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)
________
1270 Avenue of the Americas
22nd Floor
New York, New York, 10020
(Address of principal executive offices) (Zip code)
Jonathan Krane
KraneShares Trust
1270 Avenue of the Americas
22nd Floor
New York, New York, 10020
(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, 2017
Date of reporting period: September 30, 2016
Item 1. Reports to Stockholders.
Semi-Annual Report
KraneShares Bosera MSCI China A Share ETF
KraneShares Zacks New China ETF
KraneShares CSI China Internet ETF
KraneShares E Fund China Commercial Paper ETF
KraneShares FTSE Emerging Markets Plus ETF
September 30, 2016
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, are available (i) without charge, upon request, by calling 1-855-8KRANE8; and (ii) on the Commission’s website at http://www.sec.gov.
Fund shares may only be purchased or redeemed from a Fund in large Creation Unit aggregations. Investors who cannot transact in Creation Units of a Fund’s shares must buy or sell Fund shares in the secondary market at their market price, which may be at a premium or discount to a Fund’s net asset value, with the assistance of a broker. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying Fund shares and receive less than net asset value when selling Fund shares.
Schedule of Investments (Unaudited) September 30, 2016
KraneShares Bosera MSCI China A Share ETF
† | 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 – 98.7%‡ | ||||||||
CHINA – 98.7% | ||||||||
Consumer Discretionary – 11.3% | ||||||||
Alpha Group, Cl A | 42,168 | $ | 176,891 | |||||
Anhui Jianghuai Automobile, Cl A | 65,300 | 135,887 | ||||||
Anhui Zhongding Sealing Parts, Cl A | 41,900 | 151,707 | ||||||
BYD, Cl A* | 24,052 | 200,457 | ||||||
China Shipbuilding Industry Group Power, Cl A | 12,200 | 60,122 | ||||||
Chinese Universe Publishing and Media, Cl A | 33,000 | 115,624 | ||||||
Chongqing Changan Automobile, Cl A | 62,700 | 149,183 | ||||||
CITIC Guoan Information Industry, Cl A | 52,100 | 87,406 | ||||||
Gansu Gangtai Holding Group, Cl A(A)(B) | 17,700 | 43,759 | ||||||
Global Top E-Commerce, Cl A | 18,200 | 56,837 | ||||||
Hangzhou Robam Appliances, Cl A | 20,000 | 123,748 | ||||||
Jiangsu Broadcasting Cable Information Network, Cl A | 97,300 | 148,649 | ||||||
Leo Group, Cl A | 37,200 | 98,940 | ||||||
Midea Group, Cl A | 67,050 | 271,517 | ||||||
Qingdao Haier, Cl A | 47,400 | 72,059 | ||||||
SAIC Motor, Cl A | 67,700 | 221,776 | ||||||
Shanghai Jinjiang International Hotels Development, Cl A | 27,700 | 126,872 | ||||||
Shanghai Oriental Pearl Media, Cl A | 45,000 | 166,642 | ||||||
Shenzhen Overseas Chinese Town, Cl A | 191,800 | 201,289 | ||||||
Suning Commerce Group, Cl A | 136,200 | 221,351 | ||||||
Visual China Group, Cl A* | 34,100 | 122,136 | ||||||
Wanda Cinema Line, Cl A | 15,000 | 151,304 | ||||||
Wuchan Zhongda Group, Cl A | 46,910 | 72,299 | ||||||
Wuhu Shunrong Sanqi Interactive Entertainment Network Technology, Cl A | 37,400 | 103,789 | ||||||
Zhejiang Wanfeng Auto Wheel, Cl A | 41,600 | 128,106 | ||||||
3,408,350 | ||||||||
Consumer Staples – 6.0% | ||||||||
Fujian Sunner Development, Cl A* | 12,500 | 46,908 | ||||||
Henan Shuanghui Investment & Development, Cl A | 56,200 | 198,764 | ||||||
Inner Mongolia Yili Industrial Group, Cl A(A)(B) | 30,200 | 73,395 | ||||||
Jiangsu Yanghe Brewery Joint-Stock, Cl A | 16,300 | 163,953 | ||||||
Kweichow Moutai, Cl A | 15,200 | 678,895 |
The accompanying notes are an integral part of the financial statements.
1 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares Bosera MSCI China A Share ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
Consumer Staples (continued) | ||||||||
Luzhou Laojiao, Cl A | 11,500 | $ | 53,586 | |||||
Muyuan Foodstuff, Cl A | 15,500 | 56,771 | ||||||
Wuliangye Yibin, Cl A | 44,300 | 221,567 | ||||||
Yonghui Superstores, Cl A | 238,900 | 159,744 | ||||||
Yuan Longping High-tech Agriculture, Cl A | 49,893 | 148,632 | ||||||
1,802,215 | ||||||||
Energy – 2.8% | ||||||||
China Merchants Energy Shipping, Cl A | 162,900 | 124,556 | ||||||
China Petroleum & Chemical, Cl A | 257,400 | 187,551 | ||||||
Geo-Jade Petroleum, Cl A(A)(B) | 48,820 | 57,750 | ||||||
Guanghui Energy, Cl A | 100,100 | 61,381 | ||||||
Offshore Oil Engineering, Cl A | 162,900 | 167,052 | ||||||
PetroChina, Cl A | 122,100 | 132,168 | ||||||
Wintime Energy, Cl A | 203,100 | 121,799 | ||||||
852,257 | ||||||||
Financials – 28.2% | ||||||||
Agricultural Bank of China, Cl A | 873,800 | 410,044 | ||||||
Avic Capital, Cl A | 71,300 | 69,269 | ||||||
Bank of Beijing, Cl A | 138,936 | 189,553 | ||||||
Bank of China, Cl A | 560,600 | 283,242 | ||||||
Bank of Communications, Cl A | 451,900 | 374,664 | ||||||
Bank of Nanjing, Cl A | 81,100 | 124,750 | ||||||
Bank of Ningbo, Cl A | 55,900 | 131,160 | ||||||
Bohai Financial Investment Holding, Cl A*(A)(B) | 128,300 | 136,763 | ||||||
Changjiang Securities, Cl A | 97,500 | 155,240 | ||||||
China Everbright Bank, Cl A | 357,500 | 203,137 | ||||||
China Merchants Bank, Cl A | 231,100 | 623,658 | ||||||
China Merchants Securities, Cl A | 69,801 | 179,892 | ||||||
China Minsheng Banking, Cl A | 341,500 | 474,106 | ||||||
China Pacific Insurance Group, Cl A | 57,000 | 245,690 | ||||||
CITIC Securities, Cl A | 102,600 | 247,963 | ||||||
Dongxing Securities, Cl A | 48,300 | 159,021 | ||||||
Everbright Securities, Cl A | 68,800 | 167,513 | ||||||
Founder Securities, Cl A | 152,500 | 167,818 | ||||||
GF Securities, Cl A | 73,300 | 179,898 | ||||||
Guosen Securities, Cl A | 30,200 | 74,617 | ||||||
Guoyuan Securities, Cl A | 39,100 | 119,879 | ||||||
Haitong Securities, Cl A | 87,100 | 207,760 | ||||||
Huatai Securities, Cl A | 63,000 | 169,543 | ||||||
Huaxia Bank, Cl A | 102,800 | 154,894 | ||||||
Industrial & Commercial Bank of China, Cl A | 619,300 | 411,319 | ||||||
Industrial Bank, Cl A | 212,000 | 507,592 | ||||||
Industrial Securities, Cl A | 65,600 | 74,353 | ||||||
Orient Securities, Cl A | 72,400 | 171,828 | ||||||
Ping An Bank, Cl A | 172,580 | 234,678 | ||||||
Ping An Insurance Group of China, Cl A | 120,200 | 615,597 | ||||||
SDIC Essence Holdings, Cl A*(A)(B) | 24,100 | 57,161 | ||||||
Shanghai Pudong Development Bank, Cl A | 248,270 | 613,789 | ||||||
Shanxi Securities, Cl A | 57,400 | 120,394 | ||||||
Shenwan Hongyuan Group, Cl A | 247,960 | 232,718 | ||||||
Western Securities, Cl A | 56,400 | 200,486 | ||||||
8,489,989 |
The accompanying notes are an integral part of the financial statements.
2 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares Bosera MSCI China A Share ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
Health Care – 7.0% | ||||||||
Beijing SL Pharmaceutical, Cl A | 32,100 | $ | 158,864 | |||||
Beijing Tongrentang, Cl A | 47,455 | 217,212 | ||||||
China Resources Sanjiu Medical & Pharmaceutical, Cl A | 39,660 | 151,862 | ||||||
Guangzhou Baiyunshan Pharmaceutical Holdings, Cl A | 48,300 | 176,979 | ||||||
Guizhou Bailing Group Pharmaceutical, Cl A | 22,400 | 74,118 | ||||||
Harbin Pharmaceutical Group, Cl A | 96,100 | 132,408 | ||||||
Jiangsu Hengrui Medicine, Cl A | 27,940 | 184,521 | ||||||
Kangmei Pharmaceutical, Cl A | 71,500 | 173,873 | ||||||
Searainbow Holding, Cl A*(A)(B) | 14,300 | 104,538 | ||||||
Shanghai RAAS Blood Products, Cl A | 28,260 | 94,270 | ||||||
Shenzhen Salubris Pharmaceuticals, Cl A | 46,432 | 193,246 | ||||||
Shijiazhuang Yiling Pharmaceutical, Cl A | 26,600 | 63,050 | ||||||
Sichuan Kelun Pharmaceutical, Cl A | 59,700 | 145,446 | ||||||
Tasly Pharmaceutical Group, Cl A | 24,100 | 152,404 | ||||||
Yunnan Baiyao Group, Cl A(A)(B) | 8,200 | 87,127 | ||||||
2,109,918 | ||||||||
Industrials – 15.8% | ||||||||
AVIC Aero-Engine Controls, Cl A | 11,300 | 44,793 | ||||||
AVIC Aircraft, Cl A | 21,000 | 65,928 | ||||||
Avic Aviation Engine, Cl A | 31,100 | 159,976 | ||||||
AVIC Electromechanical Systems, Cl A | 22,200 | 54,319 | ||||||
Beijing Orient Landscape & Ecology, Cl A | 43,850 | 102,689 | ||||||
China Baoan Group, Cl A | 34,020 | 52,943 | ||||||
China COSCO Holdings, Cl A* | 186,300 | 141,331 | ||||||
China CSSC Holdings, Cl A | 52,800 | 170,749 | ||||||
China First Heavy Industries, Cl A | 76,100 | 59,442 | ||||||
China Railway Construction, Cl A | 51,600 | 69,703 | ||||||
China Railway Group, Cl A | 169,200 | 179,093 | ||||||
China Shipbuilding Industry, Cl A | 232,100 | 215,745 | ||||||
China Shipping Container Lines, Cl A*(A)(B) | 103,200 | 60,806 | ||||||
China Southern Airlines, Cl A | 146,300 | 153,538 | ||||||
China Spacesat, Cl A | 11,500 | 54,879 | ||||||
China State Construction Engineering, Cl A | 292,300 | 270,388 | ||||||
CMST Development, Cl A | 118,400 | 137,926 | ||||||
CRRC, Cl A | 235,100 | 315,817 | ||||||
Daqin Railway, Cl A | 171,200 | 162,730 | ||||||
Galaxy Biomedical Investment, Cl A* | 31,700 | 84,169 | ||||||
Guoxuan High-Tech, Cl A | 22,600 | 112,153 | ||||||
Hainan Airlines, Cl A* | 342,600 | 164,366 | ||||||
Hefei Meiya Optoelectronic Technology, Cl A | 40,100 | 129,438 | ||||||
Luxshare Precision Industry, Cl A | 22,450 | 68,057 | ||||||
Metallurgical Corp of China, Cl A | 120,800 | 71,538 | ||||||
NARI Technology, Cl A | 58,000 | 141,913 | ||||||
Power Construction Corp of China, Cl A | 139,300 | 124,890 | ||||||
Rizhao Port, Cl A | 307,900 | 181,878 | ||||||
Sany Heavy Industry, Cl A | 201,800 | 165,494 | ||||||
Sinotrans Air Transportation Development, Cl A | 46,300 | 125,711 | ||||||
Sinovel Wind Group, Cl A* | 150,500 | 59,794 | ||||||
Suzhou Gold Mantis Construction Decoration, Cl A | 60,400 | 109,028 | ||||||
Taihai Manoir Nuclear Equipment, Cl A | 17,100 | 128,314 | ||||||
Xiamen C & D, Cl A* | 24,500 | 40,736 | ||||||
XJ Electric, Cl A | 76,300 | 167,471 |
The accompanying notes are an integral part of the financial statements.
3 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares Bosera MSCI China A Share ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
Industrials (continued) | ||||||||
Yingkou Port Liability, Cl A | 295,500 | $ | 152,402 | |||||
Zhejiang Chint Electrics, Cl A | 20,800 | 70,819 | ||||||
Zhengzhou Yutong Bus, Cl A | 56,238 | 185,999 | ||||||
4,756,965 | ||||||||
Information Technology – 8.6% | ||||||||
Addsino, Cl A(A)(B) | 4,000 | 9,271 | ||||||
Aisino, Cl A | 19,000 | 62,868 | ||||||
Beijing Xinwei Technology Group, Cl A | 23,600 | 60,645 | ||||||
BOE Technology Group, Cl A | 576,300 | 204,772 | ||||||
China Security & Fire, Cl A | 7,500 | 25,603 | ||||||
Dawning Information Industry, Cl A | 8,200 | 39,574 | ||||||
DHC Software, Cl A | 8,800 | 27,178 | ||||||
Dongxu Optoelectronic Technology, Cl A | 41,300 | 89,845 | ||||||
Fiberhome Telecommunication Technologies, Cl A | 33,000 | 141,104 | ||||||
GoerTek, Cl A | 11,900 | 53,934 | ||||||
GRG Banking Equipment, Cl A | 64,945 | 145,469 | ||||||
Guangzhou Haige Communications Group, Cl A(A)(B) | 7,800 | 14,396 | ||||||
Hangzhou Hikvision Digital Technology, Cl A | 69,000 | 253,138 | ||||||
Hangzhou Liaison Interactive Information Technology, Cl A(A)(B) | 3,500 | 10,757 | ||||||
Hundsun Technologies, Cl A | 13,500 | 113,222 | ||||||
Iflytek, Cl A | 13,000 | 55,411 | ||||||
Jiangsu Protruly Vision Technology Group, Cl A* | 57,200 | 137,726 | ||||||
Sanan Optoelectronics, Cl A | 91,145 | 164,116 | ||||||
Shanghai 2345 Network Holding Group, Cl A | 76,100 | 129,382 | ||||||
Shanghai DZH, Cl A* | 118,000 | 135,160 | ||||||
Shenzhen O-film Tech, Cl A | 11,300 | 61,599 | ||||||
Suzhou Victory Precision Manufacture, Cl A | 34,800 | 54,574 | ||||||
Tatwah Smartech, Cl A* | 35,400 | 95,532 | ||||||
Tianjin Zhonghuan Semiconductor, Cl A(A)(B) | 9,600 | 12,406 | ||||||
Tsinghua Tongfang, Cl A | 78,200 | 161,442 | ||||||
Yonyou Network Technology, Cl A | 21,700 | 73,591 | ||||||
Zhejiang Dahua Technology, Cl A | 30,350 | 70,574 | ||||||
ZTE, Cl A | 79,040 | 175,144 | ||||||
2,578,433 | ||||||||
Materials – 7.9% | ||||||||
Aluminum Corp of China, Cl A* | 304,400 | 170,683 | ||||||
Anhui Conch Cement, Cl A | 58,400 | 147,532 | ||||||
Beijing Shougang, Cl A* | 117,500 | 89,667 | ||||||
China Hainan Rubber Industry Group, Cl A | 154,900 | 137,018 | ||||||
China Northern Rare Earth Group High-Tech, Cl A | 89,900 | 166,591 | ||||||
Hubei Biocause Pharmaceutical, Cl A | 95,900 | 113,728 | ||||||
Inner Mongolia BaoTou Steel Union, Cl A* | 508,300 | 211,855 | ||||||
Inner Mongolia Junzheng Energy & Chemical Industry Group, Cl A | 176,100 | 128,841 | ||||||
Jiangxi Ganfeng Lithium, Cl A | 7,700 | 33,282 | ||||||
Kangde Xin Composite Material Group, Cl A | 72,095 | 195,424 | ||||||
Kingenta Ecological Engineering Group, Cl A | 121,100 | 143,250 | ||||||
Org Packaging, Cl A | 85,200 | 127,992 | ||||||
Shandong Gold Mining, Cl A | 9,200 | 52,676 | ||||||
Shanxi Taigang Stainless Steel, Cl A | 176,700 | 93,516 | ||||||
Tianqi Lithium Industries, Cl A | 8,800 | 50,201 | ||||||
Wanhua Chemical Group, Cl A | 42,100 | 129,772 | ||||||
Xiamen Tungsten, Cl A | 9,600 | 36,558 |
The accompanying notes are an integral part of the financial statements.
4 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares Bosera MSCI China A Share ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
Materials (continued) | ||||||||
Xinxing Ductile Iron Pipes, Cl A | 177,900 | $ | 126,424 | |||||
Zhongjin Gold, Cl A | 26,700 | 48,556 | ||||||
Zijin Mining Group, Cl A | 377,500 | 181,675 | ||||||
2,385,241 | ||||||||
Real Estate – 6.3% | ||||||||
China Fortune Land Development, Cl A | 46,000 | 194,690 | ||||||
China Merchants Shekou Industrial Zone Holdings, Cl A | 105,682 | 253,193 | ||||||
China Vanke, Cl A | 94,500 | 370,774 | ||||||
Financial Street Holdings, Cl A | 62,500 | 110,476 | ||||||
Future Land Holdings, Cl A | 35,300 | 66,842 | ||||||
Gemdale, Cl A | 36,700 | 65,972 | ||||||
Poly Real Estate Group, Cl A | 148,900 | 214,309 | ||||||
RiseSun Real Estate Development, Cl A | 53,600 | 62,841 | ||||||
Shanghai Lujiazui Finance & Trade Zone Development, Cl A | 29,200 | 107,782 | ||||||
Shanghai SMI Holding, Cl A(A)(B) | 5,275 | 12,495 | ||||||
Shanghai Zhangjiang High-Tech Park Development, Cl A | 18,100 | 49,470 | ||||||
Suning Universal, Cl A | 96,800 | 124,229 | ||||||
Xinhu Zhongbao, Cl A | 203,800 | 134,746 | ||||||
Zhejiang China Commodities City Group, Cl A | 59,200 | 72,070 | ||||||
Zhongtian Urban Development Group, Cl A | 54,900 | 56,958 | ||||||
1,896,847 | ||||||||
Telecommunication Services – 0.6% | ||||||||
China United Network Communications, Cl A | 292,400 | 181,928 | ||||||
Utilities – 4.2% | ||||||||
China National Nuclear Power, Cl A | 223,500 | 222,495 | ||||||
China Yangtze Power, Cl A | 184,183 | 367,261 | ||||||
Huadian Power International, Cl A | 215,606 | 160,007 | ||||||
Inner Mongolia MengDian HuaNeng Thermal Power, Cl A | 335,500 | 154,421 | ||||||
Shenergy, Cl A | 191,000 | 165,801 | ||||||
Zhejiang Zheneng Electric Power, Cl A | 222,100 | 174,483 | ||||||
1,244,468 | ||||||||
TOTAL COMMON STOCK | ||||||||
(Cost $30,411,059) | 29,706,611 | |||||||
TOTAL INVESTMENTS – 98.7% | ||||||||
(Cost $30,411,059) | $ | 29,706,611 |
Percentages are based on Net Assets of $30,104,600
‡ | 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 Board of Trustees. The total value of such securities as of September 30, 2016 was $680,624 and represents 2.3% of Net Assets. |
(B) | Security considered illiquid.The total value of such securities as of September 30, 2016 was $680,624 and represents 2.3% of Net Assets. |
Cl – Class
The accompanying notes are an integral part of the financial statements.
5 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares Bosera MSCI China A Share ETF (concluded)
The following is a list of the inputs used as of September 30, 2016, in valuing the Fund’s investments carried at value:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stock | ||||||||||||||||
China | ||||||||||||||||
Consumer Discretionary | $ | 3,364,591 | $ | – | $ | 43,759 | $ | 3,408,350 | ||||||||
Consumer Staples | 1,728,820 | – | 73,395 | 1,802,215 | ||||||||||||
Energy | 794,507 | – | 57,750 | 852,257 | ||||||||||||
Financials | 8,296,065 | – | 193,924 | 8,489,989 | ||||||||||||
Health Care | 1,918,253 | – | 191,665 | 2,109,918 | ||||||||||||
Industrials | 4,696,159 | – | 60,806 | 4,756,965 | ||||||||||||
Information Technology | 2,531,603 | – | 46,830 | 2,578,433 | ||||||||||||
Materials | 2,385,241 | – | – | 2,385,241 | ||||||||||||
Real Estate | 1,884,352 | – | 12,495 | 1,896,847 | ||||||||||||
Telecommunication Services | 181,928 | – | – | 181,928 | ||||||||||||
Utilities | 1,244,468 | – | – | 1,244,468 | ||||||||||||
Total Common Stock | 29,025,987 | – | 680,624 | 29,706,611 | ||||||||||||
Total Investments in Securities | $ | 29,025,987 | $ | – | $ | 680,624 | $ | 29,706,611 |
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, 2016 | $ | 484,406 | ||
Accrued discounts/premiums | – | |||
Realized gain/(loss)(1) | (33,074 | ) | ||
Change in unrealized appreciation/(depreciation)(2) | (7,752 | ) | ||
Purchases | 54,638 | |||
Sales | (71,135 | ) | ||
Transfer into Level 3 | 622,875 | |||
Transfer out of Level 3 | (369,334 | ) | ||
Ending balance as of September 30, 2016 | $ | 680,624 |
(1) | Realized gain/(loss) from the sale of Level 3 securities is included on the Statements of Operations in Net Realized Gain (Loss) on Investments. |
(2) | Change in unrealized appreciation/(depreciation) is included on the Statements of Operations in Net Change in Unrealized Appreciation (Depreciation) on Investments. |
For the period ended September 30, 2016, there have been no transfers between Level 1 and Level 2 investments.
For the period ended September 30, 2016, there have been no transfers between Level 2 and Level 3 investments.
For the period ended September 30, 2016, the transfers in and out of Level 3 occurred due to a halt in trading of these securities. Transfers between levels are recognized at period end.
Amounts designated as ‘‘–’’ are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
6 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares Zacks New China ETF
† | 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 – 98.8%‡ | ||||||||
CHINA – 88.2% | ||||||||
Consumer Discretionary – 16.3% | ||||||||
China Lodging Group ADR | 1,800 | $ | 81,162 | |||||
China Maple Leaf Educational Systems | 52,000 | 47,937 | ||||||
Goodbaby International Holdings | 61,000 | 31,538 | ||||||
Huangshan Tourism Development, Cl A | 13,950 | 36,266 | ||||||
Huayu Automotive Systems, Cl A | 30,800 | 72,729 | ||||||
Nexteer Automotive Group | 66,000 | 85,947 | ||||||
SAIC Motor, Cl A | 32,000 | 104,828 | ||||||
Shanghai Jin Jiang International Hotels Group, Cl H | 168,000 | 51,769 | ||||||
512,176 | ||||||||
Consumer Staples – 10.9% | ||||||||
Angel Yeast, Cl A | 29,244 | 71,685 | ||||||
China Agri-Industries Holdings* | 217,712 | 78,597 | ||||||
Inner Mongolia Yili Industrial Group, Cl A(A)(B) | 41,800 | 101,586 | ||||||
Want Want China Holdings | 146,452 | 90,636 | ||||||
342,504 | ||||||||
Financials – 7.0% | ||||||||
China Pacific Insurance Group, Cl A | 25,500 | 109,914 | ||||||
Ping An Insurance Group of China, Cl A | 21,400 | 109,599 | ||||||
219,513 | ||||||||
Health Care – 12.1% | ||||||||
China Animal Healthcare(A)(B) | 4,000 | 5 | ||||||
China Biologic Products* | 600 | 74,688 | ||||||
Harbin Pharmaceutical Group, Cl A | 58,800 | 81,016 | ||||||
Jiangsu Hengrui Medicine, Cl A | 17,125 | 113,098 | ||||||
Sinopharm Group, Cl H | 22,880 | 109,887 | ||||||
378,694 | ||||||||
Industrials – 4.9% | ||||||||
Weichai Power, Cl H | 59,368 | 79,607 | ||||||
Zhengzhou Yutong Bus, Cl A | 22,740 | 75,209 | ||||||
154,816 | ||||||||
Information Technology – 31.3% | ||||||||
AAC Technologies Holdings | 13,500 | 135,680 | ||||||
Changyou.com ADR* | 1,800 | 49,050 | ||||||
ChinaCache International Holdings ADR* | 4,400 | 16,940 | ||||||
Hanergy Thin Film Power Group*(A)(B) | 65,064 | 336 | ||||||
Hollysys Automation Technologies | 1,620 | 35,915 |
The accompanying notes are an integral part of the financial statements.
7 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares Zacks New China ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
Information Technology (continued) | ||||||||
Kingsoft | 29,000 | $ | 68,574 | |||||
NetEase ADR | 637 | 153,377 | ||||||
Shengyi Technology, Cl A | 55,500 | 103,178 | ||||||
Sohu.com* | 1,467 | 64,915 | ||||||
Sunny Optical Technology Group | 24,075 | 118,886 | ||||||
Tencent Holdings | 4,942 | 135,721 | ||||||
TravelSky Technology, Cl H | 41,000 | 97,267 | ||||||
979,839 | ||||||||
Materials – 0.5% | ||||||||
BBMG, Cl H | 35,674 | 13,707 | ||||||
China Lumena New Materials*(A)(B) | 28,720 | 37 | ||||||
China Shanshui Cement Group(A)(B) | 10,672 | 137 | ||||||
Tianhe Chemicals Group*(A)(B) | 40,000 | 52 | ||||||
13,933 | ||||||||
Utilities – 5.2% | ||||||||
Beijing Jingneng Clean Energy, Cl H | 209,632 | 64,058 | ||||||
Beijing Jingneng Power, Cl A | 91,900 | 58,006 | ||||||
Yunnan Wenshan Electric Power, Cl A(A)(B) | 25,951 | 39,568 | ||||||
161,632 | ||||||||
TOTAL CHINA | 2,763,107 | |||||||
HONG KONG – 5.6% | ||||||||
Consumer Discretionary – 2.6% | ||||||||
Skyworth Digital Holdings | 111,806 | 80,439 | ||||||
Information Technology – 3.0% | ||||||||
ASM Pacific Technology | 8,400 | 69,206 | ||||||
Digital China Holdings | 26,000 | 24,974 | ||||||
94,180 | ||||||||
TOTAL HONG KONG | 174,619 | |||||||
SINGAPORE – 5.0% | ||||||||
Information Technology – 5.0% | ||||||||
Flextronics International* | 4,800 | 65,376 | ||||||
IGG | 81,000 | 53,784 | ||||||
Kulicke & Soffa Industries* | 3,000 | 38,790 | ||||||
TOTAL SINGAPORE | 157,950 | |||||||
TOTAL COMMON STOCK | ||||||||
(Cost $2,658,539) | 3,095,676 | |||||||
TOTAL INVESTMENTS – 98.8% | ||||||||
(Cost $2,658,539) | $ | 3,095,676 |
Percentages are based on Net Assets of $3,134,404
‡ | 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 Board of Trustees. The total value of such securities as of September 30, 2016 was $141,721 and represents 4.5% of Net Assets. |
(B) | Security considered illiquid.The total value of such securities as of September 30, 2016 was $141,721 and represents 4.5% of Net Assets. |
ADR – American Depositary Receipt
Cl – Class
The accompanying notes are an integral part of the financial statements.
8 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares Zacks New China ETF (concluded)
The following is a list of the inputs used as of September 30, 2016, in valuing the Fund’s investments carried at value:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stock | ||||||||||||||||
China | ||||||||||||||||
Consumer Discretionary | $ | 512,176 | $ | – | $ | – | $ | 512,176 | ||||||||
Consumer Staples | 240,918 | – | 101,586 | 342,504 | ||||||||||||
Financials | 219,513 | – | – | 219,513 | ||||||||||||
Health Care | 378,689 | – | 5 | 378,694 | ||||||||||||
Industrials | 154,816 | – | – | 154,816 | ||||||||||||
Information Technology | 979,503 | – | 336 | 979,839 | ||||||||||||
Materials | 13,707 | – | 226 | 13,933 | ||||||||||||
Utilities | 122,064 | – | 39,568 | 161,632 | ||||||||||||
Hong Kong | 174,619 | – | – | 174,619 | ||||||||||||
Singapore | 157,950 | – | – | 157,950 | ||||||||||||
Total Common Stock | 2,953,955 | – | 141,721 | 3,095,676 | ||||||||||||
Total Investments in Securities | $ | 2,953,955 | $ | – | $ | 141,721 | $ | 3,095,676 |
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, 2016 | $ | 6,064 | ||
Accrued discounts/premiums | – | |||
Realized gain/(loss)(1) | – | |||
Change in unrealized appreciation/(depreciation)(2) | (5,497 | ) | ||
Purchases | – | |||
Sales | – | |||
Transfer into Level 3 | 141,154 | |||
Transfer out of Level 3 | – | |||
Ending balance as of September 30, 2016 | $ | 141,721 |
(1) | Realized gain/(loss) from the sale of Level 3 securities is included on the Statements of Operations in Net Realized Gain (Loss) on Investments. |
(2) | Change in unrealized appreciation/(depreciation) is included on the Statements of Operations in Net Change in Unrealized Appreciation (Depreciation) on Investments. |
For the period ended September 30, 2016, there have been no transfers between Level 1 and Level 2 investments.
For the period ended September 30, 2016, there have been no transfers between Level 2 and Level 3 investments.
For the period ended September 30, 2016, the transfers into Level 3 occurred due to a halt in trading of these securities. Transfers between levels are recognized at period end.
Amounts designated as ‘‘–’’ are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
9 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares CSI China Internet ETF
† | 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 – 99.3%‡ | ||||||||
CHINA – 98.3% | ||||||||
Consumer Discretionary – 27.6% | ||||||||
500.com ADR, Cl A* | 125,374 | $ | 2,210,344 | |||||
Cogobuy Group* | 1,662,818 | 2,739,937 | ||||||
Ctrip.com International ADR* | 235,299 | 10,957,874 | ||||||
JD.com ADR* | 800,924 | 20,896,107 | ||||||
Jumei International Holding ADR* | 383,674 | 2,244,493 | ||||||
Qunar Cayman Islands ADR* | 229,563 | 6,657,327 | ||||||
TAL Education Group ADR* | 164,950 | 11,685,058 | ||||||
Tuniu ADR* | 235,526 | 2,383,523 | ||||||
Vipshop Holdings ADR* | 774,018 | 11,354,844 | ||||||
71,129,507 | ||||||||
Industrials – 1.1% | ||||||||
51job ADR* | 81,967 | 2,736,058 | ||||||
Information Technology – 69.6% | ||||||||
21Vianet Group ADR* | 218,503 | 1,737,099 | ||||||
58.com ADR* | 216,234 | 10,305,712 | ||||||
Alibaba Group Holding ADR* | 300,821 | 31,823,854 | ||||||
Autohome ADR* | 195,457 | 4,739,832 | ||||||
Baidu ADR* | 117,293 | 21,355,537 | ||||||
Baozun ADR* | 121,757 | 1,837,313 | ||||||
Bitauto Holdings ADR* | 117,315 | 3,411,520 | ||||||
Changyou.com ADR* | 52,580 | 1,432,805 | ||||||
Cheetah Mobile ADR* | 225,997 | 2,815,923 | ||||||
ChinaCache International Holdings ADR* | 123,694 | 476,222 | ||||||
Fang Holdings ADR* | 1,094,189 | 4,912,909 | ||||||
HC International* | 2,538,900 | 1,882,255 | ||||||
Kingsoft | 3,195,000 | 7,555,013 | ||||||
Momo ADR* | 314,105 | 7,067,362 | ||||||
NetEase ADR | 75,919 | 18,279,777 | ||||||
NQ Mobile ADR, Cl A* | 301,825 | 1,152,971 | ||||||
SINA* | 144,264 | 10,651,011 | ||||||
Sohu.com* | 105,624 | 4,673,862 | ||||||
Tencent Holdings | 958,100 | 26,312,096 | ||||||
Tian Ge Interactive Holdings | 3,228,000 | 2,280,757 | ||||||
Weibo ADR* | 166,769 | 8,361,808 | ||||||
YY ADR* | 114,860 | 6,119,741 | ||||||
179,185,379 | ||||||||
TOTAL CHINA | 253,050,944 |
The accompanying notes are an integral part of the financial statements.
10 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares CSI China Internet ETF (concluded)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
HONG KONG – 1.0% | ||||||||
Information Technology – 1.0% | ||||||||
NetDragon Websoft Holdings | 756,752 | $ | 2,629,525 | |||||
TOTAL COMMON STOCK (Cost $251,904,382) | 255,680,469 | |||||||
TOTAL INVESTMENTS – 99.3% (Cost $251,904,382) | $ | 255,680,469 |
Percentages are based on Net Assets of $257,449,937
‡ | Narrow industries are utilized for compliance purposes, whereas broad sectors are utilized for reporting. |
* | Non-income producing security. |
ADR – American Depositary Receipt
Cl – Class
As of September 30, 2016, all of the Fund’s investments were considered Level 1 of the fair value hierarchy, in accordance with the authoritative guidance under U.S. GAAP.
For the period ended September 30, 2016, there have been no transfers between Level 1 and Level 2 investments.
For the period ended September 30, 2016, there have been no transfers between Level 2 and Level 3 investments.
For the period ended September 30, 2016, there were no Level 3 investments.
The accompanying notes are an integral part of the financial statements.
11 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares E Fund China Commercial Paper ETF
† | Percentages are based on total investments. |
Face | ||||||||
Amount(A) | Value | |||||||
COMMERCIAL PAPER – 91.5% | ||||||||
CHINA – 91.5% | ||||||||
Consumer Discretionary – 5.0% | ||||||||
Beijing Automobile | ||||||||
2.850%, 10/29/2016 | 5,000,000 | $ | 749,685 | |||||
Consumer Staples – 8.9% | ||||||||
COFCO Group | ||||||||
2.650%, 06/09/2017 | 5,000,000 | 749,616 | ||||||
Guizhou Expressway Group | ||||||||
2.890%, 02/24/2017 | 4,000,000 | 599,779 | ||||||
1,349,395 | ||||||||
Financials – 6.0% | ||||||||
Chongqing Yufu Asset Management Group Ltd. | ||||||||
3.200%, 11/04/2016 | 3,000,000 | 449,888 | ||||||
Qinghai State-owned Assets Investment Management Ltd. | ||||||||
3.700%, 04/21/2017 | 3,000,000 | 451,447 | ||||||
901,335 | ||||||||
Industrials – 20.9% | ||||||||
AVIC International Holding | ||||||||
2.990%, 02/06/2017 | 3,000,000 | 450,164 | ||||||
Capital Airports Holding | ||||||||
2.980%, 01/30/2017 | 3,000,000 | 450,227 | ||||||
2.670%, 04/25/2017 | 2,000,000 | 299,926 | ||||||
Hangzhou Municipal Construction and Development Ltd. | ||||||||
3.000%, 12/25/2016 | 4,000,000 | 600,030 | ||||||
Henan Zhongyuan Expressway Ltd. | ||||||||
3.190%, 02/12/2017 | 3,000,000 | 450,345 | ||||||
Shanghai Urban Construction Group | ||||||||
2.700%, 05/08/2017 | 3,000,000 | 449,514 | ||||||
Xiamen Iport Group | ||||||||
2.770%, 04/10/2017 | 3,000,000 | 449,922 | ||||||
3,150,128 | ||||||||
Materials – 9.9% | ||||||||
Baoshan Iron & Steel | ||||||||
3.180%, 10/26/2016 | 5,000,000 | 749,784 | ||||||
China National Gold Group | ||||||||
3.180%, 02/11/2017 | 3,000,000 | 450,313 | ||||||
Shougang Group | ||||||||
3.070%, 03/14/2017 | 2,000,000 | 299,713 | ||||||
1,499,810 |
The accompanying notes are an integral part of the financial statements.
12 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares E Fund China Commercial Paper ETF (continued)
Face | ||||||||
Amount(A)/ | ||||||||
Shares | Value | |||||||
COMMERCIAL PAPER (continued) | ||||||||
Real Estate – 12.9% | ||||||||
Shenzhen Special Economic Zone Construction & Development Group Ltd. | ||||||||
3.030%, 01/31/2017 | 3,000,000 | $ | 450,381 | |||||
Wenzhou City Construction Investment Group Ltd. | ||||||||
3.050%, 03/31/2017 | 10,000,000 | 1,500,639 | ||||||
1,951,020 | ||||||||
Utilities – 27.9% | ||||||||
Chongqing Water Asset Management Ltd. | ||||||||
2.810%, 06/09/2017 | 3,000,000 | 449,931 | ||||||
Dadu River Hydropower Development | ||||||||
2.740%, 04/10/2017 | 2,000,000 | 300,053 | ||||||
GD Power Development Ltd. | ||||||||
2.750%, 01/06/2017 | 3,000,000 | 449,995 | ||||||
2.580%, 04/09/2017 | 10,000,000 | 1,499,457 | ||||||
Guodian Shandong Electric Power | ||||||||
2.930%, 01/28/2017 | 5,000,000 | 750,323 | ||||||
Shanghai Electric Power Ltd. | ||||||||
2.750%, 03/11/2017 | 5,000,000 | 750,089 | ||||||
4,199,848 | ||||||||
TOTAL COMMERCIAL PAPER | ||||||||
(Cost $14,027,202) | 13,801,221 | |||||||
SHORT-TERM INVESTMENTS(B)(C) – 6.0% | ||||||||
China Universal Express Income Money Market Fund, 2.314% | 358 | 54 | ||||||
E Fund Money Market Fund, 2.283%* | 3,017,889 | 452,674 | ||||||
Fortune SGAM Xianjin Tianyi Money Market Fund, 2.468% | 3,018,721 | 452,889 | ||||||
Xianjinbao Real-Time Redemption Money Market Fund, 2.193% | 3,232 | 485 | ||||||
TOTAL SHORT-TERM INVESTMENTS | ||||||||
(Cost $920,235) | 906,102 | |||||||
TOTAL INVESTMENTS – 97.5% | ||||||||
(Cost $14,947,437) | $ | 14,707,323 |
Percentages are based on Net Assets of $15,077,558
* | Affiliated investment is a Chinese investment company which is managed by E Fund Management (Hong Kong) Co., Limited (the ‘‘Sub-Adviser’’) or an affiliate of the Sub-Adviser or which is distributed by an affiliate of the Fund’s distributor. Transactions with affiliated companies during the period ended September 30, 2016 are as follows: |
Change in | Balance | |||||||||||||||||||||||||||||
Value of | Unrealized | Value of | of Shares | |||||||||||||||||||||||||||
Shares as of | Purchases | Proceeds | Appreciation | Realized | Shares Held | Held as of | Dividend | |||||||||||||||||||||||
3/31/16 | at Cost | from Sales | (Depreciation) | Gain (Loss) | 9/30/16 | 9/30/16 | Income | |||||||||||||||||||||||
E Fund Money Market Fund | ||||||||||||||||||||||||||||||
$ | 885,214 | $ | 460,090 | $ | (883,526 | ) | $ | (26,401 | ) | $ | 17,297 | $ | 452,674 | 3,017,889 | $ | – |
(A) | In CNY unless otherwise indicated. |
(B) | Class not available. |
(C) | The rate shown is the 7-day effective yield as of September 30, 2016. |
CNY – Chinese Yuan
Ltd. – Limited
The accompanying notes are an integral part of the financial statements.
13 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares E Fund China Commercial Paper ETF (concluded)
As of September 30, 2016, 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, 2016, there have been no transfers between Level 1 and Level 2 investments.
For the period ended September 30, 2016, there have been no transfers between Level 2 and Level 3 investments.
For the period ended September 30, 2016, there were no Level 3 investments.
The accompanying notes are an integral part of the financial statements.
14 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares FTSE Emerging Markets Plus ETF
† | 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 – 78.8%‡ | ||||||||
BRAZIL – 4.4% | ||||||||
Consumer Discretionary – 0.4% | ||||||||
Lojas Renner | 1,100 | $ | 8,319 | |||||
Consumer Staples – 1.5% | ||||||||
Ambev | 2,850 | 17,431 | ||||||
BRF | 900 | 15,397 | ||||||
32,828 | ||||||||
Energy – 0.7% | ||||||||
Petroleo Brasileiro* | 1,298 | 6,113 | ||||||
Ultrapar Participacoes | 427 | 9,461 | ||||||
15,574 | ||||||||
Financials – 0.8% | ||||||||
BB Seguridade Participacoes | 910 | 8,403 | ||||||
BM&FBovespa – Bolsa de Valores Mercadorias e Futuros | 1,720 | 8,947 | ||||||
17,350 | ||||||||
Information Technology – 0.3% | ||||||||
Cielo | 676 | 6,800 | ||||||
Materials – 0.5% | ||||||||
Vale | 2,000 | 11,007 | ||||||
Telecommunication Services – 0.2% | ||||||||
TIM Participacoes | 2,193 | 5,366 | ||||||
TOTAL BRAZIL | 97,244 | |||||||
CHILE – 0.9% | ||||||||
Energy – 0.2% | ||||||||
Empresas COPEC | 456 | 4,256 | ||||||
Financials – 0.1% | ||||||||
Banco Santander Chile | 56,610 | 2,925 | ||||||
Utilities – 0.6% | ||||||||
Empresa Nacional de Electricidad | 9,353 | 6,189 | ||||||
Enersis Americas | 45,128 | 7,365 | ||||||
13,554 | ||||||||
TOTAL CHILE | 20,735 |
The accompanying notes are an integral part of the financial statements.
15 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares FTSE Emerging Markets Plus ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
CHINA – 21.5% | ||||||||
Consumer Discretionary – 1.4% | ||||||||
BYD, Cl H* | 3,475 | $ | 22,805 | |||||
Ctrip.com International ADR* | 188 | 8,755 | ||||||
Shanghai Jinjiang International Hotels Development | 200 | 476 | ||||||
32,036 | ||||||||
Consumer Staples – 0.2% | ||||||||
Hengan International Group | 560 | 4,643 | ||||||
Energy – 1.9% | ||||||||
China Petroleum & Chemical, Cl H | 16,500 | 12,020 | ||||||
China Shenhua Energy, Cl H | 4,701 | 9,189 | ||||||
CNOOC | 9,826 | 12,187 | ||||||
PetroChina, Cl H | 11,984 | 7,865 | ||||||
41,261 | ||||||||
Financials – 6.1% | ||||||||
Agricultural Bank of China, Cl H | 26,397 | 11,300 | ||||||
Bank of China, Cl H | 48,396 | 22,089 | ||||||
China CITIC Bank, Cl H | 21,858 | 14,514 | ||||||
China Construction Bank, Cl H | 57,296 | 42,477 | ||||||
China Life Insurance, Cl H | 7,483 | 19,296 | ||||||
New China Life Insurance, Cl H | 1,445 | 6,381 | ||||||
PICC Property & Casualty, Cl H | 2,340 | 3,874 | ||||||
Ping An Insurance Group of China, Cl H | 3,000 | 15,549 | ||||||
135,480 | ||||||||
Health Care – 0.3% | ||||||||
China Medical System Holdings | 3,340 | 5,616 | ||||||
Industrials – 1.5% | ||||||||
Anhui Expressway, Cl H | 15,512 | 12,900 | ||||||
China Communications Construction, Cl H | 14,690 | 15,436 | ||||||
CITIC | 3,780 | 5,390 | ||||||
33,726 | ||||||||
Information Technology – 7.3% | ||||||||
Alibaba Group Holding ADR* | 378 | 39,988 | ||||||
Baidu ADR* | 173 | 31,498 | ||||||
Hanergy Thin Film Power Group* (A)(B) | 4,364 | 23 | ||||||
NetEase ADR | 78 | 18,781 | ||||||
Tencent Holdings | 2,558 | 70,250 | ||||||
160,540 | ||||||||
Real Estate – 0.7% | ||||||||
China Overseas Land & Investment | 2,839 | 9,627 | ||||||
China Resources Land | 2,214 | 6,166 | ||||||
15,793 | ||||||||
Telecommunication Services – 1.6% | ||||||||
China Mobile | 2,972 | 35,962 | ||||||
Utilities – 0.5% | ||||||||
ENN Energy Holdings | 882 | 4,293 | ||||||
Huaneng Power International, Cl H | 9,077 | 5,676 | ||||||
9,969 | ||||||||
TOTAL CHINA | 475,026 |
The accompanying notes are an integral part of the financial statements.
16 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares FTSE Emerging Markets Plus ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
COLOMBIA – 1.3% | ||||||||
Energy – 0.3% | ||||||||
Ecopetrol | 14,710 | $ | 6,384 | |||||
Financials – 0.5% | ||||||||
Bancolombia | 507 | 4,595 | ||||||
Financiera Colombiana | 191 | 2,505 | ||||||
Grupo de Inversiones Suramericana | 377 | 4,925 | ||||||
12,025 | ||||||||
Materials – 0.5% | ||||||||
Cementos Argos | 1,089 | 4,341 | ||||||
Grupo Argos | 940 | 6,077 | ||||||
10,418 | ||||||||
TOTAL COLOMBIA | 28,827 | |||||||
CZECH REPUBLIC – 0.6% | ||||||||
Financials – 0.2% | ||||||||
Komercni banka as | 130 | 4,500 | ||||||
Utilities – 0.4% | ||||||||
CEZ | 461 | 8,217 | ||||||
TOTAL CZECH REPUBLIC | 12,717 | |||||||
EGYPT – 2.5% | ||||||||
Financials – 1.5% | ||||||||
Commercial International Bank Egypt SAE | 4,326 | 23,433 | ||||||
Egyptian Financial Group-Hermes Holding* | 6,108 | 8,577 | ||||||
32,010 | ||||||||
Industrials – 0.3% | ||||||||
ElSewedy Electric | 1,111 | 6,406 | ||||||
Real Estate – 0.3% | ||||||||
Talaat Moustafa Group | 11,045 | 6,716 | ||||||
Telecommunication Services – 0.4% | ||||||||
Global Telecom Holding SAE* | 19,879 | 9,380 | ||||||
TOTAL EGYPT | 54,512 | |||||||
HONG KONG – 1.0% | ||||||||
Consumer Discretionary – 0.2% | ||||||||
Haier Electronics Group | 2,056 | 3,398 | ||||||
Consumer Staples – 0.0% | ||||||||
Qinqin Foodstuffs Group Cayman* | 112 | 41 | ||||||
Financials – 0.8% | ||||||||
China Cinda Asset Management, Cl H | 13,504 | 4,771 | ||||||
Industrial & Commercial Bank of China, Cl H | 19,441 | 12,157 | ||||||
People’s Insurance Group of China, Cl H | 6,452 | 2,629 | ||||||
19,557 | ||||||||
TOTAL HONG KONG | 22,996 | |||||||
HUNGARY – 0.3% | ||||||||
Financials – 0.3% | ||||||||
OTP Bank | 210 | 5,498 | ||||||
TOTAL HUNGARY | 5,498 | |||||||
INDIA – 14.4% | ||||||||
Consumer Discretionary – 1.6% | ||||||||
Tata Motors ADR | 900 | 35,982 |
The accompanying notes are an integral part of the financial statements.
17 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares FTSE Emerging Markets Plus ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
Financials – 7.1% | ||||||||
HDFC Bank ADR | 1,500 | $ | 107,835 | |||||
ICICI Bank ADR | 6,517 | 48,682 | ||||||
156,517 | ||||||||
Health Care – 1.1% | ||||||||
Dr Reddy’s Laboratories ADR | 512 | 23,767 | ||||||
Information Technology – 3.7% | ||||||||
Infosys ADR | 4,045 | 63,830 | ||||||
Wipro ADR | 1,962 | 19,051 | ||||||
82,881 | ||||||||
Materials – 0.9% | ||||||||
Vedanta ADR | 1,908 | 19,786 | ||||||
TOTAL INDIA | 318,933 | |||||||
INDONESIA – 6.2% | ||||||||
Consumer Discretionary – 1.1% | ||||||||
Astra International | 38,102 | 24,086 | ||||||
Consumer Staples – 0.8% | ||||||||
Indofood Sukses Makmur | 12,428 | 8,285 | ||||||
Unilever Indonesia | 2,784 | 9,503 | ||||||
17,788 | ||||||||
Financials – 2.5% | ||||||||
Bank Central Asia | 12,820 | 15,422 | ||||||
Bank Mandiri Persero | 12,722 | 10,918 | ||||||
Bank Negara Indonesia Persero | 20,176 | 8,580 | ||||||
Bank Rakyat Indonesia Persero | 20,841 | 19,482 | ||||||
54,402 | ||||||||
Industrials – 0.4% | ||||||||
United Tractors | 7,104 | 9,634 | ||||||
Materials – 0.4% | ||||||||
Semen Indonesia Persero | 12,163 | 9,413 | ||||||
Telecommunication Services – 1.0% | ||||||||
Telekomunikasi Indonesia Persero | 67,448 | 22,274 | ||||||
TOTAL INDONESIA | 137,597 | |||||||
MALAYSIA – 1.5% | ||||||||
Consumer Discretionary – 0.1% | ||||||||
Genting | 1,603 | 3,074 | ||||||
Industrials – 0.4% | ||||||||
Gamuda | 7,674 | 9,092 | ||||||
Materials – 0.4% | ||||||||
Petronas Chemicals Group | 4,820 | 7,751 | ||||||
Utilities – 0.6% | ||||||||
Petronas Gas | 1,305 | 6,892 | ||||||
Tenaga Nasional | 1,817 | 6,283 | ||||||
13,175 | ||||||||
TOTAL MALAYSIA | 33,092 | |||||||
MEXICO – 4.3% | ||||||||
Consumer Discretionary – 0.4% | ||||||||
Grupo Televisa | 1,774 | 9,130 |
The accompanying notes are an integral part of the financial statements.
18 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares FTSE Emerging Markets Plus ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
Consumer Staples – 1.1% | ||||||||
Fomento Economico Mexicano | 1,336 | $ | 12,320 | |||||
Grupo Bimbo, Ser A | 1,430 | 3,790 | ||||||
Wal-Mart de Mexico | 3,372 | 7,396 | ||||||
23,506 | ||||||||
Financials – 0.7% | ||||||||
Gentera | 4,178 | 7,562 | ||||||
Grupo Financiero Banorte, Cl O | 1,536 | 8,079 | ||||||
15,641 | ||||||||
Industrials – 0.4% | ||||||||
Grupo Aeroportuario del Sureste, Cl B | 374 | 5,481 | ||||||
Promotora y Operadora de Infraestructura | 412 | 4,444 | ||||||
9,925 | ||||||||
Materials – 0.9% | ||||||||
Cemex* | 12,141 | 9,655 | ||||||
Grupo Mexico | 3,992 | 9,781 | ||||||
19,436 | ||||||||
Real Estate – 0.3% | ||||||||
Fibra Uno Administracion | 3,433 | 6,288 | ||||||
Telecommunication Services – 0.5% | ||||||||
America Movil | 19,782 | 11,305 | ||||||
TOTAL MEXICO | 95,231 | |||||||
PAKISTAN – 1.7% | ||||||||
Energy – 1.2% | ||||||||
Oil & Gas Development | 10,465 | 14,149 | ||||||
Pakistan Petroleum | 7,376 | 11,558 | ||||||
25,707 | ||||||||
Materials – 0.5% | ||||||||
Fauji Fertilizer | 11,972 | 11,917 | ||||||
TOTAL PAKISTAN | 37,624 | |||||||
PERU – 1.0% | ||||||||
Financials – 0.7% | ||||||||
Credicorp | 105 | 15,983 | ||||||
Materials – 0.3% | ||||||||
Cia de Minas Buenaventura SAA ADR* | 502 | 6,948 | ||||||
TOTAL PERU | 22,931 | |||||||
PHILIPPINES – 1.5% | ||||||||
Consumer Staples – 0.2% | ||||||||
Universal Robina | 1,150 | 4,221 | ||||||
Financials – 0.2% | ||||||||
Ayala | 315 | 5,567 | ||||||
Industrials – 0.6% | ||||||||
International Container Terminal Services | 3,777 | 5,997 | ||||||
SM Investments | 510 | 7,083 | ||||||
13,080 | ||||||||
Real Estate – 0.3% | ||||||||
Ayala Land | 9,000 | 7,284 | ||||||
Telecommunication Services – 0.2% | ||||||||
Globe Telecom | 80 | 3,365 | ||||||
TOTAL PHILIPPINES | 33,517 |
The accompanying notes are an integral part of the financial statements.
19 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares FTSE Emerging Markets Plus ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
POLAND – 1.1% | ||||||||
Energy – 0.4% | ||||||||
Polski Koncern Naftowy ORLEN | 466 | $ | 7,915 | |||||
Financials – 0.7% | ||||||||
Bank Pekao | 130 | 4,202 | ||||||
Powszechna Kasa Oszczednosci Bank Polski | 698 | 4,762 | ||||||
Powszechny Zaklad Ubezpieczen | 1,098 | 6,994 | ||||||
15,958 | ||||||||
TOTAL POLAND | 23,873 | |||||||
RUSSIA – 5.8% | ||||||||
Consumer Staples – 0.9% | ||||||||
Magnit PJSC GDR | 463 | 19,302 | ||||||
Energy – 3.1% | ||||||||
Gazprom PJSC | 9,824 | 21,029 | ||||||
Lukoil PJSC | 569 | 27,700 | ||||||
Novatek OAO | 130 | 1,408 | ||||||
Rosneft PJSC | 1,064 | 5,787 | ||||||
Tatneft* | 2,482 | 12,613 | ||||||
68,537 | ||||||||
Financials – 1.2% | ||||||||
Sberbank of Russia PJSC | 9,698 | 22,366 | ||||||
VTB Bank PJSC | 4,583,252 | 5,243 | ||||||
27,609 | ||||||||
Materials – 0.6% | ||||||||
MMC Norilsk Nickel* | 88 | 13,701 | ||||||
TOTAL RUSSIA | 129,149 | |||||||
SOUTH AFRICA – 1.5% | ||||||||
Consumer Discretionary – 0.7% | ||||||||
Naspers, Cl N | 77 | 13,300 | ||||||
Steinhoff International Holdings | 506 | 2,890 | ||||||
16,190 | ||||||||
Financials – 0.5% | ||||||||
Remgro | 634 | 10,584 | ||||||
Information Technology – 0.3% | ||||||||
Sasol | 244 | 6,672 | ||||||
TOTAL SOUTH AFRICA | 33,446 | |||||||
TAIWAN – 2.1% | ||||||||
Energy – 0.2% | ||||||||
Formosa Petrochemical | 1,447 | 4,349 | ||||||
Information Technology – 0.8% | ||||||||
Taiwan Semiconductor Manufacturing | 3,163 | 18,416 | ||||||
Materials – 1.1% | ||||||||
Formosa Chemicals & Fibre | 2,556 | 6,874 | ||||||
Formosa Plastics | 3,312 | 8,220 | ||||||
Nan Ya Plastics | 4,403 | 8,709 | ||||||
23,803 | ||||||||
TOTAL TAIWAN | 46,568 |
The accompanying notes are an integral part of the financial statements.
20 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares FTSE Emerging Markets Plus ETF (continued)
Shares | Value | |||||||
COMMON STOCK (continued) | ||||||||
THAILAND – 1.8% | ||||||||
Consumer Staples – 0.3% | ||||||||
CP ALL | 4,096 | $ | 7,270 | |||||
Energy – 0.7% | ||||||||
PTT | 865 | 8,462 | ||||||
Thai Oil | 3,342 | 6,607 | ||||||
15,069 | ||||||||
Health Care – 0.2% | ||||||||
Bumrungrad Hospital | 824 | 4,150 | ||||||
Industrials – 0.2% | ||||||||
Airports of Thailand | 470 | 5,412 | ||||||
Telecommunication Services – 0.4% | ||||||||
Advanced Info Service | 1,805 | 8,335 | ||||||
TOTAL THAILAND | 40,236 | |||||||
TURKEY – 2.7% | ||||||||
Consumer Discretionary – 0.3% | ||||||||
Arcelik | 986 | 6,940 | ||||||
Consumer Staples – 0.4% | ||||||||
BIM Birlesik Magazalar | 496 | 8,273 | ||||||
Energy – 0.5% | ||||||||
Tupras Turkiye Petrol Rafinerileri | 505 | 9,559 | ||||||
Financials – 0.8% | ||||||||
Akbank | 2,892 | 7,749 | ||||||
Turkiye Garanti Bankasi | 3,481 | 9,222 | ||||||
16,971 | ||||||||
Industrials – 0.4% | ||||||||
KOC Holding | 2,195 | 9,429 | ||||||
Telecommunication Services – 0.3% | ||||||||
Turkcell Iletisim Hizmetleri | 2,250 | 7,281 | ||||||
TOTAL TURKEY | 58,453 | |||||||
UNITED ARAB EMIRATES – 0.7% | ||||||||
Financials – 0.2% | ||||||||
Abu Dhabi Commercial Bank PJSC | 1,164 | 2,044 | ||||||
First Gulf Bank PJSC | 534 | 1,716 | ||||||
3,760 | ||||||||
Real Estate – 0.5% | ||||||||
Emaar Properties PJSC | 5,130 | 9,916 | ||||||
Telecommunication Services – 0.0% | ||||||||
Emirates Telecommunications Group PJSC | 186 | 1,013 | ||||||
TOTAL UNITED ARAB EMIRATES | 14,689 | |||||||
TOTAL COMMON STOCK | ||||||||
(Cost $1,773,686) | 1,742,894 | |||||||
OTHER INVESTMENT COMPANY – 16.2% | ||||||||
KraneShares Bosera MSCI China A Share ETF** | 12,342 | 358,659 | ||||||
TOTAL OTHER INVESTMENT COMPANY | ||||||||
(Cost $472,194) | 358,659 |
The accompanying notes are an integral part of the financial statements.
21 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares FTSE Emerging Markets Plus ETF (continued)
Shares | Value | |||||||
PREFERRED STOCK(C) – 2.8% | ||||||||
BRAZIL – 2.8% | ||||||||
Energy – 0.6% | ||||||||
Petroleo Brasileiro* | 3,200 | $ | 13,494 | |||||
Financials – 1.8% | ||||||||
Banco Bradesco | 1,584 | 14,597 | ||||||
Itau Unibanco Holding | 1,520 | 16,726 | ||||||
Itausa - Investimentos Itau | 3,336 | 8,605 | ||||||
39,928 | ||||||||
Telecommunication Services – 0.4% | ||||||||
Telefonica Brasil | 500 | 7,287 | ||||||
TOTAL PREFERRED STOCK | ||||||||
(Cost $58,844) | 60,709 | |||||||
TOTAL INVESTMENTS – 97.8% | ||||||||
(Cost $2,304,724) | $ | 2,162,262 |
Percentages are based on Net Assets of $2,210,712
** | Affiliated investment is a registered investment company which is managed by Krane Funds Advisors, LLC (the ‘‘Adviser’’). Transactions with affiliated companies during the period ended September 30, 2016 are as follows: |
Change in | Balance | |||||||||||||||||||||||||||||
Value of | Unrealized | Value of | of Shares | |||||||||||||||||||||||||||
Shares as | Purchases | Proceeds | Appreciation | Realized | Shares Held | Held as of | Dividend | |||||||||||||||||||||||
of 3/31/16 | at Cost | from Sales | (Depreciation) | Gain (Loss) | 9/30/16 | 9/30/16 | Income | |||||||||||||||||||||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||||||||||||||||||||
$ | 355,203 | $ | 91,379 | $ | (86,971 | ) | $ | 34,172 | $ | (35,124 | ) | $ | 358,659 | 12,342 | $ | – |
‡ | 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 Board of Trustees. The total value of such securities as of September 30, 2016 was $23 and represents 0.0% of Net Assets. |
(B) | Security considered illiquid. The total value of such securities as of September 30, 2016 was $23 and represents 0.0% of Net Assets. |
(C) | Rates not available for international preferred securities. |
ADR – American Depositary Receipt
Cl – Class
ETF – Exchange Traded Fund
GDR – Global Depositary Receipt
MSCI – Morgan Stanley Capital International
Ser – Series
The accompanying notes are an integral part of the financial statements.
22 |
Schedule of Investments (Unaudited) September 30, 2016
KraneShares FTSE Emerging Markets Plus ETF (concluded)
The following is a list of the inputs used as of September 30, 2016, in valuing the Fund’s investments carried at value:
Level 1 | Level 2 | Level 3^ | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stock | ||||||||||||||||
Brazil | $ | 97,244 | $ | – | $ | – | $ | 97,244 | ||||||||
Chile | 20,735 | – | – | 20,735 | ||||||||||||
China | ||||||||||||||||
Consumer Discretionary | 32,036 | – | – | 32,036 | ||||||||||||
Consumer Staples | 4,643 | – | – | 4,643 | ||||||||||||
Energy | 41,261 | – | – | 41,261 | ||||||||||||
Financials | 135,480 | – | – | 135,480 | ||||||||||||
Health Care | 5,616 | – | – | 5,616 | ||||||||||||
Industrials | 33,726 | – | – | 33,726 | ||||||||||||
Information Technology | 160,517 | – | 23 | 160,540 | ||||||||||||
Real Estate | 15,793 | – | – | 15,793 | ||||||||||||
Telecommunication Services | 35,962 | – | – | 35,962 | ||||||||||||
Utilities | 9,969 | – | – | 9,969 | ||||||||||||
Colombia | 28,827 | – | – | 28,827 | ||||||||||||
Czech Republic | 12,717 | – | – | 12,717 | ||||||||||||
Egypt | 54,512 | – | – | 54,512 | ||||||||||||
Hong Kong | 22,996 | – | – | 22,996 | ||||||||||||
Hungary | 5,498 | – | – | 5,498 | ||||||||||||
India | 318,933 | – | – | 318,933 | ||||||||||||
Indonesia | 137,597 | – | – | 137,597 | ||||||||||||
Malaysia | 33,092 | – | – | 33,092 | ||||||||||||
Mexico | 95,231 | – | – | 95,231 | ||||||||||||
Pakistan | 37,624 | – | – | 37,624 | ||||||||||||
Peru | 22,931 | – | – | 22,931 | ||||||||||||
Philippines | 33,517 | – | – | 33,517 | ||||||||||||
Poland | 23,873 | – | – | 23,873 | ||||||||||||
Russia | 129,149 | – | – | 129,149 | ||||||||||||
South Africa | 33,446 | – | – | 33,446 | ||||||||||||
Taiwan | 46,568 | – | – | 46,568 | ||||||||||||
Thailand | 40,236 | – | – | 40,236 | ||||||||||||
Turkey | 58,453 | – | – | 58,453 | ||||||||||||
United Arab Emirates | 14,689 | – | – | 14,689 | ||||||||||||
Total Common Stock | 1,742,871 | – | 23 | 1,742,894 | ||||||||||||
Other Investment Company | 358,659 | – | – | 358,659 | ||||||||||||
Preferred Stock | 60,709 | – | – | 60,709 | ||||||||||||
Total Investments in Securities | $ | 2,162,239 | $ | – | $ | 23 | $ | 2,162,262 |
^ | A reconciliation of Level 3 investments, including certain disclosures related to significant inputs used in valuing Level 3 investments is only presented when the Fund has over 1% of Level 3 investments at the beginning and/or end of the period in relation to net assets. |
For the period ended September 30, 2016, there have been no transfers between Level 1 and Level 2 investments.
For the period ended September 30, 2016, there have been no transfers between Level 2 and Level 3 investments.
For the period ended September 30, 2016, there have been no transfers between Level 1 and Level 3 investments. 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.
23 |
Statements of Assets and Liabilities (Unaudited)
September 30, 2016
KraneShares | KraneShares | KraneShares | ||||||||||
Bosera MSCI | Zacks New | CSI China | ||||||||||
China A Share | China | Internet | ||||||||||
ETF | ETF | ETF | ||||||||||
Assets: | ||||||||||||
Investments at Value | $ | 29,706,611 | $ | 3,095,676 | $ | 255,680,469 | ||||||
Foreign Currency at Value | 410,961 | – | 8,829 | |||||||||
Cash and Cash Equivalents | – | 36,014 | 1,728,530 | |||||||||
Unrealized Appreciation on Spot Contracts | 598,758 | – | – | |||||||||
Dividend and Interest Receivable | – | 1,567 | – | |||||||||
Prepaid Expenses | – | 2,900 | 163,359 | |||||||||
Total Assets | 30,716,330 | 3,136,157 | 257,581,187 | |||||||||
Liabilities: | �� | |||||||||||
Unrealized Depreciation on Spot Contracts | 599,700 | – | – | |||||||||
Payable due to Investment Adviser | 9,544 | 1,753 | 131,250 | |||||||||
Payable for Trustees’ Fee | 2,486 | – | – | |||||||||
Total Liabilities | 611,730 | 1,753 | 131,250 | |||||||||
Net Assets | $ | 30,104,600 | $ | 3,134,404 | $ | 257,449,937 | ||||||
Net Assets Consist of: | ||||||||||||
Paid-in Capital | $ | 31,337,509 | $ | 2,693,752 | $ | 262,281,160 | ||||||
Undistributed Net Investment Income/ (Accumulated Net Investment Loss) | 15,986 | 20,500 | (660,445 | ) | ||||||||
Accumulated Net Realized Loss on Investments and Foreign Currency Translations | (543,438 | ) | (16,996 | ) | (7,946,863 | ) | ||||||
Net Unrealized Appreciation (Depreciation) on Investments | (704,448 | ) | 437,137 | 3,776,087 | ||||||||
Net Unrealized Appreciation (Depreciation) on Foreign Currency Translations | (1,009 | ) | 11 | (2 | ) | |||||||
Net Assets | $ | 30,104,600 | $ | 3,134,404 | $ | 257,449,937 | ||||||
Outstanding Shares of Beneficial Interest (unlimited authorization - no par value) | 1,050,000 | 100,000 | # | 6,250,000 | ||||||||
Net Asset Value, Offering and Redemption Price Per Share | $ | 28.67 | $ | 31.34 | $ | 41.19 | ||||||
Cost of Investments | $ | 30,411,059 | $ | 2,658,539 | $ | 251,904,382 | ||||||
Cost of Foreign Currency | 411,028 | – | 8,829 |
# | After the close of the markets on September 13, 2016, the Fund effected a 2 for 1 share split (see Note 7). |
The accompanying notes are an integral part of the financial statements.
24 |
Statements of Assets and Liabilities (Unaudited) (concluded)
September 30, 2016
KraneShares | KraneShares | |||||||
E Fund China | FTSE Emerging | |||||||
Commercial | Markets Plus | |||||||
Paper ETF | ETF | |||||||
Assets: | ||||||||
Investments at Value | $ | 14,254,649 | $ | 1,803,603 | ||||
Affiliated Investments at Value | 452,674 | 358,659 | ||||||
Foreign Currency at Value | 130,638 | 1,229 | ||||||
Cash and Cash Equivalents | 333 | 46,889 | ||||||
Dividend and Interest Receivable | 179,623 | 2,119 | ||||||
Prepaid Expenses | 66,551 | – | ||||||
Reclaim Receivable | – | 112 | ||||||
Total Assets | 15,084,468 | 2,212,611 | ||||||
Liabilities: | ||||||||
Payable due to Investment Adviser | 6,910 | 1,239 | ||||||
Payable for Trustees’ Fee | – | 660 | ||||||
Total Liabilities | 6,910 | 1,899 | ||||||
Net Assets | $ | 15,077,558 | $ | 2,210,712 | ||||
Net Assets Consist of: | ||||||||
Paid-in Capital | $ | 17,155,055 | $ | 2,501,433 | ||||
Undistributed (Distributions in Excess of) Net Investment Income | (1,397,645 | ) | 20,233 | |||||
Accumulated Net Realized Loss on Investments, Affiliated Investments and Foreign Currency Translations | (437,949 | ) | (168,537 | ) | ||||
Net Unrealized Depreciation on Investments and Affiliated Investments | (240,114 | ) | (142,462 | ) | ||||
Net Unrealized Appreciation (Depreciation) on Foreign Currency Translations | (1,789 | ) | 45 | |||||
Net Assets | $ | 15,077,558 | $ | 2,210,712 | ||||
Outstanding Shares of Beneficial Interest (unlimited authorization – no par value) | 450,000 | 100,000 | ||||||
Net Asset Value, Offering and Redemption Price Per Share | $ | 33.51 | $ | 22.11 | ||||
Cost of Investments | $ | 14,487,347 | $ | 1,832,530 | ||||
Cost of Affiliated Investments | 460,090 | 472,194 | ||||||
Cost of Foreign Currency | 130,445 | 1,201 |
The accompanying notes are an integral part of the financial statements.
25 |
Statements of Operations (Unaudited)
For the Period Ended September 30, 2016
KraneShares | KraneShares | KraneShares | ||||||||||
Bosera MSCI | Zacks New | CSI China | ||||||||||
China A Share | China | Internet | ||||||||||
ETF | ETF | ETF | ||||||||||
Investment Income: | ||||||||||||
Dividend Income | $ | 126,133 | $ | 42,197 | $ | 808,956 | ||||||
Interest Income | 167 | 40 | 667 | |||||||||
Less: Foreign Taxes Withheld | (13,247 | ) | (3,521 | ) | (8,149 | ) | ||||||
Total Investment Income | 113,053 | 38,716 | 801,474 | |||||||||
Expenses: | ||||||||||||
Management Fees | 34,600 | 9,815 | 616,597 | |||||||||
Trustees’ Fees | 6,052 | 787 | 23,963 | |||||||||
Total Expenses | 40,652 | 10,602 | 640,560 | |||||||||
Management Fee Waiver | (4,436 | ) | – | – | ||||||||
Net Expenses | 36,216 | 10,602 | 640,560 | |||||||||
Net Investment Income | 76,837 | 28,114 | 160,914 | |||||||||
Net Realized Gain (Loss) on: | ||||||||||||
Investments | (396,628 | ) | 145,780 | 2,082,431 | (1) | |||||||
Foreign Currency Translations | 10,843 | 4,067 | (1,508 | ) | ||||||||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations | (385,785 | ) | 149,847 | 2,080,923 | ||||||||
Net Change in Unrealized Appreciation (Depreciation) on: | ||||||||||||
Investments | (112,895 | ) | 153,987 | 22,744,368 | ||||||||
Foreign Currency Translations | (1,411 | ) | (160 | ) | (5 | ) | ||||||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations | (114,306 | ) | 153,827 | 22,744,363 | ||||||||
Net Realized and Change in Unrealized Gain (Loss) on Investments and Foreign Currency Translations | (500,091 | ) | 303,674 | 24,825,286 | ||||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (423,254 | ) | $ | 331,788 | $ | 24,986,200 |
(1) | Includes realized gains (losses) as a result of in-kind redemptions. (See Note 4 in Notes to Financial Statements.) |
The accompanying notes are an integral part of the financial statements.
26 |
Statements of Operations (Unaudited) (concluded)
For the Period Ended September 30, 2016
KraneShares | ||||||||
E Fund China | KraneShares | |||||||
Commercial | FTSE Emerging | |||||||
Paper | Markets Plus | |||||||
ETF | ETF | |||||||
Investment Income: | ||||||||
Dividend Income | $ | – | $ | 33,573 | ||||
Interest Income | 223,116 | 15 | ||||||
Less: Foreign Taxes Withheld | (1,534 | ) | (4,858 | ) | ||||
Total Investment Income | 221,582 | 28,730 | ||||||
Expenses: | ||||||||
Management Fees | 52,599 | 9,046 | ||||||
Trustees’ Fees | 2,053 | 809 | ||||||
Total Expenses | 54,652 | 9,855 | ||||||
Management Fee Waiver | (9,282 | ) | (1,739 | ) | ||||
Net Expenses | 45,370 | 8,116 | ||||||
Net Investment Income | 176,212 | 20,614 | ||||||
Net Realized Gain (Loss) on: | ||||||||
Investments | (21,626 | ) | (132,738 | ) | ||||
Affiliated Investments | 17,297 | (35,124 | ) | |||||
Foreign Currency Translations | (379,682 | ) | (675 | ) | ||||
Net Realized Loss on Investments, Affiliated Investments and Foreign Currency Translations | (384,011 | ) | (168,537 | ) | ||||
Net Change in Unrealized Appreciation (Depreciation) on: | ||||||||
Investments | (64,967 | ) | 244,634 | |||||
Affiliated Investments | (26,401 | ) | 34,172 | |||||
Foreign Currency Translations | (5,851 | ) | 55 | |||||
Net Change in Unrealized Appreciation (Depreciation) on Investments, Affiliated Investments and Foreign Currency Translations | (97,219 | ) | 278,861 | |||||
Net Realized and Change in Unrealized Gain (Loss) on Investments, Affiliated Investments and Foreign Currency Translations | (481,230 | ) | 110,324 | |||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (305,018 | ) | $ | 130,938 |
The accompanying notes are an integral part of the financial statements.
27 |
Statements of Changes in Net Assets
KraneShares Bosera | ||||||||
MSCI China A Share ETF | ||||||||
Period Ended | ||||||||
September 30, | Year Ended | |||||||
2016 | March 31, | |||||||
(Unaudited) | 2016 | |||||||
Operations: | ||||||||
Net Investment Income | $ | 76,837 | $ | 186,437 | ||||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations | (385,785 | ) | 1,759,188 | |||||
Net Change in Unrealized Depreciation on Investments and Foreign Currency Translations | (114,306 | ) | (6,505,315 | ) | ||||
Net Decrease in Net Assets Resulting from Operations | (423,254 | ) | (4,559,690 | ) | ||||
Dividends and Distributions from: | ||||||||
Net Investment Income | – | (82,915 | ) | |||||
Net Realized Gains | (127,487 | ) | (2,017,341 | ) | ||||
Total Dividends and Distributions | (127,487 | ) | (2,100,256 | ) | ||||
Capital Share Transactions:(1) | ||||||||
Issued | 26,099,947 | 3,264,139 | ||||||
Redeemed | – | (18,822,951 | ) | |||||
Increase (Decrease) in Net Assets from Capital Share Transactions | 26,099,947 | (15,558,812 | ) | |||||
Total Increase (Decrease) in Net Assets | 25,549,206 | (22,218,758 | ) | |||||
Net Assets: | ||||||||
Beginning of Period | 4,555,394 | 26,774,152 | ||||||
End of Period | $ | 30,104,600 | $ | 4,555,394 | ||||
Undistributed (Distributions in Excess of) Net Investment Income | $ | 15,986 | $ | (60,851 | ) | |||
Share Transactions: | ||||||||
Issued | 900,000 | 50,000 | ||||||
Redeemed | – | (400,002 | ) | |||||
Net Increase (Decrease) in Shares Outstanding from Share Transactions | 900,000 | (350,002 | ) |
(1) | Includes transaction costs related to creations and redemptions. |
The accompanying notes are an integral part of the financial statements.
28 |
Statements of Changes in Net Assets (continued)
KraneShares | ||||||||
Zacks New China ETF | ||||||||
Period Ended | ||||||||
September 30, | Year Ended | |||||||
2016 | March 31, | |||||||
(Unaudited) | 2016 | |||||||
Operations: | ||||||||
Net Investment Income | $ | 28,114 | $ | 18,440 | ||||
Net Realized Gain (Loss) on Investments and Foreign Currency Translations | 149,847 | (1,029 | ) | |||||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations | 153,827 | (504,675 | ) | |||||
Net Increase (Decrease) in Net Assets Resulting from Operations | 331,788 | (487,264 | ) | |||||
Dividends and Distributions from: | ||||||||
Net Investment Income | – | (25,169 | ) | |||||
Net Realized Gains | – | (289,653 | ) | |||||
Return of Capital | – | (788 | ) | |||||
Total Dividends and Distributions | – | (315,610 | ) | |||||
Capital Share Transactions:(1) | ||||||||
Issued | – | 184,546 | ||||||
Increase in Net Assets from Capital Share Transactions | – | 184,546 | ||||||
Total Increase (Decrease) in Net Assets | 331,788 | (618,328 | ) | |||||
Net Assets: | ||||||||
Beginning of Period | 2,802,616 | 3,420,944 | ||||||
End of Period | $ | 3,134,404 | $ | 2,802,616 | ||||
Undistributed (Distributions in Excess of) Net Investment Income | $ | 20,500 | $ | (7,614 | ) | |||
Share Transactions: | ||||||||
Issued | 50,000 | # | – | |||||
Net Increase in Shares Outstanding from Share Transactions | 50,000 | – |
(1) | Includes transaction costs related to creations and redemptions. |
# | After the close of the markets on September 13, 2016, the Fund effected a 2 for 1 share split (see Note 7). |
The accompanying notes are an integral part of the financial statements.
29 |
Statements of Changes in Net Assets (continued)
KraneShares | ||||||||
CSI China Internet ETF | ||||||||
Period Ended | ||||||||
September 30, | Year Ended | |||||||
2016 | March 31, | |||||||
(Unaudited) | 2016 | |||||||
Operations: | ||||||||
Net Investment Income (Loss) | $ | 160,914 | $ | (741,539 | ) | |||
Net Realized Gain on Investments and Foreign Currency Translations | 2,080,923 | 19,253,499 | ||||||
Net Change in Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations | 22,744,363 | (4,193,530 | ) | |||||
Net Increase in Net Assets Resulting from Operations | 24,986,200 | 14,318,430 | ||||||
Dividends and Distributions from: | ||||||||
Net Investment Income | – | (240,264 | ) | |||||
Return of Capital | – | (18,722 | ) | |||||
Total Dividends and Distributions | – | (258,986 | ) | |||||
Capital Share Transactions:(1) | ||||||||
Issued | 176,831,039 | 327,489,029 | ||||||
Redeemed | (139,236,230 | ) | (278,291,404 | ) | ||||
Increase in Net Assets from Capital Share Transactions | 37,594,809 | 49,197,625 | ||||||
Total Increase in Net Assets | 62,581,009 | 63,257,069 | ||||||
Net Assets: | ||||||||
Beginning of Period | 194,868,928 | 131,611,859 | ||||||
End of Period | $ | 257,449,937 | $ | 194,868,928 | ||||
Accumulated Net Investment Loss/Distributions in Excess of Net Investment Income | $ | (660,445 | ) | $ | (821,359 | ) | ||
Share Transactions: | ||||||||
Issued | 4,800,000 | 9,150,000 | ||||||
Redeemed | (4,000,000 | ) | (7,550,000 | ) | ||||
Net Increase in Shares Outstanding from Share Transactions | 800,000 | 1,600,000 |
(1) | Includes transaction costs related to creations and redemptions. |
The accompanying notes are an integral part of the financial statements.
30 |
Statements of Changes in Net Assets (continued)
KraneShares E Fund | ||||||||
China Commercial Paper ETF | ||||||||
Period Ended | ||||||||
September 30, | Year Ended | |||||||
2016 | March 31, | |||||||
(Unaudited) | 2016 | |||||||
Operations: | ||||||||
Net Investment Income | $ | 176,212 | $ | 1,127,869 | ||||
Net Realized Loss on Investments, Affiliated Investments and Foreign Currency Translations | (384,011 | ) | (2,343,319 | ) | ||||
Net Change in Unrealized Depreciation on Investments, Affiliated Investments and Foreign Currency Translations | (97,219 | ) | (131,988 | ) | ||||
Net Decrease in Net Assets Resulting from Operations | (305,018 | ) | (1,347,438 | ) | ||||
Dividends and Distributions from: | ||||||||
Net Investment Income | (6,584 | ) | (343,941 | ) | ||||
Net Realized Gains | – | (9,852 | ) | |||||
Return of Capital | – | (52,224 | ) | |||||
Total Dividends and Distributions | (6,584 | ) | (406,017 | ) | ||||
Capital Share Transactions:(1) | ||||||||
Issued | 426 | 59,536,118 | ||||||
Redeemed | (3,410,511 | ) | (47,685,576 | ) | ||||
Increase (Decrease) in Net Assets from Capital Share Transactions | (3,410,085 | ) | 11,850,542 | |||||
Total Increase (Decrease) in Net Assets | (3,721,687 | ) | 10,097,087 | |||||
Net Assets: | ||||||||
Beginning of Period | 18,799,245 | 8,702,158 | ||||||
End of Period | $ | 15,077,558 | $ | 18,799,245 | ||||
Distributions in Excess of Net Investment Income | $ | (1,397,645 | ) | $ | (1,567,273 | ) | ||
Share Transactions: | ||||||||
Issued | – | 1,700,000 | ||||||
Redeemed | (100,000 | ) | (1,400,002 | ) | ||||
Net Increase (Decrease) in Shares Outstanding from Share Transactions | (100,000 | ) | 299,998 |
(1) | Includes transaction costs related to creations and redemptions. |
The accompanying notes are an integral part of the financial statements.
31 |
Statements of Changes in Net Assets (concluded)
KraneShares FTSE | ||||||||
Emerging Markets Plus ETF | ||||||||
Period Ended | ||||||||
September 30, | Year Ended | |||||||
2016 | March 31, | |||||||
(Unaudited) | 2016 | |||||||
Operations: | ||||||||
Net Investment Income | $ | 20,614 | $ | 29,419 | ||||
Net Realized Gain (Loss) on Investments, Affiliated Investments and Foreign Currency Translations | (168,537 | ) | 84,600 | |||||
Net Change in Unrealized Appreciation (Depreciation) on Investments, Affiliated Investments and Foreign Currency Translations | 278,861 | (471,459 | ) | |||||
Net Increase (Decrease) in Net Assets Resulting from Operations | 130,938 | (357,440 | ) | |||||
Dividends and Distributions from: | ||||||||
Net Investment Income | (39,218 | ) | (34,814 | ) | ||||
Net Realized Gains | (46,996 | ) | (5,119 | ) | ||||
Total Dividends and Distributions | (86,214 | ) | (39,933 | ) | ||||
Capital Share Transactions:(1) | ||||||||
Issued | – | 584 | ||||||
Redeemed | – | (43 | ) | |||||
Increase in Net Assets from Capital Share Transactions | – | 541 | ||||||
Total Increase (Decrease) in Net Assets | 44,724 | (396,832 | ) | |||||
Net Assets: | ||||||||
Beginning of Period | 2,165,988 | 2,562,820 | ||||||
End of Period | $ | 2,210,712 | $ | 2,165,988 | ||||
Undistributed Net Investment Income | $ | 20,233 | $ | 38,837 | ||||
Share Transactions: | ||||||||
Redeemed | – | (2 | ) | |||||
Net Decrease in Shares Outstanding from Share Transactions | – | (2 | ) |
(1) | Includes transaction costs related to creations and redemptions. |
The accompanying notes are an integral part of the financial statements.
32 |
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33 |
Selected Per Share Data & Ratios
For the Periods Ended September 30, 2016 (Unaudited) and the Years/Periods Ended March 31
For a Share Outstanding Throughout Each Period
Net Asset Value, Beginning of Period ($) | Net Investment Income (Loss) ($)* | Net Realized and Unrealized Gain (Loss) on Investments ($) | Total from Operations ($) | Distribution from Net Investment Income ($) | Distribution from Capital Gains ($) | Return of Capital ($) | ||||||||||||||||||||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||||||||||||||||||
2016*** | 30.37 | 0.25 | (1.10 | ) | (0.85 | ) | – | (0.85 | ) | – | ||||||||||||||||||
2016 | 53.55 | 0.62 | (13.67 | ) | (13.05 | ) | (0.41 | ) | (9.72 | ) | – | |||||||||||||||||
2015 | 28.92 | (0.22 | ) | 24.90 | 24.68 | (0.05 | ) | – | – | |||||||||||||||||||
2014(1) | 30.00 | (0.02 | ) | (1.06 | ) | (1.08 | ) | – | – | – | ||||||||||||||||||
KraneShares Zacks New China ETF(6)# | ||||||||||||||||||||||||||||
2016*** | 28.02 | 0.52 | 2.80 | 3.32 | – | – | – | |||||||||||||||||||||
2016 | 34.20 | 0.18 | (3.21 | ) | (3.03 | ) | (0.25 | ) | (2.89 | ) | (0.01 | ) | ||||||||||||||||
2015 | 31.42 | 0.12 | 2.97 | 3.09 | (0.31 | ) | – | – | ||||||||||||||||||||
2014(2) | 25.00 | (0.03 | ) | 6.45 | 6.42 | – | – | – | ||||||||||||||||||||
KraneShares CSI China Internet ETF | ||||||||||||||||||||||||||||
2016*** | 35.76 | 0.03 | 5.40 | 5.43 | – | – | – | |||||||||||||||||||||
2016 | 34.18 | (0.20 | ) | 1.84 | 1.64 | (0.06 | ) | – | – | (7) | ||||||||||||||||||
2015 | 35.93 | (0.14 | ) | (1.32 | ) | (1.46 | ) | (0.29 | ) | – | – | |||||||||||||||||
2014(3) | 25.00 | (0.02 | ) | 11.05 | 11.03 | (0.06 | ) | (0.04 | ) | – | ||||||||||||||||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||||||||||||||||||
2016*** | 34.18 | 0.38 | (1.04 | ) | (0.66 | ) | (0.01 | ) | – | – | ||||||||||||||||||
2016 | 34.81 | 1.01 | (1.39 | ) | (0.38 | ) | (0.21 | ) | (0.01 | ) | (0.03 | ) | ||||||||||||||||
2015(4) | 35.00 | 0.39 | (0.35 | ) | 0.04 | (0.23 | ) | – | – | |||||||||||||||||||
KraneShares FTSE Emerging Markets Plus ETF | ||||||||||||||||||||||||||||
2016*** | 21.66 | 0.21 | 1.10 | 1.31 | (0.39 | ) | (0.47 | ) | – | |||||||||||||||||||
2016 | 25.63 | 0.29 | (3.86 | ) | (3.57 | ) | (0.35 | ) | (0.05 | ) | – | |||||||||||||||||
2015(5) | 25.00 | – | 0.63 | 0.63 | – | – | – |
(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 1, 2014, the KraneShares CSI China Five Year Plan ETF changed its name to KraneShares CSI New China ETF. Effective June 1, 2016, the KraneShares CSI New China ETF changed its name to KraneShares Zacks New China ETF. |
(7) | Amount was less than $0.01 per share. |
(8) | Management fees and expense cap decreased to 0.78% and 0.68%, respectively, as of March 24, 2016. Prior to March 24, 2016, the management fee was 1.10% before a contractual waiver and 0.85% after the contractual waiver. |
* | Per share data calculated using average shares method. |
** | Total return is based on the change in net asset value of a share during the year or period and assumes reinvestment of dividends and distributions at net asset value. Total return is for the period indicated and periods of less than one year have not been annualized. The return shown does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Excludes effects of creation and redemption fees associated with creation units. |
The accompanying notes are an integral part of the financial statements.
34 |
Total from Distributions ($) | 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 (%) | |||||||||||||||||||||||
(0.85 | ) | 28.67 | (2.69 | ) | 30,105 | 0.81 | † | 0.91 | † | 1.73 | † | 31 | †† | |||||||||||||||||
(10.13 | ) | 30.37 | (27.18 | ) | 4,555 | 0.93 | (8) | 1.18 | (8) | 1.18 | 116 | |||||||||||||||||||
(0.05 | ) | 53.55 | 85.37 | 26,774 | 1.31 | 1.51 | (0.55 | ) | 110 | |||||||||||||||||||||
– | 28.92 | (3.60 | ) | 11,566 | 1.10 | † | 1.10 | † | (0.84 | )† | – | †† | ||||||||||||||||||
– | 31.34 | 11.83 | 3,134 | 0.73 | † | 0.73 | † | 1.94 | † | 88 | †† | |||||||||||||||||||
(3.15 | ) | 28.02 | (9.71 | ) | 2,803 | 0.73 | 0.73 | 0.60 | 575 | |||||||||||||||||||||
(0.31 | ) | 34.20 | 9.92 | 3,421 | 0.71 | 0.71 | 0.37 | 36 | ||||||||||||||||||||||
– | 31.42 | 25.70 | 3,143 | 0.68 | † | 0.68 | † | (0.15 | )† | 7 | †† | |||||||||||||||||||
– | 41.19 | 15.18 | 257,450 | 0.70 | † | 0.70 | † | 0.18 | † | 19 | †† | |||||||||||||||||||
(0.06 | ) | 35.76 | 4.77 | 194,869 | 0.72 | 0.72 | (0.56 | ) | 27 | |||||||||||||||||||||
(0.29 | ) | 34.18 | (4.09 | ) | 131,612 | 0.71 | 0.71 | (0.39 | ) | 43 | ||||||||||||||||||||
(0.10 | ) | 35.93 | 44.18 | 77,243 | 0.68 | † | 0.68 | † | (0.90 | )† | 8 | †† | ||||||||||||||||||
(0.01 | ) | 33.51 | (1.93 | ) | 15,078 | 0.59 | †^ | 0.70 | †^ | 2.27 | †^ | – | †† | |||||||||||||||||
(0.25 | ) | 34.18 | (1.11 | ) | 18,799 | 0.57 | ^ | 0.69 | ^ | 2.92 | ^ | 717 | ||||||||||||||||||
(0.23 | ) | 34.81 | 0.13 | 8,702 | 0.60 | †^ | 0.72 | †^ | 3.46 | †^ | – | †† | ||||||||||||||||||
(0.86 | ) | 22.11 | 6.45 | 2,211 | 0.75 | †‡ | 0.75 | †‡ | 1.91 | †‡ | 25 | †† | ||||||||||||||||||
(0.40 | ) | 21.66 | (14.00 | ) | 2,166 | 0.91 | ‡ | 1.12 | ‡ | 1.27 | ‡ | 1 | ||||||||||||||||||
– | 25.63 | 2.52 | 2,563 | 0.88 | †‡ | 0.88 | †‡ | (0.07 | )†‡ | 8 | †† |
*** | For the six-month period ended September 30, 2016. 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 reflect the expenses and net investment income/(loss), respectively, for the year/period as reported in the Statements of Operations and do not reflect the Fund’s proportionate share of the income and expenses of the money market funds. |
‡ | The ratios of expenses and net investment income/(loss) to Average Net Assets reflect the expenses and net investment income/(loss), respectively, for the year/period as reported in the Statements of Operations and do not reflect the Fund’s proportionate share of the income and expenses of the KraneShares Bosera MSCI China A Share ETF. |
# | After the close of the markets on September 13, 2016, the Fund effected a 2 for 1 share split (see Note 7). Per share data has been adjusted to reflect the share split. |
Amounts designated as ‘‘–’’ are $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
35 |
Notes to Financial Statements (Unaudited)
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. This does not mean, however, that individual investors will be able to redeem and purchase Shares directly with the series of the Trust. Only Authorized Participants can redeem and purchase Creation Units of Shares directly. As of September 30, 2016, the Trust had five operational series.The financial statements herein and the related notes pertain to the KraneShares Bosera MSCI China A Share ETF, KraneShares Zacks New China ETF (formerly, 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 Zacks 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 Adviser may use co-advisers (each, a ‘‘Sub-Adviser’’ or, collectively, the ‘‘Sub-Advisers’’) to perform the day-to-day management for the Funds.
The shares of KraneShares Bosera MSCI China A Share ETF, KraneShares Zacks New China ETF and KraneShares E Fund China Commercial Paper ETF are listed and traded on the NYSE Arca, Inc. Shares of KraneShares CSI China Internet ETF are listed and traded on the NASDAQ Exchange. Shares of KraneShares FTSE Emerging Markets Plus ETF are listed and traded on the BATS Exchange. Market prices for Fund shares may be different from their net asset value (‘‘NAV’’). The Funds issue and redeem Shares (‘‘Shares’’) on a continuous basis at NAV only in large blocks of Shares, typically 50,000 Shares or multiples thereof, called Creation Units (‘‘Creation Units’’). With respect to the KraneShares Zacks 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.
36 |
Notes to Financial Statements (Unaudited) (continued)
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’’):
Fund | Index | |
KraneShares Bosera MSCI China A Share ETF | MSCI China A International Index | |
KraneShares Zacks New China ETF | Zacks New China 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 incl. 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 registered investment companies in conformity with U.S. generally accepted accounting principles (‘‘U.S. GAAP’’) and, therefore, the Funds follow the accounting and reporting guidelines for registered 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 the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates, and could have a material impact to the Funds.
SECURITY VALUATION – The NAV per share of the Fund is computed by dividing the value of the net assets of the Fund (i.e., the value of its total assets less total liabilities) by the total number of shares of the Fund outstanding, rounded to the nearest cent. Expenses and fees, including without limitation, the management, administration and distribution fees, are accrued daily and taken into account for purposes of determining NAV. Withholdings for capital gains (if any) are also taken into account for purposes of determining NAV. The NAV per share for the Fund normally is calculated by the Administrator and determined as of the scheduled close of the regular trading session on the NYSE (ordinarily 4:00 p.m., Eastern Time) on each day that the Exchange is open.
In calculating the values of the Fund’s portfolio securities, securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued at the last reported sale price on the primary exchange or market (foreign or domestic) on which they are traded (or at the time as of which the Fund’s NAV is calculated if a security’s exchange is normally open at that time). If there is no such reported sale, such securities are valued at the most 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
37 |
Notes to Financial Statements (Unaudited) (continued)
are reported in local currency and converted to U.S. dollars using currency exchange rates. The value of a swap contract is equal to the obligation (or rights) under the swap contract, which will generally be equal to the net amounts to be paid or received under the contract based upon the relative values of the positions held by each party to the contract as determined by the applicable independent, third party pricing agent. Exchange traded options are valued at the last reported sales price on the exchange on which they are listed. Futures are valued at the settlement price established by the board of trade on which they are traded. Foreign currency forward contracts are valued at the current day’s interpolated foreign exchange rate, as calculated using the current day’s spot rate. The exchange rates used for valuation are captured as of the close of the London Stock Exchange each day normally at 11:00 a.m. Eastern Time. Prices for most securities held by the Fund are provided daily by independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Fund seeks to obtain a bid price from at least one independent broker.
Securities for which market prices are not ‘‘readily available,’’ or are not deemed to reflect current market values, or debt securities where no evaluated price is available from the Trust’s third-party pricing agents pursuant to established methodologies, are fair valued by the Trust’s Fair Valuation Committee in accordance with the Trust’s valuation policies and procedures approved by the Board of Trustees. Some of the more common reasons that may necessitate that a security be valued using ‘‘fair value’’ pricing may include: the security’s trading has been halted or suspended; the security’s primary trading market is temporarily closed; or the security has not been traded for an extended period of time. The Fund may fair value certain of the foreign securities held by the Fund each day the Fund calculates its NAV.
In addition, the Fund may fair value its securities if an event that may materially affect the value of the Fund’s securities that trade outside of the United States (a ‘‘Significant Event’’) has occurred between the time of the security’s last close and the time that the Fund calculates its NAV. A Significant Event may relate to a single issuer or to an entire market sector. Events that may be Significant Events may include: government actions, natural disasters, armed conflict, acts of terrorism and significant market fluctuations. When fair-value pricing is employed, the prices of securities used by the Fund to calculate its NAV may differ from quoted or published prices for the same securities.
Investments in open-end investment companies that do not trade on an exchange are valued at the end of day NAV per share. Investments in open-end investment companies that trade on an exchange are valued at the last reported sale price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. If there is no such reported sale, such securities are valued at the most recent mean between the quoted bid and asked prices (absent both bid and asked prices on such exchange, the bid price may be used). Fair value pricing involves subjective judgments and it is possible that a fair value determination for a security is materially different than the value that could be realized upon the sale of the security or that another fund that uses market quotations or its own fair value procedures to price the same securities. In addition, fair value pricing could result in a difference between the prices used to calculate the Fund’s NAV and the prices used by the Underlying Index. This may adversely affect the Fund’s ability to track the Underlying Index.
38 |
Notes to Financial Statements (Unaudited) (continued)
As of September 30, 2016, the total market value of securities valued in accordance with Fair Value Procedures is as follows:
Fair Valued | % of | |||||||
Amount | Net Assets | |||||||
KraneShares Bosera MSCI China A Share ETF | $ | 680,624 | 2.3 | % | ||||
KraneShares Zacks New China ETF | 141,721 | 4.5 | % | |||||
KraneShares FTSE Emerging Markets Plus ETF | 23 | 0.0 | % |
In accordance with the authoritative guidance on fair value measurements and disclosure under U.S. GAAP, the Funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accordingly, the fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 – Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Funds have the ability to access at the measurement date.
Level 2 – Other significant observable inputs (including quoted prices in non-active markets, quoted prices for similar investments, fair value of investments for which the Funds have the ability to fully redeem tranches at net asset value as of the measurement date or within the near term, and short-term investments valued at amortized cost).
Level 3 – Significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments, broker quotes, fair value of investments for which the Funds’ do not have the ability to fully redeem tranches at net asset value as of the measurement date or within the near term).
Investments are classified within the level of the lowest significant input considered in determining fair value. Investments classified within Level 3 whose fair value measurement considers several inputs may include Level 1 or Level 2 inputs as components of the overall fair value measurement.
For the period ended September 30, 2016, there have been no significant changes to the Funds’ fair valuation methodologies.
39 |
Notes to Financial Statements (Unaudited) (continued)
The following table summarizes the quantitative inputs and assumptions used for items categorized as material Level 3 investments as of September 30, 2016. The disclosures below also include qualitative information on the sensitivity of the fair value measurements to changes in the significant unobservable inputs.
KraneShares Bosera MSCI China A Share ETF
Quantitative information about Level 3 fair value measurements | ||||||||||
Assets | Fair Value at 9/30/16 | Valuation Technique(s) | Unobservable Input | Discount Percentage* | ||||||
Common Stock | $ | 680,624 | Sector Movement | Sector Performance | +/-10% |
KraneShares Zacks New China ETF
Quantitative information about Level 3 fair value measurements | ||||||||||
Assets | Fair Value at 9/30/16 | Valuation Technique(s) | Unobservable Input | Discount Percentage* | ||||||
Common Stock | $ | 141,721 | Sector Movement | Sector Performance | +/-10% |
* | Certain foreign securities exchanges have mechanisms in place that confine one day’s price movement in an individual security to a pre-determined price range, based on that day’s opening price (‘‘Collared Securities’’). Fair value determinations for Collared Securities will be capped by the Committee based on any applicable pre-determined ‘‘limit down’’ or ‘‘limit up’’ prices established by a foreign securities exchange. As a result, the Committee ensures that any fair value price determination on a given day is capped accordingly plus or minus ten percent. |
The unobservable input used to determine fair value of the Level 3 asset may have similar or diverging impacts on valuation. Significant increases and decreases in this input could result in significantly higher or lower fair value measurement.
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.
As of September 30, 2016, management of the Funds has reviewed all open tax years since inception and concluded that there is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next 12 months.
40 |
Notes to Financial Statements (Unaudited) (continued)
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. 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 Statements of Operations. Capital gain distributions received from affiliated funds are recognized on ex-dividend date and are recorded on the Statements 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 – The books and records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars on the date of valuation. Purchases and sales of investment securities, income and expenses are translated into U.S. dollars at the relevant rates of exchange prevailing on the respective dates of such transactions. The Funds do not isolate that portion of realized or unrealized gains and losses resulting from changes in the foreign exchange rate from fluctuations arising from changes in the market prices of the securities. These gains and losses are included in net realized and unrealized gains and losses on foreign currency translations on the Statements of Operations. Net realized and unrealized gains and losses on foreign currency transactions and translations 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 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.
The standard creation and redemption fees for each Fund are listed below:
Standard creation and redemption fees | |
KraneShares Bosera MSCI China A Share ETF | $8,500 and a variable fee of up to 2.0% |
KraneShares Zacks New China ETF | $1,500 and a variable fee of up to 2.0% |
KraneShares CSI China Internet ETF | $500 and a variable fee of up to 2.0% |
KraneShares E Fund China Commercial Paper ETF | $500 and a variable fee of up to 2.0% |
KraneShares FTSE Emerging Markets Plus ETF | $8,500 and a variable fee of up to 2.0% |
Except when aggregated in Creation Units, Shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed by certain Authorized Participants. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a Depository Trust Company (‘‘DTC’’) participant and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors will not qualify as Authorized Participants or
41 |
Notes to Financial Statements (Unaudited) (continued)
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 and the KraneShares E Fund China Commercial Paper ETF generally expect that Creation Units of the Fund will be issued and redeemed principally for cash.
The following table discloses Creation Unit breakdown as of September 30, 2016:
Creation | Transaction | Redemption | ||||||||||||||
Unit Shares | Fee | Value | Fee | |||||||||||||
KraneShares Bosera MSCI China A Share ETF | 900,000 | $ | 77,598 | $ | 26,047,849 | $ | – | |||||||||
KraneShares CSI China Internet ETF | 1,400,000 | 13,807 | 59,048,269 | 5,500 | ||||||||||||
KraneShares E Fund China Commercial Paper ETF | (100,000 | ) | – | (3,410,511 | ) | 1,444 |
CASH AND CASH EQUIVALENTS – Idle cash and currency balances may be swept into various overnight sweep accounts and are classified as cash equivalents on the Statements of Assets and Liabilities. These amounts, at times, may exceed United States federally insured limits. Amounts swept are available on the next business day.
3. RELATED PARTY TRANSACTIONS
INVESTMENT ADVISORY AGREEMENT – The Adviser serves as investment adviser to each Fund pursuant to an investment advisory agreement between the Trust on behalf of each Fund and the Adviser (the ‘‘Agreements’’). Under the Agreements, the Adviser is responsible for overseeing 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 between the Trust and the Adviser, the Funds below pay the Adviser a fee, which is calculated and accrued daily and paid monthly, at the following annual rates, based on a percentage of the average daily net assets of each Fund:
Management | ||||
Fee | ||||
KraneShares Bosera MSCI China A Share ETF | 0.78% | |||
KraneShares Zacks 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, 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
42 |
Notes to Financial Statements (Unaudited) (continued)
distribution plan adopted by the Trust in compliance with Rule 12b-1 under the Investment Company Act, including distribution fees; (d) ‘‘Acquired Fund Fees and Expenses’’ (as defined by Form N-1A under the Investment Company Act); (e) litigation expenses; (f) compensation and expenses of the Independent Trustees (including any fees of independent legal counsel to the Independent Trustees); and (g) any expenses determined to be extraordinary expenses by the Board.
Pursuant to the terms of an Expense Limitation Agreement, the Adviser has contractually agreed to reduce its management fee to 0.68% of the KraneShares Bosera MSCI China A Share ETF average daily net assets until July 31, 2017. The Expense Limitation Agreement may only be terminated prior to July 31, 2017 by the Board.
Pursuant to the terms of an Expense Limitation Agreement, the Adviser has contractually agreed to reduce its management fee for the KraneShares E Fund China Commercial Paper ETF to 0.56% of the Fund’s average daily net assets until July 31, 2017. The Expense Limitation Agreement may only be terminated prior to July 31, 2017 by the Board.
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.
The Adviser and each Sub-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, but excluding interest expense, taxes, Acquired Fund Fees and Expenses, if any, brokerage commissions, derivative counterparty fees and other expenses connected with execution of portfolio transactions, expenses of the Independent Trustees (including any fees of counsel to the Independent Trustees), 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 – Bosera Asset Management (International) Co., Ltd. (‘‘Bosera’’), operating out of Hong Kong, serves as the Sub-Adviser to the KraneShares Bosera MSCI China A Share ETF and is responsible for the day-to-day management of the Fund, subject to 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 Sub-Adviser to the KraneShares E Fund China Commercial Paper ETF and is responsible for the day-to-day management of the Fund, subject to 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.
43 |
Notes to Financial Statements (Unaudited) (continued)
DISTRIBUTION AGREEMENT – SEI Investments Distribution Co. (the ‘‘Distributor’’), a wholly owned subsidiary of SEI Investments Company and an affiliate of the administrator, serves as the Funds’ distributor of Creation Units pursuant to a distribution agreement. The Distributor does not maintain any secondary market in Fund shares.
The Trust has adopted a Distribution and Service Plan (‘‘Plan’’) pursuant to Rule 12b-1 under the 1940 Act. In accordance with its Plan, each Fund is authorized to pay an amount up to 0.25% of its average daily net assets each year for certain distribution-related activities. For the period ended September 30, 2016 no fees were charged under the Plan. Fees would only be charged under the Plan upon approval by 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, 2016, the purchases and sales of investments in securities excluding in-kind transactions, long-term U.S. Government and short-term securities were:
Sales and | ||||||||
Purchases | Maturities | |||||||
KraneShares Bosera MSCI China A Share ETF | $ | 28,993,880 | $ | 3,283,071 | ||||
KraneShares Zacks New China ETF | 2,612,926 | 2,518,294 | ||||||
KraneShares CSI China Internet ETF | 35,441,913 | 35,646,601 | ||||||
KraneShares FTSE Emerging Markets Plus ETF | 524,051 | 608,557 |
For the period ended September 30, 2016, in-kind transactions associated with creations and redemptions were:
Sales and | Realized | |||||||||||
Purchases | Maturities | Gain/(Loss) | ||||||||||
KraneShares CSI China Internet ETF | $ | 196,819,444 | $ | 139,041,360 | $ | 5,134,122 |
During the period ended September 30, 2016, 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.
44 |
Notes to Financial Statements (Unaudited) (continued)
The tax character of dividends and distributions paid during the years or periods ended March 31, 2016 and March 31, 2015 were as follows:
Ordinary | Long-Term | Return of | ||||||||||||||
KraneShares Funds | Income | Capital Gain | Capital | Totals | ||||||||||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||||||
2016 | $ | 949,369 | $ | 1,150,887 | $ | – | $ | 2,100,256 | ||||||||
2015 | 25,024 | – | – | 25,024 | ||||||||||||
KraneShares Zacks New China ETF | ||||||||||||||||
2016 | $ | 25,169 | $ | 289,655 | $ | 786 | $ | 315,610 | ||||||||
2015 | 30,982 | 26 | – | 31,008 | ||||||||||||
KraneShares CSI China Internet ETF | ||||||||||||||||
2016 | $ | 240,264 | $ | – | $ | 18,722 | $ | 258,986 | ||||||||
2015 | 596,577 | – | – | 596,577 | ||||||||||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||||||
2016 | $ | 353,793 | $ | – | $ | 52,224 | $ | 406,017 | ||||||||
2015 | 188,251 | – | – | 188,251 | ||||||||||||
KraneShares FTSE Emerging Markets Plus ETF | ||||||||||||||||
2016 | $ | 39,933 | $ | – | $ | – | $ | 39,933 | ||||||||
2015 | – | – | – | – |
As of March 31, 2016, the components of tax basis distributable earnings (accumulated losses) were as follows:
KraneShares | KraneShares | |||||||||||||||||||
KraneShares | E Fund | FTSE | ||||||||||||||||||
Bosera MSCI | KraneShares | KraneShares | China | Emerging | ||||||||||||||||
China A | Zacks New | CSI China | Commercial | Markets | ||||||||||||||||
Share ETF | China ETF | Internet ETF | Paper ETF | Plus ETF | ||||||||||||||||
Undistributed Ordinary Income | $ | – | $ | – | $ | – | $ | – | $ | 39,218 | ||||||||||
Undistributed Long-Term Capital Gain | 127,486 | – | – | – | 46,996 | |||||||||||||||
Post October Losses | (139,366 | ) | (151,137 | ) | – | – | – | |||||||||||||
Capital Loss Carryforwards | – | – | (6,371,670 | ) | – | – | ||||||||||||||
Qualified Late-Year Loss Deferrals | (60,305 | ) | (7,614 | ) | (701,760 | ) | (1,567,274 | ) | – | |||||||||||
Unrealized Appreciation (Depreciation) on Investments and Foreign Currency | (609,978 | ) | 267,615 | (22,743,993 | ) | (198,621 | ) | (421,659 | ) | |||||||||||
Other Temporary Differences | (5 | ) | – | – | – | – | ||||||||||||||
Total Distributable Earnings (Accumulated Losses) | $ | (682,168 | ) | $ | 108,864 | $ | (29,817,423 | ) | $ | (1,765,895 | ) | $ | (335,445 | ) |
Qualified late year ordinary and Post-October capital losses (including currency and specified gain/loss items) represent losses realized from January 1, 2016 through March 31, 2016 and November 1, 2015 through March 31, 2016, respectively, that in accordance with federal income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year.
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
45 |
Notes to Financial Statements (Unaudited) (continued)
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. Losses carried forward under these new provisions are as follows:
Short-Term | Long-Term | |||||||||||
Loss | Loss | Total | ||||||||||
KraneShares CSI China Internet ETF | $ | 6,206,978 | $ | 164,692 | $ | 6,371,670 |
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, 2016 were as follows:
Aggregated | Aggregated | |||||||||||||||
Gross | Gross | Net Unrealized | ||||||||||||||
Federal | Unrealized | Unrealized | Appreciation | |||||||||||||
KraneShares Funds | Tax Cost | Appreciation | Depreciation | (Depreciation) | ||||||||||||
KraneShares Bosera MSCI China A Share ETF | $ | 30,411,059 | $ | 309,832 | $ | (1,014,280 | ) | $ | (704,448 | ) | ||||||
KraneShares Zacks New China ETF | 2,658,539 | 533,034 | (95,897 | ) | 437,137 | |||||||||||
KraneShares CSI China Internet ETF | 251,904,382 | 22,593,390 | (18,817,303 | ) | 3,776,087 | |||||||||||
KraneShares E Fund China Commercial Paper ETF | 14,947,437 | 11,608 | (251,722 | ) | (240,114 | ) | ||||||||||
KraneShares FTSE Emerging Markets Plus ETF | 2,304,724 | 158,334 | (300,796 | ) | (142,462 | ) |
Uncertainties in the Chinese tax rules governing the taxation of income distributions and capital gains from investments in A-Shares could result in unexpected tax liabilities for the Funds. China generally imposes withholding tax at a rate of 10% on dividends and interest derived by non-Chinese resident investors (including, for example, Qualified Foreign Institutional Investors (QFII)) from Chinese companies and those companies which are not Chinese tax residents, but which are deemed to be Chinese tax residents (e.g., under Notice 7). China also imposes withholding tax at a rate of 10% on capital gains derived by 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).
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
46 |
Notes to Financial Statements (Unaudited) (continued)
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’’.
CHINESE CREDIT RATINGS RISK – The debt securities included in Underlying Index securities, and therefore the securities held by the KraneShares E Fund China Commercial Paper ETF 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 debt issued. Interest rate risk refers to fluctuations in the value of a debt security resulting from changes in the level of interest rates. When interest rates go up, the prices of most debt securities go down; and when interest rates go down, the prices of most debt securities go up. Debt securities with longer durations tend to be more sensitive to interest rate changes, typically making them more volatile.The current low-interest-rate environment heightens the risks associated with rising interest rates.
FOREIGN SECURITIES RISK – Investments in securities of non-U.S. issuers involve certain risks that may not be present with investments in securities of U.S. issuers, such as risk of loss due to foreign currency fluctuations or to political or economic instability. There may be less information publicly available about non-U.S. issuers. Non-U.S. issuers, especially issuers in China and other emerging markets, may also be subject to different accounting, auditing, financial reporting and investor protection standards than U.S. issuers.
Income from securities of non-U.S. issuers, including, in the case of Chinese issuers, gains on the sale of such securities, may be subject to foreign taxes. Even if the Funds qualify to pass these taxes through to shareholders, your ability to claim a credit for such taxes may be limited, particularly in the case of taxes on capital gains. Investments in foreign securities may be less liquid than investments in U.S. securities.
GEOGRAPHIC FOCUS IN CHINA AND HONG KONG – Because the Funds focus their investments, at least in part, in securities issued in China and Hong Kong, each Fund’s performance will be affected by social, political, and economic conditions within China and Hong Kong and may 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.
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.
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 group of industries. To the extent that an Underlying Index concentrates in the securities of issuers in a particular industry or group of industries, each Fund also is expected to
47 |
Notes to Financial Statements (Unaudited) (continued)
concentrate its investments to approximately the same extent. If a Fund concentrates its investments in an industry, the Fund may face more risks than if it were diversified broadly over industries. 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 may disproportionately impact a Fund’s NAV.
INVESTMENTS IN OTHER INVESTMENT COMPANIES – The Funds utilize a cash sweep program (the ‘‘Cash Sweep Program’’), whereby at least a portion of the Funds’ uninvested cash balances are expect to be used to purchase shares of money market funds. In addition, under the Cash Sweep Program, the KraneShares E Fund China Commercial Paper ETF is expected to invest at least a portion of its uninvested cash balance to purchase shares of funds that are registered in China, but not the United States (‘‘PRC Investment Companies’’). Investments in money market funds and the PRC Investment Companies are subject to the risks faced by them, which include credit risk and interest rate risk. Investments in PRC Investment Companies are also subject to currency risk, foreign investment risk, and custody risk. The PRC Investment Companies are PRC-domiciled funds, and to the extent that they or any fund is not registered pursuant to the 1940 Act, the Funds will not enjoy the protections of the United States securities laws, including the 1940 Act, with respect to its investments in the PRC Investment Companies or other funds not registered in the United States.
The KraneShares FTSE Emerging Markets Plus ETF also invests in other investment companies. By doing so, the Fund is exposed to the risks of investments by such companies. Moreover, the Fund will incur its pro rata share of the fees and expenses of the underlying funds.
The KraneShares E Fund China Commercial Paper ETF and KraneShares FTSE Emerging Markets Plus ETF may invest in investment companies that are sponsored or advised by the Adviser and/or Co-Adviser. The Adviser and/or Co-Adviser may be subject to conflicts of interest in allocating Fund assets to such funds if they derive fees or other benefits from the fees and expenses of the underlying funds.
LIQUIDITY RISK – The Funds’ investments are subject to liquidity risk, which exists when an investment is or becomes difficult to purchase or sell. If a transaction is particularly large or if the relevant market is or becomes illiquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may cause the Funds to suffer significant losses and difficulties in meeting redemptions. If a number of securities held by the Funds halt trading, such as due to an exchange’s limit-up, limit-down rules, it may have a cascading effect and cause the Funds to halt trading. Volatility in market prices will increase the risk of the Funds being subject to a trading halt.
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-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. The performance of each Fund and its Underlying Index may vary due to asset valuation differences
48 |
Notes to Financial Statements (Unaudited) (continued)
and differences between each Fund’s portfolio and its Underlying Index resulting from legal restrictions, cost or liquidity constraints. Further, performance may diverge when a Fund employs a representative sampling, rather than a replication strategy.
NON-DIVERSIFICATION RISK – The KraneShares Zacks New China ETF, KraneShares CSI China Internet ETF and KraneShares E Fund China Commercial Paper ETF are considered to be non-diversified, which means that they may invest more of their assets in the securities of a single issuer or a smaller number of issuers than if they were diversified funds. 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.
VALUATION RISK – Independent market quotations for the non-U.S. securities held by the Funds may not be readily available, and such securities may be fair valued. In addition, the securities in which the Funds invest may trade on days that the Funds do not price their shares; as a result, the value of Funds shares may change on days when investors cannot purchase or sell their holdings.
7. OTHER
At September 30, 2016, the records of the Trust reflect all Shares outstanding created by Authorized Participants are in the form of Creation Units. However, the individual shares comprising such Creation Units are listed and traded on either the NYSE Arca, Inc., NASDAQ Exchange or BATS Exchange, 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.
After the close of the markets on September 13, 2016, the KraneShares Zacks New China ETF effected a split of its issued and outstanding shares for shareholders of record on September 12, 2016. The effect of this transaction was to increase the number of outstanding shares of the Fund by a ratio of two-for-one, resulting in a corresponding decrease in the net asset value per share. The capital share activity presented in the Statements of Changes in net assets for each of the years in the period then ended, and per share data in the financial highlights for each of the years in the period then ended have been given retroactive effect to reflect these share splits. There were no changes in net assets, results of operations or total return as a result of these transactions.
8. INDEMNIFICATIONS
In the normal course of business, the Funds enter into contracts that provide general indemnifications. The Funds’ maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be established; however, based on experience, the risk of loss from such claims is considered remote.
9. 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
49 |
Notes to Financial Statements (Unaudited) (concluded)
Expenses or has entered into work-out arrangements to schedule the future payment by the Adviser of outstanding Expenses, which include amounts due to certain service providers of the Funds.
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.
50 |
Disclosure of Fund Expenses (Unaudited)
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including brokerage expenses; and (2) ongoing costs. All Exchange Traded Funds (‘‘ETFs’’) have operating expenses. As a shareholder of an ETF, your investment is affected by these ongoing costs, which include (among others) costs for ETF management, administrative services, commissions, and shareholder reports like this one. It is important for you to understand the impact of these costs on your investment returns. In addition, a shareholder is responsible for brokerage fees as a result of their investment in the Fund.
Operating expenses such as these are deducted from an ETFs 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 ETFs 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, 2016 to September 30, 2016).
The table on the next page illustrates your Fund’s costs in two ways:
Actual Fund Return. This section helps you to estimate the actual expenses that your Fund incurred over the period. The ‘‘Expenses Paid During Period’’ column shows the actual dollar expense cost incurred by a $1,000 investment in the Fund, and the ‘‘Ending Account Value’’ number is derived from deducting that expense cost from the Fund’s gross investment return.
You can use this information, together with the actual amount you invested in the Fund, to estimate the expenses you paid over that period. Simply divide your actual account value by $1,000 to arrive at a ratio (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply that ratio by the number shown for your Fund under ‘‘Expenses Paid During Period.’’
Hypothetical 5% Return. This section helps you compare your Fund’s costs with those of other funds. It assumes that the Fund had an annual 5% return before expenses during the year, but that the expense ratio (Column 3) for the period is unchanged. This example is useful in making comparisons because the Securities and Exchange Commission requires all funds to make this 5% calculation. You can assess your Fund’s comparative cost by comparing the hypothetical result for your Fund in the ‘‘Expenses Paid During Period’’ column with those that appear in the same charts in the shareholder reports for other funds.
NOTE: Because the return is set at 5% for comparison purposes – NOT your Fund’s actual return – the account values shown may not apply to your specific investment.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, including brokerage commissions on the purchases and sale of Fund shares. Therefore, the expense examples are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs had been included, your costs would have been higher.
51 |
Disclosure of Fund Expenses (Unaudited) (concluded)
Beginning | Ending | |||||||||||||||
Account | Account | Annualized | Expenses | |||||||||||||
Value | Value | Expense | Paid During | |||||||||||||
4/1/2016 | 9/30/2016 | Ratios | Period(1) | |||||||||||||
KraneShares Bosera MSCI China A Share ETF | ||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 973.10 | 0.81 | % | $ | 4.03 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,020.99 | 0.81 | 4.12 | ||||||||||||
KraneShares Zacks New China ETF | ||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,118.30 | 0.73 | % | $ | 3.89 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,021.40 | 0.73 | 3.71 | ||||||||||||
KraneShares CSI China Internet ETF | ||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,151.80 | 0.70 | % | $ | 3.80 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,021.54 | 0.70 | 3.57 | ||||||||||||
KraneShares E Fund China Commercial Paper ETF | ||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 980.70 | 0.59 | % | $ | 2.90 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,022.14 | 0.59 | 2.97 | ||||||||||||
KraneShares FTSE Emerging Markets Plus ETF | ||||||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,064.50 | 0.75 | % | $ | 3.90 | ||||||||
Hypothetical 5% Return | 1,000.00 | 1,021.29 | 0.75 | 3.82 |
(1) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied 183/365 (to reflect the one-half year period from 4/1/16-9/30/16). |
52 |
Supplemental Information (Unaudited)
Net asset value, or ‘‘NAV’’, is the price per Share at which the Funds issue and redeem Shares to Authorized Participants. It is calculated in accordance with the policies described in Note 2 in Notes to Financial Statements.) The ‘‘Market Price’’ of the Funds generally is determined using the midpoint between the highest bid and the lowest offer on the stock exchange on which the Shares of the Funds are listed for trading, as of the time that the Funds’ NAV is calculated. The Funds’ Market Price may be at, above or below their NAV. The NAV of the Funds will fluctuate with changes in the market value of their holdings. The Market Price of the Funds will fluctuate in accordance with changes in their NAV, as well as market supply and demand of Fund Shares.
Premiums or discounts are the differences (expressed as a percentage) between the NAV and Market Price of the Funds on a given day, generally at the time NAV is calculated. A premium is the amount that the Funds are trading above the reported NAV, expressed as a percentage of the NAV. A discount is the amount that the Funds are trading below the reported NAV, expressed as a percentage of the NAV. Shareholders may pay more than NAV when they buy Fund shares and receive less than NAV when they sell those shares, because shares are bought and sold at market prices.
Further information regarding premiums and discounts is available on the Funds’ website at www.kraneshares.com. The premium and discount information contained on the website represents past performance and cannot be used to predict future results.
53 |
KraneShares Trust
1270 Avenue of the Americas, 22nd Floor
New York, New York 10020
1-855-857-2638
www.kraneshares.com
Investment Adviser
Krane Funds Advisors, LLC
1270 Avenue of the Americas, 22nd Floor
New York, New York 10020
Distributor
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456
Administrator
SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, PA 19456
This information must be preceded or accompanied by a current prospectus for the Funds described.
KraneShares Trust
1270 Avenue of the Americas
22nd Floor
New York, NY 10020
KRS-SA-001-0400
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.
Items 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 7, 2016
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 7, 2016 | |
By (Signature and Title) | /s/ Jonathan Krane |
Jonathan Krane | |
Principal Financial Officer |
Date: December 7, 2016