
Hangzhou Hikvision Digital Technology, Cl A | 10,800 | 55,350 | ||||||
Hangzhou Liaison Interactive Information Technology, Cl A | 1,600 | 8,875 | ||||||
Hundsun Technologies, Cl A | 1,600 | 10,994 | ||||||
Iflytek, Cl A | 3,400 | 14,334 | ||||||
Inspur Electronic Information Industry, Cl A | 2,500 | 9,930 | ||||||
Neusoft, Cl A | 3,300 | 7,210 | ||||||
People.cn, Cl A | 2,900 | 7,541 | ||||||
Sanan Optoelectronics, Cl A | 6,353 | 19,717 | ||||||
Shanghai 2345 Network Holding Group, Cl A | 1,900 | 7,762 | ||||||
Shanghai DZH, Cl A* | 5,300 | 7,995 | ||||||
Shenzhen Kingdom Sci-Tech, Cl A(A)(B) | 6,300 | 30,196 | ||||||
Shenzhen O-film Tech, Cl A | 2,700 | 7,756 | ||||||
Sinodata, Cl A | 800 | 7,665 | ||||||
Tianjin Zhonghuan Semiconductor, Cl A | 6,100 | 9,797 | ||||||
Tianma Microelectronics, Cl A | 2,500 | 5,462 | ||||||
Tongfang Guoxin Electronics, Cl A | 1,600 | 7,727 | ||||||
Tsinghua Tongfang, Cl A | 7,900 | 17,870 | ||||||
Xi’an LONGi Silicon Materials, Cl A | 4,700 | 6,765 | ||||||
Yonyou Network Technology, Cl A | 3,700 | 14,056 | ||||||
Zhejiang Dahua Technology, Cl A | 3,100 | 16,487 | ||||||
ZTE, Cl A | 8,940 | 21,938 | ||||||
468,062 |
The accompanying notes are an integral part of the financial statements.
8
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Materials — 8.1% | ||||||||
Aluminum Corp of China, Cl A* | 29,003 | $ | 21,306 | |||||
Angang Steel, Cl A | 13,600 | 10,076 | ||||||
Anhui Conch Cement, Cl A | 10,600 | 28,096 | ||||||
Baoshan Iron & Steel, Cl A | 29,100 | 25,589 | ||||||
BBMG, Cl A | 6,400 | 7,692 | ||||||
CEFC Anhui International Holding, Cl A(A)(B) | 10,300 | 64,275 | ||||||
China Hainan Rubber Industry Group, Cl A | 10,446 | 12,143 | ||||||
China Minmetals Rare Earth, Cl A* | 2,600 | 5,955 | ||||||
China Nonferrous Metal Industry’s Foreign Engineering and Construction, Cl A | 2,600 | 5,108 | ||||||
Guangdong Guanhao High-Tech, Cl A | 3,400 | 4,685 | ||||||
Guangdong HEC Technology Holding, Cl A | 6,500 | 5,276 | ||||||
Hebei Iron & Steel, Cl A | 28,100 | 13,747 | ||||||
Inner Mongolia Baotou Steel Rare-Earth Hi-Tech, Cl A | 9,600 | 19,103 | ||||||
Inner Mongolia BaoTou Steel Union, Cl A* | 71,900 | 40,151 | ||||||
Inner Mongolia Junzheng Energy & Chemical Industry, Cl A | 9,800 | 14,290 | ||||||
Jiangsu Kangde Xin Composite Material, Cl A | 3,800 | 18,106 | ||||||
Jiangsu Protruly Vision Technology Group, Cl A* | 19,500 | 42,116 | ||||||
Jiangxi Copper, Cl A | 5,500 | 11,239 | ||||||
Jilin Ji En Nickel Industry, Cl A(A)(B) | 4,800 | 6,562 | ||||||
Jinduicheng Molybdenum, Cl A | 7,100 | 7,617 | ||||||
Kingenta Ecological Engineering Group, Cl A | 4,100 | 11,474 | ||||||
Kingfa Sci & Tech, Cl A | 6,800 | 7,445 | ||||||
Luxin Venture Capital Group, Cl A | 2,000 | 6,855 | ||||||
Maanshan Iron & Steel, Cl A* | 15,800 | 7,879 | ||||||
Org Packaging, Cl A | 2,600 | 8,691 | ||||||
Pangang Group Vanadium Titanium & Resources, Cl A | 22,799 | 10,544 | ||||||
Pengxin International Mining, Cl A(A)(B) | 5,300 | 5,336 | ||||||
Qinghai Salt Lake Industry, Cl A | 3,500 | 9,349 | ||||||
Shandong Gold Mining, Cl A(A)(B) | 3,800 | 9,743 | ||||||
Shandong Iron and Steel, Cl A* | 14,900 | 7,149 | ||||||
Shandong Nanshan Aluminum, Cl A(A)(B) | 7,500 | 7,562 | ||||||
Shanxi Taigang Stainless Steel, Cl A | 15,100 | 9,549 | ||||||
Shenzhen Zhongjin Lingnan Nonfemet, Cl A | 5,900 | 8,715 | ||||||
Sinopec Shanghai Petrochemical, Cl A* | 16,100 | 16,158 | ||||||
Tangshan Jidong Cement, Cl A | 3,600 | 4,813 | ||||||
Tongling Nonferrous Metals Group, Cl A(A)(B) | 84,480 | 40,532 | ||||||
Wanhua Chemical Group, Cl A | 5,700 | 14,301 | ||||||
Western Mining, Cl A | 6,300 | 6,204 | ||||||
Wuhan Iron & Steel, Cl A | 26,700 | 15,792 | ||||||
Xiamen Tungsten, Cl A | 2,900 | 6,929 | ||||||
Xinxing Ductile Iron Pipes, Cl A | 11,500 | 11,650 | ||||||
Yunnan Chihong Zinc & Germanium, Cl A | 4,400 | 5,862 | ||||||
Yunnan Tin, Cl A | 3,100 | 4,964 |
The accompanying notes are an integral part of the financial statements.
9
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares/ Face Amount | Value | |||||||
COMMON STOCK — continued | ||||||||
Materials — continued | ||||||||
Zhejiang Hailiang, Cl A(A)(B) | 12,600 | $ | 22,813 | |||||
Zhejiang Longsheng Group, Cl A | 8,600 | 12,798 | ||||||
Zhongjin Gold, Cl A | 7,800 | 10,736 | ||||||
Zijin Mining Group, Cl A | 41,900 | 22,278 | ||||||
669,253 | ||||||||
Telecommunication Services — 0.8% | ||||||||
China United Network Communications, Cl A | 56,200 | 53,131 | ||||||
Dr Peng Telecom & Media Group, Cl A | 3,700 | 12,531 | ||||||
65,662 | ||||||||
Utilities — 6.6% | ||||||||
Beijing Capital, Cl A | 6,400 | 8,869 | ||||||
Beijing Jingneng Power, Cl A | 10,200 | 8,456 | ||||||
Chengdu Xingrong Environment, Cl A | 7,900 | 7,121 | ||||||
China National Nuclear Power, Cl A* | 34,400 | 49,080 | ||||||
China Yangtze Power, Cl A(A)(B) | 118,700 | 247,591 | ||||||
GD Power Development, Cl A | 52,044 | 32,993 | ||||||
Guangdong Golden Dragon Development, Cl A(A)(B) | 6,900 | 21,350 | ||||||
Huadian Power International, Cl A | 21,606 | 23,417 | ||||||
Huaneng Power International, Cl A | 18,500 | 25,173 | ||||||
Hubei Energy Group, Cl A | 14,200 | 13,224 | ||||||
Inner Mongolia MengDian HuaNeng Thermal Power, Cl A | 15,400 | 10,586 | ||||||
SDIC Power Holdings, Cl A | 21,500 | 29,897 | ||||||
Shanghai Electric Power, Cl A | 5,700 | 12,894 | ||||||
Shenergy, Cl A | 12,100 | 13,666 | ||||||
Shenzhen Energy Group, Cl A | 10,500 | 15,063 | ||||||
Sichuan Chuantou Energy, Cl A | 11,700 | 19,030 | ||||||
Sound Environmental Resources, Cl A | 2,200 | 11,662 | ||||||
550,072 | ||||||||
TOTAL COMMON STOCK (Cost $10,039,766) | 8,216,282 | |||||||
TIME DEPOSIT — 0.6% | ||||||||
Brown Brothers Harriman 0.030%, 10/01/2015 | $ | 48,860 | 48,860 | |||||
TOTAL TIME DEPOSIT (Cost $48,860) | 48,860 | |||||||
TOTAL INVESTMENTS — 99.5% (Cost $10,088,626) | $ | 8,265,142 |
Percentages are based on Net Assets of $8,304,592
‡ | Narrow industries are utilized for compliance purposes, whereas broad 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 Fund. The total value of such security as of September 30, 2015 was $1,462,403 and represents 17.6% of Net Assets. |
The accompanying notes are an integral part of the financial statements.
10
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares Bosera MSCI China A Share ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
(B) | Securities considered illiquid. The total value of such securities as of September 30, 2015 was $1,462,403 and represents 17.6% of Net Assets. |
Cl — Class
The following is a list of the inputs used as of September 30, 2015, in valuing the Fund’s investments carried at value:
![]() | ![]() | ![]() | ![]() | ![]() | ||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stock | ||||||||||||||||
China | ||||||||||||||||
Consumer Discretionary | $ | 600,886 | $ | — | $ | 200,384 | $ | 801,270 | ||||||||
Consumer Staples | 331,405 | — | 104,314 | 435,719 | ||||||||||||
Energy | 297,243 | — | — | 297,243 | ||||||||||||
Financials | 2,533,372 | — | 25,200 | 2,558,572 | ||||||||||||
Health Care | 408,359 | — | 59,937 | 468,296 | ||||||||||||
Industrials | 1,285,525 | — | 616,608 | 1,902,133 | ||||||||||||
Information Technology | 437,866 | — | 30,196 | 468,062 | ||||||||||||
Materials | 512,430 | — | 156,823 | 669,253 | ||||||||||||
Telecommunication Services | 65,662 | — | — | 65,662 | ||||||||||||
Utilities | 281,131 | — | 268,941 | 550,072 | ||||||||||||
Total Common Stock | 6,753,879 | — | 1,462,403 | 8,216,282 | ||||||||||||
Time Deposit | — | 48,860 | — | 48,860 | ||||||||||||
Total Investments in Securities | $ | 6,753,879 | $ | 48,860 | $ | 1,462,403 | $ | 8,265,142 |
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 April 1, 2015 | $ | 1,703,442 | ||
Accrued discounts/premiums | — | |||
Realized gain/(loss) | (803 | ) | ||
Change in unrealized appreciation/(depreciation) | (123,668 | ) | ||
Purchases | 66,498 | |||
Sales | (317,348 | ) | ||
Transfer into Level 3 | 1,386,391 | |||
Transfer out of Level 3 | (1,252,109 | ) | ||
Ending balance as of September 30, 2015 | $ | 1,462,403 | ||
Changes in unrealized gains (losses) included in earnings related to securities held at reporting date | $ | (1,367,718 | ) |
For the period ended September 30, 2015, there have been no transfers between Level 1 and Level 2 investments.
For the period ended September 30, 2015, there have been no transfers between Level 2 and Level 3 investments.
For the period ended September 30, 2015, the transfers in and out of Level 3 were due to changes in the availability of observable inputs to determine fair value. 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.
11
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares CSI New China ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
† | Percentages are based on total investments. More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes. |
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — 99.4%‡ | ||||||||
CHINA — 94.0% | ||||||||
Consumer Discretionary — 18.3% | ||||||||
ANTA Sports Products | 5,818 | $ | 15,014 | |||||
Belle International Holdings | 26,001 | 22,478 | ||||||
Brilliance China Automotive Holdings | 15,174 | 17,934 | ||||||
Byd, Cl H* | 2,933 | 15,460 | ||||||
China Dongxiang Group | 22,822 | 5,507 | ||||||
China Travel International Investment Hong Kong | 17,434 | 6,343 | ||||||
Cogobuy Group*(A) | 5,165 | 5,211 | ||||||
Ctrip.com International ADR* | 2,331 | 147,272 | ||||||
Dongfeng Motor Group, Cl H | 15,056 | 18,747 | ||||||
Geely Automobile Holdings | 28,038 | 13,350 | ||||||
GOME Electrical Appliances Holding | 60,274 | 9,177 | ||||||
Great Wall Motor, Cl H | 15,222 | 16,813 | ||||||
Guangzhou Automobile Group, Cl H | 13,135 | 10,694 | ||||||
Homeinns Hotel Group ADR* | 97 | 2,788 | ||||||
Intime Retail Group | 7,399 | 7,638 | ||||||
JD.com ADR* | 3,862 | 100,644 | ||||||
Jumei International Holding ADR* | 164 | 1,619 | ||||||
Minth Group | 4,178 | 7,450 | ||||||
New Oriental Education & Technology Group ADR | 637 | 12,874 | ||||||
Qunar Cayman Islands ADR* | 138 | 4,150 | ||||||
Shenzhou International Group Holdings | 3,112 | 16,022 | ||||||
Vipshop Holdings ADR* | 1,664 | 27,955 | ||||||
485,140 |
The accompanying notes are an integral part of the financial statements.
12
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares CSI New China ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Consumer Staples — 6.0% | ||||||||
China Agri-Industries Holdings | 14,712 | $ | 5,031 | |||||
China Huishan Dairy Holdings | 34,226 | 12,321 | ||||||
China Mengniu Dairy | 6,483 | 22,753 | ||||||
China Modern Dairy Holdings | 15,443 | 4,703 | ||||||
China Resources Enterprise | 5,915 | 10,975 | ||||||
Hengan International Group | 3,952 | 38,423 | ||||||
NVC Lighting Holding(B)(C) | 14,305 | 18 | ||||||
Tingyi Cayman Islands Holding | 10,918 | 17,356 | ||||||
Tsingtao Brewery, Cl H | 2,195 | 9,601 | ||||||
Uni-President China Holdings | 8,024 | 7,744 | ||||||
Want Want China Holdings | 37,465 | 30,745 | ||||||
159,670 | ||||||||
Health Care — 4.3% | ||||||||
China Animal Healthcare*(B)(C) | 4,000 | 5 | ||||||
China Medical System Holdings | 6,843 | 7,832 | ||||||
China Traditional Chinese Medicine* | 9,256 | 6,963 | ||||||
CSPC Pharmaceutical Group | 15,249 | 13,360 | ||||||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl H | 1,296 | 3,328 | ||||||
Luye Pharma Group* | 10,280 | 9,139 | ||||||
Mindray Medical International ADR | 479 | 10,476 | ||||||
Shandong Weigao Group Medical Polymer, Cl H | 10,855 | 6,835 | ||||||
Shanghai Fosun Pharmaceutical Group, Cl H | 2,242 | 7,015 | ||||||
Shanghai Pharmaceuticals Holding, Cl H | 3,324 | 6,931 | ||||||
Sihuan Pharmaceutical Holdings Group(B)(C) | 27,024 | 35 | ||||||
Sinopharm Group, Cl H | 5,710 | 19,967 | ||||||
Tong Ren Tang Technologies, Cl H | 3,851 | 5,247 | ||||||
WuXi PharmaTech Cayman ADR* | 388 | 16,766 | ||||||
113,899 | ||||||||
Industrials — 15.6% | ||||||||
Air China, Cl H | 12,141 | 9,572 | ||||||
AviChina Industry & Technology, Cl H | 12,565 | 9,258 | ||||||
Beijing Capital International Airport, Cl H | 8,538 | 7,943 | ||||||
Beijing Enterprises Holdings | 2,808 | 16,830 | ||||||
China Communications Construction, Cl H | 21,738 | 26,731 | ||||||
China COSCO Holdings, Cl H*(B)(C) | 14,653 | 8,187 | ||||||
China Eastern Airlines, Cl H* | 10,381 | 6,202 | ||||||
China Everbright International | 14,046 | 19,610 | ||||||
China International Marine Containers Group, Cl H | 4,127 | 7,242 | ||||||
China Lesso Group Holdings | 8,406 | 6,768 | ||||||
China Machinery Engineering, Cl H | 5,995 | 5,152 | ||||||
China Merchants Holdings International | 6,324 | 18,564 | ||||||
China Railway Construction, Cl H | 11,264 | 16,540 | ||||||
China Railway Group, Cl H | 21,721 | 19,703 |
The accompanying notes are an integral part of the financial statements.
13
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares CSI New China ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Industrials — continued | ||||||||
China Shipping Container Lines, Cl H*(B)(C) | 21,714 | $ | 7,649 | |||||
China Shipping Development, Cl H(B)(C) | 8,568 | 5,317 | ||||||
China Southern Airlines, Cl H | 10,311 | 7,570 | ||||||
China State Construction International Holdings | 11,040 | 15,783 | ||||||
CITIC | 23,658 | 43,042 | ||||||
COSCO Pacific(B)(C) | 10,708 | 12,145 | ||||||
CRRC | 25,143 | 31,793 | ||||||
Dongfang Electric, Cl H | 2,923 | 2,998 | ||||||
Fosun International | 11,346 | 19,471 | ||||||
Haitian International Holdings | 4,425 | 7,297 | ||||||
Jiangsu Expressway, Cl H | 8,400 | 10,698 | ||||||
Shanghai Electric Group, Cl H | 15,803 | 8,585 | ||||||
Shanghai Industrial Holdings | 3,474 | 7,665 | ||||||
Shenzhen International Holdings | 6,798 | 9,315 | ||||||
Sinotrans, Cl H | 13,000 | 6,072 | ||||||
Weichai Power, Cl H | 6,368 | 5,908 | ||||||
Zhejiang Expressway, Cl H | 8,855 | 9,609 | ||||||
Zhuzhou CSR Times Electric, Cl H | 2,896 | 21,318 | ||||||
Zoomlion Heavy Industry Science and Technology | 9,536 | 3,581 | ||||||
414,118 | ||||||||
Information Technology — 44.2% | ||||||||
21Vianet Group ADR* | 212 | 3,875 | ||||||
58.com ADR* | 377 | 17,738 | ||||||
Alibaba Group Holding ADR* | 5,685 | 335,244 | ||||||
Alibaba Health Information Technology* | 12,000 | 7,649 | ||||||
Autohome ADR* | 198 | 6,441 | ||||||
Baidu ADR* | 1,606 | 220,680 | ||||||
Bitauto Holdings ADR* | 155 | 4,614 | ||||||
Canadian Solar* | 241 | 4,005 | ||||||
Hollysys Automation Technologies | 256 | 4,475 | ||||||
NetEase ADR | 365 | 43,844 | ||||||
Qihoo 360 Technology ADR* | 402 | 19,228 | ||||||
Semiconductor Manufacturing International* | 147,488 | 13,321 | ||||||
SINA* | 278 | 11,153 | ||||||
Sohu.com* | 170 | 7,021 | ||||||
SouFun Holdings ADR | 1,048 | 6,917 | ||||||
Sunny Optical Technology Group | 4,075 | 8,087 | ||||||
Tencent Holdings | 25,019 | 417,411 | ||||||
Trina Solar ADR* | 466 | 4,180 | ||||||
Weibo ADR* | 250 | 2,923 | ||||||
Xinjiang Goldwind Science & Technology, Cl H | 3,313 | 5,728 | ||||||
Xinyi Solar Holdings | 25,712 | 8,759 |
The accompanying notes are an integral part of the financial statements.
14
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares CSI New China ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Information Technology — continued | ||||||||
Youku Tudou ADR* | 644 | $ | 11,354 | |||||
YY ADR* | 170 | 9,272 | ||||||
1,173,919 | ||||||||
Materials — 2.6% | ||||||||
Aluminum Corp of China, Cl H* | 22,822 | 7,097 | ||||||
Angang Steel, Cl H | 8,952 | 3,592 | ||||||
Anhui Conch Cement, Cl H | 6,852 | 20,114 | ||||||
BBMG, Cl H | 8,174 | 5,600 | ||||||
China Hongqiao Group | 8,083 | 3,786 | ||||||
China Lumena New Materials*(B)(C) | 28,720 | 37 | ||||||
China Molybdenum, Cl H | 8,782 | 4,261 | ||||||
China National Building Material, Cl H | 16,765 | 9,648 | ||||||
China Shanshui Cement Group(B)(C) | 10,672 | 5,605 | ||||||
Jiangxi Copper, Cl H | 8,215 | 9,964 | ||||||
Tianhe Chemicals Group*(A)(B)(C) | 40,000 | 52 | ||||||
69,756 | ||||||||
Utilities — 3.0% | ||||||||
Beijing Jingneng Clean Energy, Cl H | 12,602 | 3,854 | ||||||
China Longyuan Power Group, Cl H | 17,551 | 18,842 | ||||||
China Resources Gas Group | 4,893 | 12,602 | ||||||
China Suntien Green Energy, Cl H | 27,740 | 4,904 | ||||||
CT Environmental Group | 17,708 | 5,529 | ||||||
ENN Energy Holdings | 4,001 | 19,179 | ||||||
Huadian Fuxin Energy, Cl H | 15,816 | 5,449 | ||||||
Huaneng Renewables, Cl H | 24,365 | 8,991 | ||||||
79,350 | ||||||||
TOTAL CHINA | 2,495,852 | |||||||
HONG KONG — 5.4% | ||||||||
Consumer Discretionary — 1.5% | ||||||||
Alibaba Pictures Group* | 36,463 | 8,092 | ||||||
Haier Electronics Group | 7,370 | 12,286 | ||||||
Man Wah Holdings | 5,775 | 5,618 | ||||||
Skyworth Digital Holdings | 10,588 | 7,132 | ||||||
Xinyi Glass Holdings | 17,219 | 7,687 | ||||||
40,815 | ||||||||
Health Care — 0.7% | ||||||||
Sino Biopharmaceutical | 14,633 | 17,975 |
The accompanying notes are an integral part of the financial statements.
15
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares CSI New China ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares/ Face Amount(1) | Value | |||||||
COMMON STOCK — continued | ||||||||
Industrials — 0.5% | ||||||||
China High Speed Transmission Equipment Group | 7,371 | $ | 7,152 | |||||
Kerry Logistics Network | 4,500 | 6,387 | ||||||
13,539 | ||||||||
Information Technology — 1.1% | ||||||||
GCL-Poly Energy Holdings | 57,514 | 11,058 | ||||||
Hanergy Thin Film Power Group*(B)(C) | 65,064 | 17,378 | ||||||
28,436 | ||||||||
Materials — 0.9% | ||||||||
China Resources Cement Holdings | 14,721 | 6,705 | ||||||
Huabao International Holdings | 13,490 | 4,265 | ||||||
Lee & Man Paper Manufacturing | 12,150 | 6,146 | ||||||
Nine Dragons Paper Holdings | 10,800 | 5,588 | ||||||
22,704 | ||||||||
Utilities — 0.7% | ||||||||
China Gas Holdings | 10,899 | 14,963 | ||||||
Towngas China | 7,652 | 4,700 | ||||||
19,663 | ||||||||
TOTAL HONG KONG | 143,132 | |||||||
TOTAL COMMON STOCK (Cost $2,666,353) | 2,638,984 | |||||||
TIME DEPOSITS — 0.2% | ||||||||
Brown Brothers Harriman | ||||||||
0.030%, 10/01/2015 | $ | 4,453 | 4,453 | |||||
0.005%, 10/01/2015 HKD | 1,980 | 256 | ||||||
TOTAL TIME DEPOSITS (Cost $4,709) | 4,709 | |||||||
TOTAL INVESTMENTS — 99.6% (Cost $2,671,062) | $ | 2,643,693 |
Percentages are based on Net Assets of $2,653,844
‡ | Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. |
* | Non-income producing security. |
(1) | In U.S. Dollars unless otherwise indicated. |
(A) | Securities sold within terms of a private placement memorandum, exempt from registration under Section 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other “accredited investors.” These securities have been determined to be liquid under guidelines established by the Board of Trustees. |
(B) | Security is fair valued using methods determined in good faith by the Fair Value Committee of the Fund. The total value of such security as of September 30, 2015 was $56,428 and represents 2.1% of Net Assets. |
(C) | Securities considered illiquid. The total value of such securities as of September 30, 2015 was $56,428 and represents 2.1% of Net Assets. |
ADR — American Depositary Receipt
Cl — Class
HKD — Hong Kong Dollar
The accompanying notes are an integral part of the financial statements.
16
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares CSI New China ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
The following is a list of the inputs used as of September 30, 2015, in valuing the Fund’s investments carried at value:
![]() | ![]() | ![]() | ![]() | ![]() | ||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stock | ||||||||||||||||
China | ||||||||||||||||
Consumer Discretionary | $ | 485,140 | $ | — | $ | — | $ | 485,140 | ||||||||
Consumer Staples | 159,652 | — | 18 | 159,670 | ||||||||||||
Health Care | 113,859 | — | 40 | 113,899 | ||||||||||||
Industrials | 380,820 | — | 33,298 | 414,118 | ||||||||||||
Information Technology | 1,173,919 | — | — | 1,173,919 | ||||||||||||
Materials | 64,062 | — | 5,694 | 69,756 | ||||||||||||
Utilities | 79,350 | — | — | 79,350 | ||||||||||||
Hong Kong | ||||||||||||||||
Consumer Discretionary | 40,815 | — | — | 40,815 | ||||||||||||
Health Care | 17,975 | — | — | 17,975 | ||||||||||||
Industrials | 13,539 | — | — | 13,539 | ||||||||||||
Information Technology | 11,058 | — | 17,378 | 28,436 | ||||||||||||
Materials | 22,704 | — | — | 22,704 | ||||||||||||
Utilities | 19,663 | — | — | 19,663 | ||||||||||||
Total Common Stock | 2,582,556 | — | 56,428 | 2,638,984 | ||||||||||||
Time Deposits | — | 4,709 | — | 4,709 | ||||||||||||
Total Investments in Securities | $ | 2,582,556 | $ | 4,709 | $ | 56,428 | $ | 2,643,693 |
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 April 1, 2015 | $ | 82,763 | ||
Accrued discounts/premiums | — | |||
Realized gain/(loss) | (3,193 | ) | ||
Change in unrealized appreciation/(depreciation) | (26,170 | ) | ||
Purchases | — | |||
Sales | — | |||
Transfer into Level 3 | 56,286 | |||
Transfer out of Level 3 | (53,258 | ) | ||
Ending balance as of September 30, 2015 | $ | 56,428 | ||
Changes in unrealized gains (losses) included in earnings related to securities held at reporting date | $ | (407,029 | ) |
For the period ended September 30, 2015, there have been no transfers between Level 1 and Level 2 investments.
For the period ended September 30, 2015, there have been no transfers between Level 2 and Level 3 investments.
For the period ended September 30, 2015, the transfers in and out of Level 3 were due to changes in the availability of observable inputs to determine fair value. 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.
17
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares CSI China Internet ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
† | Percentages are based on total investments. More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes. |
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — 100.0%‡ | ||||||||
CHINA — 96.5% | ||||||||
Consumer Discretionary — 24.2% | ||||||||
500.com ADR, Cl A* | 33,412 | $ | 541,943 | |||||
China Distance Education Holdings ADR | 31,264 | 399,554 | ||||||
Cogobuy Group*(A) | 1,763,000 | 1,778,912 | ||||||
Ctrip.com International ADR* | 124,066 | 7,838,490 | ||||||
E-Commerce China Dangdang ADR, Cl A* | 83,006 | 495,546 | ||||||
eLong ADR* | 15,049 | 256,134 | ||||||
JD.com ADR* | 239,713 | 6,246,921 | ||||||
Jumei International Holding ADR* | 64,267 | 634,315 | ||||||
Qunar Cayman Islands ADR* | 39,400 | 1,184,758 | ||||||
Tuniu ADR* | 35,620 | 422,809 | ||||||
Vipshop Holdings ADR* | 222,807 | 3,743,158 | ||||||
23,542,540 | ||||||||
Industrials — 1.2% | ||||||||
51job ADR* | 29,903 | 819,342 | ||||||
Zhaopin ADR* | 27,120 | 349,848 | ||||||
1,169,190 | ||||||||
Information Technology — 71.1% | ||||||||
21Vianet Group ADR* | 82,110 | 1,500,971 | ||||||
58.com ADR* | 82,353 | 3,874,709 | ||||||
Alibaba Group Holding ADR* | 139,893 | 8,249,490 | ||||||
Autohome ADR* | 57,561 | 1,872,459 | ||||||
Baidu ADR* | 51,068 | 7,017,254 | ||||||
BAIOO Family Interactive(A) | 2,618,000 | 172,280 | ||||||
Bitauto Holdings ADR* | 58,328 | 1,736,425 | ||||||
Boyaa Interactive International | 927,984 | 380,770 | ||||||
Changyou.com ADR* | 32,693 | 581,935 | ||||||
Cheetah Mobile ADR* | 47,030 | 680,054 | ||||||
China Binary Sale Technology* | 183,355 | 19,637 | ||||||
China Finance Online ADR* | 13,281 | 46,085 | ||||||
ChinaCache International Holdings ADR* | 38,864 | 303,916 | ||||||
Forgame Holdings* | 94,556 | 173,250 | ||||||
HC International* | 648,000 | 358,697 |
The accompanying notes are an integral part of the financial statements.
18
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares CSI China Internet ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Information Technology — continued | ||||||||
iDreamsky Technology ADR* | 25,406 | $ | 256,601 | |||||
Jiayuan.com International ADR | 32,729 | 201,120 | ||||||
Kingsoft | 1,099,470 | 2,142,179 | ||||||
KongZhong ADR | 37,013 | 242,435 | ||||||
Leju Holdings ADR | 26,921 | 150,488 | ||||||
Linekong Interactive Group*(A) | 231,000 | 205,663 | ||||||
Momo ADR* | 106,214 | 1,327,675 | ||||||
NetEase ADR | 35,865 | 4,308,104 | ||||||
NQ Mobile ADR* | 108,925 | 360,542 | ||||||
Ourgame International Holdings | 642,000 | 326,383 | ||||||
Pacific Online | 663,676 | 214,088 | ||||||
Phoenix New Media ADR* | 96,297 | 421,781 | ||||||
Qihoo 360 Technology ADR* | 78,539 | 3,756,520 | ||||||
Renren ADR* | 108,437 | 336,155 | ||||||
SINA* | 87,008 | 3,490,761 | ||||||
Sky-mobi ADR* | 17,338 | 42,998 | ||||||
Sohu.com* | 51,919 | 2,144,255 | ||||||
SouFun Holdings ADR | 346,855 | 2,289,243 | ||||||
Tencent Holdings | 633,312 | 10,566,027 | ||||||
Tian Ge Interactive Holdings(A) | 1,172,000 | 509,628 | ||||||
V1 Group | 5,090,910 | 407,270 | ||||||
Weibo ADR* | 96,927 | 1,133,077 | ||||||
Xunlei ADR* | 82,545 | 602,578 | ||||||
Youku Tudou ADR* | 227,713 | 4,014,580 | ||||||
YY ADR* | 48,123 | 2,624,628 | ||||||
69,042,711 | ||||||||
TOTAL CHINA | 93,754,441 | |||||||
HONG KONG — 1.3% | ||||||||
Information Technology — 1.3% | ||||||||
Feiyu Technology International(A) | 762,000 | 179,929 | ||||||
NetDragon Websoft | 417,752 | 1,045,721 | ||||||
TOTAL HONG KONG | 1,225,650 | |||||||
UNITED STATES — 2.2% | ||||||||
Consumer Discretionary — 2.2% | ||||||||
ChinaNet Online Holdings* | 19,058 | 15,433 | ||||||
TAL Education Group ADR* | 67,530 | 2,171,090 | ||||||
TOTAL UNITED STATES | 2,186,523 | |||||||
TOTAL COMMON STOCK (Cost $126,502,865) | 97,166,614 |
The accompanying notes are an integral part of the financial statements.
19
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares CSI China Internet ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Face Amount(1) | Value | |||||||
TIME DEPOSITS — 0.1% | ||||||||
Brown Brothers Harriman | ||||||||
0.030%, 10/01/2015 | $ | 114,158 | $ | 114,158 | ||||
0.005%, 10/01/2015 HKD | 5,601 | 723 | ||||||
TOTAL TIME DEPOSITS (Cost $114,881) | 114,881 | |||||||
TOTAL INVESTMENTS — 100.1% (Cost $126,617,746) | $ | 97,281,495 |
Percentages are based on Net Assets of $97,169,379
‡ | Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. |
(1) | In U.S. Dollars unless otherwise indicated. |
* | Non-income producing security. |
(A) | Securities sold within terms of a private placement memorandum, exempt from registration under Section 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other “accredited investors.” These securities have been determined to be liquid under guidelines established by the Board of Trustees. |
ADR — American Depositary Receipt
Cl — Class
HKD — Hong Kong Dollar
The following is a list of the inputs used as of September 30, 2015, in valuing the Fund’s investments carried at value:
![]() | ![]() | ![]() | ![]() | ![]() | ||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stock | $ | 97,166,614 | $ | — | $ | — | $ | 97,166,614 | ||||||||
Time Deposits | — | 114,881 | — | 114,881 | ||||||||||||
Total Investments in Securities | $ | 97,166,614 | $ | 114,881 | $ | — | $ | 97,281,495 |
For the period ended September 30, 2015, there have been no transfers between Level 1 and Level 2 investments.
For the period ended September 30, 2015, there have been no transfers between Level 2 and Level 3 investments.
For the period ended September 30, 2015, there were no Level 3 investments.
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
20
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares E Fund China Commercial Paper ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
† | Percentages are based on total investments. More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes. |
![]() | ![]() | ![]() | ||||||
Face Amount(1) | Value | |||||||
COMMERCIAL PAPER — 89.3% | ||||||||
CHINA — 89.3% | ||||||||
Aluminum Corporation of China | ||||||||
4.380%, 01/19/2016 | 4,000,000 | $ | 630,623 | |||||
Beijing Energy Group | ||||||||
3.950%, 02/02/2016 | 10,000,000 | 1,576,014 | ||||||
Beijing Haidian State-Owned Assets Operation | ||||||||
5.050%, 03/27/2016 | 2,000,000 | 316,759 | ||||||
Beijing State-Owned Asset | ||||||||
3.850%, 02/02/2016 | 20,000,000 | 3,151,758 | ||||||
China Development Bank | ||||||||
3.190%, 05/12/2016 | 10,000,000 | 1,578,059 | ||||||
China Guodian | ||||||||
4.080%, 04/22/2016 | 3,000,000 | 473,833 | ||||||
China Heavy Duty Truck | ||||||||
4.270%, 04/27/2016 | 4,000,000 | 631,574 | ||||||
China Huaneng Group | ||||||||
4.500%, 03/26/2016 | 2,000,000 | 316,236 | ||||||
China Longyuan Power Group | ||||||||
4.600%, 12/20/2015 | 2,000,000 | 315,508 | ||||||
China National Building Material | ||||||||
4.700%, 12/12/2015 | 2,000,000 | 315,473 | ||||||
China Power Construction | ||||||||
4.550%, 03/12/2016 | 10,000,000 | 1,580,049 | ||||||
China Power Investment | ||||||||
4.600%, 11/21/2015 | 2,000,000 | 315,198 | ||||||
3.870%, 02/01/2016 | 10,000,000 | 1,576,050 | ||||||
China Railway | ||||||||
3.990%, 04/27/2016 | 20,000,000 | 3,157,896 | ||||||
China Southern Glass | ||||||||
4.280%, 04/23/2016 | 4,000,000 | 630,912 | ||||||
CQ Jiangbeizui Development & Investment | ||||||||
4.200%, 05/11/2016 | 20,000,000 | 3,158,654 |
The accompanying notes are an integral part of the financial statements.
21
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares E Fund China Commercial Paper ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Face Amount(1) | Value | |||||||
COMMERCIAL PAPER — continued | ||||||||
Datang International Tuoketuo Power | ||||||||
4.980%, 03/18/2016 | 10,000,000 | $ | 1,582,030 | |||||
Gansu Asset Investment | ||||||||
5.200%, 04/07/2016 | 10,000,000 | 1,578,209 | ||||||
Hangzhou Tourism Trading | ||||||||
4.450%, 04/27/2016 | 5,000,000 | 790,271 | ||||||
Hebei Iron and Steel Group | ||||||||
5.250%, 02/05/2016 | 2,000,000 | 316,315 | ||||||
Huaneng Lancang Hydro | ||||||||
3.340%, 08/20/2016 | 5,000,000 | 785,427 | ||||||
Jingmei Group | ||||||||
4.350%, 05/08/2016 | 10,000,000 | 1,577,534 | ||||||
Metallurgical Corporation of China | ||||||||
4.300%, 12/19/2015 | 4,000,000 | 630,371 | ||||||
Shandong Expressway | ||||||||
4.250%, 01/18/2016 | 10,000,000 | 1,576,634 | ||||||
Shandong Iron and Steel Group | ||||||||
5.330%, 12/21/2015 | 2,000,000 | 315,734 | ||||||
Shenhua Group Ltd. | ||||||||
3.800%, 01/18/2016 | 10,000,000 | 1,575,325 | ||||||
Shaanxi Nonferrous Metal | ||||||||
4.990%, 02/10/2016 | 10,000,000 | 1,580,803 | ||||||
State Grid | ||||||||
3.400%, 06/16/2016 | 5,000,000 | 787,295 | ||||||
State Power Investment | ||||||||
3.290%, 05/28/2016 | 20,000,000 | 3,145,283 | ||||||
Xinxing Cathay International | ||||||||
4.300%, 01/23/2016 | 5,000,000 | 788,684 | ||||||
Zhejiang Materials | ||||||||
4.180%, 01/29/2016 | 10,000,000 | 1,576,515 | ||||||
TOTAL COMMERCIAL PAPER (Cost $39,050,416) | 38,331,026 | |||||||
TIME DEPOSIT — 0.0% | ||||||||
Brown Brothers Harriman | ||||||||
0.030%, 10/01/2015 USD | $ | 685 | 685 | |||||
TOTAL TIME DEPOSIT (Cost $685) | 685 |
The accompanying notes are an integral part of the financial statements.
22
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares E Fund China Commercial Paper ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
CASH EQUIVALENTS — 8.0% | ||||||||
China Universal Express Income Money Market Fund | 348 | $ | 55 | |||||
Fortune SGAM Xianjin Tianyi Money Market Fund | 10,947,488 | 1,722,743 | ||||||
Xianjinbao Real-Time Redemption Money Market Fund | 10,000,000 | 1,573,044 | ||||||
Yinhua Traded Money Market Fund | 1,000,000 | 161,702 | ||||||
TOTAL CASH EQUIVALENTS (Cost $3,512,745) | 3,457,544 | |||||||
TOTAL INVESTMENTS — 97.3% (Cost $42,563,846) | $ | 41,789,255 |
Percentages are based on Net Assets of $42,942,532
(1) | In CNY unless otherwise indicated. |
CNY — Chinese Yuan
Ltd. — Limited
USD — U.S. Dollar
As of September 30, 2015, 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 period ended September 30, 2015, there have been no transfers between Level 1 and Level 2 investments.
For the period ended September 30, 2015, there have been no transfers between Level 2 and Level 3 investments.
For the period ended September 30, 2015, there were no Level 3 investments.
The accompanying notes are an integral part of the financial statements.
23
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
† | Percentages are based on total investments. More narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting purposes. |
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — 79.1%‡ | ||||||||
BRAZIL — 2.6% | ||||||||
Consumer Discretionary — 0.4% | ||||||||
Cyrela Brazil Realty Empreendimentos e Participacoes | 515 | $ | 1,079 | |||||
Kroton Educacional | 1,000 | 1,949 | ||||||
Lojas Renner | 1,000 | 4,656 | ||||||
7,684 | ||||||||
Consumer Staples — 0.8% | ||||||||
Ambev | 1,850 | 9,050 | ||||||
BRF | 400 | 7,097 | ||||||
Souza Cruz | 400 | 2,677 | ||||||
18,824 | ||||||||
Energy — 0.2% | ||||||||
Ultrapar Participacoes | 205 | 3,428 | ||||||
Financials — 0.4% | ||||||||
Banco do Brasil | 405 | 1,529 | ||||||
BB Seguridade Participacoes | 400 | 2,480 | ||||||
BM&FBovespa — Bolsa de Valores Mercadorias e Futuros | 1,000 | 2,762 | ||||||
BR Malls Participacoes | 400 | 1,055 | ||||||
7,826 | ||||||||
Industrials — 0.3% | ||||||||
CCR | 652 | 1,991 | ||||||
Embraer | 400 | 2,547 | ||||||
WEG | 496 | 1,927 | ||||||
6,465 |
The accompanying notes are an integral part of the financial statements.
24
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Information Technology — 0.2% | ||||||||
Cielo | 480 | $ | 4,443 | |||||
Materials — 0.3% | ||||||||
Vale | 1,400 | 5,826 | ||||||
Utilities — 0.0% | ||||||||
Cia Energetica de Minas Gerais | 600 | 1,047 | ||||||
TOTAL BRAZIL | 55,543 | |||||||
CHILE — 0.7% | ||||||||
Energy — 0.1% | ||||||||
Empresas COPEC | 246 | 2,227 | ||||||
Financials — 0.2% | ||||||||
Banco de Credito e Inversiones | 65 | 2,632 | ||||||
Banco Santander Chile | 56,610 | 2,559 | ||||||
5,191 | ||||||||
Industrials — 0.1% | ||||||||
Latam Airlines Group* | 267 | 1,279 | ||||||
Utilities — 0.3% | ||||||||
Empresa Nacional de Electricidad | 2,438 | 2,863 | ||||||
Enersis | 11,240 | 2,824 | ||||||
5,687 | ||||||||
TOTAL CHILE | 14,384 | |||||||
CHINA — 25.3% | ||||||||
Consumer Discretionary — 2.2% | ||||||||
Belle International Holdings | 4,207 | 3,637 | ||||||
Brilliance China Automotive Holdings | 2,148 | 2,539 | ||||||
Byd, Cl H* | 3,475 | 18,316 | ||||||
Ctrip.com International ADR* | 94 | 5,939 | ||||||
Dongfeng Motor Group, Cl H | 2,392 | 2,978 | ||||||
Great Wall Motor, Cl H | 1,914 | 2,114 | ||||||
Guangzhou Automobile Group, Cl H | 2,800 | 2,280 | ||||||
JD.com ADR* | 182 | 4,743 | ||||||
New Oriental Education & Technology Group ADR | 150 | 3,031 | ||||||
Shanghai Jinjiang International Hotels Development(A)(B) | 200 | 440 | ||||||
Vipshop Holdings ADR* | 164 | 2,755 | ||||||
48,772 | ||||||||
Consumer Staples — 0.5% | ||||||||
China Resources Enterprise | 1,216 | 2,256 | ||||||
Hengan International Group | 560 | 5,445 | ||||||
Tsingtao Brewery, Cl H | 531 | 2,323 | ||||||
10,024 |
The accompanying notes are an integral part of the financial statements.
25
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Energy — 2.5% | ||||||||
China Coal Energy, Cl H | 45,070 | $ | 18,203 | |||||
China Oilfield Services, Cl H | 1,678 | 1,676 | ||||||
China Petroleum & Chemical, Cl H | 14,500 | 8,812 | ||||||
China Shenhua Energy, Cl H | 2,201 | 3,363 | ||||||
CNOOC | 9,826 | 10,054 | ||||||
Kunlun Energy | 2,594 | 1,854 | ||||||
PetroChina, Cl H | 11,784 | 8,165 | ||||||
52,127 | ||||||||
Financials — 7.9% | ||||||||
Agricultural Bank of China, Cl H | 26,397 | 9,980 | ||||||
Bank of China, Cl H | 48,396 | 20,795 | ||||||
Bank of Communications, Cl H | 19,997 | 13,856 | ||||||
China CITIC Bank, Cl H | 21,858 | 12,663 | ||||||
China Construction Bank, Cl H | 57,296 | 38,074 | ||||||
China Everbright | 768 | 1,748 | ||||||
China Life Insurance, Cl H | 7,483 | 25,877 | ||||||
China Overseas Land & Investment | 2,839 | 8,572 | ||||||
China Resources Land | 1,614 | 3,782 | ||||||
Chongqing Rural Commercial Bank, Cl H | 3,386 | 1,909 | ||||||
Evergrande Real Estate Group | 7,336 | 4,165 | ||||||
New China Life Insurance, Cl H | 445 | 1,912 | ||||||
PICC Property & Casualty, Cl H | 2,340 | 4,547 | ||||||
Ping An Insurance Group of China, Cl H | 3,000 | 14,845 | ||||||
Shenzhen Investment | 7,638 | 2,690 | ||||||
Sino-Ocean Land Holdings | 4,428 | 2,411 | ||||||
167,826 | ||||||||
Health Care — 0.1% | ||||||||
Sinopharm Group, Cl H | 888 | 3,105 | ||||||
Industrials — 3.6% | ||||||||
Anhui Expressway, Cl H | 15,512 | 12,610 | ||||||
Beijing Enterprises Holdings | 489 | 2,931 | ||||||
China Communications Construction, Cl H | 14,690 | 18,064 | ||||||
China Everbright International | 2,702 | 3,772 | ||||||
China International Marine Containers Group, Cl H | 7,307 | 12,822 | ||||||
China Merchants Holdings International | 1,128 | 3,311 | ||||||
China State Construction International Holdings | 1,787 | 2,555 | ||||||
CITIC | 3,780 | 6,877 | ||||||
COSCO Pacific(A)(B) | 2,120 | 2,404 | ||||||
Jiangsu Expressway, Cl H | 2,978 | 3,793 | ||||||
Yangzijiang Shipbuilding Holdings | 3,600 | 2,874 | ||||||
Zhuzhou CSR Times Electric, Cl H | 476 | 3,504 | ||||||
75,517 |
The accompanying notes are an integral part of the financial statements.
26
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Information Technology — 4.3% | ||||||||
Alibaba Group Holding ADR* | 229 | $ | 13,504 | |||||
Baidu ADR* | 173 | 23,772 | ||||||
Lenovo Group | 3,826 | 3,224 | ||||||
NetEase ADR | 78 | 9,369 | ||||||
Tencent Holdings | 2,558 | 42,677 | ||||||
92,546 | ||||||||
Materials — 1.0% | ||||||||
Aluminum Corp of China, Cl H* | 7,342 | 2,283 | ||||||
Anhui Conch Cement, Cl H | 5,007 | 14,698 | ||||||
China National Building Material, Cl H | 3,472 | 1,998 | ||||||
Jiangxi Copper, Cl H | 1,544 | 1,873 | ||||||
20,852 | ||||||||
Telecommunication Services — 2.1% | ||||||||
China Mobile | 2,972 | 35,204 | ||||||
China Telecom, Cl H | 9,374 | 4,512 | ||||||
China Unicom Hong Kong | 3,480 | 4,405 | ||||||
44,121 | ||||||||
Utilities — 1.1% | ||||||||
Beijing Enterprises Water Group | 4,140 | 2,885 | ||||||
CGN Power, Cl H(C) | 8,230 | 3,430 | ||||||
China Longyuan Power Group, Cl H | 3,188 | 3,422 | ||||||
China Resources Power Holdings | 1,483 | 3,383 | ||||||
ENN Energy Holdings | 682 | 3,269 | ||||||
Guangdong Investment | 2,168 | 3,222 | ||||||
Huaneng Power International, Cl H | 2,777 | 2,985 | ||||||
22,596 | ||||||||
TOTAL CHINA | 537,486 | |||||||
COLOMBIA — 0.8% | ||||||||
Consumer Staples — 0.1% | ||||||||
Almacenes Exito | 311 | 1,336 | ||||||
Energy — 0.1% | ||||||||
Ecopetrol | 5,045 | 2,173 | ||||||
Financials — 0.5% | ||||||||
Bancolombia | 507 | 3,876 | ||||||
Financiera Colombiana | 192 | 2,365 | ||||||
Grupo Aval Acciones y Valores | 3,934 | 1,504 | ||||||
Grupo de Inversiones Suramericana | 369 | 4,289 | ||||||
12,034 | ||||||||
Utilities — 0.1% | ||||||||
Isagen ESP | 1,739 | 1,622 | ||||||
TOTAL COLOMBIA | 17,165 |
The accompanying notes are an integral part of the financial statements.
27
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
CZECH REPUBLIC — 0.7% | ||||||||
Financials — 0.2% | ||||||||
Komercni banka as | 26 | $ | 5,628 | |||||
Telecommunication Services — 0.2% | ||||||||
Ceska telekomunikacni infrastruktura* | 231 | 1,613 | ||||||
O2 Czech Republic | 231 | 2,021 | ||||||
3,634 | ||||||||
Utilities — 0.3% | ||||||||
CEZ | 326 | 6,779 | ||||||
TOTAL CZECH REPUBLIC | 16,041 | |||||||
EGYPT — 1.6% | ||||||||
Consumer Staples — 0.1% | ||||||||
Juhayna Food Industries | 2,243 | 2,300 | ||||||
Financials — 1.1% | ||||||||
Commercial International Bank Egypt SAE | 2,552 | 17,297 | ||||||
Egypt Kuwait Holding SAE | 4,048 | 2,348 | ||||||
Egyptian Financial Group-Hermes Holding* | 2,071 | 2,134 | ||||||
Talaat Moustafa Group | 3,754 | 3,260 | ||||||
25,039 | ||||||||
Industrials — 0.1% | ||||||||
ElSwedy Electric* | 399 | 2,191 | ||||||
Materials — 0.1% | ||||||||
Ezz Steel* | 1,071 | 1,243 | ||||||
Telecommunication Services — 0.2% | ||||||||
Global Telecom Holding SAE* | 4,763 | 1,156 | ||||||
Telecom Egypt | 1,642 | 1,464 | ||||||
2,620 | ||||||||
TOTAL EGYPT | 33,393 | |||||||
HONG KONG — 0.4% | ||||||||
Financials — 0.1% | ||||||||
Shimao Property Holdings | 1,102 | 1,652 | ||||||
Health Care — 0.2% | ||||||||
Sino Biopharmaceutical | 2,736 | 3,361 | ||||||
Information Technology — 0.1% | ||||||||
Hanergy Thin Film Power Group*(A)(B) | 4,364 | 1,165 | ||||||
Kingboard Chemical Holdings | 1,416 | 1,716 | ||||||
2,881 | ||||||||
TOTAL HONG KONG | 7,894 | |||||||
HUNGARY — 0.5% | ||||||||
Energy — 0.1% | ||||||||
MOL Hungarian Oil & Gas | 70 | 3,048 |
The accompanying notes are an integral part of the financial statements.
28
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Financials — 0.2% | ||||||||
OTP Bank | 210 | $ | 4,045 | |||||
Health Care — 0.2% | ||||||||
Richter Gedeon Nyrt | 206 | 3,271 | ||||||
TOTAL HUNGARY | 10,364 | |||||||
INDIA — 20.4% | ||||||||
Consumer Discretionary — 1.0% | ||||||||
Tata Motors ADR* | 974 | 21,915 | ||||||
Financials — 7.6% | ||||||||
HDFC Bank ADR | 1,564 | 95,545 | ||||||
ICICI Bank ADR | 7,952 | 66,638 | ||||||
162,183 | ||||||||
Health Care — 1.5% | ||||||||
Dr Reddy’s Laboratories ADR | 512 | 32,722 | ||||||
Information Technology — 9.8% | ||||||||
Infosys ADR | 9,600 | 183,264 | ||||||
Wipro ADR | 1,950 | 23,965 | ||||||
207,229 | ||||||||
Materials — 0.5% | ||||||||
Vedanta ADR | 1,908 | 9,883 | ||||||
TOTAL INDIA | 433,932 | |||||||
INDONESIA — 2.9% | ||||||||
Consumer Discretionary — 0.3% | ||||||||
Astra International | 19,202 | 6,848 | ||||||
Consumer Staples — 0.4% | ||||||||
Charoen Pokphand Indonesia | 9,350 | 1,276 | ||||||
Gudang Garam | 609 | 1,746 | ||||||
Indofood Sukses Makmur | 6,128 | 2,301 | ||||||
Unilever Indonesia | 1,284 | 3,331 | ||||||
8,654 | ||||||||
Financials — 1.1% | ||||||||
Bank Central Asia | 11,520 | 9,652 | ||||||
Bank Mandiri Persero | 8,622 | 4,664 | ||||||
Bank Negara Indonesia Persero | 7,176 | 2,026 | ||||||
Bank Rakyat Indonesia Persero | 10,448 | 6,169 | ||||||
22,511 | ||||||||
Health Care — 0.1% | ||||||||
Kalbe Farma | 24,282 | 2,279 | ||||||
Industrials — 0.2% | ||||||||
Jasa Marga Persero | 3,662 | 1,206 | ||||||
United Tractors | 1,904 | 2,271 | ||||||
3,477 |
The accompanying notes are an integral part of the financial statements.
29
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Materials — 0.2% | ||||||||
Indocement Tunggal Prakarsa | 1,656 | $ | 1,859 | |||||
Semen Indonesia Persero | 3,763 | 2,325 | ||||||
4,184 | ||||||||
Telecommunication Services — 0.5% | ||||||||
Telekomunikasi Indonesia Persero | 51,748 | 9,343 | ||||||
Tower Bersama Infrastructure* | 2,866 | 1,281 | ||||||
10,624 | ||||||||
Utilities — 0.1% | ||||||||
Perusahaan Gas Negara Persero | 12,748 | 2,202 | ||||||
TOTAL INDONESIA | 60,779 | |||||||
MALAYSIA — 1.1% | ||||||||
Consumer Discretionary — 0.1% | ||||||||
Genting | 1,033 | 1,708 | ||||||
Consumer Staples — 0.1% | ||||||||
IOI | 2,000 | 1,852 | ||||||
Financials — 0.4% | ||||||||
AMMB Holdings | 1,616 | 1,677 | ||||||
CIMB Group Holdings | 1,800 | 1,826 | ||||||
Malayan Banking | 928 | 1,807 | ||||||
Public Bank | 612 | 2,439 | ||||||
7,749 | ||||||||
Health Care — 0.1% | ||||||||
Genting Malaysia | 2,274 | 2,147 | ||||||
Industrials — 0.2% | ||||||||
Gamuda | 2,474 | 2,471 | ||||||
Sime Darby | 1,279 | 2,267 | ||||||
4,738 | ||||||||
Materials — 0.1% | ||||||||
Petronas Chemicals Group | 1,600 | 2,235 | ||||||
Telecommunication Services — 0.1% | ||||||||
Maxis | 1,454 | 2,166 | ||||||
TOTAL MALAYSIA | 22,595 | |||||||
MEXICO — 4.7% | ||||||||
Consumer Discretionary — 0.4% | ||||||||
Grupo Televisa | 1,674 | 8,696 | ||||||
Consumer Staples — 1.3% | ||||||||
Coca-Cola Femsa | 362 | 2,511 | ||||||
Controladora Comercial Mexicana | 652 | 1,886 | ||||||
Fomento Economico Mexicano | 1,336 | 11,915 | ||||||
Grupo Bimbo, Ser A* | 1,430 | 3,611 |
The accompanying notes are an integral part of the financial statements.
30
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Consumer Staples — continued | ||||||||
Wal-Mart de Mexico | 3,372 | $ | 8,299 | |||||
28,222 | ||||||||
Financials — 0.7% | ||||||||
Fibra Uno Administracion | 1,933 | 3,982 | ||||||
Grupo Financiero Banorte, Cl O | 1,536 | 7,516 | ||||||
Grupo Financiero Inbursa, Cl O | 1,376 | 2,836 | ||||||
Grupo Financiero Santander Mexico, Cl B | 1,060 | 1,564 | ||||||
15,898 | ||||||||
Industrials — 0.7% | ||||||||
Alfa, Cl A | 2,304 | 4,470 | ||||||
Grupo Aeroportuario del Pacifico, Cl B | 346 | 3,001 | ||||||
Grupo Aeroportuario del Sureste, Cl B | 254 | 3,867 | ||||||
Promotora y Operadora de Infraestructura* | 267 | 2,918 | ||||||
14,256 | ||||||||
Materials — 0.8% | ||||||||
Cemex* | 8,501 | 5,919 | ||||||
Grupo Mexico | 2,492 | 6,013 | ||||||
Industrias Penoles | 117 | 1,596 | ||||||
Mexichem | 1,080 | 2,648 | ||||||
16,176 | ||||||||
Telecommunication Services — 0.8% | ||||||||
America Movil | 19,782 | 16,401 | ||||||
TOTAL MEXICO | 99,649 | |||||||
MOROCCO — 0.2% | ||||||||
Financials — 0.2% | ||||||||
Douja Promotion Groupe Addoha | 1,964 | 5,061 | ||||||
PERU — 0.7% | ||||||||
Financials — 0.5% | ||||||||
Credicorp | 105 | 11,168 | ||||||
Materials — 0.2% | ||||||||
Cia de Minas Buenaventura SAA ADR | 502 | 2,992 | ||||||
TOTAL PERU | 14,160 | |||||||
PHILIPPINES — 1.5% | ||||||||
Consumer Staples — 0.1% | ||||||||
Universal Robina | 580 | 2,383 | ||||||
Financials — 0.7% | ||||||||
Ayala | 185 | 3,036 | ||||||
Ayala Land | 4,400 | 3,201 | ||||||
Bank of the Philippine Islands | 1,265 | 2,173 | ||||||
BDO Unibank | 800 | 1,772 |
The accompanying notes are an integral part of the financial statements.
31
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Financials — continued | ||||||||
SM Prime Holdings | 7,000 | $ | 3,092 | |||||
13,274 | ||||||||
Industrials — 0.6% | ||||||||
Aboitiz Equity Ventures | 2,352 | 2,903 | ||||||
Alliance Global Group | 4,200 | 1,377 | ||||||
International Container Terminal Services | 1,217 | 1,954 | ||||||
JG Summit Holdings | 1,720 | 2,607 | ||||||
SM Investments | 240 | 4,573 | ||||||
13,414 | ||||||||
Information Technology — 0.1% | ||||||||
Philippine Long Distance Telephone | 60 | 2,811 | ||||||
TOTAL PHILIPPINES | 31,882 | |||||||
POLAND — 1.4% | ||||||||
Consumer Discretionary — 0.1% | ||||||||
LPP* | 1 | 2,057 | ||||||
Energy — 0.2% | ||||||||
Polski Koncern Naftowy Orlen | 242 | 4,213 | ||||||
Financials — 0.8% | ||||||||
Bank Pekao | 102 | 4,142 | ||||||
Bank Zachodni WBK | 35 | 2,701 | ||||||
Powszechna Kasa Oszczednosci Bank Polski | 698 | 5,402 | ||||||
Powszechny Zaklad Ubezpieczen | 44 | 4,509 | ||||||
16,754 | ||||||||
Materials — 0.1% | ||||||||
KGHM Polska Miedz | 114 | 2,457 | ||||||
Utilities — 0.2% | ||||||||
Energa | 394 | 1,747 | ||||||
PGE Polska Grupa Energetyczna | 676 | 2,397 | ||||||
4,144 | ||||||||
TOTAL POLAND | 29,625 | |||||||
RUSSIA — 4.5% | ||||||||
Consumer Discretionary — 0.5% | ||||||||
Magnit* | 56 | 9,902 | ||||||
Energy — 2.6% | ||||||||
Gazprom PAO | 9,824 | 20,148 | ||||||
Lukoil PJSC | 378 | 12,923 | ||||||
Novatek OAO | 970 | 8,827 | ||||||
Rosneft OAO | 1,064 | 3,940 | ||||||
Surgutneftegas* | 6,322 | 3,228 | ||||||
Tatneft* | 1,192 | 5,606 | ||||||
54,672 |
The accompanying notes are an integral part of the financial statements.
32
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Financials — 0.9% | ||||||||
Moscow Exchange MICEX-RTS PJSC | 2,120 | $ | 2,585 | |||||
Sberbank of Russia | 9,698 | 11,131 | ||||||
VTB Bank PJSC | 4,573,252 | 4,719 | ||||||
18,435 | ||||||||
Materials — 0.4% | ||||||||
MMC Norilsk Nickel* | 43 | 6,227 | ||||||
Uralkali PJSC | 1,041 | 3,071 | ||||||
9,298 | ||||||||
Telecommunication Services — 0.1% | ||||||||
Mobile TeleSystems PJSC | 976 | 3,164 | ||||||
TOTAL RUSSIA | 95,471 | |||||||
SOUTH AFRICA — 1.3% | ||||||||
Consumer Discretionary — 0.3% | ||||||||
Naspers, Cl N | 40 | 5,007 | ||||||
Steinhoff International Holdings | 506 | 3,107 | ||||||
8,114 | ||||||||
Financials — 0.5% | ||||||||
Barclays Africa Group | 110 | 1,354 | ||||||
FirstRand | 576 | 2,048 | ||||||
MMI Holdings | 810 | 1,394 | ||||||
Remgro | 130 | 2,370 | ||||||
Standard Bank Group | 254 | 2,480 | ||||||
9,646 | ||||||||
Health Care — 0.1% | ||||||||
Aspen Pharmacare Holdings | 65 | 1,382 | ||||||
Industrials — 0.1% | ||||||||
Bidvest Group | 130 | 3,067 | ||||||
Information Technology — 0.1% | ||||||||
Sasol | 112 | 3,139 | ||||||
Telecommunication Services — 0.2% | ||||||||
MTN Group | 272 | 3,501 | ||||||
TOTAL SOUTH AFRICA | 28,849 | |||||||
TAIWAN — 2.2% | ||||||||
Financials — 0.2% | ||||||||
Cathay Financial Holding | 1,855 | 2,532 | ||||||
Mega Financial Holding | 3,555 | 2,462 | ||||||
4,994 | ||||||||
Information Technology — 1.3% | ||||||||
Asustek Computer | 224 | 1,922 | ||||||
Delta Electronics | 439 | 2,053 | ||||||
Hon Hai Precision Industry | 1,982 | 5,154 |
The accompanying notes are an integral part of the financial statements.
33
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
Information Technology — continued | ||||||||
MediaTek | 276 | $ | 2,041 | |||||
Quanta Computer | 1,011 | 1,753 | ||||||
Taiwan Semiconductor Manufacturing | 3,163 | 12,488 | ||||||
25,411 | ||||||||
Materials — 0.6% | ||||||||
China Steel | 4,869 | 2,839 | ||||||
Formosa Chemicals & Fibre | 1,363 | 2,765 | ||||||
Formosa Plastics | 1,348 | 2,841 | ||||||
Nan Ya Plastics | 1,403 | 2,369 | ||||||
Taiwan Cement | 2,268 | 2,297 | ||||||
13,111 | ||||||||
Telecommunication Services — 0.1% | ||||||||
Chunghwa Telecom | 904 | 2,712 | ||||||
TOTAL TAIWAN | 46,228 | |||||||
THAILAND — 1.7% | ||||||||
Consumer Staples — 0.3% | ||||||||
Charoen Pokphand Foods | 3,042 | 1,735 | ||||||
CP ALL | 3,296 | 4,336 | ||||||
6,071 | ||||||||
Energy — 0.2% | ||||||||
PTT | 465 | 3,075 | ||||||
PTT Exploration & Production | 1,044 | 2,013 | ||||||
5,088 | ||||||||
Financials — 0.4% | ||||||||
Bank of Ayudhya | 1,052 | 877 | ||||||
Kasikornbank | 680 | 3,204 | ||||||
Siam Commercial Bank | 1,000 | 3,692 | ||||||
7,773 | ||||||||
Industrials — 0.1% | ||||||||
Airports of Thailand | 300 | 2,323 | ||||||
Materials — 0.3% | ||||||||
Bangkok Bank | 487 | 2,147 | ||||||
PTT Global Chemical | 1,600 | 2,370 | ||||||
Siam Cement | 235 | 3,004 | ||||||
7,521 | ||||||||
Telecommunication Services — 0.4% | ||||||||
Advanced Info Service | 705 | 4,390 | ||||||
Intouch Holdings | 1,475 | 2,956 | ||||||
7,346 | ||||||||
TOTAL THAILAND | 36,122 |
The accompanying notes are an integral part of the financial statements.
34
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares | Value | |||||||
COMMON STOCK — continued | ||||||||
TURKEY — 3.5% | ||||||||
Consumer Discretionary — 0.2% | ||||||||
Arcelik | 400 | $ | 1,949 | |||||
Tofas Turk Otomobil Fabrikasi | 312 | 1,850 | ||||||
3,799 | ||||||||
Consumer Staples — 0.6% | ||||||||
Anadolu Efes Biracilik Ve Malt Sanayii | 394 | 2,778 | ||||||
BIM Birlesik Magazalar | 384 | 6,804 | ||||||
Coca-Cola Icecek | 138 | 1,577 | ||||||
Ulker Biskuvi Sanayi | 332 | 2,100 | ||||||
13,259 | ||||||||
Energy — 0.3% | ||||||||
Tupras Turkiye Petrol Rafinerileri | 218 | 5,335 | ||||||
Financials — 1.6% | ||||||||
Akbank | 2,892 | 6,476 | ||||||
Emlak Konut Gayrimenkul Yatirim Ortakligi | 3,936 | 3,263 | ||||||
Haci Omer Sabanci Holding | 1,462 | 4,283 | ||||||
Turkiye Garanti Bankasi | 3,474 | 8,066 | ||||||
Turkiye Halk Bankasi | 1,002 | 3,343 | ||||||
Turkiye Is Bankasi, Cl C | 2,182 | 3,394 | ||||||
Turkiye Vakiflar Bankasi TAO, Cl D | 1,726 | 2,183 | ||||||
Yapi ve Kredi Bankasi | 1,650 | 1,837 | ||||||
32,845 | ||||||||
Industrials — 0.4% | ||||||||
KOC Holding | 1,116 | 4,349 | ||||||
TAV Havalimanlari Holding | 332 | 2,604 | ||||||
Turk Hava Yollari AO* | 916 | 2,411 | ||||||
9,364 | ||||||||
Materials — 0.1% | ||||||||
Eregli Demir ve Celik Fabrikalari | 2,346 | 2,890 | ||||||
Telecommunication Services — 0.3% | ||||||||
Turk Telekomunikasyon | 1,096 | 2,161 | ||||||
Turkcell Iletisim Hizmetleri | 1,421 | 4,952 | ||||||
7,113 | ||||||||
TOTAL TURKEY | 74,605 | |||||||
UNITED ARAB EMIRATES — 0.4% | ||||||||
Financials — 0.4% | ||||||||
Abu Dhabi Commercial Bank PJSC | 1,164 | 2,425 | ||||||
Emaar Properties PJSC | 2,068 | 3,637 | ||||||
First Gulf Bank PJSC | 534 | 2,028 | ||||||
TOTAL UNITED ARAB EMIRATES | 8,090 | |||||||
TOTAL COMMON STOCK (Cost $2,017,481) | 1,679,318 |
The accompanying notes are an integral part of the financial statements.
35
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
![]() | ![]() | ![]() | ||||||
Shares/ Face Amount(1) | Value | |||||||
AFFILIATED INVESTMENT COMPANY — 18.3% | ||||||||
UNITED STATES — 18.3% | ||||||||
KraneShares Bosera MSCI China A ETF** | 9,378 | $ | 388,061 | |||||
TOTAL AFFILIATED INVESTMENT COMPANY (Cost $425,146) | 388,061 | |||||||
PREFERRED STOCK — 1.6% | ||||||||
BRAZIL — 1.6% | ||||||||
Consumer Discretionary — 0.1% | ||||||||
Lojas Americanas | 441 | 1,796 | ||||||
Consumer Staples — 0.1% | ||||||||
Cia Brasileira de Distribuicao | 94 | 1,177 | ||||||
Energy — 0.3% | ||||||||
Petroleo Brasileiro* | 3,200 | 5,802 | ||||||
Financials — 0.9% | ||||||||
Banco Bradesco | 1,440 | 7,707 | ||||||
Itau Unibanco Holding | 1,320 | 8,728 | ||||||
Itausa — Investimentos Itau | 1,760 | 3,156 | ||||||
19,591 | ||||||||
Materials — 0.1% | ||||||||
Gerdau | 651 | 888 | ||||||
Klabin | 2,206 | 2,338 | ||||||
3,226 | ||||||||
Telecommunication Services — 0.1% | ||||||||
Telefonica Brasil | 200 | 1,828 | ||||||
TOTAL PREFERRED STOCK (Cost $60,774) | 33,420 | |||||||
TIME DEPOSITS — 0.5% | ||||||||
Brown Brothers Harriman | ||||||||
5.617%, 10/01/2015 ZAR | $ 3,286 | 238 | ||||||
0.030%, 10/01/2015 | 9,348 | 9,348 | ||||||
0.005%, 10/01/2015 HKD | 1,531 | 197 | ||||||
TOTAL TIME DEPOSITS (Cost $9,783) | 9,783 | |||||||
TOTAL INVESTMENTS — 99.5% (Cost $2,513,184) | $ | 2,110,582 |
Percentages are based on Net Assets of $2,121,906
The accompanying notes are an integral part of the financial statements.
36
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
** | Affiliated investment is a registered investment company which is managed by Krane Fund Advisors, LLC (the “Adviser”) or an affiliate of the Adviser or which is distributed by an affiliate of the Fund’s distributor. Transactions with affiliated companies during the period ended September 30, 2015 are as follows: |
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||||
Value of Shares as of 3/31/15 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation (Depreciation) | Realized Gain (Loss) | Value of Shares Held 9/30/2015 | Balance of Shares Held as of 9/30/15 | Dividend Income | ||||||||||||||||||||||||||
KraneShares Bosera MSCI China A Share ETF | |||||||||||||||||||||||||||||||||
$ | 504,876 | $ | 3,650 | $ | (5,509 | ) | $ | (114,541 | ) | $ | (415 | ) | $ | 388,061 | 9,378 | $ | — |
‡ | Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. |
* | Non-income producing security. |
(1) | In U.S. Dollars unless otherwise indicated. |
(A) | Security is fair valued using methods determined in good faith by the Fair Value Committee of the Fund. The total value of such security as of September 30, 2015 was $4,009 and represents 0.2% of Net Assets. |
(B) | Securities considered illiquid. The total value of such securities as of September 30, 2015 was $4,009 and represents 0.2% of Net Assets. |
(C) | Securities sold within terms of a private placement memorandum, exempt from registration under Section 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other “accredited investors.” These securities have been determined to be liquid under guidelines established by the Board of Trustees. |
ADR — American Depositary Receipt
Cl — Class
ETF — Exchange Traded Fund
HKD — Hong Kong Dollar
MSCI — Morgan Stanley Capital International
Ser — Series
ZAR — South African Rand
The accompanying notes are an integral part of the financial statements.
37
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
The following is a list of the inputs used as of September 30, 2015, in valuing the Fund’s investments carried at value:
![]() | ![]() | ![]() | ![]() | ![]() | ||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stock | ||||||||||||||||
Brazil | $ | 55,543 | $ | — | $ | — | $ | 55,543 | ||||||||
Chile | 14,384 | — | — | 14,384 | ||||||||||||
China | ||||||||||||||||
Consumer Discretionary | 48,332 | — | 440 | 48,772 | ||||||||||||
Consumer Staples | 10,024 | — | — | 10,024 | ||||||||||||
Energy | 52,127 | — | — | 52,127 | ||||||||||||
Financials | 167,826 | — | — | 167,826 | ||||||||||||
Health Care | 3,105 | — | — | 3,105 | ||||||||||||
Industrials | 73,113 | — | 2,404 | 75,517 | ||||||||||||
Information Technology | 92,546 | — | — | 92,546 | ||||||||||||
Materials | 20,852 | — | — | 20,852 | ||||||||||||
Telecommunication Services | 44,121 | — | — | 44,121 | ||||||||||||
Utilities | 22,596 | — | — | 22,596 | ||||||||||||
Colombia | 17,165 | — | — | 17,165 | ||||||||||||
Czech Republic | 16,041 | — | — | 16,041 | ||||||||||||
Egypt | 33,393 | — | — | 33,393 | ||||||||||||
Hong Kong | ||||||||||||||||
Financials | 1,652 | — | — | 1,652 | ||||||||||||
Health Care | 3,361 | — | — | 3,361 | ||||||||||||
Information Technology | 1,716 | — | 1,165 | 2,881 | ||||||||||||
Hungary | 10,364 | — | — | 10,364 | ||||||||||||
India | 433,932 | — | — | 433,932 | ||||||||||||
Indonesia | 60,779 | — | — | 60,779 | ||||||||||||
Malaysia | 22,595 | — | — | 22,595 | ||||||||||||
Mexico | 99,649 | — | — | 99,649 | ||||||||||||
Morocco | 5,061 | — | — | 5,061 | ||||||||||||
Peru | 14,160 | — | — | 14,160 | ||||||||||||
Philippines | 31,882 | — | — | 31,882 | ||||||||||||
Poland | 29,625 | — | — | 29,625 | ||||||||||||
Russia | 95,471 | — | — | 95,471 | ||||||||||||
South Africa | 28,849 | — | — | 28,849 | ||||||||||||
Taiwan | 46,228 | — | — | 46,228 | ||||||||||||
Thailand | 36,122 | — | — | 36,122 | ||||||||||||
Turkey | 74,605 | — | — | 74,605 | ||||||||||||
United Arab Emirates | 8,090 | — | — | 8,090 | ||||||||||||
Total Common Stock | 1,675,309 | — | 4,009 | 1,679,318 | ||||||||||||
Affiliated Investment Company | 388,061 | — | — | 388,061 | ||||||||||||
Preferred Stock | 33,420 | — | — | 33,420 | ||||||||||||
Time Deposits | — | 9,783 | — | 9,783 | ||||||||||||
Total Investments in Securities | $ | 2,096,790 | $ | 9,783 | $ | 4,009 | $ | 2,110,582 |
The accompanying notes are an integral part of the financial statements.
38
![]() | ![]() | |
Schedule of Investments (unaudited) | September 30, 2015 |
KraneShares FTSE Emerging Markets Plus ETF
![](https://capedge.com/proxy/N-CSRS/0001144204-15-069341/line.gif)
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 April 1, 2015 | $ | — | ||
Accrued discounts/premiums | — | |||
Realized gain/(loss) | — | |||
Change in unrealized appreciation/(depreciation) | — | |||
Purchases | — | |||
Sales | — | |||
Transfer into Level 3 | 4,009 | |||
Transfer out of Level 3 | — | |||
Ending balance as of September 30, 2015 | $ | 4,009 | ||
Changes in unrealized gains (losses) included in earnings related to securities held at reporting date | $ | (15,819 | ) |
For the period ended September 30, 2015, there have been no transfers between Level 1 and Level 2 investments.
For the period ended September 30, 2015, there have been no transfers between Level 2 and Level 3 investments.
For the period ended September 30, 2015, the transfers into Level 3 were due to changes in the availability of observable inputs to determine fair value. 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.
39
Statements of Assets and Liabilities (unaudited)
September 30, 2015
![]() | ![]() | ![]() | ![]() | |||||||||
KraneShares Bosera MSCI China A Share ETF | KraneShares CSI New China ETF | KraneShares CSI China Internet ETF | ||||||||||
Assets: | ||||||||||||
Investments at Value | $ | 8,265,142 | $ | 2,643,693 | $ | 97,281,495 | ||||||
Foreign Currency at Value | 60,522 | 244 | 3,261 | |||||||||
Cash | — | 143 | — | |||||||||
Receivable for Capital Shares Sold | — | — | 4,352,757 | |||||||||
Dividend and Interest Receivable | — | 12,111 | — | |||||||||
Total Assets | 8,325,664 | 2,656,191 | 101,637,513 | |||||||||
Liabilities: | ||||||||||||
Payable for Investment Securities Purchased | — | — | 4,371,251 | |||||||||
Payable to Custodian | 7,549 | — | 49,999 | |||||||||
Payable due to Investment Adviser | 6,812 | 1,501 | 37,371 | |||||||||
Payable for Trustees’ Fee | 6,711 | 846 | 9,513 | |||||||||
Total Liabilities | 21,072 | 2,347 | 4,468,134 | |||||||||
Net Assets | $ | 8,304,592 | $ | 2,653,844 | $ | 97,169,379 | ||||||
Net Assets Consist of: | ||||||||||||
Paid-in Capital | $ | 6,780,910 | $ | 2,509,994 | $ | 123,971,262 | ||||||
Undistributed Net Investment Income/(Accumulated Net Investment Loss) | 180,027 | 19,290 | (701,774 | ) | ||||||||
Accumulated Net Realized Gain on Investments and Foreign Currency Translations | 3,166,975 | 151,929 | 3,236,143 | |||||||||
Net Unrealized Depreciation on Investments | (1,823,484 | ) | (27,369 | ) | (29,336,251 | ) | ||||||
Net Unrealized Appreciation (Depreciation) on Foreign Currency Translations | 164 | — | (1 | ) | ||||||||
Net Assets | $ | 8,304,592 | $ | 2,653,844 | $ | 97,169,379 | ||||||
Outstanding Shares of Beneficial Interest (unlimited authorization — no par value) | 200,002 | 50,000 | 3,250,000 | |||||||||
Net Asset Value, Offering and Redemption Price Per Share | $ | 41.52 | $ | 53.08 | $ | 29.90 | ||||||
Cost of Investments | $ | 10,088,626 | $ | 2,671,062 | $ | 126,617,746 | ||||||
Cost of Foreign Currency | 60,358 | 500 | 3,984 |
The accompanying notes are an integral part of the financial statements.
40
Statements of Assets and Liabilities (unaudited)
September 30, 2015
![]() | ![]() | ![]() | ||||||
KraneShares E Fund China Commercial Paper ETF | KraneShares FTSE Emerging Markets Plus ETF | |||||||
Assets: | ||||||||
Investments at Value | $ | 41,789,255 | $ | 1,722,521 | ||||
Affiliated Investments at Value | — | 388,061 | ||||||
Foreign Currency at Value | 503,898 | 18,714 | ||||||
Dividend and Interest Receivable | 666,741 | 4,103 | ||||||
Receivable for Investment Securities Sold | — | 76 | ||||||
Reclaim Receivable | — | 89 | ||||||
Prepaid Expenses | 2,629 | — | ||||||
Total Assets | 42,962,523 | 2,133,564 | ||||||
Liabilities: | ||||||||
Payable for Investment Securities Purchased | — | 76 | ||||||
Payable due to Investment Adviser | 19,713 | 1,191 | ||||||
Payable to Custodian | 278 | 7,720 | ||||||
Payable for Trustees’ Fee | — | 2,671 | ||||||
Total Liabilities | 19,991 | 11,658 | ||||||
Net Assets | $ | 42,942,532 | $ | 2,121,906 | ||||
Net Assets Consist of: | ||||||||
Paid-in Capital | $ | 44,222,198 | $ | 2,501,476 | ||||
Undistributed Net Investment Income | 244,812 | 28,352 | ||||||
Accumulated Net Realized Loss on Investments, Affiliated Investments and Foreign Currency Translations | (740,976 | ) | (4,284 | ) | ||||
Net Unrealized Depreciation on Investments and Affiliated Investments | (774,591 | ) | (402,602 | ) | ||||
Net Unrealized Depreciation on Foreign Currency Translations | (8,911 | ) | (1,036 | ) | ||||
Net Assets | $ | 42,942,532 | $ | 2,121,906 | ||||
Outstanding Shares of Beneficial Interest (unlimited authorization — no par value) | 1,250,002 | 100,002 | ||||||
Net Asset Value, Offering and Redemption Price Per Share | $ | 34.35 | $ | 21.22 | ||||
Cost of Investments | $ | 42,563,846 | $ | 2,088,038 | ||||
Cost of Affiliated Investments | — | 425,146 | ||||||
Cost of Foreign Currency | 502,807 | 20,137 |
The accompanying notes are an integral part of the financial statements.
41
Statements of Operations (unaudited)
For the period ended September 30, 2015
![]() | ![]() | ![]() | ![]() | |||||||||
KraneShares Bosera MSCI China A Share ETF | KraneShares CSI New China ETF | KraneShares CSI China Internet ETF | ||||||||||
Investment Income: | ||||||||||||
Dividend Income | $ | 364,866 | $ | 35,653 | $ | 185,135 | ||||||
Interest Income | 425 | — | 32 | |||||||||
Less: Foreign Taxes Withheld | (37,341 | ) | (1,953 | ) | (55,191 | ) | ||||||
Total Investment Income | 327,950 | 33,700 | 129,976 | |||||||||
Advisory Fees | 136,567 | 11,422 | 390,860 | |||||||||
Trustees’ Fees | 6,052 | 787 | 23,963 | |||||||||
Total Expenses | 142,619 | 12,209 | 414,823 | |||||||||
Advisory Fee Waiver | (31,038 | ) | — | — | ||||||||
Net Expenses | 111,581 | 12,209 | 414,823 | |||||||||
Net Investment Income (Loss) | 216,369 | 21,491 | (284,847 | ) | ||||||||
Net Realized Gain (Loss) on: | ||||||||||||
Investments(1) | 3,246,595 | 163,184 | 11,415,801 | |||||||||
Foreign Currency Transactions | (64,299 | ) | (10 | ) | (770 | ) | ||||||
Net Realized Gain on Investments and Foreign Currency Transactions | 3,182,296 | 163,174 | 11,415,031 | |||||||||
Net Change in Unrealized Depreciation on: | ||||||||||||
Investments | (7,735,919 ) | (815,365 | ) | (14,561,503 | ) | |||||||
Foreign Currency Transactions | (1,565 | ) | — | (1 | ) | |||||||
Net Change in Unrealized Depreciation on Investments and Foreign Currency Transactions | (7,737,484 | ) | (815,365 | ) | (14,561,504 | ) | ||||||
Net Realized and Unrealized Loss on Investments and Foreign Currency Transactions | (4,555,188 | ) | (652,191 | ) | (3,146,473 | ) | ||||||
Net Decrease in Net Assets Resulting from Operations | $ | (4,338,819 | ) | $ | (630,700 | ) | $ | (3,431,320 | ) |
(1) | Includes realized gains (losses) as a result of in-kind redemptions. (See Note 4 in Notes to Financial Statments.) |
The accompanying notes are an integral part of the financial statements.
42
Statements of Operations (unaudited)
For the period ended September 30, 2015
![]() | ![]() | ![]() | ||||||
KraneShares E Fund China Commercial Paper ETF | KraneShares FTSE Emerging Markets Plus ETF | |||||||
Investment Income: | ||||||||
Dividend Income | $ | 10,663 | $ | 44,054 | ||||
Income Distribution from Affiliated Fund | — | 2 | ||||||
Interest Income | 806,229 | 25 | ||||||
Less: Foreign Taxes Withheld | (4,539 | ) | (3,990 | ) | ||||
Total Investment Income | 812,353 | 40,091 | ||||||
Advisory Fees | 152,966 | 8,626 | ||||||
Trustees’ Fees | 2,052 | 2,647 | ||||||
Total Expenses | 155,018 | 11,273 | ||||||
Advisory Fee Waiver | (26,994 | ) | — | |||||
Net Expenses | 128,024 | 11,273 | ||||||
Net Investment Income | 684,329 | 28,818 | ||||||
Net Realized Gain (Loss) on: | ||||||||
Investments | 18,988 | (1,331 | ) | |||||
Affiliated Investments | — | (415 | ) | |||||
Foreign Currency Transactions | (751,348 | ) | (544 | ) | ||||
Capital Gains Distribution Received From Affiliated Fund | — | (1,993 | ) | |||||
Net Realized Loss on Investments, Affiliated Investments and Foreign Currency Transactions | (732,360 | ) | (4,283 | ) | ||||
Net Change in Unrealized Depreciation on: | ||||||||
Investments | (761,435 | ) | (338,437 | ) | ||||
Affiliated Investments | — | (114,541 | ) | |||||
Foreign Currency Transactions | (9,371 | ) | (841 | ) | ||||
Net Change in Unrealized Depreciation on Investments, Affiliated Investments and Foreign Currency Transactions | (770,806 | ) | (453,819 | ) | ||||
Net Realized and Unrealized Loss on Investments, Affiliated Investments and Foreign Currency Transactions | (1,503,166 | ) | (458,102 | ) | ||||
Net Decrease in Net Assets Resulting from Operations | $ | (818,837 | ) | $ | (429,284 | ) |
The accompanying notes are an integral part of the financial statements.
43
Statements of Changes in Net Assets
![]() | ![]() | ![]() | ||||||
KraneShares Bosera MSCI China A Share ETF | ||||||||
Period Ended September 30, 2015 (unaudited) | Year Ended March 31, 2015 | |||||||
Operations: | ||||||||
Net Investment Income (Loss) | $ | 216,369 | $ | (56,828 | ) | |||
Net Realized Gain on Investments and Foreign Currency Transactions | 3,182,296 | 184,968 | ||||||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Transactions | (7,737,484 | ) | 6,344,607 | |||||
Net Increase (Decrease) in Net Assets Resulting from Operations | (4,338,819 | ) | 6,472,747 | |||||
Dividends and Distributions from: | ||||||||
Net Investment Income | — | (25,024 | ) | |||||
Net Realized Gains | (115,277 | ) | — | |||||
Total Dividends and Distributions | (115,277 | ) | (25,024 | ) | ||||
Capital Share Transactions(1): | ||||||||
Issued | 3,274,540 | 17,369,814 | ||||||
Redeemed | (17,290,004 | ) | (8,609,500 | ) | ||||
Increase (Decrease) in Net Assets from Capital Share Transactions | (14,015,464 | ) | 8,760,314 | |||||
Total Increase (Decrease) in Net Assets | (18,469,560 | ) | 15,208,037 | |||||
Net Assets: | ||||||||
Beginning of Period | 26,774,152 | 11,566,115 | ||||||
End of Period | $ | 8,304,592 | $ | 26,774,152 | ||||
Undistributed (Distributions in Excess of) Net Investment Income | $ | 180,027 | $ | (36,342 | ) | |||
Share Transactions: | ||||||||
Issued | 50,000 | 400,000 | ||||||
Redeemed | (350,000 | ) | (300,000 | ) | ||||
Net Increase (Decrease) in Shares Outstanding from Share Transactions | (300,000 | ) | 100,000 |
(1) | Includes transaction costs related to creations and redemptions. |
The accompanying notes are an integral part of the financial statements.
44
Statements of Changes in Net Assets
![]() | ![]() | ![]() | ||||||
KraneShares CSI New China ETF | ||||||||
Period Ended September 30, 2015 (unaudited) | Year Ended March 31, 2015 | |||||||
Operations: | ||||||||
Net Investment Income | $ | 21,491 | $ | 12,207 | ||||
Net Realized Gain on Investments and Foreign Currency Transactions | 163,174 | 125,197 | ||||||
Net Change in Unrealized Appreciation (Depreciation) on Investments | (815,365 | ) | 171,872 | |||||
Net Increase (Decrease) in Net Assets Resulting from Operations | (630,700 | ) | 309,276 | |||||
Dividends and Distributions from: | ||||||||
Net Investment Income | — | (31,008 | ) | |||||
Net Realized Gains | (136,400 | ) | — | |||||
Total Dividends and Distributions | (136,400 | ) | (31,008 | ) | ||||
Total Increase (Decrease) in Net Assets | (767,100 | ) | 278,268 | |||||
Net Assets: | ||||||||
Beginning of Period | 3,420,944 | 3,142,676 | ||||||
End of Period | $ | 2,653,844 | $ | 3,420,944 | ||||
Undistributed (Distributions in Excess of) Net Investment Income | $ | 19,290 | $ | (2,201 | ) |
The accompanying notes are an integral part of the financial statements.
45
Statements of Changes in Net Assets
![]() | ![]() | ![]() | ||||||
KraneShares CSI China Internet ETF | ||||||||
Period Ended September 30, 2015 (unaudited) | Year Ended March 31, 2015 | |||||||
Operations: | ||||||||
Net Investment Loss | $ | (284,847 | ) | $ | (477,936 | ) | ||
Net Realized Gain (Loss) on Investments and Foreign Currency Transactions | 11,415,031 | (2,491,875 | ) | |||||
Net Change in Unrealized Depreciation on Investments and Foreign Currency Transactions | (14,561,504 | ) | (18,003,378 | ) | ||||
Net Decrease in Net Assets Resulting from Operations | (3,431,320 | ) | (20,973,189 | ) | ||||
Dividends and Distributions from: | ||||||||
Net Investment Income | — | (596,577 | ) | |||||
Total Dividends and Distributions | — | (596,577 | ) | |||||
Capital Share Transactions(1): | ||||||||
Issued | 142,222,576 | 222,349,613 | ||||||
Redeemed | (173,233,736 | ) | (146,411,226 | ) | ||||
Increase (Decrease) in Net Assets from Capital Share Transactions | (31,011,160 | ) | 75,938,387 | |||||
Total Increase (Decrease) in Net Assets | (34,442,480 | ) | 54,368,621 | |||||
Net Assets: | ||||||||
Beginning of Period | 131,611,859 | 77,243,238 | ||||||
End of Period | $ | 97,169,379 | $ | 131,611,859 | ||||
Accumulated Net Investment Loss/Distributions in Excess of Net Investment Income | $ | (701,774 | ) | $ | (416,927 | ) | ||
Share Transactions: | ||||||||
Issued | 3,950,000 | 6,200,000 | ||||||
Redeemed | (4,550,000 | ) | (4,500,000 | ) | ||||
Net Increase (Decrease) in Shares Outstanding from Share Transactions | (600,000 | ) | 1,700,000 |
(1) | Includes transaction costs related to creations and redemptions. |
The accompanying notes are an integral part of the financial statements.
46
Statements of Changes in Net Assets
![]() | ![]() | ![]() | ||||||
KraneShares E Fund China Commercial Paper ETF | ||||||||
Period Ended September 30, 2015 (unaudited) | Period Ended March 31, 2015(1) | |||||||
Operations: | ||||||||
Net Investment Income | $ | 684,329 | $ | 289,907 | ||||
Net Realized Loss on Investments and Foreign Currency Transactions | (732,360 | ) | (153,624 | ) | ||||
Net Change in Unrealized Depreciation on Investments and Foreign Currency Transactions | (770,806 | ) | (12,696 | ) | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | (818,837 | ) | 123,587 | |||||
Dividends and Distributions from: | ||||||||
Net Investment Income | (396,165 | ) | (188,251 | ) | ||||
Total Dividends and Distributions | (396,165 | ) | (188,251 | ) | ||||
Capital Share Transactions(2): | ||||||||
Issued | 59,532,888 | 31,449,489 | ||||||
Redeemed | (24,077,512 | ) | (22,682,667 | ) | ||||
Increase in Net Assets from Capital Share Transactions | 35,455,376 | 8,766,822 | ||||||
Total Increase in Net Assets | 34,240,374 | 8,702,158 | ||||||
Net Assets: | ||||||||
Beginning of Period | 8,702,158 | — | ||||||
End of Period | $ | 42,942,532 | $ | 8,702,158 | ||||
Undistributed (Distributions in Excess of) Net Investment Income | $ | 244,812 | $ | (43,352 | ) | |||
Share Transactions: | ||||||||
Issued | 1,700,000 | 900,002 | ||||||
Redeemed | (700,000 | ) | (650,000 | ) | ||||
Net Increase in Shares Outstanding from Share Transactions | 1,000,000 | 250,002 |
(1) | Commenced operations on December 2, 2014. |
(2) | Includes transaction costs related to creations and redemptions. |
The accompanying notes are an integral part of the financial statements.
47
Statements of Changes in Net Assets
![]() | ![]() | ![]() | ||||||
KraneShares FTSE Emerging Markets Plus ETF | ||||||||
Period Ended September 30, 2015 (unaudited) | Period Ended March 31, 2015(1) | |||||||
Operations: | ||||||||
Net Investment Income (Loss) | $ | 28,818 | $ | (240 | ) | |||
Net Realized Gain (Loss) on Investments, Affiliated Investments and Foreign Currency Transactions | (4,283 | ) | 11,987 | |||||
Net Change in Unrealized Appreciation (Depreciation) on Investments, Affiliated Investments and Foreign Currency Transactions | (453,819 | ) | 50,181 | |||||
Net Increase (Decrease) in Net Assets Resulting from Operations | (429,284 | ) | 61,928 | |||||
Dividends and Distributions from: | ||||||||
Net Investment Income | (7,095 | ) | — | |||||
Net Realized Gains | (5,119 | ) | — | |||||
Total Dividends and Distributions | (12,214 | ) | — | |||||
Capital Share Transactions(2): | ||||||||
Issued | 584 | 2,501,476 | ||||||
Redeemed | — | (584 | ) | |||||
Increase in Net Assets from Capital Share Transactions | 584 | 2,500,892 | ||||||
Total Increase (Decrease) in Net Assets | (440,914 | ) | 2,562,820 | |||||
Net Assets: | ||||||||
Beginning of Period | 2,562,820 | — | ||||||
End of Period | $ | 2,121,906 | $ | 2,562,820 | ||||
Undistributed Net Investment Income | $ | 28,352 | $ | 6,629 | ||||
Share Transactions: | ||||||||
Issued | — | 100,002 | ||||||
Net Increase in Shares Outstanding from Share Transactions | — | 100,002 |
(1) | Commenced operations on February 12, 2015. |
(2) | Includes transaction costs related to creations and redemptions. |
The accompanying notes are an integral part of the financial statements.
48
Selected Per Share Data & Ratios
For the Periods Ended September 30, 2015 (unaudited) and the Year/Periods Ended March 31
For a Share Outstanding Throughout Each Period
![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | ![]() | |||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period ($) | Net Investment Income (Loss) ($)* | Net Realized and Unrealized Gain (Loss) on Investments ($) | Total from Operations ($) | Distribution from Net Investment Income ($) | Distribution from Capital Gains ($) | Total from Distributions ($) | Net Asset Value, End of Period ($) | Total Return (%)** | Net Assets End of Period ($)(000) | Ratio of Expenses to Average Net Assets (%) | Ratio of Expenses to Average Net Assets (Excluding Waivers) (%) | Ratio of Net Investment Income (Loss) to Average Net Assets (%) | Portfolio Turnover (%) | ||||||||||||||||||||||||||||||||||||||||||||
KraneShares Bosera MSCI China A Share ETF | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015*** | 53.55 | 0.51 | (12.33 | ) | (11.82 | ) | — | (0.21 | ) | (0.21 | ) | 41.52 | (22.21 | ) | 8,305 | 0.90 | † | 1.15 | † | 1.75 | † | 32 | †† | ||||||||||||||||||||||||||||||||||
2015 | 28.92 | (0.22 | ) | 24.90 | 24.68 | (0.05 | ) | — | (0.05 | ) | 53.55 | 85.37 | 26,774 | 1.31 | 1.51 | (0.55 | ) | 110 | |||||||||||||||||||||||||||||||||||||||
2014(1) | 30.00 | (0.02 | ) | (1.06 | ) | (1.08 | ) | — | — | — | 28.92 | (3.60 | ) | 11,566 | 1.10 | † | 1.10 | † | (0.84 | )† | — | †† | |||||||||||||||||||||||||||||||||||
KraneShares CSI New China ETF(6) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015*** | 68.42 | 0.43 | (13.04 | ) | (12.61 | ) | — | (2.73 | ) | (2.73 | ) | 53.08 | (19.43 | ) | 2,654 | 0.73 | † | 0.73 | † | 1.28 | † | 15 | †† | ||||||||||||||||||||||||||||||||||
2015 | 62.85 | 0.24 | 5.95 | 6.19 | (0.62 | ) | — | (0.62 | ) | 68.42 | 9.92 | 3,421 | 0.71 | 0.71 | 0.37 | 36 | |||||||||||||||||||||||||||||||||||||||||
2014(2) | 50.00 | (0.06 | ) | 12.91 | 12.85 | — | — | — | 62.85 | 25.70 | 3,143 | 0.68 | 0.68 | † | (0.15 | )† | 7 | †† | |||||||||||||||||||||||||||||||||||||||
KraneShares CSI China Internet ETF | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015*** | 34.18 | (0.09 | ) | (4.19 | ) | (4.28 | ) | — | — | — | 29.90 | (12.52 | ) | 97,169 | 0.72 | † | 0.72 | † | (0.50 | )† | 15 | †† | |||||||||||||||||||||||||||||||||||
2015 | 35.93 | (0.14 | ) | (1.32 | ) | (1.46 | ) | (0.29 | ) | — | (0.29 | ) | 34.18 | (4.09 | ) | 131,612 | 0.71 | 0.71 | (0.39 | ) | 43 | ||||||||||||||||||||||||||||||||||||
2014(3) | 25.00 | (0.02 | ) | 11.05 | 11.03 | (0.06 | ) | (0.04 | ) | (0.10 | ) | 35.93 | 44.18 | 77,243 | 0.68 | † | 0.68 | † | (0.90 | )† | 8 | †† | |||||||||||||||||||||||||||||||||||
KraneShares E Fund China Commercial Paper ETF | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015*** | 34.81 | 0.53 | (0.75 | ) | (0.22 | ) | (0.24 | ) | — | (0.24 | ) | 34.35 | (0.64 | ) | 42,943 | 0.57 | † | 0.69 | † | 3.05 | † | 386 | †† | ||||||||||||||||||||||||||||||||||
2015(4) | 35.00 | 0.39 | (0.35 | ) | 0.04 | (0.23 | ) | — | (0.23 | ) | 34.81 | 0.13 | 8,702 | 0.60 | † | 0.72 | † | 3.46 | † | — | †† | ||||||||||||||||||||||||||||||||||||
KraneShares FTSE Emerging Markets Plus ETF | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015*** | 25.63 | 0.29 | (4.58 | ) | (4.29 | ) | (0.07 | ) | (0.05 | ) | (0.12 | ) | 21.22 | (16.83 | ) | 2,122 | 0.89 | †‡ | 0.89 | †‡ | 2.28 | †‡ | 1 | †† | |||||||||||||||||||||||||||||||||
2015(5) | 25.00 | — | 0.63 | 0.63 | — | — | — | 25.63 | 2.52 | 2,563 | 0.88 | †‡ | 0.88 | †‡ | (0.07 | )†‡ | 8 | †† |
(1) | The Fund commenced operations on March 4, 2014. |
(2) | The Fund commenced operations on July 22, 2013. |
(3) | The Fund commenced operations on July 31, 2013. |
(4) | The Fund commenced operations on December 2, 2014. |
(5) | The Fund commenced operations on February 12, 2015. |
(6) | Effective August 1st, 2014, the KraneShares CSI China Five Year Plan ETF changed its name to KraneShares CSI New China ETF. |
* | 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. |
*** | For the six-month period ended September 30, 2015. All ratios for the period have been annualized. |
† | Annualized. |
†† | Portfolio turnover rate is for the period indicated and periods of less than one year have not been annualized. Excludes effect of in-kind transfers. |
‡ | The ratios of expenses and net investment income/(loss) to Average Net Assets reflects the expenses and net investment income/(loss), respectively, for the period as reported in the Statement of Operations and do not reflect the Fund’s proportionate share of the income and expenses of the KraneShares Bosera MSCI China A Shares ETF. |
Amounts designated as “—” are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
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Notes to Financial Statements (unaudited)
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1. ORGANIZATION
KraneShares Trust (the “Trust”) is a Delaware Statutory Trust formed on February 3, 2012. The Trust is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. As of September 30, 2015, the Trust had five portfolios. The financial statements herein and the related notes pertain to the KraneShares Bosera MSCI China A Share ETF, KraneShares CSI New China ETF, KraneShares CSI China Internet ETF, KraneShares E Fund China Commercial Paper ETF and Kraneshares FTSE Emerging Markets Plus ETF (each a “Fund” and collectively, the “Funds”). KraneShares Bosera MSCI China A Share ETF and KraneShares FTSE Emerging Markets Plus ETF are diversified, as defined under Section 5(b)(1) of the Investment Company Act of 1940; while the KraneShares CSI China Internet ETF, KraneShares CSI New China ETF and KraneShares E Fund China Commercial Paper ETF are non-diversified. Krane Funds Advisors, LLC (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 shares of KraneShares Bosera MSCI China A Share ETF, KraneShares CSI New China ETF, KraneShares CSI China Internet ETF and KraneShares E Fund China Commercial Paper ETF are listed and traded on the NYSE Arca, Inc. Shares of KraneShares FTSE Emerging Markets Plus ETF shares are listed and traded on the BATS Exchange. Market prices for the 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, called Creation Units (“Creation Units”). With respect to the KraneShares CSI New China ETF, KraneShares CSI China Internet ETF and KraneShares FTSE Emerging Markets Plus ETF, Creation Units will be issued and redeemed principally in-kind for a basket of securities and a balancing cash amount. With respect to the KraneShares Bosera MSCI China A Share ETF and the KraneShares E Fund China Commercial Paper ETF, Creation Units will be issued and redeemed principally for cash. To the extent the KraneShares Bosera MSCI China A Share ETF and the KraneShares E Fund China Commercial Paper ETF permit in kind consideration for the purchase of a Creation Units, such Creation Units will be issued and redeemed for a basket of securities and a balancing cash amount. Shares generally will trade in the secondary market in amounts less than a Creation Unit at market prices that change throughout the day.
The investment objective of each Fund is to seek investment results that generally correspond (before fees, and expenses) to its respective index listed below (each, an “Underlying Index”):
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Fund | Index | |
KraneShares Bosera MSCI China A Share ETF | MSCI China A Index | |
KraneShares CSI China Five Year Plan ETF | CSI Overseas China Five-Year Plan Index | |
KraneShares CSI China Internet ETF | CSI Overseas China Internet Index | |
KraneShares E Fund China Commercial Paper ETF | CSI Diversified High Grade Commercial Paper Index | |
KraneShares FTSE Emerging Markets Plus ETF | FTSE Emerging including China Overseas non-R/QFII GDP Weighted Index |
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed by the Funds. The Funds are investment companies in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Therefore, the Funds follow the accounting and reporting guidelines for investment companies.
USE OF ESTIMATES — The preparation of financial statements in conformity with 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
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Notes to Financial Statements (unaudited)
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2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
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 — 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 quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded (or at approximately 4:00 pm Eastern Standard Time if a security’s primary exchange is normally open at that time), or, if there is no such reported sale, at the most recent mean between the quoted bid and asked prices (absent both bid and asked prices on such exchange, the bid price may be used).
For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. If available, debt securities are priced based upon valuations provided by independent, third-party pricing agents. Such values generally reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which approximates market value. The prices for foreign securities are reported in local currency and converted to U.S. dollars using currency exchange rates. Prices for most securities held in the Funds are provided daily by recognized independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Funds seek to obtain a bid price from at least one independent broker.
Securities for which market prices are not “readily available” are valued in accordance with Fair Value Procedures established by the Board. The Funds’ Fair Value Procedures are implemented through a Fair Value Committee (the “Committee”) designated by the Board. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the security’s trading has been halted or suspended; the security has been de-listed from its primary trading exchange; the security’s primary trading market is temporarily closed at a time when under normal conditions it would be open; the security has not been traded for an extended period of time; the security’s primary pricing source is not able or willing to provide a price; or trading of the security is subject to local government-imposed restrictions. In addition, the Funds may fair value their securities if an event that may materially affect the value of the Funds’ securities that traded outside of the United States (a “Significant Event”) has occurred between the time of the security’s last close and the time that the Funds calculate their net asset value. A Significant Event may relate to a single issuer or to an entire market sector. Events that may be Significant Events include: government actions, natural disasters, armed conflict, acts of terrorism and significant market fluctuations. If the Adviser becomes aware of a Significant Event that has occurred with respect to a security or group of securities after the closing of the exchange or market on which the security or securities principally trade, but before the time at which the Funds calculate net asset value, it may request that a Committee meeting be called. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration all relevant information reasonably available to the Committee.
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Notes to Financial Statements (unaudited)
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2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
As of September 30, 2015, the total market value of securities valued in accordance with Fair Value Procedures is as follows:
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Fair Valued Amount | % of Net Assets | |||||||
KraneShares Bosera MSCI China A Share ETF | $ | 1,462,403 | 17.6 | % | ||||
KraneShares CSI New China ETF | 56,428 | 2.1 | % | |||||
KraneShares FTSE Emerging Markets Plus ETF | 4,009 | 0.2 | % |
In accordance with the authoritative guidance on fair value measurements and disclosure under U.S. GAAP, the Funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 — Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Funds have the ability to access at the measurement date.
Level 2 — Other significant observable inputs (including quoted prices in non-active markets, quoted prices for similar investments, fair value of investments for which the Funds have the ability to fully redeem tranches at net asset value as of the measurement date or within the near term, and short-term investments valued at amortized cost).
Level 3 — Significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments, 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 the period ended September 30, 2015, there have been no significant changes to the Funds’ fair valuation methodologies.
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 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.
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Notes to Financial Statements (unaudited)
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2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
As of September 30, 2015, management of the Funds has reviewed all open tax years and major jurisdictions and concluded that there is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next 12 months.
SECURITY TRANSACTIONS AND INVESTMENT INCOME — Security transactions are accounted for on the trade date for financial reporting purposes. Costs used in determining realized gains and losses on the sale of investment securities are based on specific identification. Dividend income is generally recorded on the ex-dividend date. Dividend income for certain issuers headquartered in countries which the Funds invest may not be recorded until approved by the shareholders (which may occur after the ex-dividend date) if, in the judgment of management, such dividends are not reasonably determined as of the ex-dividend date. Interest income is recognized on the accrual basis from the settlement date.
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 investment securities are on the basis of specific identification.
FOREIGN CURRENCY TRANSLATION — 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, except the KraneShares E Fund China Commercial Paper ETF, 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. These gains and losses are included in net realized and unrealized gains and losses on foreign currency transactions on the Statement of Operations. Net realized and unrealized gains and losses on foreign currency transactions represent net foreign exchange gains or losses from foreign currency exchange contracts, disposition of foreign currencies, currency gains or losses realized between trade and settlement dates on securities transactions and the difference between the amount of the investment income and foreign withholding taxes recorded on the Funds’ books and the U.S. dollar equivalent amounts actually received or paid.
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.
CREATION UNITS — The Funds issue and redeem shares (“Shares”) at Net Asset Value (“NAV”) and only in large blocks of Shares (each block of Shares for a Fund is a Creation Unit or multiples thereof). These fees are subject to adjustment from time to time by the Adviser.
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Notes to Financial Statements (unaudited)
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2. SIGNIFICANT ACCOUNTING POLICIES – (continued)
The maximum creation and redemption fees for each Fund are listed below:
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Maximum creation and redemption fees | ||||
KraneShares Bosera MSCI China A Share ETF | $ | 6,000 and a variable fee | ||
KraneShares CSI New China ETF | $ | 1,500 | ||
KraneShares CSI China Internet ETF | $ | 500 | ||
KraneShares E Fund China Commercial Paper ETF | $ | 500 and a variable fee | ||
KraneShares FTSE Emerging Markets Plus ETF | $ | 22,000 |
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 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 the 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.
If a Creation Unit is purchased or redeemed for cash, a higher transaction fee will be charged. The KraneShares Bosera MSCI China A Share ETF generally expects that Creation Units of the Fund issued and redeemed principally for cash.
The following table discloses Creation Unit breakdown as of September 30, 2015:
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Creation Unit Shares | Transaction Fee | Value | Redemption Fee | |||||||||||||
KraneShares Bosera MSCI China A Share ETF | (300,000 | ) | $ | 6,324 | $ | (14,128,034 | ) | $ | 36,980 | |||||||
KraneShares CSI China Internet ETF | (600,000 | ) | 8,505 | (17,337,200 | ) | 13,807 | ||||||||||
KraneShares E Fund China Commercial Paper ETF | 1,000,000 | 7,227 | 35,439,235 | 9,144 |
Organizational Expenses
All organizational and offering expenses of the Trust were borne by the Adviser and will not be subject to future recoupment. As a result, organizational and offering expenses are not reflected in the statement of assets and liabilities.
Concentration of Risk
Cash at September 30, 2015, is held in time deposits at Brown Brothers Harriman. Amounts may exceed federally insured limits.
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 “Agreements”). Under the Agreements, the Adviser is responsible for the day-to-day management of each Fund listed below, and continuously reviews, supervises, and administers the Fund’s investment program. The Board of Trustees of the Trust supervises the Adviser and establishes policies that the Adviser must follow in its day-to-day management activities. Each Agreement provides that the Fund pays a unitary (or unified) fee to the Adviser for advisory and management services provided to the Fund. Pursuant to the Agreements
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Notes to Financial Statements (unaudited)
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3. RELATED PARTY TRANSACTIONS – (continued)
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:
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Management Fee | ||||
KraneShares Bosera MSCI China A Share ETF | 1.10 | % | ||
KraneShares CSI New China ETF | 0.68 | % | ||
KraneShares CSI China Internet ETF | 0.68 | % | ||
KraneShares E Fund China Commercial Paper ETF | 0.68 | % | ||
KraneShares FTSE Emerging Markets Plus ETF | 0.68 | % |
The Agreements require the Adviser to pay all operating expenses of the Funds, except: (a) interest and taxes (including, but not limited to, income, excise, transaction, 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, “acquired fund fees and expenses” (as defined by form N-1A under the Investment Company Act; (d) litigation expenses; (e) compensation and expenses of the Independent Trustees (including any Trustees’ fees of independent legal counsel; and (f) any expenses determined to be extraordinary expenses by the Board (all such expenses not including the exceptions, “Expenses”). In addition, effective July 10, 2014, Krane has contractually agreed to reduce its management fee to the extent necessary to keep the KraneShares Bosera MSCI China A Share Fund’s total annual operating expenses (except interest expense, taxes, Acquired Fund Fees and Expenses, if any, brokerage commissions, derivative counterparty fees, and other expenses connected with the execution of portfolio transactions, expenses of the Independent Trustees (including any Trustees’ counsel fees), extraordinary expenses, distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act, if any) from exceeding 0.85% of the Fund’s average daily net assets. This contractual fee waiver will continue in effect through at least July 31, 2016. The Expense Limitation Agreement may be terminated by the Board upon sixty (60) days’ written notice to Krane or by Krane, effective at the end of the current term of the Expense Limitation Agreement, upon at least 60 days’ written notice prior to the end of such current term, and subject to the consent of the Board of Trustees. In addition, the Expense Limitation Agreement will terminate if the investment advisory agreement for the Fund is terminated with such termination effective upon the effective date of the investment advisory agreement’s termination.
Pursuant to the terms of an Expense Limitation Agreement, Krane has contractually agreed to reduce its management fee to the extent necessary to keep the KraneShares E Fund China Commercial Paper Fund’s total annual operating expenses (except interest expense, taxes, Acquired Fund Fees and Expenses, if any, brokerage commissions, derivative counterparty fees, and other expenses connected with the execution of portfolio transactions, expenses of the Independent Trustees (including any Trustees’ counsel fees), extraordinary expenses, distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act, if any) from exceeding 0.56% of the Fund’s average daily net assets. This contractual fee waiver will continue in effect through at least July 31, 2016. The Expense Limitation Agreement may be terminated by the Board upon sixty (60) days’ written notice to Krane or by Krane, effective at the end of the current term of the Expense Limitation Agreement, upon at least 60 days’ written notice prior to the end of such current term, and subject to the consent of the Board of Trustees. In addition, the Expense Limitation Agreement will terminate if the
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Notes to Financial Statements (unaudited)
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3. RELATED PARTY TRANSACTIONS – (continued)
investment advisory agreement for the Fund is terminated with such termination effective upon the effective date of the investment advisory agreement’s termination.
Pursuant to the terms of an Expense Limitation Agreement, Krane has contractually agreed to reduce its management fee for the KraneShares FTSE Emerging Markets Plus ETF 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 Expense Limitation Agreement will continue in effect for so long as the Fund invests in the KraneShares Bosera MSCI China A Share ETF. The Expense Limitation Agreement may only be terminated by the Board of Trustees.
Bosera Asset Management (International) Co., Ltd. (“Bosera”), operating out of Hong Kong, serves as the Co-Adviser to the KraneShares Bosera MSCI China A Share ETF and is responsible for the day-to-day management of the Fund, subject to oversight by the Adviser and the Board of Trustees of the Trust. 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.
E Fund Management (Hong Kong) Co., Limited. (“E Fund”), operating out of Hong Kong, serves as the Co-Adviser to the KraneShares E Fund China Commercial Paper ETF and is responsible for the day-to-day management of the Fund, subject to oversight by the Adviser and the Board of Trustees of the Trust. 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.
The Adviser and Co-Adviser bear all of their own costs associated with providing these advisory services. As part of its agreement with the Trust, the Adviser has contractually agreed to pay all operating expenses of the Funds, including the cost of index licensing fees, transfer agency, custody, fund administration, legal, audit and other services, except interest expense, taxes, Acquired Fund Fees and Expenses, if any, brokerage commissions and other expenses connected with execution of portfolio transactions, expenses of the Independent Trustees (including any Trustees’ counsel fees), extraordinary expenses, distribution fees and any expenses paid by the Trust under the distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act and the advisory fee payable to the Adviser.
Sub-Advisory Agreement
Index Management Solutions, LLC serves as the investment sub-adviser to the KraneShares CSI New China ETF, KraneShares CSI China Internet ETF and KraneShares FTSE Emerging Markets Plus ETF (the “Sub-Adviser”). The Sub-Adviser is responsible for trading portfolio securities on behalf of the KraneShares CSI New China ETF, KraneShares CSI China Internet ETF and KraneShares FTSE Emerging Markets Plus ETF, including selecting broker-dealers to execute purchase and sale transactions as instructed by the Adviser or in connection with any rebalancing or reconstitution of the Underlying Index, subject to the supervision of the Adviser and the Board of Trustees. For the services it provides to the KraneShares CSI New China ETF, KraneShares CSI China Internet ETF and KraneShares FTSE Emerging Markets Plus ETF, the Adviser pays the Sub-Adviser a fee, which is calculated daily and paid monthly, at an annual rate of 0.05% on each Fund’s daily average net assets up to $50 million; 0.04% on each Fund’s daily average net assets on the next $50 million; and 0.03% on each Fund’s daily average net assets in excess of $100 million.
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.
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Notes to Financial Statements (unaudited)
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3. RELATED PARTY TRANSACTIONS – (continued)
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 first twelve months of operations, no fees will be charged by the Distributor under the Plan and the Plan will only be implemented with the approval of the Board of Trustees.
Administrator, Custodian and Transfer Agent
SEI Investments Global Funds Services (the “Administrator”) serves as the Funds’ Administrator pursuant to an administration agreement. Brown Brothers Harriman & Co. serves as the Funds’ Custodian and Transfer Agent pursuant to a Custodian and Transfer Agent Agreement.
4. INVESTMENT TRANSACTIONS
For the period ended September 30, 2015, the purchases and sales of investments in securities excluding in-kind transactions, long-term U.S. Government and short-term securities were:
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Purchases | Sales and Maturities | |||||||
KraneShares Bosera MSCI China A Share ETF | $ | 7,429,799 | $ | 21,397,539 | ||||
KraneShares CSI New China ETF | 489,580 | 601,344 | ||||||
KraneShares CSI China Internet ETF | 16,863,067 | 27,770,316 | ||||||
KraneShares E Fund China Commercial Paper ETF | 164,657 | 165,951 | ||||||
KraneShares FTSE Emerging Markets Plus ETF | 34,867 | 15,535 |
For the period ended September 30, 2015, in-kind transactions associated with creations and redemptions were:
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Purchases | Sales and Maturities | Realized Gain/(Loss) | ||||||||||
KraneShares CSI China Internet ETF | $ | 155,899,641 | $ | 175,983,868 | $ | 11,020,998 |
During the period ended September 30, 2015, there were no purchases or sales of long-term U.S. Government securities for the Funds.
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 undistributed net investment income (loss), accumulated net realized gain (loss) or paid-in capital, as appropriate, in the period that the differences arise.
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Notes to Financial Statements (unaudited)
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5. TAX INFORMATION – (continued)
The tax character of dividends and distributions paid during the period ended March 31, 2015 were as follows:
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KraneShares Funds | Ordinary Income | Long-Term Capital Gain | Return of Capital | Totals | ||||||||||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||||||
2015 | $ | 25,024 | $ | — | $ | — | $ | 25,024 | ||||||||
2014 | — | — | — | — | ||||||||||||
KraneShares CSI New China ETF | ||||||||||||||||
2015 | $ | 30,982 | $ | 26 | $ | — | $ | 31,008 | ||||||||
2014 | — | — | — | — | ||||||||||||
KraneShares CSI China Internet ETF | ||||||||||||||||
2015 | $ | 596,577 | $ | — | $ | — | $ | 596,577 | ||||||||
2014 | 67,648 | — | — | 67,648 | ||||||||||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||||||
2015 | $ | 188,251 | $ | — | $ | — | $ | 188,251 | ||||||||
KraneShares FTSE Emerging Markets Plus ETF | ||||||||||||||||
2015 | $ | — | $ | — | $ | — | $ | — |
As of March 31, 2015, the components of tax basis distributable earnings (accumulated losses) were as follows:
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KraneShares Bosera MSCI China A Share ETF | KraneShares CSI New China ETF | KraneShares CSI China Internet ETF | KraneShares E Fund China Commercial Paper ETF | KraneShares FTSE Emerging Markets Plus ETF | ||||||||||||||||
Undistributed Ordinary Income | $ | 108,103 | $ | — | $ | — | $ | — | $ | 12,199 | ||||||||||
Undistributed Long-Term Capital Gain | 7,130 | 136,398 | — | — | — | |||||||||||||||
Capital Loss Carryforwards | — | — | (499,940 | ) | — | — | ||||||||||||||
Qualified Late-Year Loss Deferrals | — | (11,718 | ) | (3,403,654 | ) | (51,845 | ) | — | ||||||||||||
Unrealized Appreciation (Depreciation) on Investments and Foreign Currency | 5,862,545 | 786,270 | (19,466,969 | ) | (12,819 | ) | 49,729 | |||||||||||||
Other Temporary Differences | — | — | — | — | — | |||||||||||||||
Total Distributable Earnings (Accumulated Losses) | $ | 5,977,778 | $ | 910,950 | $ | (23,370,563 | ) | $ | (64,664 | ) | $ | 61,928 |
Under the Regulated Investment Company Modernization Act of 2010, the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. Short-term losses for the KraneShares CSI China Internet ETF carried forward under these new provisions are $499,940.
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Notes to Financial Statements (unaudited)
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5. TAX INFORMATION – (continued)
The differences between book and tax-basis unrealized appreciation/(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 September 30, 2015 were as follows:
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KraneShares Funds | Federal Tax Cost | Aggregated Gross Unrealized Appreciation | Aggregated Gross Unrealized Depreciation | Net Unrealized Depreciation | ||||||||||||
KraneShares Bosera MSCI China A Share ETF | $ | 10,088,626 | $ | 494,341 | $ | (2,317,825 | ) | $ | (1,823,484 | ) | ||||||
KraneShares CSI New China ETF | 2,671,062 | 449,149 | (476,518 | ) | (27,369 | ) | ||||||||||
KraneShares CSI China Internet ETF | 126,617,746 | — | (29,336,251 | ) | (29,336,251 | ) | ||||||||||
KraneShares E Fund China Commercial Paper ETF | 42,563,846 | 17,976 | (792,567 | ) | (774,591 | ) | ||||||||||
KraneShares FTSE Emerging Markets Plus ETF | 2,513,184 | 37,430 | (440,032 | ) | (402,602 | ) |
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 KraneShares Bosera MSCI China A Share ETF. 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 nonresidents from investment in actual and constructive Chinese resident companies. The Chinese withholding taxes applied to dividends, interest and capital gains may, in principle, be subject to a reduced rate under an applicable Chinese tax treaty, but the application of such treaties in the case of a non-resident (e.g., in the case of a QFII acting on behalf of non-resident investors, such as the Funds) is also uncertain. The imposition of such taxes could have a material adverse effect on the Funds’ returns. The People’s Republic of China (the “PRC”) rules regarding the taxation of non-resident investors are quickly evolving and certain of the tax regulations to be issued by the PRC State Administration of Taxation and/or the PRC Ministry of Finance to clarify matters may apply retrospectively. Such retroactively applied rules may be adverse to the Funds and their shareholders. Effective November 17, 2014, QFIIs, RQFIIs (i.e., QFIIs investing in Yuan, rather than foreign currency) and non-Chinese resident investors investing through the Hong Kong-Shanghai Stock Connect are exempted temporarily from the 10% capital gains tax that normally applies to sales of “A” shares on a public Chinese exchange (such as the Shanghai stock market). However, such investors are still required to pay capital gains tax for gains realized on trades executed before November 17, 2014. The Funds have recorded capital gains tax for gains realized prior to November 17, 2014, and have reflected such taxes in the Statement of Assets and Liabilities.
6. CONCENTRATION OF RISKS
As with all exchange traded funds (“ETFs”), shareholders of Funds are subject to the risk that their investment could lose money. The Funds are subject to the principal risks noted below, any of which may adversely affect a Fund’s net asset value (“NAV”), trading price, yield, total return and ability to meet its investment objective. A more complete description of principal risks is included in the prospectus under the heading “Principal Risks”.
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Notes to Financial Statements (unaudited)
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6. CONCENTRATION OF RISKS – (continued)
Geographic Concentration in China and Hong Kong
Because the Funds concentrate their investments in securities issued in China and Hong Kong, each Fund’s performance is expected to be closely tied to social, political, and economic conditions within China and Hong Kong and to be more volatile than the performance of more geographically diversified funds. These and other factors could have a negative impact on the Funds’ performance and increase the volatility of an investment in the Funds.
Industry Concentration Risk
In following its methodology, each Fund’s Underlying Index from time to time may be concentrated to a significant degree in securities of issuers located in a single industry or a sector. To the extent that an Underlying Index concentrates in the securities of issuers in a particular industry or sector, each Fund will also concentrate its investments to approximately the same extent. By concentrating its investments in an industry or sector, a Fund may face more risks than if it were diversified broadly over numerous industries or sectors. In addition, at times, an industry or sector may be out of favor and underperforms other industries or the market as a whole. Any factors detrimental to the performance of such industry or sector will disproportionately impact a Fund’s NAV.
Chinese Credit Ratings Risk
The components of the Underlying Index securities, and therefore the securities held by the Fund, will be rated by Chinese ratings agencies (and not by U.S. entities, such as 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 international credit rating agencies.
Fixed Income Securities Risk
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 bonds issued. Interest rate risk refers to fluctuations in the value of a bond resulting from changes in the level of interest rates. When interest rates go up, the prices of most bonds go down; and when interest rates go down, the prices of most bonds go up. Bonds 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.
Non-Correlation Risk
Each Fund’s return may not match the return of its Underlying Index for a number of reasons. For example, each Fund incurs operating expenses not applicable to the Underlying Index, and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of its Underlying Index. In addition, the performance of each Fund and its Underlying Index may vary due to asset valuation differences and differences between each Fund’s portfolio and its Underlying Index resulting from legal restrictions, cost or liquidity constraints.
Index Risk
Unlike many investment companies, the Funds do not utilize an investing strategy that seeks returns in excess of each Fund’s respective Underlying Index. Therefore, a Fund would not necessarily buy or sell a security unless that security is added or removed, respectively, from its respective Underlying Index, even if that security generally is underperforming.
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Notes to Financial Statements (unaudited)
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6. CONCENTRATION OF RISKS – (continued)
Market Risk
The trading prices of equity securities and other instruments fluctuate in response to a variety of factors. The Funds NAV and market price may fluctuate significantly in response to such factors. As a result, an investor could lose money over short or long periods of time.
Non-Diversification Risk
The Funds are considered to be non-diversified, which means that it may invest more of their assets in the securities of a single issuer or a smaller number of issuers than if they were a diversified fund. To the extent a Fund invests a significant percentage of its assets in a limited number of issuers, the Fund is subject to the risks of investing in those few issuers, and may be more susceptible to a single adverse economic or regulatory occurrence. As a result, changes in the market value of a single security could cause greater fluctuations in the value of Fund shares than would occur in a diversified fund.
7. OTHER
At September 30, 2015, the records of the Trust reflected that 100% of each Fund’s total Shares outstanding were each held by one Authorized Participant, in the form of Creation Units. However, the individual shares comprising such Creation Units are listed and traded on the NYSE Arca, Inc. and a portion thereof have been purchased and sold by persons other than Authorized Participants. Each Authorized Participant has entered into an agreement with the Funds’ Distributor.
8. CONTRACTUAL OBLIGATIONS
The Funds enter into contracts in the normal course of business that contain a variety of indemnifications. The Funds’ maximum exposure under these arrangements is unknown. However, the Funds have not had prior gains or losses pursuant to these contracts. Management has reviewed the Funds’ existing contracts and expects the risk of loss to be remote.
9. ADVISER OBLIGATIONS
The Adviser serves as investment adviser to each Fund pursuant to unitary (or unified) fee investment advisory agreements (“Agreements”). As discussed in Note 3, the Adviser is responsible for certain expenses of the Funds (the “Expenses”). The Adviser is current with the payment of all Expenses or has entered into work-out arrangements to schedule the future payment by the Adviser of outstanding Expenses, which include amounts past due to certain service providers of the Funds, and a principal of the Adviser has entered into a personal guarantee to guarantee the payment by the Adviser of such Expenses. Nevertheless, it cannot be certain that the outstanding Expenses will be paid on the agreed-upon work-out schedule or that future Expenses will be timely paid, which, in the case of non-payment, could have a material adverse effect on the operations of the Funds. In the event that outstanding Expenses are not paid on schedule or that future Expenses are not timely paid, the Board may seek to appoint a new investment adviser for the Funds, seek to adopt a voluntary plan of liquidation of the Funds, and/or take any other action that the Board deems to be in the best interest of the Funds and their shareholders. The Board does not currently intend to adopt a voluntary plan of liquidation.
10. SUBSEQUENT EVENTS
The Funds have evaluated the need for additional disclosures and/or adjustments resulting from subsequent events. Based on this evaluation, no additional disclosures or adjustments were required to the financial statements as of the date the financial statements were issued.
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Disclosure of Fund Expenses (unaudited)
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All Exchange Traded Funds (“ETF’s”) 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 (April 1, 2015 to September 30, 2015).
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.
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Disclosure of Fund Expenses (unaudited)
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Beginning Account Value 4/1/2015 | Ending Account Value 9/30/2015 | Annualized Expense Ratios | Expenses Paid During Period(1) | |||||||||||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 777.90 | 0.90 | % | $ | 4.01 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,020.49 | 0.90 | 4.55 | ||||||||||||
KraneShares CSI New China ETF | ||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 805.70 | 0.73 | % | $ | 3.29 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,021.36 | 0.73 | 3.68 | ||||||||||||
KraneShares CSI China Internet ETF | ||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 874.80 | 0.72 | % | $ | 3.39 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,021.38 | 0.72 | 3.66 | ||||||||||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 993.60 | 0.57 | % | $ | 2.84 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,022.15 | 0.57 | 2.89 | ||||||||||||
KraneShares FTSE Emerging Markets Plus ETF | ||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 831.70 | 0.89 | % | $ | 4.08 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,020.55 | 0.89 | 4.50 |
(1) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied 183/366 (to reflect the one-half year period from 4/1/15-9/30/15). |
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Supplemental Information (unaudited)
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Net asset value, or “NAV”, is the price per Share at which the Funds issue and redeem Shares. It is calculated in accordance with the standard formula for valuing mutual fund shares. 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.
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.
Further information regarding premiums and discounts is available on the Funds’ website at KraneShares.com
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Notes
KraneShares Trust:
1350 Avenue of the Americas, 2nd Floor
New York, New York 10019
1-855-857-2638
http://kraneshares.com/
Investment Adviser:
Krane Funds Advisors, LLC
1350 Avenue of the Americas, 2nd Floor
New York, New York 10019
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.
KRS-SA-001-0300
Item 2. Code of Ethics.
Not applicable for semi-annual report.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual report.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual report.
Item 5. Audit Committee of Listed Registrants.
Not applicable to open-end management investment companies.
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. Effective for closed-end management investment companies for fiscal years ending on or after December 31, 2005.
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 (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 Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the 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. Exhibits.
(a)(1) Not applicable for semi-annual report.
(a)(2) A separate certification for the principal executive officer and the principal financial officer of the Registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment Company Act of 1940, 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.
(Registrant) | KraneShares Trust | |
By (Signature and Title) | /s/ Jonathan Krane | |
Jonathan Krane | ||
Trustee and Principal Executive Officer | ||
Date: December 3, 2015 | ||
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 (Signature and Title) | /s/ Jonathan Krane | |
Jonathan Krane | ||
Trustee and Principal Executive Officer | ||
Date: December 3, 2015 | ||
By (Signature and Title) | /s/ Jonathan Krane | |
Jonathan Krane | ||
Principal Financial Officer | ||
Date: December 3, 2015 | ||