UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number 811-22698
KraneShares Trust
(Exact name of registrant as specified in charter)
280 Park Avenue, 32nd Floor
New York, New York 10017
(Address of principal executive offices) (Zip code)
Jonathan Krane
KraneShares Trust
280 Park Avenue, 32nd Floor
New York, New York 10017
(Name and address of agent for service)
Copy to:
Stacy L. Fuller
Willkie Farr & Gallagher LLP
1875 K Street, N.W.
Washington, DC 20006-1238
Registrant’s telephone number, including area code: (212) 933-0393
Date of fiscal year end: March 31, 2026
Date of reporting period: March 31, 2026
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
(a) A copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the “Act”) [17 CFR § 270.30e-1], is attached hereto.
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KraneShares 2x Long BABA Daily ETF
Principal Listing Exchange: NASDAQ
Annual Shareholder Report: March 31, 2026
This annual shareholder report contains important information about the KraneShares 2x Long BABA Daily ETF (the "Fund") for the period from April 1, 2025 to March 31, 2026. You can find additional information about the Fund at https://kraneshares.com/kbab/. You can also request this information by contacting us at 1-855-857-2638.
What were the Fund costs for the last year?
(based on a hypothetical $10,000 investment)
Table SummaryFund Name | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment |
|---|
KraneShares 2x Long BABA Daily ETF | $83 | 0.99% |
|---|
How did the Fund perform in the last year?
For the 12-month Period ended March 31, 2026 ("Period"), the Fund delivered the following returns:
Table SummaryFund | NAV Return (%) | Market Price Return (%) | Underlying Stock Return (%) |
|---|
KBAB | -32.01 | -32.26 | -3.49Footnote Reference(a) |
|---|
(a) Alibaba Group Holdings Limited (NYSE: BABA)
The Fund seeks daily investment results, before fees and expenses, of two times (200%) the daily performance of Alibaba Group Holding Limited (NYSE: BABA) (the “Underlying Stock”).
Because of the daily reset, the Fund’s performance for any period longer than a day will not be 200% of the performance of the Underlying Stock, particularly during volatile markets. During the period, market volatility and the performance of the Underlying Stock contributed materially to the performance of the Fund. Alibaba is an online commerce and cloud computing company operating globally. Extreme competition in China’s e-commerce industry, along with concerns about global protectionist policies, led to a decline in Alibaba's share price during the period.
How did the Fund perform since inception?
Total Return Based on $10,000 Investment
Table Summary | KraneShares 2x Long BABA Daily ETF | MSCI China All Shares Index (USD) (NR)Footnote Reference* |
|---|
Mar/25 | $10,000 | $10,000 |
|---|
Mar/25 | $8,932 | $9,765 |
|---|
Jun/25 | $6,232 | $9,992 |
|---|
Sep/25 | $14,208 | $12,037 |
|---|
Dec/25 | $8,912 | $11,527 |
|---|
Mar/26 | $6,072 | $10,776 |
|---|
| Footnote | Description |
Footnote* | Net Return (NR) - Reflects no deductions for fees, expenses or taxes (except foreign withholding taxes). |
Average Annual Total Returns as of March 31, 2026
Table SummaryFund/Index Name | 1 Year | Annualized
Since
Inception |
|---|
KraneShares 2x Long BABA Daily ETF | -32.01% | -37.68% |
|---|
MSCI China All Shares Index (USD) (NR)Footnote Reference* | 10.36% | 7.34% |
|---|
The line graph represents historical performance of a hypothetical investment of $10,000 in the Fund since its inception on March 11, 2025. Returns shown are total returns, which assume the reinvestment of dividends and capital gains. The table and graph presented above do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. Past performance is not indicative of future performance.Call 1-855-857-2638 or visit https://kraneshares.com/kbab/ for current month-end performance.
Key Fund Statistics as of March 31, 2026
Table Summary | Total Net Assets | Number of Holdings | Total Advisory Fees Paid | Portfolio Turnover Rate |
|---|
| $3,396,788 | 2 | $37,417 | 0% |
|---|
What did the Fund invest in?
Market ExposureFootnote Reference*
Table SummaryMarket Exposure | (%) |
|---|
Total Return Swaps | 199.1% |
| Footnote | Description |
Footnote* | Percentages are calculated based on total net assets. Investments are presented at the notional amount (net of financing costs). |
Table SummaryCash Equivalent | 108.01% |
|---|
Derivatives | -18.37% |
|---|
Liabilities in Excess of Other Assets | 10.36% |
|---|
This is a summary of certain changes to the Fund since April 1, 2025. For more complete information, you may review the Fund’s prospectus, which is available at https://kraneshares.com/etf/kbab/ or upon request at 1-855-857-2638.
Krane Funds Advisors, LLC (“Krane” or the “Adviser”), the investment adviser to the Fund, entered into an agreement whereby its officers and employees, among others, through KFA Two Holdings, LLC, will acquire a majority interest in the Adviser from China International Capital Corporation (USA) Holdings Inc., a wholly-owned, indirect subsidiary of China International Capital Corporation Limited (the “Transaction”). Consummation of the Transaction will, under the Investment Company Act of 1940, result in the automatic termination of the Fund’s existing investment advisory and, if applicable, sub-advisory agreements. In anticipation of the Transaction, the Board approved new advisory and, if applicable, sub-advisory agreements on terms identical to the existing agreements (other than effective and termination dates), subject to shareholder approval of the new advisory agreement. The new sub-advisory agreement will take effect in reliance on a manager-of-managers exemptive order. To ensure continuity of management pending shareholder approval of the new advisory agreement, the Board also approved interim advisory and, if applicable, sub-advisory agreements, effective upon closing of the Transaction, each with terms substantially identical to the current agreements, to remain in effect for up to 150 days while shareholder approval is sought.
Changes in and Disagreements with Accountants
There were no changes in or disagreements with accountants during the reporting period.
For additional information about the Fund, including its prospectus, financial information, holdings, and proxy voting information, visit https://kraneshares.com/kbab/.
You may have consented to receive one copy of a shareholder report at your address if you and one or more individuals in your home have multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses. If you wish to change your householding status or receive individual copies of your shareholder report, please contact us at 1-855-857-2638 or your financial intermediary.
KraneShares 2x Long BABA Daily ETF: KBAB
Principal Listing Exchange: NASDAQ
Annual Shareholder Report: March 31, 2026
KBAB-AR-2026
KraneShares 2x Long PDD Daily ETF
Principal Listing Exchange: NASDAQ
Annual Shareholder Report: March 31, 2026
This annual shareholder report contains important information about the KraneShares 2x Long PDD Daily ETF (the "Fund") for the period from April 1, 2025 to March 31, 2026. You can find additional information about the Fund at https://kraneshares.com/kpdd/. You can also request this information by contacting us at 1-855-857-2638.
What were the Fund costs for the last year?
(based on a hypothetical $10,000 investment)
Table SummaryFund Name | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment |
|---|
KraneShares 2x Long PDD Daily ETF | $99 | 1.26% |
|---|
How did the Fund perform in the last year?
For the 12-month Period ended March 31, 2026 ("Period"), the Fund delivered the following returns:
Table SummaryFund | NAV Return (%) | Market Price Return (%) | Underlying Stock Return (%) |
|---|
KPDD | -42.96 | -43.20 | -13.66Footnote Reference(a) |
|---|
(a) PDD Holdings (NASDAQ: PDD)
The Fund seeks daily investment results, before fees and expenses, of 2 times (200%) the daily percentage change of the ADR of PDD Holdings (NASDAQ: PDD) (the “Underlying Stock”).
Because of the daily reset, the Fund’s performance for any period longer than a day will not be 200% of the performance of the Underlying Stock, particularly during volatile markets. During the period, market volatility and the performance of the Underlying Stock contributed materially to the performance of the Fund. PDD Holdings is an online commerce company operating globally, and concerns about protectionist trade policies led to a decline in PDD Holdings’ share price during the period.
How did the Fund perform since inception?
Total Return Based on $10,000 Investment
Table Summary | KraneShares 2x Long PDD Daily ETF | MSCI China All Shares Index (USD) (NR)Footnote Reference* |
|---|
Mar/25 | $10,000 | $10,000 |
|---|
Mar/25 | $9,888 | $9,765 |
|---|
Jun/25 | $6,976 | $9,992 |
|---|
Sep/25 | $10,612 | $12,037 |
|---|
Dec/25 | $7,309 | $11,527 |
|---|
Mar/26 | $5,640 | $10,776 |
|---|
| Footnote | Description |
Footnote* | Net Return (NR) - Reflects no deductions for fees, expenses or taxes (except foreign withholding taxes). |
Average Annual Total Returns as of March 31, 2026
Table SummaryFund/Index Name | 1 Year | Annualized
Since
Inception |
|---|
KraneShares 2x Long PDD Daily ETF | -42.96% | -41.90% |
|---|
MSCI China All Shares Index (USD) (NR)Footnote Reference* | 10.36% | 7.34% |
|---|
The line graph represents historical performance of a hypothetical investment of $10,000 in the Fund since its inception on March 11, 2025. Returns shown are total returns, which assume the reinvestment of dividends and capital gains. The table and graph presented above do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. Past performance is not indicative of future performance.Call 1-855-857-2638 or visit https://kraneshares.com/kpdd/ for current month-end performance.
Key Fund Statistics as of March 31, 2026
Table Summary | Total Net Assets | Number of Holdings | Total Advisory Fees Paid | Portfolio Turnover Rate |
|---|
| $18,135,987 | 2 | $130,241 | 0% |
|---|
What did the Fund invest in?
Market ExposureFootnote Reference*
Table SummaryMarket Exposure | (%) |
|---|
Total Return Swaps | 199.6% |
| Footnote | Description |
Footnote* | Percentages are calculated based on total net assets. Investments are presented at the notional amount (net of financing costs). |
Table SummaryCash Equivalent | 81.83% |
|---|
Derivatives | 8.50% |
|---|
Liabilities in Excess of Other Assets | 9.66% |
|---|
This is a summary of certain changes to the Fund since April 1, 2025. For more complete information, you may review the Fund’s prospectus, which is available at https://kraneshares.com/etf/kpdd/ or upon request at 1-855-857-2638.
Krane Funds Advisors, LLC (“Krane” or the “Adviser”), the investment adviser to the Fund, entered into an agreement whereby its officers and employees, among others, through KFA Two Holdings, LLC, will acquire a majority interest in the Adviser from China International Capital Corporation (USA) Holdings Inc., a wholly-owned, indirect subsidiary of China International Capital Corporation Limited (the “Transaction”). Consummation of the Transaction will, under the Investment Company Act of 1940, result in the automatic termination of the Fund’s existing investment advisory and, if applicable, sub-advisory agreements. In anticipation of the Transaction, the Board approved new advisory and, if applicable, sub-advisory agreements on terms identical to the existing agreements (other than effective and termination dates), subject to shareholder approval of the new advisory agreement. The new sub-advisory agreement will take effect in reliance on a manager-of-managers exemptive order. To ensure continuity of management pending shareholder approval of the new advisory agreement, the Board also approved interim advisory and, if applicable, sub-advisory agreements, effective upon closing of the Transaction, each with terms substantially identical to the current agreements, to remain in effect for up to 150 days while shareholder approval is sought.
Changes in and Disagreements with Accountants
There were no changes in or disagreements with accountants during the reporting period.
For additional information about the Fund, including its prospectus, financial information, holdings, and proxy voting information, visit https://kraneshares.com/kpdd/.
You may have consented to receive one copy of a shareholder report at your address if you and one or more individuals in your home have multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses. If you wish to change your householding status or receive individual copies of your shareholder report, please contact us at 1-855-857-2638 or your financial intermediary.
KraneShares 2x Long PDD Daily ETF: KPDD
Principal Listing Exchange: NASDAQ
Annual Shareholder Report: March 31, 2026
KPDD-AR-2026
KraneShares 2x Long MELI Daily ETF
Principal Listing Exchange: NASDAQ
Annual Shareholder Report: March 31, 2026
This annual shareholder report contains important information about the KraneShares 2x Long MELI Daily ETF (the "Fund") for the period from June 11, 2025 (commencement of operations) to March 31, 2026. You can find additional information about the Fund at https://kraneshares.com/kmli/. You can also request this information by contacting us at 1-855-857-2638.
What were the Fund costs for the period?
(based on a hypothetical $10,000 investment)
Table SummaryFund Name | Costs of a $10,000 investmentFootnote Reference* | Costs paid as a percentage of a $10,000 investment |
|---|
KraneShares 2x Long MELI Daily ETF | $72 | 1.26% |
|---|
| Footnote | Description |
Footnote* | Costs shown not annualized. If the Fund had been open for the full fiscal year, costs shown would have been higher for the period ended. |
How did the Fund perform in the period?
For the Period from Fund inception to March 31, 2026 ("Period"), the Fund delivered the following returns:
Table SummaryFund | NAV Return (%) | Market Price Return (%) | Underlying Index Return (%) |
|---|
KMLI* | -58.43 | -58.34 | -11.37Footnote Reference(a) |
|---|
The KraneShares 2x Long MELI Daily ETF seeks daily investment results of 2 times (200%) the daily percentage change of the ADR of MercadoLibre, Inc. (NASDAQ: MELI) (the “Underlying Stock”).
Because of the daily reset, the Fund’s performance for any period longer than a day will not be 200% of the performance of the Underlying Stock, particularly during volatile markets. During the period, market volatility and the performance of the Underlying Stock contributed materially to the performance of the Fund. Mercado Libre is a Latin American technology company that operates a regional online marketplace, online payments infrastructure, and other web-based financial services. Investments in shipping, credit, and first-party retail, which compressed margins, led to a decline in Mercado Libre’s share price during the period.
Key Fund Statistics as of March 31, 2026
Table Summary | Total Net Assets | Number of Holdings | Total Advisory Fees Paid | Portfolio Turnover Rate |
|---|
| $6,803,175 | 2 | $40,794 | 0% |
|---|
What did the Fund invest in?
Market ExposureFootnote Reference*
Table SummaryMarket Exposure | (%) |
|---|
Total Return Swaps | 199.0% |
| Footnote | Description |
Footnote* | Percentages are calculated based on total net assets. Investments are presented at the notional amount (net of financing costs). |
Table SummaryCash Equivalent | 79.08% |
|---|
Derivatives | -5.81% |
|---|
Liabilities in Excess of Other Assets | 26.72% |
|---|
This is a summary of certain changes to the Fund since April 1, 2025. For more complete information, you may review the Fund’s prospectus, which is available at https://kraneshares.com/etf/kmli/ or upon request at 1-855-857-2638.
Krane Funds Advisors, LLC (“Krane” or the “Adviser”), the investment adviser to the Fund, entered into an agreement whereby its officers and employees, among others, through KFA Two Holdings, LLC, will acquire a majority interest in the Adviser from China International Capital Corporation (USA) Holdings Inc., a wholly-owned, indirect subsidiary of China International Capital Corporation Limited (the “Transaction”). Consummation of the Transaction will, under the Investment Company Act of 1940, result in the automatic termination of the Fund’s existing investment advisory and, if applicable, sub-advisory agreements. In anticipation of the Transaction, the Board approved new advisory and, if applicable, sub-advisory agreements on terms identical to the existing agreements (other than effective and termination dates), subject to shareholder approval of the new advisory agreement. The new sub-advisory agreement will take effect in reliance on a manager-of-managers exemptive order. To ensure continuity of management pending shareholder approval of the new advisory agreement, the Board also approved interim advisory and, if applicable, sub-advisory agreements, effective upon closing of the Transaction, each with terms substantially identical to the current agreements, to remain in effect for up to 150 days while shareholder approval is sought.
Changes in and Disagreements with Accountants
There were no changes in or disagreements with accountants during the reporting period.
For additional information about the Fund, including its prospectus, financial information, holdings, and proxy voting information, visit https://kraneshares.com/kmli/.
You may have consented to receive one copy of a shareholder report at your address if you and one or more individuals in your home have multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses. If you wish to change your householding status or receive individual copies of your shareholder report, please contact us at 1-855-857-2638 or your financial intermediary.
KraneShares 2x Long MELI Daily ETF: KMLI
Principal Listing Exchange: NASDAQ
Annual Shareholder Report: March 31, 2026
KMLI-AR-2026
KraneShares 2x Long JD Daily ETF
Principal Listing Exchange: NASDAQ
Annual Shareholder Report: March 31, 2026
This annual shareholder report contains important information about the KraneShares 2x Long JD Daily ETF (the "Fund") for the period from October 14, 2025 (commencement of operations) to March 31, 2026. You can find additional information about the Fund at https://kraneshares.com/etf/kjd/. You can also request this information by contacting us at 1-855-857-2638.
What were the Fund costs for the period?
(based on a hypothetical $10,000 investment)
Table SummaryFund Name | Costs of a $10,000 investmentFootnote Reference* | Costs paid as a percentage of a $10,000 investment |
|---|
KraneShares 2x Long JD Daily ETF | $51 | 1.25% |
|---|
| Footnote | Description |
Footnote* | Costs shown not annualized. If the Fund had been open for the full fiscal year, costs shown would have been higher for the period ended. |
How did the Fund perform in the period?
For the Period from Fund inception to March 31, 2026 ("Period"), the Fund delivered the following returns:
Table SummaryFund | NAV Return (%) | Market Price Return (%) | Underlying Index Return (%) |
|---|
KJD* | -25.28 | -25.32 | -25.91Footnote Reference(a) |
|---|
The KraneShares 2x Long JD Daily ETF seeks daily investment results of 2 times (200%) the daily percentage change of the ADR of JD.com, Inc. (NASDAQ: JD) (the “Underlying Stock”).
Because of the daily reset, the Fund’s performance for any period longer than a day will not be 200% of the performance of the Underlying Stock, particularly during volatile markets. During the period, market volatility and the performance of the Underlying Stock contributed materially to the performance of the Fund. JD.com is an online commerce company operating primarily in China. Heavy spending on consumer subsidies to support its new instant commerce business led to a decline in JD.com’s share price during the period.
Key Fund Statistics as of March 31, 2026
Table Summary | Total Net Assets | Number of Holdings | Total Advisory Fees Paid | Portfolio Turnover Rate |
|---|
| $1,868,263 | 2 | $10,630 | 0% |
|---|
What did the Fund invest in?
Market ExposureFootnote Reference*
Table SummaryMarket Exposure | (%) |
|---|
Total Return Swaps | 199.1% |
| Footnote | Description |
Footnote* | Percentages are calculated based on total net assets. All Investments are presented at market value with the exception of future contracts which are presented at the notional amount. |
Table SummaryCash Equivalent | 68.96% |
|---|
Derivatives | 23.36% |
|---|
Liabilities in Excess of Other Assets | 7.69% |
|---|
This is a summary of certain changes to the Fund since April 1, 2025. For more complete information, you may review the Fund’s prospectus, which is available at https://kraneshares.com/etf/kjd/ or upon request at 1-855-857-2638.
Krane Funds Advisors, LLC (“Krane” or the “Adviser”), the investment adviser to the Fund, entered into an agreement whereby its officers and employees, among others, through KFA Two Holdings, LLC, will acquire a majority interest in the Adviser from China International Capital Corporation (USA) Holdings Inc., a wholly-owned, indirect subsidiary of China International Capital Corporation Limited (the “Transaction”). Consummation of the Transaction will, under the Investment Company Act of 1940, result in the automatic termination of the Fund’s existing investment advisory and, if applicable, sub-advisory agreements. In anticipation of the Transaction, the Board approved new advisory and, if applicable, sub-advisory agreements on terms identical to the existing agreements (other than effective and termination dates), subject to shareholder approval of the new advisory agreement. The new sub-advisory agreement will take effect in reliance on a manager-of-managers exemptive order. To ensure continuity of management pending shareholder approval of the new advisory agreement, the Board also approved interim advisory and, if applicable, sub-advisory agreements, effective upon closing of the Transaction, each with terms substantially identical to the current agreements, to remain in effect for up to 150 days while shareholder approval is sought.
Changes in and Disagreements with Accountants
There were no changes in or disagreements with accountants during the reporting period.
For additional information about the Fund, including its prospectus, financial information, holdings, and proxy voting information, visit https://kraneshares.com/etf/kjd/.
You may have consented to receive one copy of a shareholder report at your address if you and one or more individuals in your home have multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses. If you wish to change your householding status or receive individual copies of your shareholder report, please contact us at 1-855-857-2638 or your financial intermediary.
KraneShares 2x Long JD Daily ETF: KJD
Principal Listing Exchange: NASDAQ
Annual Shareholder Report: March 31, 2026
KJD-AR-2026
KraneShares 2x Long BIDU Daily ETF
Principal Listing Exchange: NASDAQ
Annual Shareholder Report: March 31, 2026
This annual shareholder report contains important information about the KraneShares 2x Long BIDU Daily ETF (the "Fund") for the period from November 19, 2025 (commencement of operations) to March 31, 2026. You can find additional information about the Fund at https://kraneshares.com/etf/kbdu/. You can also request this information by contacting us at 1-855-857-2638.
What were the Fund costs for the period?
(based on a hypothetical $10,000 investment)
Table SummaryFund Name | Costs of a $10,000 investmentFootnote Reference* | Costs paid as a percentage of a $10,000 investment |
|---|
KraneShares 2x Long BIDU Daily ETF | $41 | 1.25% |
|---|
| Footnote | Description |
Footnote* | Costs shown not annualized. If the Fund had been open for the full fiscal year, costs shown would have been higher for the period ended. |
How did the Fund perform in the period?
For the Period from Fund inception to March 31, 2026 ("Period"), the Fund delivered the following returns:
Table SummaryFund | NAV Return (%) | Market Price Return (%) | Underlying Index Return (%) |
|---|
KBDU* | -17.96 | -17.88 | 21.07Footnote Reference(a) |
|---|
The KraneShares 2x Long BIDU Daily ETF seeks daily investment results of 2 times (200%) the daily percentage change of the ADR of Baidu Inc. (NASDAQ: BIDU) (the “Underlying Stock”).
Because of the daily reset, the Fund’s performance for any period longer than a day will not be 200% of the performance of the Underlying Stock, particularly during volatile markets. During the period, market volatility and the performance of the Underlying Stock contributed materially to the performance of the Fund. Baidu is an internet services platform that originally offered traditional search services and has since expanded into artificial intelligence, cloud computing, and autonomous driving, operating primarily in China. Concerns over declines in its traditional search business due to competition from AI chatbots led to a decline in Baidu’s share price during the period.
Key Fund Statistics as of March 31, 2026
Table Summary | Total Net Assets | Number of Holdings | Total Advisory Fees Paid | Portfolio Turnover Rate |
|---|
| $512,781 | 2 | $6,791 | 0% |
|---|
What did the Fund invest in?
Market ExposureFootnote Reference*
Table SummaryMarket Exposure | (%) |
|---|
Total Return Swaps | 198.7% |
| Footnote | Description |
Footnote* | Percentages are calculated based on total net assets. All Investments are presented at market value with the exception of future contracts which are presented at the notional amount. |
Table SummaryCash Equivalent | 89.59% |
|---|
Derivatives | -0.04% |
|---|
Liabilities in Excess of Other Assets | 10.45% |
|---|
This is a summary of certain changes to the Fund since April 1, 2025. For more complete information, you may review the Fund’s prospectus, which is available at https://kraneshares.com/etf/kbdu/ or upon request at 1-855-857-2638.
Krane Funds Advisors, LLC (“Krane” or the “Adviser”), the investment adviser to the Fund, entered into an agreement whereby its officers and employees, among others, through KFA Two Holdings, LLC, will acquire a majority interest in the Adviser from China International Capital Corporation (USA) Holdings Inc., a wholly-owned, indirect subsidiary of China International Capital Corporation Limited (the “Transaction”). Consummation of the Transaction will, under the Investment Company Act of 1940, result in the automatic termination of the Fund’s existing investment advisory and, if applicable, sub-advisory agreements. In anticipation of the Transaction, the Board approved new advisory and, if applicable, sub-advisory agreements on terms identical to the existing agreements (other than effective and termination dates), subject to shareholder approval of the new advisory agreement. The new sub-advisory agreement will take effect in reliance on a manager-of-managers exemptive order. To ensure continuity of management pending shareholder approval of the new advisory agreement, the Board also approved interim advisory and, if applicable, sub-advisory agreements, effective upon closing of the Transaction, each with terms substantially identical to the current agreements, to remain in effect for up to 150 days while shareholder approval is sought.
Changes in and Disagreements with Accountants
There were no changes in or disagreements with accountants during the reporting period.
For additional information about the Fund, including its prospectus, financial information, holdings, and proxy voting information, visit https://kraneshares.com/etf/kbdu/.
You may have consented to receive one copy of a shareholder report at your address if you and one or more individuals in your home have multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses. If you wish to change your householding status or receive individual copies of your shareholder report, please contact us at 1-855-857-2638 or your financial intermediary.
KraneShares 2x Long BIDU Daily ETF: KBDU
Principal Listing Exchange: NASDAQ
Annual Shareholder Report: March 31, 2026
KBDU-AR-2026
(b) Not applicable to the Registrant.
Item 2. Code of Ethics.
The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, and any person who performs a similar function. During the period covered by the report, there were no amendments to the code of ethics, and the Registrant did not grant any waivers from a provision of the code of ethics.
Item 3. Audit Committee Financial Expert.
(a)(1) The Registrant’s Board of Trustees has determined that the Registrant has an audit committee financial expert serving on the audit committee.
(a)(2) The audit committee financial expert, John Ferguson, is an independent trustee as defined in Form N-CSR Item 3 (a)(2).
Item 4. Principal Accountant Fees and Services.
Fees billed by KPMG LLP (“KPMG”) related to the Registrant.
KPMG billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as follows:
| |
2026 |
2025 |
| |
|
All fees and services
to the Registrant that
were pre-approved |
All fees and services
to service affiliates that
were pre-approved |
All other fees and services
to service affiliates that
did not require pre-approval |
All fees and services
to the Registrant that
were pre-approved |
All fees and services
to service affiliates that
were pre-approved |
All other fees and services
to service affiliates that
did not require pre-approval |
| (a) |
Audit Fees |
$730,750 |
$0 |
N/A |
$662,000 |
$0 |
N/A |
| (b) |
Audit-Related Fees |
$0 |
$0 |
N/A |
$7,500 |
$0 |
N/A |
| (c) |
Tax Fees(1) |
$202,880 |
$0 |
N/A |
$172,195 |
$0 |
N/A |
| (d) |
All Other Fees |
$18,675 |
$0 |
N/A |
$4,076 |
$0 |
N/A |
Notes:
|
(1) |
These services included tax return preparation and tax compliance for the Funds. |
(e)(1) Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the SEC adopted Rule 2-01 under Regulation S-X, which, among other things, requires a fund’s audit committee to pre-approve certain audit and non-audit services that are provided by its independent auditors in order to ensure the auditors’ independence. The Registrant’s Board of Trustees has established an Audit Committee that has been charged with, among other things, assisting the Board of Trustees in its oversight of: the Registrant’s independent auditors; preapproving all audit and non-audit services provided by the Registrant’s independent auditors; the integrity of the Funds’ financial statements; the independent auditors’ qualifications and independence; and the use of appropriate accounting principles.
(e)(2) Percentage of fees billed applicable to non-audit services approved pursuant to the “de minimis” exception of Rule 2-01(c)(7)(i)(C) were as follows for KPMG:
| |
2026 |
2025 |
|
Audit-Related Fees |
0% |
0% |
| Tax Fees |
0% |
0% |
|
All Other Fees |
0% |
0% |
(f) Not applicable.
(g) The aggregate non-audit fees and services billed by KPMG for the last two fiscal years were $0 and $0, respectively.
(h) During the past fiscal year, all non-audit services provided by the Registrant’s principal accountant to either the Registrant’s investment adviser or to entities controlling, controlled by, or under common control with the Registrant’s investment adviser that provides ongoing services to the Registrant were pre-approved by the Audit Committee of the Registrant’s Board of Trustees. Included in the audit committee’s pre-approval was the review and consideration as to whether the provision of these non-audit services is compatible with maintaining the principal accountant’s independence.
(i) Not applicable. The Registrant has not retained, for the preparation of the audit report on the financial statements included in the Form N-CSR, a registered public accounting firm that has a branch or office that is located in a foreign jurisdiction and that the Public Company Accounting Oversight Board (the “PCAOB”) has determined that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction.
(j) Not applicable. The Registrant is not a “foreign issuer,” as defined in 17 CFR 240.3b-4.
Item 5. Audit Committee of Listed Registrants.
(a) The Registrant has a separately-designated standing Audit Committee, which is composed of the Registrant’s Independent Trustees, Messrs. Luis Berruga, John Ferguson and Matthew Stroyman.
(b) Not applicable to the Registrant.
Item 6. Investments.
(a) The Schedules of Investments and Consolidated Schedules of Investments are included as part of the Registrant’s Financial Statements and Other Information filed under Item 7 of this form.
(b) Not applicable to the Registrant.
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
Financial statements and financial highlights are filed herein.
| |
|
Annual
Financials and Other Information
KraneShares
2x Long BABA Daily ETF
KraneShares
2x Long PDD Daily ETF
KraneShares
2x Long MELI Daily ETF
KraneShares
2x Long JD Daily ETF
KraneShares
2x Long BIDU Daily ETF
March 31,
2026 |
|
|
Table
of Contents
Fund
shares may only be purchased or redeemed from a Fund in Creation Unit aggregations. Investors who cannot transact in Creation Units of
a Fund’s shares must buy or sell Fund shares in the secondary market at their market price, which may be at a premium or discount
to a Fund’s net asset value, with the assistance of a broker. In doing so, the investor may incur brokerage commissions and may
pay more than net asset value when buying Fund shares and receive less than net asset value when selling Fund shares.
Schedule
of Investments March 31, 2026
KraneShares
2x Long BABA Daily ETF
A
list of the open OTC Swap agreement held by the Fund at March 31, 2026, is as follows:
| Total
Return Swaps |
| Counterparty |
|
Reference
Entity/
Obligation |
|
Fund
Pays* |
|
|
Fund
Receives |
|
Payment
Frequency |
|
Termination
Date |
|
Currency |
|
|
Notional
Amount |
|
|
Value |
|
|
Upfront
Payments/
Receipts |
|
|
Net
Unrealized
Appreciation
(Depreciation) |
|
| Marex
Securities Products Inc. |
|
Alibaba
Group Holding Ltd. |
|
OBFR+225
bps |
|
|
Total
Return |
|
At
Termination |
|
05/12/2027 |
|
USD |
|
|
|
7,386,636 |
|
|
$ |
6,762,535 |
|
|
$ |
— |
|
|
$ |
(624,101 |
) |
|
* |
OBFR
- Overnight Bank Funding Rate was 3.64% as of March 31, 2026. |
The
following summarizes the market value of the Fund’s other financial instruments used as of March 31, 2026, based on the inputs
used to value them:
| Other
Financial Instruments |
|
Level
1 |
|
|
Level
2 |
|
|
Level
3 |
|
|
Total |
|
| OTC
Swap |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
Return Swap* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized
Depreciation |
|
$ |
— |
|
|
|
(624,101 |
) |
|
$ |
— |
|
|
$ |
(624,101 |
) |
| * |
Swap
contracts are valued at the unrealized appreciation (depreciation) on the instrument |
See
“Glossary” for abbreviations.
The
accompanying notes are an integral part of the financial statements.
Schedule
of Investments March 31, 2026
KraneShares
2x Long PDD Daily ETF
A
list of the open OTC Swap agreement held by the Fund at March 31, 2026, is as follows:
| Total
Return Swaps |
| Counterparty |
|
Reference
Entity/
Obligation |
|
Fund
Pays* |
|
|
Fund
Receives |
|
Payment
Frequency |
|
Termination
Date |
|
Currency |
|
|
Notional
Amount |
|
|
Value |
|
|
Upfront
Payments/
Receipts |
|
|
Net
Unrealized
Appreciation
(Depreciation) |
|
| Marex
Securities Products Inc. |
|
PDD
Holdings Inc. |
|
OBFR+250
bps |
|
|
Total
Return |
|
At
Termination |
|
05/12/2027 |
|
USD |
|
|
|
34,660,780 |
|
|
$ |
36,203,093 |
|
|
$ |
— |
|
|
$ |
1,542,313 |
|
|
* |
OBFR
- Overnight Bank Funding Rate was 3.64% as of March 31, 2026. |
The
following summarizes the market value of the Fund’s other financial instruments used as of March 31, 2026, based on the inputs
used to value them:
| Other
Financial Instruments |
|
Level
1 |
|
|
Level
2 |
|
|
Level
3 |
|
|
Total |
|
| OTC
Swap |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
Return Swap* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized
Appreciation |
|
$ |
— |
|
|
$ |
1,542,313 |
|
|
$ |
— |
|
|
$ |
1,542,313 |
|
| * |
Swap
contracts are valued at the unrealized appreciation (depreciation) on the instrument |
See
“Glossary” for abbreviations.
The
accompanying notes are an integral part of the financial statements.
Schedule
of Investments March 31, 2026
KraneShares
2x Long MELI Daily ETF
A
list of the open OTC Swap agreement held by the Fund at March 31, 2026, is as follows:
| Total
Return Swaps |
| Counterparty |
|
Reference
Entity/
Obligation |
|
Fund
Pays* |
|
|
Fund
Receives |
|
Payment
Frequency |
|
Termination
Date |
|
Currency |
|
|
Notional
Amount |
|
|
Value |
|
|
Upfront
Payments/
Receipts |
|
|
Net
Unrealized
Appreciation
(Depreciation) |
|
| Marex
Securities Products Inc. |
|
MercadoLibre
Inc. |
|
OBFR+350
bps |
|
|
Total
Return |
|
At
Termination |
|
07/12/2026 |
|
USD |
|
|
|
13,932,935 |
|
|
$ |
13,537,737 |
|
|
$ |
— |
|
|
$ |
(395,198 |
) |
|
* |
OBFR
- Overnight Bank Funding Rate was 3.64% as of March 31, 2026. |
The
following summarizes the market value of the Fund’s other financial instruments used as of March 31, 2026, based on the inputs
used to value them:
| Other
Financial Instruments |
|
Level
1 |
|
|
Level
2 |
|
|
Level
3 |
|
|
Total |
|
| OTC
Swap |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
Return Swap* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized
Depreciation |
|
$ |
— |
|
|
$ |
(395,198 |
) |
|
$ |
— |
|
|
$ |
(395,198 |
) |
| * |
Swap
contracts are valued at the unrealized appreciation (depreciation) on the instrument |
See
“Glossary” for abbreviations.
The
accompanying notes are an integral part of the financial statements.
Schedule
of Investments March 31, 2026
KraneShares
2x Long JD Daily ETF
A
list of the open OTC Swap agreement held by the Fund at March 31, 2026, is as follows:
| Total
Return Swaps |
| Counterparty |
|
Reference
Entity/
Obligation |
|
Fund
Pays* |
|
|
Fund
Receives |
|
Payment
Frequency |
|
Termination
Date |
|
Currency |
|
|
Notional
Amount |
|
|
Value |
|
|
Upfront
Payments/
Receipts |
|
|
Net
Unrealized
Appreciation
(Depreciation) |
|
| Marex
Securities Products Inc.* |
|
JD.com
Inc. |
|
OBFR+300
bps |
|
|
Total
Return |
|
At
Termination |
|
11/25/2026 |
|
USD |
|
|
|
3,283,167 |
|
|
$ |
3,719,505 |
|
|
$ |
— |
|
|
$ |
436,338 |
|
|
* |
OBFR
- Overnight Bank Funding Rate was 3.64% as of March 31, 2026. |
The
following summarizes the market value of the Fund’s other financial instruments used as of March 31, 2026, based on the inputs
used to value them:
| Other
Financial Instruments |
|
Level
1 |
|
|
Level
2 |
|
|
Level
3 |
|
|
Total |
|
| OTC
Swap |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
Return Swap* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized
Depreciation |
|
$ |
— |
|
|
$ |
436,338 |
|
|
$ |
— |
|
|
$ |
436,338 |
|
| * |
Swap
contracts are valued at the unrealized appreciation (depreciation) on the instrument |
See
“Glossary” for abbreviations.
The
accompanying notes are an integral part of the financial statements.
Schedule
of Investments March 31, 2026
KraneShares
2x Long BIDU Daily ETF
A
list of the open OTC Swap agreement held by the Fund at March 31, 2026, is as follows:
| Total
Return Swaps |
| Counterparty |
|
Reference
Entity/
Obligation |
|
Fund
Pays |
|
|
Fund
Receives |
|
Payment
Frequency |
|
Termination
Date |
|
Currency |
|
|
Notional
Amount |
|
|
Value |
|
|
Upfront
Payments/
Receipts |
|
|
Net
Unrealized
Appreciation
(Depreciation) |
|
| Marex
Securities Products Inc. |
|
Baidu
Inc. |
|
OBFR+300
bps |
|
|
Total
Return |
|
At
Termination |
|
12/20/2026 |
|
USD |
|
|
|
1,019,146 |
|
|
$ |
1,018,926 |
|
|
$ |
— |
|
|
$ |
(220 |
) |
|
* |
OBFR
- Overnight Bank Funding Rate was 3.64% as of March 31, 2026. |
The
following summarizes the market value of the Fund’s other financial instruments used as of March 31, 2026, based on the inputs
used to value them:
| Other
Financial Instruments |
|
Level
1 |
|
|
Level
2 |
|
|
Level
3 |
|
|
Total |
|
| OTC
Swap |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
Return Swap* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unrealized
Depreciation |
|
$ |
— |
|
|
$ |
(220 |
) |
|
$ |
— |
|
|
$ |
(220 |
) |
|
* |
Swap
contracts are valued at the unrealized appreciation (depreciation) on the instrument |
See “Glossary”
for abbreviations.
The
accompanying notes are an integral part of the financial statements.
Schedule
of Investments March 31, 2026
Glossary
(abbreviations which may be used in preceding Schedules of Investments):
Portfolio
Abbreviations
OBFR
— Overnight Bank Funding Rate
OTC
— Over The Counter
USD
— United States Dollar
225
bps — 225 Basis points or 2.25%
250
bps — 250 Basis points or 2.50%
300
bps — 300 Basis points or 3.00%
350
bps — 350 Basis points or 3.50%
Statements
of Assets and Liabilities
March 31,
2026
| |
|
KraneShares
2x Long BABA
Daily ETF |
|
|
KraneShares
2x Long PDD
Daily ETF |
|
|
KraneShares
2x Long MELI
Daily ETF |
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash
Collateral on Swap Contracts |
|
$ |
3,668,987 |
|
|
$ |
14,841,400 |
|
|
$ |
5,380,255 |
|
| Cash
and Cash Equivalents |
|
|
354,686 |
|
|
|
1,767,771 |
|
|
|
1,821,709 |
|
| OTC
Swap Contracts at Value |
|
|
— |
|
|
|
1,542,313 |
|
|
|
— |
|
| Dividend
and Interest Receivable |
|
|
32 |
|
|
|
1,875 |
|
|
|
2,393 |
|
| Total
Assets |
|
|
4,023,705 |
|
|
|
18,153,359 |
|
|
|
7,204,357 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| OTC
Swap Contracts at Value |
|
|
624,101 |
|
|
|
— |
|
|
|
395,198 |
|
| Payable
for Management Fees |
|
|
2,782 |
|
|
|
17,272 |
|
|
|
5,903 |
|
| Payable
for Trustees’ Fees |
|
|
34 |
|
|
|
100 |
|
|
|
31 |
|
| Payable
for Capital Shares Redeemed |
|
|
— |
|
|
|
— |
|
|
|
50 |
|
| Total
Liabilities |
|
|
626,917 |
|
|
|
17,372 |
|
|
|
401,182 |
|
| Net
Assets |
|
$ |
3,396,788 |
|
|
$ |
18,135,987 |
|
|
$ |
6,803,175 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net
Assets Consist of: |
|
|
|
|
|
|
|
|
|
|
|
|
| Paid-in
Capital |
|
$ |
7,396,821 |
|
|
$ |
28,166,367 |
|
|
$ |
10,565,183 |
|
| Total
Distributable Loss |
|
|
(4,000,033 |
) |
|
|
(10,030,380 |
) |
|
|
(3,762,008 |
) |
| Net
Assets |
|
$ |
3,396,788 |
|
|
$ |
18,135,987 |
|
|
$ |
6,803,175 |
|
| Outstanding
Shares of Beneficial Interest (unlimited authorization - no par value) |
|
|
350,002 |
|
|
|
2,050,002 |
|
|
|
725,002 |
|
| Net
Asset Value, Offering and Redemption Price Per Share |
|
$ |
9.71 |
|
|
$ |
8.85 |
|
|
$ |
9.38 |
|
Amounts
designated as “—” are $0 or have been rounded to $0.
The
accompanying notes are an integral part of the financial statements.
Statements
of Assets and Liabilities (concluded)
March 31,
2026
| |
|
KraneShares
2x Long JD
Daily ETF |
|
|
KraneShares
2x Long BIDU
Daily ETF |
|
| Assets: |
|
|
|
|
|
|
|
|
| Cash
Collateral on Swap Contracts |
|
$ |
1,288,333 |
|
|
$ |
459,394 |
|
| OTC
Swap Contracts at Value |
|
|
436,338 |
|
|
|
— |
|
| Cash
and Cash Equivalents |
|
|
145,331 |
|
|
|
54,185 |
|
| Dividend
and Interest Receivable |
|
|
— |
|
|
|
48 |
|
| Total
Assets |
|
|
1,870,002 |
|
|
|
513,627 |
|
| |
|
|
|
|
|
|
|
|
| Liabilities: |
|
|
|
|
|
|
|
|
| OTC
Swap Contracts at Value |
|
|
— |
|
|
|
220 |
|
| Payable
for Management Fees |
|
|
1,683 |
|
|
|
622 |
|
| Payable
for Capital Shares Redeemed |
|
|
49 |
|
|
|
— |
|
| Payable
for Trustees’ Fees |
|
|
7 |
|
|
|
4 |
|
| Total
Liabilities |
|
|
1,739 |
|
|
|
846 |
|
| Net
Assets |
|
$ |
1,868,263 |
|
|
$ |
512,781 |
|
| |
|
|
|
|
|
|
|
|
| Net
Assets Consist of: |
|
|
|
|
|
|
|
|
| Paid-in
Capital |
|
$ |
2,503,119 |
|
|
$ |
329,267 |
|
| Total
Distributable Earnings/(Loss) |
|
|
(634,856 |
) |
|
|
183,514 |
|
| Net
Assets |
|
$ |
1,868,263 |
|
|
$ |
512,781 |
|
| Outstanding
Shares of Beneficial Interest (unlimited authorization - no par value) |
|
|
100,002 |
|
|
|
25,002 |
|
| Net
Asset Value, Offering and Redemption Price Per Share |
|
$ |
18.68 |
|
|
$ |
20.51 |
|
Amounts
designated as “—” are $0 or have been rounded to $0.
The
accompanying notes are an integral part of the financial statements.
Statements
of Operations
For
the Year or Period Ended March 31, 2026
| |
|
KraneShares
2x Long BABA
Daily ETF |
|
|
KraneShares
2x Long PDD
Daily ETF |
|
|
KraneShares
2x Long MELI
Daily ETF(1) |
|
| Investment
Income: |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest
Income |
|
$ |
144,788 |
|
|
$ |
397,523 |
|
|
$ |
110,229 |
|
| Total
Investment Income |
|
|
144,788 |
|
|
|
397,523 |
|
|
|
110,229 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| Management
Fees† |
|
|
47,726 |
|
|
|
130,241 |
|
|
|
40,794 |
|
| Trustees’
Fees |
|
|
281 |
|
|
|
710 |
|
|
|
241 |
|
| Insurance
Expense |
|
|
28 |
|
|
|
32 |
|
|
|
— |
|
| Total
Expenses |
|
|
48,035 |
|
|
|
130,983 |
|
|
|
41,035 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Management
Fee Waiver† |
|
|
(10,309 |
) |
|
|
— |
|
|
|
— |
|
| Net
Expenses |
|
|
37,726 |
|
|
|
130,983 |
|
|
|
41,035 |
|
| Net
Investment Income |
|
|
107,062 |
|
|
|
266,540 |
|
|
|
69,194 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net
Realized Gain (Loss) on: |
|
|
|
|
|
|
|
|
|
|
|
|
| Swap
Contracts |
|
|
(2,682,758 |
) |
|
|
(7,126,161 |
) |
|
|
(3,090,534 |
) |
| Net
Realized Loss |
|
|
(2,682,758 |
) |
|
|
(7,126,161 |
) |
|
|
(3,090,534 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net
Change in Unrealized Appreciation (Depreciation) on: |
|
|
|
|
|
|
|
|
|
|
|
|
| Swap
Contracts |
|
|
(7,652 |
) |
|
|
2,314,649 |
|
|
|
(395,198 |
) |
| Net
Change in Unrealized Appreciation (Depreciation) |
|
|
(7,652 |
) |
|
|
2,314,649 |
|
|
|
(395,198 |
) |
| Net
Realized and Unrealized Loss |
|
|
(2,690,410 |
) |
|
|
(4,811,512 |
) |
|
|
(3,485,732 |
) |
| Net
Decrease in Net Assets Resulting from Operations |
|
$ |
(2,583,348 |
) |
|
$ |
(4,544,972 |
) |
|
$ |
(3,416,538 |
) |
|
† |
See
Note 4 in Notes to Financial Statements. |
|
(1) |
The
Fund’s inception date was on June 11, 2025. |
Amounts
designated as “—” are $0 or have been rounded to $0.
The
accompanying notes are an integral part of the financial statements.
Statements
of Operations (concluded)
For
the Year or Period Ended March 31, 2026
| |
|
KraneShares
2x Long JD
Daily ETF(1) |
|
|
KraneShares
2x Long BIDU
Daily ETF(2) |
|
| Investment
Income: |
|
|
|
|
|
|
|
|
| Interest
Income |
|
$ |
28,332 |
|
|
$ |
15,852 |
|
| Total
Investment Income |
|
|
28,332 |
|
|
|
15,852 |
|
| |
|
|
|
|
|
|
|
|
| Expenses: |
|
|
|
|
|
|
|
|
| Management
Fees† |
|
|
10,630 |
|
|
|
6,791 |
|
| Trustees’
Fees |
|
|
33 |
|
|
|
27 |
|
| Total
Expenses |
|
|
10,663 |
|
|
|
6,818 |
|
| Net
Investment Income |
|
|
17,669 |
|
|
|
9,034 |
|
| |
|
|
|
|
|
|
|
|
| Net
Realized Gain (Loss) on: |
|
|
|
|
|
|
|
|
| Swap
Contracts |
|
|
(1,088,863 |
) |
|
|
300,296 |
|
| Net
Realized Gain (Loss) |
|
|
(1,088,863 |
) |
|
|
300,296 |
|
| |
|
|
|
|
|
|
|
|
| Net
Change in Unrealized Appreciation (Depreciation) on: |
|
|
|
|
|
|
|
|
| Swap
Contracts |
|
|
436,338 |
|
|
|
(220 |
) |
| Net
Change in Unrealized Appreciation (Depreciation) |
|
|
436,338 |
|
|
|
(220 |
) |
| Net
Realized and Unrealized Gain (Loss) |
|
|
(652,525 |
) |
|
|
300,076 |
|
| Net
Increase (Decrease) in Net Assets Resulting from Operations |
|
$ |
(634,856 |
) |
|
$ |
309,110 |
|
|
† |
See
Note 4 in Notes to Financial Statements. |
|
(1) |
The
Fund’s inception date was on October 14, 2025. |
|
(2) |
The
Fund’s inception date was on Novermber 19, 2025. |
Amounts
designated as “—” are $0 or have been rounded to $0.
The
accompanying notes are an integral part of the financial statements.
Statements
of Changes in Net Assets
| |
|
KraneShares
2x Long BABA Daily ETF |
|
| |
|
Year
Ended
March 31,
2026 |
|
|
Period
Ended
March 31,
2025(1) |
|
| Operations: |
|
|
|
|
|
|
|
|
| Net
Investment Income (Loss) |
|
$ |
107,062 |
|
|
$ |
(1,261 |
) |
| Net
Realized Gain (Loss) |
|
|
(2,682,758 |
) |
|
|
350,960 |
|
| Net
Change in Unrealized Appreciation (Depreciation) |
|
|
(7,652 |
) |
|
|
(616,449 |
) |
| Net
Decrease in Net Assets Resulting from Operations |
|
|
(2,583,348 |
) |
|
|
(266,750 |
) |
| |
|
|
|
|
|
|
|
|
| Distributions: |
|
|
(2,349,532 |
) |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Capital
Share Transactions:(2) |
|
|
|
|
|
|
|
|
| Issued |
|
|
8,788,407 |
|
|
|
2,500,051 |
|
| Redeemed |
|
|
(2,692,040 |
) |
|
|
— |
|
| Increase
in Net Assets from Capital Share Transactions |
|
|
6,096,367 |
|
|
|
2,500,051 |
|
| Total
Increase in Net Assets |
|
|
1,163,487 |
|
|
|
2,233,301 |
|
| |
|
|
|
|
|
|
|
|
| Net
Assets: |
|
|
|
|
|
|
|
|
| Beginning
of Year |
|
|
2,233,301 |
|
|
|
— |
|
| End
of Year |
|
$ |
3,396,788 |
|
|
$ |
2,233,301 |
|
| |
|
|
|
|
|
|
|
|
| Share
Transactions: |
|
|
|
|
|
|
|
|
| Issued |
|
|
400,000 |
|
|
|
100,002 |
|
| Redeemed |
|
|
(150,000 |
) |
|
|
— |
|
| Net
Increase in Shares Outstanding from Share Transactions |
|
|
250,000 |
|
|
|
100,002 |
|
|
(1) |
The
Fund’s inception date was on March 11, 2025. |
|
(2) |
Includes
transaction costs related to creations and redemptions. |
Amounts
designated as “—” are $0 or have been rounded to $0.
The
accompanying notes are an integral part of the financial statements.
Statements
of Changes in Net Assets (continued)
| |
|
KraneShares
2x Long PDD Daily
ETF |
|
| |
|
Year
Ended
March 31,
2026 |
|
|
Period
Ended
March 31,
2025(1) |
|
| Operations: |
|
|
|
|
|
|
|
|
| Net
Investment Income (Loss) |
|
$ |
266,540 |
|
|
$ |
(1,810 |
) |
| Net
Realized Gain (Loss) |
|
|
(7,126,161 |
) |
|
|
745,752 |
|
| Net
Change in Unrealized Appreciation (Depreciation) |
|
|
2,314,649 |
|
|
|
(772,336 |
) |
| Net
Decrease in Net Assets Resulting from Operations |
|
|
(4,544,972 |
) |
|
|
(28,394 |
) |
| |
|
|
|
|
|
|
|
|
| Distributions: |
|
|
(5,485,408 |
) |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Capital
Share Transactions:(2) |
|
|
|
|
|
|
|
|
| Issued |
|
|
34,167,994 |
|
|
|
2,500,050 |
|
| Redeemed |
|
|
(8,473,283 |
) |
|
|
— |
|
| Increase
in Net Assets from Capital Share Transactions |
|
|
25,694,711 |
|
|
|
2,500,050 |
|
| Total
Increase in Net Assets |
|
|
15,664,331 |
|
|
|
2,471,656 |
|
| |
|
|
|
|
|
|
|
|
| Net
Assets: |
|
|
|
|
|
|
|
|
| Beginning
of Year |
|
|
2,471,656 |
|
|
|
— |
|
| End
of Year |
|
$ |
18,135,987 |
|
|
$ |
2,471,656 |
|
| |
|
|
|
|
|
|
|
|
| Share
Transactions: |
|
|
|
|
|
|
|
|
| Issued |
|
|
2,525,000 |
|
|
|
100,002 |
|
| Redeemed |
|
|
(575,000 |
) |
|
|
— |
|
| Net
Increase in Shares Outstanding from Share Transactions |
|
|
1,950,000 |
|
|
|
100,002 |
|
|
(1) |
The
Fund’s inception date was on March 11, 2025. |
|
(2) |
Includes
transaction costs related to creations and redemptions. |
Amounts
designated as “—” are $0 or have been rounded to $0.
The
accompanying notes are an integral part of the financial statements.
Statements
of Changes in Net Assets (continued)
| |
|
KraneShares
2x Long MELI
Daily ETF |
|
| |
|
Period
Ended
March 31,
2026(1) |
|
| Operations: |
|
|
|
|
| Net
Investment Income |
|
$ |
69,194 |
|
| Net
Realized Loss |
|
|
(3,090,534 |
) |
| Net
Change in Unrealized Appreciation (Depreciation) |
|
|
(395,198 |
) |
| Net
Decrease in Net Assets Resulting from Operations |
|
|
(3,416,538 |
) |
| |
|
|
|
|
| Distributions: |
|
|
(440,504 |
) |
| |
|
|
|
|
| Capital
Share Transactions:(2) |
|
|
|
|
| Issued |
|
|
11,930,850 |
|
| Redeemed |
|
|
(1,270,633 |
) |
| Increase
in Net Assets from Capital Share Transactions |
|
|
10,660,217 |
|
| Total
Increase in Net Assets |
|
|
6,803,175 |
|
| |
|
|
|
|
| Net
Assets: |
|
|
|
|
| Beginning
of Period |
|
|
— |
|
| End
of Period |
|
$ |
6,803,175 |
|
| |
|
|
|
|
| Share
Transactions: |
|
|
|
|
| Issued |
|
|
800,002 |
|
| Redeemed |
|
|
(75,000 |
) |
| Net
Increase in Shares Outstanding from Share Transactions |
|
|
725,002 |
|
|
(1) |
The
Fund’s inception date was on June 11, 2025. |
|
(2) |
Includes
transaction costs related to creations and redemptions. |
Amounts
designated as “—” are $0 or have been rounded to $0.
The
accompanying notes are an integral part of the financial statements.
Statements
of Changes in Net Assets (continued)
| |
|
KraneShares
2x Long JD
Daily ETF |
|
| |
|
Period
Ended
March 31,
2026(1) |
|
| Operations: |
|
|
|
|
| Net
Investment Income |
|
$ |
17,669 |
|
| Net
Realized Loss |
|
|
(1,088,863 |
) |
| Net
Change in Unrealized Appreciation (Depreciation) |
|
|
436,338 |
|
| Net
Decrease in Net Assets Resulting from Operations |
|
|
(634,856 |
) |
| |
|
|
|
|
| Capital
Share Transactions:(2) |
|
|
|
|
| Issued |
|
|
3,474,717 |
|
| Redeemed |
|
|
(971,598 |
) |
| Increase
in Net Assets from Capital Share Transactions |
|
|
2,503,119 |
|
| Total
Increase in Net Assets |
|
|
1,868,263 |
|
| |
|
|
|
|
| Net
Assets: |
|
|
|
|
| Beginning
of Period |
|
|
— |
|
| End
of Period |
|
$ |
1,868,263 |
|
| |
|
|
|
|
| Share
Transactions: |
|
|
|
|
| Issued |
|
|
150,002 |
|
| Redeemed |
|
|
(50,000 |
) |
| Net
Increase in Shares Outstanding from Share Transactions |
|
|
100,002 |
|
|
(1) |
The
Fund’s inception date was on October 14, 2025. |
|
(2) |
Includes
transaction costs related to creations and redemptions. |
Amounts
designated as “—” are $0 or have been rounded to $0.
The
accompanying notes are an integral part of the financial statements.
Statements
of Changes in Net Assets (concluded)
| |
|
KraneShares
2x Long BIDU
Daily ETF |
|
| |
|
Period
Ended
March 31,
2026(1) |
|
| Operations: |
|
|
|
|
| Net
Investment Income |
|
$ |
9,034 |
|
| Net
Realized Gain |
|
|
300,296 |
|
| Net
Change in Unrealized Appreciation (Depreciation) |
|
|
(220 |
) |
| Net
Increase in Net Assets Resulting from Operations |
|
|
309,110 |
|
| |
|
|
|
|
| Capital
Share Transactions:(2) |
|
|
|
|
| Issued |
|
|
3,145,837 |
|
| Redeemed |
|
|
(2,942,166 |
) |
| Increase
in Net Assets from Capital Share Transactions |
|
|
203,671 |
|
| Total
Increase in Net Assets |
|
|
512,781 |
|
| |
|
|
|
|
| Net
Assets: |
|
|
|
|
| Beginning
of Period |
|
|
— |
|
| End
of Period |
|
$ |
512,781 |
|
| |
|
|
|
|
| Share
Transactions: |
|
|
|
|
| Issued |
|
|
125,002 |
|
| Redeemed |
|
|
(100,000 |
) |
| Net
Increase in Shares Outstanding from Share Transactions |
|
|
25,002 |
|
|
(1) |
The
Fund’s inception date was on November 19, 2025. |
|
(2) |
Includes
transaction costs related to creations and redemptions. |
Amounts
designated as “—” are $0 or have been rounded to $0.
The
accompanying notes are an integral part of the financial statements.
Financial
Highlights
Selected
Per Share Data & Ratios
For
the Year or Period Ended March 31, 2026
For
a Share Outstanding Throughout the Year
| |
|
Net
Asset Value,
Beginning of
Period
($) |
|
Net
Investment
Income (Loss)
($)* |
|
Net
Realized
and Unrealized
Loss on
Investments
($) |
|
Total
from
Operations
($) |
|
Distribution
from
Net Investment
Income
($) |
|
Return
of
Capital
($) |
|
| KraneShares
2x Long BABA Daily ETF |
|
| 2026 |
|
22.33 |
|
0.56 |
|
(4.64) |
|
(4.08) |
|
(8.54) |
|
— |
|
| 2025(1) |
|
25.00 |
|
(0.01) |
|
(2.66) |
|
(2.67) |
|
— |
|
— |
|
| KraneShares
2x Long PDD Daily ETF |
|
| 2026 |
|
24.72 |
|
0.37 |
|
(9.59) |
|
(9.22) |
|
(6.65) |
|
— |
|
| 2025(1) |
|
25.00 |
|
(0.02) |
|
(0.26) |
|
(0.28) |
|
— |
|
— |
|
| KraneShares
2x Long MELI Daily ETF |
|
| 2026(2) |
|
25.00 |
|
0.26 |
|
(14.41) |
|
(14.15) |
|
(1.47) |
|
— |
|
| KraneShares
2x Long JD Daily ETF |
|
| 2026(3) |
|
25.00 |
|
0.19 |
|
(6.51) |
|
(6.32) |
|
— |
|
— |
|
| KraneShares
2x Long BIDU Daily ETF |
|
| 2026(4) |
|
25.00 |
|
0.18 |
|
(4.67) |
|
(4.49) |
|
— |
|
— |
|
|
* |
Per
share data calculated using average shares method. |
|
** |
Total
return is based on the change in net asset value of a share during the year or period and assumes reinvestment of dividends and distributions
at net asset value. Total return is for the period indicated and periods of less than one year have not been annualized. The return shown
does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Excludes
effects of standard creation and redemption transaction fees associated with creation units. |
|
† |
Annualized. |
|
†† |
Portfolio turnover rate is for the period indicated and periods of less than one year have not been annualized. Excludes effect of
in-kind transfers. |
|
~ |
During
the periods, certain fees were waived. (See Note 4 in the Notes to Financial Statements). |
|
(1) |
The
Fund’s inception date was on March 11, 2025. |
|
(2) |
The
Fund’s inception date was on June 11, 2025. |
|
(3) |
The
Fund’s inception date was on October 14, 2025. |
|
(4) |
The
Fund’s inception date was on November 19, 2025. |
Amounts
designated as “—” are $0 or have been rounded to $0.
The
accompanying notes are an integral part of the financial statements.
Total
from
Distributions
($) |
|
Net
Asset
Value, End of
Period
($) |
|
Total
Return
(%)** |
|
Net
Assets,
End of
Period
($)(000) |
|
Ratio
of
Expenses to
Average
Net Assets
(%)~ |
|
Ratio
of Expenses
to Average Net
Assets (Excluding
Waivers, as
applicable)
(%)~ |
|
Ratio
of Net
Investment
Income (Loss)
to Average
Net Assets
(%) |
|
Portfolio
Turnover Rate
(%) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (8.54) |
|
9.71 |
|
(32.01) |
|
3,397 |
|
0.99 |
|
1.26 |
|
2.81 |
|
— |
|
| — |
|
22.33 |
|
(10.68) |
|
2,233 |
|
1.00† |
|
1.27† |
|
(1.00)† |
|
—†† |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (6.65) |
|
8.85 |
|
(42.96) |
|
18,136 |
|
1.26 |
|
1.26 |
|
2.56 |
|
— |
|
| — |
|
24.72 |
|
(1.12) |
|
2,472 |
|
1.27† |
|
1.27† |
|
(1.27)† |
|
—†† |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1.47) |
|
9.38 |
|
(58.43) |
|
6,803 |
|
1.26† |
|
1.26† |
|
2.12† |
|
—†† |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
18.68 |
|
(25.28) |
|
1,868 |
|
1.25† |
|
1.25† |
|
2.08† |
|
—†† |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
20.51 |
|
(17.96) |
|
513 |
|
1.25† |
|
1.25† |
|
1.66† |
|
—†† |
|
The
accompanying notes are an integral part of the financial statements.
Notes
to Financial Statements
1.
ORGANIZATION
KraneShares
Trust (the “Trust”) is a Delaware Statutory Trust formed on February 3, 2012. The Trust is registered under the Investment
Company Act of 1940, as amended (the “Investment Company Act”), as an open-end management investment company. As of March 31,
2026, the Trust had 34 operational series. The financial statements herein and the related notes pertain to the following five series:
KraneShares 2X Long BABA Daily ETF, KraneShares 2X Long PDD Daily ETF, KraneShares 2X Long MELI Daily ETF, Kraneshares 2x Long JD Daily
ETF, and KraneShares 2X Long BIDU Daily ETF (each, a “Fund” and collectively, the “Funds”). The Funds are non-diversified
Funds, as defined under Section 5(b)(1) of the Investment Company Act. Krane Funds Advisors, LLC (“Krane” or the “Adviser”),
a Delaware limited liability company, serves as the investment adviser for the Funds and is subject to the supervision of the Board of
Trustees (the “Board”). The Adviser is responsible for managing the investment activities of the Funds, the Funds’ business
affairs and other administrative matters. The Adviser may use sub-advisers (each, a “Sub-Adviser” or collectively, the “Sub-Advisers”)
to perform the day-to-day management of the Funds.
China
International Capital Corporation (USA) Holdings Inc., a wholly-owned, indirect subsidiary of China International Capital Corporation
Limited owns a majority stake in Krane. As of March 31, 2026, KFA One Holdings, LLC (“KFA1”), located at 280 Park Avenue,
32nd Floor, New York, New York 10017, held the remaining equity interests in Krane. As of the same date, officers and certain employees
of Krane, among others, had agreed to acquire, through KFA Two Holdings, LLC (“KFA2”), at 280 Park Avenue, 32nd Floor, New
York, New York 10017, the entire interest of China International Capital Corporation Limited in Krane. Such transaction is expected to
close no later than June 30. Jonathan Krane, through his equity interests in KFA1 and KFA2, may be deemed to control Krane. Jonathan
Krane, being a Trustee, the Principal Executive Officer and Principal Financial Officer of the Trust, is also an affiliated person of
the Trust.
Shares
of the Funds are listed and traded on the NASDAQ Stock Market LLC (the “Exchange” or the “NASDAQ”). Market prices
for Fund shares (“Shares”) may be different from their net asset value (“NAV”). The Funds issue and redeem Shares
on a continuous basis at NAV only in large blocks of Shares each called a “Creation Unit”. This does not mean, however, that
individual investors will be able to redeem and purchase Shares directly with the series of the Trust. Only Authorized Participants can
redeem and purchase Creation Units of Shares directly. Each Fund will issue and redeem Shares for a basket of securities and/or a balancing
cash amount. Individual shares trade in the secondary market at market prices that change throughout the day.
At
March 31, 2026, all shares issued by the Funds were in Creation Unit aggregations to Authorized Participants through primary market
transactions (e.g., transactions directly with the Funds). However, the individual shares that make up those Creation Units are traded
on the Exchange (e.g., secondary market transactions). Some of those individual shares have been bought and sold by persons that are not
Authorized Participants. Each Authorized Participant has entered into an agreement with the Funds’ Distributor.
The
Funds seek daily leveraged investment results and are intended to be used as short-term trading vehicles. Each Fund attempts to provide
daily investment results that correspond to the respective long leveraged multiple of the performance of an underlying stock (each a “Leveraged
Long Fund”).
Notes
to Financial Statements (continued)
2.
SIGNIFICANT ACCOUNTING POLICIES
The
following is a summary of the significant accounting policies followed by the Funds. The Funds are investment companies that apply the
accounting and reporting guidance issued in Topic 946 by the U.S. Financial Accounting Standards Board (“FASB”).
USE
OF ESTIMATES — The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S.
GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could differ from those estimates, and could have a material impact
to the Funds.
SEGMENT
REPORTING — An operating segment is defined in Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU
2023-07”) as a component of a public entity that engages in business activities from which it may recognize revenues and incur expenses,
has operating results that are regularly reviewed by the public entity’s chief operating decision maker (CODM) to make decisions
about resources to be allocated to the segment and assess its performance, and has discrete financial information available. The Funds’
Principal Executive Officer and Principal Financial Officer act as the Funds’ CODM. The Funds represent a single operating segment,
as the CODM monitors the operating results of the Funds as a whole and the Funds’ long-term strategic asset allocation is predetermined
in accordance with the Funds’ single investment objective which is executed by the Funds’ portfolio manager. The financial
information in the form of the Funds’ schedule of investments, total returns, expense ratios and changes in net assets (i.e., changes
in net assets resulting from operations, subscriptions and redemptions), which are used by the CODM to assess the segment’s performance
versus the Funds’ comparative benchmarks and to make resource allocation decisions for the Funds’ single segment, is consistent
with that presented within the Funds’ financial statements. Segment assets are reflected on the accompanying Statements of Assets
and Liabilities as “Total Assets” and significant segment expenses are listed on the accompanying Statements of Operations.
SECURITY
VALUATION — The NAV per share of each Fund is computed by dividing the value of the net assets of a Fund (i.e., the value of its
total assets less total liabilities and withholdings) by the total number of shares of a Fund outstanding, rounded to the nearest cent.
Expenses and fees, including without limitation, the management, administration and distribution fees, are accrued daily and taken into
account for purposes of determining NAV; as of March 31, 2026, there are no distribution fees paid by the Fund, and the Board of
Trustees has not currently approved the commencement of any payments under the Distribution Plan. The NAV per share for each Fund normally
is calculated by the Administrator (as defined below) and determined as of the regularly scheduled close of normal trading on each day
that the NYSE is scheduled to be open for business (normally 4:00 p.m., Eastern Time). Any assets or liabilities denominated in currencies
other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more
sources.
Securities
listed on a securities exchange (i.e., exchange-traded equity securities), market or automated quotation system for which quotations are
readily available (except for securities traded on NASDAQ), including securities traded over the counter, are valued by independent pricing
agents at the last reported sale price on the primary exchange or market (foreign or domestic) on which they are traded (or at the time
as of which the Fund’s NAV is calculated if a security’s exchange is normally open at that time). If there is no such reported
sale, such securities are valued at the
Notes
to Financial Statements (continued)
most
recently reported bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. If a security price cannot
be obtained from an independent, third-party pricing agent, the Fund seeks to obtain bid and ask prices from two broker-dealers who make
a market in the portfolio instrument and determines the average of the two.
If
available, debt securities are priced based upon valuations provided by independent, third-party pricing agents. Such values generally
reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value debt securities
at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies
designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued
at their amortized cost, which approximates market value.
The
prices for foreign securities are reported in local currency and converted to U.S. dollars using currency exchange rates. The exchange
rates used for valuation are captured as of the close of the London Stock Exchange each day normally at 4:00 p.m. Greenwich Mean Time.
The
value of a swap contract is equal to the obligation (or rights) under the swap contract, which will generally be equal to the net amounts
to be paid or received under the contract based upon the relative values of the positions held by each party to the contract as determined
by the applicable independent, third party pricing agent.
Swaps
cleared through a central clearing house (“centrally cleared swaps”) are valued at the settlement price established each day
by the board of the exchange on which they are listed. The daily settlement prices for centrally cleared swaps are provided by an Independent
Pricing Agent. Swaps which are not centrally cleared are priced based on valuations provided by an Independent Pricing Agent.
In
a typical equity swap, one party agrees to pay another party the return on a stock, stock index, or basket of stocks (the “equity
leg” of the swap) in return for interest payment(s) calculated based on the notional amount of the swap (the “financing leg”
of the swap). Each leg of the swap is valued separately, and the net amount of the two legs is included in the Fund’s net asset
value. The value of the equity leg of the swap is provided by an Independent Pricing Agent based on the value of the financial instrument
underlying the swap. The value of the financing leg of the swap is systematically calculated by the Fund’s accounting agent based
on the details of the swap.
Exchange-traded
options, except as discussed below for FLEX options, are valued at the mean of their most recent bid and asked price, if available, and
otherwise, long positions will be valued at the most-recent bid price, and short positions will be valued at the most-recent ask price.
Over-the-counter (“OTC”) options are valued based upon prices determined by the applicable independent, third party pricing
agent. FLEX (short for flexible) options are normally valued using a model-based price provided by a third-party pricing vendor. On days
when a trade in a FLEX option occurs, the trade price will be used to value such FLEX options in lieu of the model price.
Futures
are valued at the settlement price established by the board of trade on which they are traded. Foreign currency forward contracts are
valued at the current day’s interpolated foreign exchange rate, as calculated using the current day’s spot rate and the 30-,
60-, 90- and 180-day forward rates provided by an independent pricing agent.
Notes
to Financial Statements (continued)
On
certain days, the settlement price for futures may not be available at the time the Fund calculates its NAV. On such days, the best available
price (which is typically the last trade price) may be used to value futures.
As
of and during the year or period ended March 31, 2026, the Funds held swaps contracts. As of and during the year or period ended
March 31, 2026, the Funds did not hold foreign currency forward, futures, and option contracts.
Securities
issued by a wholly owned subsidiary of a Fund will be valued at the subsidiary’s net asset value, which will be determined using
the same pricing policies and procedures applicable to the Fund.
Investments
in open-end investment companies that do not trade on an exchange are valued at the end of day NAV per share. Investments in open-end
investment companies that trade on an exchange are valued in the same manner as other exchange-traded equity securities (described above).
Investments
for which market prices are not “readily available,” or are not deemed to reflect current market values, or are debt securities
where no evaluated price is available from third-party pricing agents pursuant to established methodologies, are fair valued in accordance
with the Adviser’s valuation policies and procedures approved by the Board. Some of the more common reasons that may necessitate
that a security be valued using “fair value” pricing may include, but are not limited to: the security’s trading has
been halted or suspended; the security’s primary trading market is temporarily closed; or the security has not been traded for an
extended period of time.
In
addition, a Fund may fair value its securities if an event that may materially affect the value of a Fund’s securities that trade
outside of the United States (a “Significant Event”) has occurred between the time of the security’s last close and
the time that a Fund calculates its NAV. A Significant Event may relate to a single issuer or to an entire market sector, country or region.
Events that may be Significant Events may include: government actions, natural disasters, armed conflict, acts of terrorism and significant
market fluctuations. If Krane becomes aware of a Significant Event that has occurred with respect to a portfolio instrument or group of
portfolio instruments after the closing of the exchange or market on which the portfolio instrument or portfolio instruments principally
trade, but before the time at which a Fund calculates its NAV, it will notify the Administrator and may request that an ad hoc meeting
of the Fair Value Pricing Committee be called.
With
respect to trade-halted securities, the Adviser typically will fair value a trade-halted security by adjusting the security’s last
market close price by the security’s sector performance, as measured by a predetermined index, unless Krane’s Fair Value Pricing
Committee determines to make additional adjustments. Certain foreign securities exchanges have mechanisms in place that confine one day’s
price movement in an individual security to a pre-determined price range based on that day’s opening price (“Collared Securities”).
Fair value determinations for Collared Securities will generally be capped based on any applicable pre-determined “limit down”
or “limit up” prices established by the relevant foreign securities exchange. As an example, China A-Shares can only be plus
or minus ten percent in one day of trading in the relevant mainland China equity market. As a result, the fair value price determination
on a given day will generally be capped plus or minus ten percent.
Fair
value pricing involves subjective judgments and it is possible that a fair value determination for a security is materially different
than the value that could actually be realized upon the sale of the security or that another fund that uses market quotations or its own
fair value procedures to price
Notes
to Financial Statements (continued)
the
same securities. In addition, fair value pricing could result in a difference between the prices used to calculate a Fund’s NAV
and the prices used by the Underlying Index, if applicable. This may adversely affect a Fund’s ability to track its Underlying Index,
if applicable.
Trading
in securities on many foreign exchanges is normally completed before the close of business on each Business Day (a “Business Day”,
as used herein, is any day on which the Exchange is open for business). In addition, securities trading in a particular country or countries
may not take place on each Business Day or may take place on days that are not Business Days. Changes in valuations on certain securities
may occur at times or on days on which a Fund’s NAV is not calculated and on which Fund shares do not trade and sales and redemptions
of shares do not occur. As a result, the value of a Fund’s portfolio securities and the net asset value of its shares may change
on days when share purchases or sales cannot occur.
Fund
shares are purchased or sold on a national securities exchange at market prices, which may be higher or lower than NAV. Transactions in
Fund shares will be priced at NAV only if shares are purchased or redeemed directly from a Fund in Creation Units. No secondary sales
will be made to brokers or dealers at concession by the Distributor or by a Fund. Purchases and sales of shares in the secondary market,
which will not involve a Fund, will be subject to customary brokerage commissions and charges.
With
respect to the securities of private companies, the Administrator will obtain the price of private company securities from the Valuation
Designee, who will determine their fair value using various inputs, including observable data such as cost basis, primary financing rounds,
tender offers, and secondary market activity. The Valuation Designee will also consider pricing from independent pricing experts1,
comparables of public and private companies, and relevant market news. While primary financing rounds, tender offers, and cost basis are
expected to be the main drivers of fair value, all factors will be considered. A daily dashboard will be stored to record data being considered.
In addition to conducting a pricing and trend analysis on the data received from the independent pricing experts, the Valuation Designee
will take business cycle, market depth, transaction size and other relevant factors into consideration when reviewing observable data
and will periodically assess the pricing methodology used by the independent pricing experts.
|
1 |
It
is currently expected that the Valuation Designee will get pricing from two independent pricing agents. |
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.
Notes
to Financial Statements (continued)
Level
2 – Other significant observable inputs (including quoted prices in non-active markets, quoted prices for similar investments, fair
value of investments for which the Funds have the ability to fully redeem tranches at net asset value as of the measurement date or within
the near term, and short-term investments valued at amortized cost).
Level
3 – Significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments, broker
quotes, fair value of investments for which the Funds do not have the ability to fully redeem tranches at net asset value as of the measurement
date or within the near term).
Investments
are classified within the level of the lowest significant input considered in determining fair value. Investments classified within Level
3 whose fair value measurement considers several inputs may include Level 1 or Level 2 inputs as components of the overall fair value
measurement. For details of the investment classification, refer to each Fund’s Schedule of Investments.
FEDERAL
INCOME TAXES — It is each Fund’s intention to qualify or continue to qualify as a regulated investment company for federal
income tax purposes by complying with the appropriate provisions of Subchapter M of the Internal Revenue Code of 1986, as amended (the
“Code”), and to distribute annually all or substantially all of its taxable income and gains to shareholders. Accordingly,
no provisions for federal income taxes have been made in the financial statements.
The
Funds evaluate tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether
it is “more-likely-than-not” (i.e., greater than 50 percent) that each tax position will be sustained upon examination by
a taxing authority based on the technical merits of the position. Tax positions not deemed to meet the more-likely-than-not threshold
are recorded as a tax benefit or expense in the current year. The Funds did not record any tax provisions in the current period. However,
management’s conclusions regarding tax positions may be subject to review and adjustment at a later date based on factors including,
but not limited to, examination by tax authorities (i.e., the last three tax year ends, as applicable), on-going analysis of and changes
to tax laws, regulations and interpretations thereof.
As
of March 31, 2026, management of the Funds has reviewed all open tax years since inception and concluded that there is no tax liability
resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns.
The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits
will significantly change in the next 12 months.
SECURITY
TRANSACTIONS AND INVESTMENT INCOME — Security transactions are accounted for on the trade date for financial reporting purposes.
Costs used in determining realized gains and losses on the sale of investment securities are based on specific identification. Dividend
income is recorded, net of any applicable withholding tax, on the ex-dividend date, or for certain foreign securities, when the information
becomes available to the Funds. Interest income is recognized on the accrual basis from the settlement date and includes the amortization
of premiums and the accretion of discount calculated using the effective interest method.
Dividend
income received from affiliated funds is recognized on the ex-dividend date and is recorded as income distributions in the Statement of
Operations. Capital gain distributions received from affiliated funds are recognized on ex-dividend date and are recorded on the Statement
of Operations as such. Costs used in determining realized gains and losses on the sales of affiliated funds are on the basis of specific
identification. See details on the Statements of Operations.
Notes
to Financial Statements (continued)
SWAPS
— Each of the Funds invests at least 80% of its net assets (plus any borrowings for investment purposes) in its Underlying Stock
and financial instruments, such as swap agreements and options, that, in combination, provide investment exposure to 2 times (200%) the
performance of the Underlying Stock.
Generally,
each Fund will invest in its Underlying Stock and enter into swap agreements on the Underlying Stock as it attempts to replicate 2 times
(200%) the daily percentage change of the Underlying Stock. Each Fund aims to generate 2 times the daily performance of its Underlying
Stock for a single day. A “single day” is defined as being calculated “from the close of regular trading on one trading
day to the close on the next trading day.”
Each
Fund will enter into one or more swap agreements with major financial institutions for a specified period ranging from a day to more than
one year whereby each Fund and the financial institution will agree to exchange the return (or differentials in rates of return) earned
or realized on the Underlying Stock. The gross return to be exchanged or “swapped” between the parties is calculated with
respect to a “notional amount,” e.g., the return on or change in value of a particular dollar amount representing the Underlying
Stock.
The
Funds are required to disclose the impact of offsetting assets and liabilities represented in the Statements of Assets and Liabilities
to enable users of the financial statements to evaluate the effect or potential effect of netting arrangements on its financial position
for recognized assets and liabilities. These recognized assets and liabilities are financial instruments and derivative instruments that
are either subject to an enforceable master netting arrangement or similar agreement or meet the following right of setoff criteria: the
amounts owed by the Fund to another party are determinable, the Fund has the right to set off the amounts owed with the amounts owed by
the other party, the Fund intends to set off, and the Fund’s right of setoff is enforceable at law.
The
International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements maintain provisions for general obligations,
representations, agreements, collateral, and events of default or termination. The occurrence of a specified event of termination may
give a counterparty the right to terminate all of its contracts and effect settlement of all outstanding transactions under the applicable
ISDA Master Agreement.
To
reduce counterparty risk with respect to Over-the-Counter (“OTC”) transactions, the Funds have entered into master netting
arrangements, established within the Funds’ ISDA Master Agreements, which allow the Fund to make (or to have an entitlement to receive)
a single net payment in the event of default (close-out netting) for outstanding payables and receivables with respect to certain OTC
positions in swaps for each individual counterparty. In addition, the Funds may require that certain counterparties post cash and/or securities
in collateral accounts to cover their net payment obligations for those derivative contracts subject to ISDA Master Agreements. If the
counterparty fails to perform under these contracts and agreements, the cash and/or securities will be made available to the Funds.
For
financial reporting purposes, the Funds do not offset derivative assets and derivative liabilities that are subject to netting arrangements
in the Statements of Assets and Liabilities. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or
prohibitions against the right of offset in bankruptcy, insolvency or other events.
Notes
to Financial Statements (continued)
Collateral
terms are contract specific for OTC derivatives. For derivatives traded under an ISDA Master Agreement, the collateral requirements are
typically calculated by netting marked-to-market amount of each transaction under such agreement and comparing that amount to the value
of any collateral currently pledged by the Funds or the counterparty.
For
financial reporting purposes, cash collateral that has been pledged to cover obligations of the Funds, if any, is reported separately
on the Statements of Assets and Liabilities as cash pledged as collateral. Non-cash collateral pledged by the Funds, if any, is noted
in the Schedules of Investments. Generally, the amount of collateral due from or to a party must exceed a minimum transfer amount threshold
before a transfer has to be made. To the extent amounts due to the Funds from its respective counterparties are not fully collateralized,
contractually or otherwise, the Funds bear the risk of loss from counterparty nonperformance.
The
following is a summary by counterparty of the market value of swap agreements and collateral (received)/pledged for the KraneShares 2x
Long BABA Daily ETF as of March 31, 2026:
| |
|
|
|
|
|
|
|
|
|
|
|
Gross
Amounts not offset in the Statements of Assets and Liabilities |
|
Gross
Amounts of
Recognized Assets |
|
|
Gross
Amounts
Offset in the
Statements
of Assets and
Liabilities |
|
|
Net
Amounts
Presented
in the
Statements
of Assets and
Liabilities |
|
|
Financial
Instruments
for Offset |
|
Cash
Collateral
(Received)
Pledged(1) |
|
|
Net
Amount(2) |
|
| $ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Gross
Amounts not offset in the Statements of Assets and Liabilities |
|
Gross
Amounts of
Recognized Liabilities |
|
|
Gross
Amounts
Offset in the
Statements
of Assets and
Liabilities |
|
|
Net
Amounts
Presented
in the
Statements
of Assets and
Liabilities |
|
|
Financial
Instruments
for Offset |
|
Cash
Collateral
(Received)
Pledged(1) |
|
|
Net
Amount(2) |
|
| $ |
(624,101 |
) |
|
$ |
— |
|
|
$ |
(624,101 |
) |
|
$ |
— |
|
$ |
624,101 |
|
|
$ |
— |
|
|
(1) |
Excess
collateral pledged is not shown for financial reporting purposes. |
|
(2) |
Net
Exposures represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC
financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. |
Notes
to Financial Statements (continued)
The
following is a summary by counterparty of the market value of swap agreements and collateral (received)/pledged for the KraneShares 2x
Long PDD Daily ETF as of March 31, 2026:
| |
|
|
|
|
|
|
|
|
|
|
|
Gross
Amounts not offset in the Statements of Assets and Liabilities |
|
Gross
Amounts of
Recognized Assets |
|
|
Gross
Amounts
Offset in the
Statements
of Assets and
Liabilities |
|
|
Net
Amounts
Presented
in the
Statements
of Assets and
Liabilities |
|
|
Financial
Instruments
for Offset |
|
Cash
Collateral
(Received)
Pledged(1) |
|
|
Net
Amount(2) |
|
| $ |
1,542,313 |
|
|
$ |
— |
|
|
$ |
1,542,313 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
1,542,313 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Gross
Amounts not offset in the Statements of Assets and Liabilities |
|
Gross
Amounts of
Recognized Liabilities |
|
|
Gross
Amounts
Offset in the
Statements
of Assets and
Liabilities |
|
|
Net
Amounts
Presented
in the
Statements
of Assets and
Liabilities |
|
|
Financial
Instruments
for Offset |
|
Cash
Collateral
(Received)
Pledged(1) |
|
|
Net
Amount(2) |
|
| $ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
(1) |
Excess
collateral pledged is not shown for financial reporting purposes. |
|
(2) |
Net
Exposures represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC
financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. |
The
following is a summary by counterparty of the market value of swap agreements and collateral (received)/pledged for the KraneShares 2x
Long MELI Daily ETF as of March 31, 2026:
| |
|
|
|
|
|
|
|
|
|
|
|
Gross
Amounts not offset in the Statements of Assets and Liabilities |
|
Gross
Amounts of
Recognized Assets |
|
|
Gross
Amounts
Offset in the
Statements
of Assets and
Liabilities |
|
|
Net
Amounts
Presented
in the
Statements
of Assets and
Liabilities |
|
|
Financial
Instruments
for Offset |
|
Cash
Collateral
(Received)
Pledged(1) |
|
|
Net
Amount(2) |
|
| $ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Gross
Amounts not offset in the Statements of Assets and Liabilities |
|
Gross
Amounts of
Recognized Liabilities |
|
|
Gross
Amounts
Offset in the
Statements
of Assets and
Liabilities |
|
|
Net
Amounts
Presented
in the
Statements
of Assets and
Liabilities |
|
|
Financial
Instruments
for Offset |
|
Cash
Collateral
(Received)
Pledged(1) |
|
|
Net
Amount(2) |
|
| $ |
(395,198 |
) |
|
$ |
— |
|
|
$ |
(395,198 |
) |
|
$ |
— |
|
$ |
395,198 |
|
|
$ |
— |
|
Notes
to Financial Statements (continued)
|
(1) |
Excess
collateral pledged is not shown for financial reporting purposes. |
|
(2) |
Net
Exposures represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC
financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. |
The
following is a summary by counterparty of the market value of swap agreements and collateral (received)/pledged for the KraneShares 2x
Long JD Daily ETF as of March 31, 2026:
| |
|
|
|
|
|
|
|
|
|
|
|
Gross
Amounts not offset in the Statements of Assets and Liabilities |
|
Gross
Amounts of
Recognized Assets |
|
|
Gross
Amounts
Offset in the
Statements
of Assets and
Liabilities |
|
|
Net
Amounts
Presented
in the
Statements
of Assets and
Liabilities |
|
|
Financial
Instruments
for Offset |
|
Cash
Collateral
(Received)
Pledged(1) |
|
|
Net
Amount(2) |
|
| $ |
436,338 |
|
|
$ |
— |
|
|
$ |
436,338 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
436,338 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Gross
Amounts not offset in the Statements of Assets and Liabilities |
|
Gross
Amounts of
Recognized Liabilities |
|
|
Gross
Amounts
Offset in the
Statements
of Assets and
Liabilities |
|
|
Net
Amounts
Presented
in the
Statements
of Assets and
Liabilities |
|
|
Financial
Instruments
for Offset |
|
Cash
Collateral
(Received)
Pledged(1) |
|
|
Net
Amount(2) |
|
| $ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
|
(1) |
Excess
collateral pledged is not shown for financial reporting purposes. |
|
(2) |
Net
Exposures represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC
financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. |
Notes
to Financial Statements (continued)
The
following is a summary by counterparty of the market value of swap agreements and collateral (received)/pledged for the KraneShares 2x
Long BIDU Daily ETF as of March 31, 2026:
| |
|
|
|
|
|
|
|
|
|
|
|
Gross
Amounts not offset in the Statements of Assets and Liabilities |
|
Gross
Amounts of
Recognized Assets |
|
|
Gross
Amounts
Offset in the
Statements
of Assets and
Liabilities |
|
|
Net
Amounts
Presented
in the
Statements
of Assets and
Liabilities |
|
|
Financial
Instruments
for Offset |
|
Cash
Collateral
(Received)
Pledged(1) |
|
|
Net
Amount(2) |
|
| $ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Gross
Amounts not offset in the Statements of Assets and Liabilities |
|
Gross
Amounts of
Recognized Liabilities |
|
|
Gross
Amounts
Offset in the
Statements
of Assets and
Liabilities |
|
|
Net
Amounts
Presented
in the
Statements
of Assets and
Liabilities |
|
|
Financial
Instruments
for Offset |
|
Cash
Collateral
(Received)
Pledged(1) |
|
|
Net
Amount(2) |
|
| $ |
(220 |
) |
|
$ |
— |
|
|
$ |
(220 |
) |
|
$ |
— |
|
$ |
220 |
|
|
$ |
— |
|
|
(1) |
Excess
collateral pledged is not shown for financial reporting purposes. |
|
(2) |
Net
Exposures represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC
financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. |
As
of March 31, 2026, the Funds had open total return swap contracts. Refer to the Schedule of Investments for details regarding open
swap contracts as of March 31, 2026. All total return swap contracts held during the period were total return contracts.
For
the year or period ended March 31, 2026, the average monthly notional balances for total return swap contracts held during the period
by the KraneShares 2X Long BABA Daily ETF, KraneShares 2X Long PDD Daily ETF, KraneShares 2X Long MELI Daily ETF, KraneShares 2X Long
JD Daily ETF, and KraneShares 2X Long BIDU Daily ETF were $8,313,368, $23,864,766, $8,917,139, $3,681,567 and $2,801,767, respectively.
FOREIGN
CURRENCY — The books and records of the Funds are maintained in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars on the date of valuation. Purchases and sales of investment securities,
income and expenses are translated into U.S. dollars at the relevant rates of exchange prevailing on the respective dates of such transactions.
The Funds do not isolate that portion of realized or unrealized gains and losses resulting from changes in the foreign exchange rate from
fluctuations arising from changes in the market prices of the securities. The Funds report certain foreign-currency-related transactions
as components of realized gains for financial reporting purposes, whereas such components are treated as ordinary income for Federal income
tax purposes.
Notes
to Financial Statements (continued)
DIVIDENDS
AND DISTRIBUTIONS TO SHAREHOLDERS — Each Fund intends to pay out to their shareholders net investment income, if any, at least annually.
Any net realized capital gains are distributed annually. All distributions are recorded on the ex-dividend date.
CASH
OVERDRAFT CHARGES — Per the terms of an agreement with Brown Brothers Harriman & Co. (“BBH”), the Funds’ Custodian,
if a Fund has a cash overdraft on a given day, it will be assessed an overdraft charge of the BBH Overdraft Base Rate plus 2.00%. Cash
overdraft charges are included in “Interest Expense” on the Statements of Operations.
CREATION
UNITS — The Funds issue and redeem Shares at NAV and only in large blocks of Shares (each block of Shares for a Fund is a Creation
Unit of 25,000 Shares or multiples thereof). In its discretion, the Trust reserves the right to increase or decrease the number of each
Fund’s shares that constitute a Creation Unit.
Except
when aggregated in Creation Units, Shares are not redeemable securities of a Fund. Shares of a Fund may only be purchased or redeemed
by certain Authorized Participants. An Authorized Participant is either (i) a broker-dealer or other participant in the clearing process
through the Continuous Net Settlement System of the National Securities Clearing Corporation or (ii) a Depository Trust Company participant
and, in each case, must have executed a Participant Agreement with the Distributor. Most retail investors will not qualify as Authorized
Participants or have the resources to buy and sell whole Creation Units. Therefore, they will be unable to purchase or redeem the Shares
directly from a Fund. Rather, most retail investors will purchase Shares in the secondary market with the assistance of a broker and will
be subject to customary brokerage commissions or fees when buying or selling Shares. If a Creation Unit is purchased or redeemed for cash,
a higher transaction fee may be charged.
The
Adviser may adjust the transaction fees from time to time based on actual experience.
CASH
AND CASH EQUIVALENTS — Idle cash and currency balances may be swept into various overnight sweep accounts and are classified as
cash equivalents on the Statement of Assets and Liabilities. These amounts, at times, may exceed United States federally insured limits.
Amounts swept are available on the next business day.
3.
DERIVATIVES TRANSACTIONS
The
following tables show the derivatives categorized by underlying risk exposure.
The
fair value of derivative instruments located on the Statements of Assets and Liabilities as of March 31, 2026 was as follows:
Notes
to Financial Statements (continued)
| |
|
Asset
Derivatives |
|
|
Liability
Derivatives |
|
| |
|
Statements
of Assets
and Liabilities |
|
Fair
Value |
|
|
Statements
of Assets
and Liabilities |
|
Fair
Value |
|
| KraneShares
2x Long BABA Daily ETF |
|
|
|
|
|
|
|
|
|
|
| Equity
contracts |
|
Unrealized
appreciation on swap contracts |
|
$ |
— |
† |
|
Unrealized
depreciation on swap contracts |
|
$ |
(624,101 |
)† |
| Total
Derivatives not accounted for as hedging instruments |
|
$ |
— |
|
|
|
|
$ |
(624,101 |
) |
| |
|
|
|
|
|
|
|
|
|
|
| KraneShares
2x Long PPD Daily ETF |
|
|
|
|
|
|
|
|
|
|
| Equity
contracts |
|
Unrealized
appreciation on swap contracts |
|
$ |
1,542,313 |
† |
|
Unrealized
depreciation on swap contracts |
|
$ |
— |
† |
| Total
Derivatives not accounted for as hedging instruments |
|
$ |
1,542,313 |
|
|
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
| KraneShares
2x Long MELI Daily ETF |
|
|
|
|
|
|
|
|
|
|
| Equity
contracts |
|
Unrealized
appreciation on swap contracts |
|
$ |
— |
† |
|
Unrealized
depreciation on swap contracts |
|
$ |
(395,198 |
)† |
| Total
Derivatives not accounted for as hedging instruments |
|
$ |
— |
|
|
|
|
$ |
(395,198 |
) |
| |
|
|
|
|
|
|
|
|
|
|
| KraneShares
2x Long JD Daily ETF |
|
|
|
|
|
|
|
|
|
|
| Equity
contracts |
|
Unrealized
appreciation on swap contracts |
|
$ |
— |
† |
|
Unrealized
depreciation on swap contracts |
|
$ |
436,338 |
† |
| Total
Derivatives not accounted for as hedging instruments |
|
$ |
— |
|
|
|
|
$ |
436,338 |
|
| |
|
|
|
|
|
|
|
|
|
|
| KraneShares
2x Long BIDU Daily ETF |
|
|
|
|
|
|
|
|
|
|
| Equity
contracts |
|
Unrealized
appreciation on swap contracts |
|
$ |
— |
† |
|
Unrealized
depreciation on swap contracts |
|
$ |
(220 |
)† |
| Total
Derivatives not accounted for as hedging instruments |
|
$ |
— |
|
|
|
|
$ |
(220 |
) |
|
† |
Includes
cumulative appreciation/depreciation of swap contracts as reported in the Schedules of Investments. Market Value is reported within the
Statements of Assets & Liabilities for swap contracts that have paid premiums. |
The
effect of derivative instruments on the Statements of Operations for the year or period ended March 31, 2026:
Amount
of realized gain or (loss) on derivatives recognized in income:
| Derivatives
Not Accounted for as Hedging Instruments |
|
Swaps |
|
| KraneShares
2x Long BABA Daily ETF |
|
|
|
|
| Equity
contracts |
|
$ |
(2,682,758 |
) |
| Total |
|
$ |
(2,682,758 |
) |
Notes
to Financial Statements (continued)
| Derivatives
Not Accounted for as Hedging Instruments |
|
Swaps |
|
| KraneShares
2x Long PDD Daily ETF |
|
|
|
|
| Equity
contracts |
|
$ |
(7,126,161 |
) |
| Total |
|
$ |
(7,126,161 |
) |
| |
|
|
|
|
| KraneShares
2x Long MELI Daily ETF |
|
|
|
|
| Equity
contracts |
|
$ |
(3,090,534 |
) |
| Total |
|
$ |
(3,090,534 |
) |
| |
|
|
|
|
| KraneShares
2x Long JD Daily ETF |
|
|
|
|
| Equity
contracts |
|
$ |
(1,088,863 |
) |
| Total |
|
$ |
(1,088,863 |
) |
| |
|
|
|
|
| KraneShares
2x Long BIDU Daily ETF |
|
|
|
|
| Equity
contracts |
|
$ |
300,296 |
|
| Total |
|
$ |
300,296 |
|
Change
in unrealized appreciation or (depreciation) on derivatives recognized in income:
| Derivatives
Not Accounted for as Hedging Instruments |
|
Swaps |
|
| KraneShares
2x Long BABA Daily ETF |
|
|
|
|
| Equity
contracts |
|
$ |
(7,652 |
) |
| Total |
|
$ |
(7,652 |
) |
| |
|
|
|
|
| KraneShares
2x Long PDD Daily ETF |
|
|
|
|
| Equity
contracts |
|
$ |
2,314,649 |
|
| Total |
|
$ |
2,314,649 |
|
| |
|
|
|
|
| KraneShares
2x Long MELI Daily ETF |
|
|
|
|
| Equity
contracts |
|
$ |
(395,198 |
) |
| Total |
|
$ |
(395,198 |
) |
| |
|
|
|
|
| KraneShares
2x Long JD Daily ETF |
|
|
|
|
| Equity
contracts |
|
$ |
436,338 |
|
| Total |
|
$ |
436,338 |
|
| |
|
|
|
|
| KraneShares
2x Long BIDU Daily ETF |
|
|
|
|
| Equity
contracts |
|
$ |
(220 |
) |
| Total |
|
$ |
(220 |
) |
4.
RELATED PARTY TRANSACTIONS
INVESTMENT
ADVISORY AGREEMENT — As part of the Investment Advisory Agreement, Krane has contractually agreed to pay all expenses of each Fund,
except (i) interest and taxes (including, but not limited to, income, excise, transaction, transfer and withholding taxes);(ii) expenses
of a Fund 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; (iii) expenses incurred in connection with any distribution
plan adopted by the Trust in compliance with Rule 12b-1 under the 1940 Act, including distribution fees; (iv) Acquired Fund Fees
and Expenses; (v) litigation expenses; (vi) the compensation payable to the Adviser under the Investment Advisory Agreement; (vii) compensation
and expenses of the Independent Trustees (including any Trustees’ counsel fees); and (viii) any expenses determined to be extraordinary
Notes
to Financial Statements (continued)
expenses
by the Board. Nevertheless, there exists a risk that a Trust service provider will seek recourse against the Trust if is not timely paid
by Krane for the fees and expenses for which it is responsible, which could materially adversely affect a Fund.
The
Agreement requires the Adviser to pay all operating expenses of the Funds, except: (a) interest and taxes (including, but not limited
to, income, excise, transaction, transfer and withholding taxes); (b) expenses of the Funds incurred with respect to the acquisition and
disposition of portfolio securities and the execution of portfolio transactions, including brokerage commissions and short sale dividend
or interest expense; (c) expenses incurred in connection with any distribution plan adopted by the Trust in compliance with Rule 12b-1
under the Investment Company Act, including distribution fees; (d) “Acquired Fund Fees and Expenses” (as defined by Form N-1A
under the Investment Company Act); (e) litigation expenses; (f) the compensation payable to the Adviser under the Agreement; (g) compensation
and expenses of the Independent Trustees (including any fees of independent legal counsel to the Independent Trustees); and (h) any expenses
determined to be extraordinary expenses by the Board. In addition, under the Agreement, while the fees and expenses related to the Funds’
securities lending-related activities reduce the gross revenues and income of the Funds from such activities, they are not fees and expenses
for which Krane is responsible. As of March 31, 2026, the Fund did not participate in securities lending related activities.
Each
Agreement provides that each Fund pays a unitary (or unified) fee to the Adviser for advisory and management services provided to the
Fund, subject to the exceptions noted herein. In this context, there exists a risk that a Trust service provider will seek recourse against
the Trust if it is not timely paid by Krane for the fees and expenses for which it is responsible, which could materially adversely affect
the Funds. Pursuant to the Agreement between the Trust and the Adviser, the Funds below pay the Adviser a fee, which is calculated daily
and paid monthly, at the following annual rates, based on a percentage of the average daily net assets of each Fund. In addition, as compensation
for the services provided by the Adviser in connection with any securities lending-related activities, each Fund pays the Adviser 10%
of the monthly investment income received from the investment of cash collateral and loan fees received from borrowers in respect to securities
loans (net of any amounts paid to the custodian and/or securities lending agent or rebated to borrowers). As of March 31, 2026, the
Funds did not participate in securities lending related activities.
| |
|
Management
Fee |
|
| KraneShares
2X Long BABA Daily ETF |
|
1.25% |
|
| KraneShares
2X Long PDD Daily ETF |
|
1.25% |
|
| KraneShares
2X Long MELI Daily ETF |
|
1.25% |
|
| KraneShares
2x Long JD Daily ETF |
|
1.25% |
|
| KraneShares
2x Long BIDU Daily ETF |
|
1.25% |
|
The
Adviser bears all of its own costs associated with providing these advisory services.
Pursuant
to the terms of the Fee Waiver Agreement, Krane has contractually agreed to waive its management fee for the below listed Fund by the
following amount of the Fund’s average daily net assets until August 1, 2026. The Fee Waiver Agreement may only be terminated
prior thereto by the Board. In addition, the Fee Waiver Agreement will terminate if the Agreement for the Fund is terminated.
Notes
to Financial Statements (continued)
| |
|
Fee
Waiver |
|
| KraneShares
2X Long BABA Daily ETF |
|
0.27% |
|
DISTRIBUTION
AGREEMENT — SEI Investments Distribution Co. (the “Distributor”), a wholly-owned subsidiary of SEI Investments Company,
and an affiliate of the Administrator, serves as the Funds’ distributor of Creation Units pursuant to a Distribution Agreement.
The Distributor does not maintain any secondary market in Fund shares.
The
Trust has adopted a Distribution and Service Plan (“Plan”) pursuant to Rule 12b-1 under the Investment Company Act. In
accordance with its Plan, each Fund is authorized to pay an amount up to 0.25% of its average daily net assets each year for certain distribution-related
activities. For the period ended March 31, 2026, no fees were charged under the Plan. Fees would only be charged under the Plan upon
approval by the Board.
ADMINISTRATOR,
CUSTODIAN AND TRANSFER AGENT — SEI Investments Global Funds Services (the “Administrator”) serves as the Funds’
Administrator pursuant to an Administration Agreement. BBH serves as the Funds’ Custodian and Transfer Agent pursuant to a Custodian
and Transfer Agent Agreement.
5.
INVESTMENT TRANSACTIONS
For
the period ended March 31, 2026, there were no purchases or sales of investments in securities excluding long-term U.S. Government
and short-term securities.
For
the period ended March 31, 2026, there were no purchases or sales of long-term U.S. government securities for the Funds.
For
the period ended March 31, 2026, there were no in-kind transactions associated with creations and redemptions.
6.
TAX INFORMATION
The
amount and character of income and capital gain distributions to be paid, if any, are determined in accordance with Federal income tax
regulations, which may differ from U.S. GAAP. As a result, net investment income (loss) and net realized gain (loss) on investment transactions
for a reporting period may differ significantly from distributions during such period. These book/tax differences may be temporary or
permanent. To the extent these differences are permanent in nature, they are charged or credited to distributable earnings (loss) or paid-in
capital, as appropriate, in the period that the differences arise.
The
permanent differences primarily consist of reclassification of income and expense from swap transactions. The permanent differences that
are credited or charged to Paid-in Capital and Distributable Earnings for the fiscal year ended March 31, 2026 are primarily related
to distribution in excess and utilization of earnings and profits on shareholder redemptions.
| |
|
Distributable
Earnings/(Loss) |
|
|
Paid-in
Capital |
|
| KraneShares
2x Long BABA Daily ETF |
|
$ |
932,847 |
|
|
$ |
(932,847 |
) |
| KraneShares
2x Long MELI Daily ETF |
|
|
95,034 |
|
|
|
(95,034 |
) |
| KraneShares
2x Long BIDU Daily ETF |
|
|
(125,596 |
) |
|
|
125,596 |
|
Notes
to Financial Statements (continued)
The
tax character of dividends and distributions paid during the years or periods ended March 31, 2026 and March 31, 2025 were as
follows:
| |
|
Ordinary
Income |
|
|
Long-Term
Capital Gain |
|
|
Totals |
|
| KraneShares
2x Long BABA Daily ETF |
|
|
|
|
|
|
|
|
|
|
|
|
| 2026 |
|
$ |
2,349,532 |
|
|
$ |
— |
|
|
$ |
2,349,532 |
|
| 2025 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| KraneShares
2x Long PDD Daily ETF |
|
|
|
|
|
|
|
|
|
|
|
|
| 2026 |
|
$ |
5,485,408 |
|
|
$ |
— |
|
|
$ |
5,485,408 |
|
| 2025 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| KraneShares
2x Long MELI Daily ETF |
|
|
|
|
|
|
|
|
|
|
|
|
| 2026 |
|
$ |
440,504 |
|
|
$ |
— |
|
|
$ |
440,504 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| KraneShares
2x Long JD Daily ETF |
|
|
|
|
|
|
|
|
|
|
|
|
| 2026 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| KraneShares
2x Long BIDU Daily ETF |
|
|
|
|
|
|
|
|
|
|
|
|
| 2026 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
The
KraneShares 2x Long MELI Daily ETF, KraneShares 2X Long JD Daily ETF, and KraneShares 2X Long BIDU Daily ETF commenced on June 11,
2025, October 14, 2025, November 19, 2025, respectively and the Fund were not in operations during the prior fiscal year.
As
of March 31, 2026, the components of tax basis distributable earnings (distributable losses) were as follows:
| |
|
KraneShares
2x Long BABA
Daily ETF |
|
|
KraneShares
2x Long PDD
Daily ETF |
|
|
KraneShares
2x Long MELI
Daily ETF |
|
| Capital
Loss Carryforwards |
|
|
(1,419,232 |
) |
|
|
(3,726,208 |
) |
|
|
(798,679 |
) |
| Qualified
Late-Year |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss
Deferrals |
|
|
— |
|
|
|
(6,354,248 |
) |
|
|
— |
|
| Unrealized
Appreciation (Depreciation) on Investments and Foreign Currency |
|
|
(16,459 |
) |
|
|
50,076 |
|
|
|
79,609 |
|
| Other
Temporary Differences |
|
|
(2,564,342 |
) |
|
|
— |
|
|
|
(3,042,938 |
) |
| Total
Distributable Loss |
|
$ |
(4,000,033 |
) |
|
$ |
(10,030,380 |
) |
|
$ |
(3,762,008 |
) |
| |
|
KraneShares
2x Long JD
Daily ETF |
|
|
KraneShares
2x Long BIDU
Daily ETF |
|
| Undistributed
Ordinary Income |
|
$ |
— |
|
|
$ |
503,591 |
|
| Capital
Loss Carryforwards |
|
|
(174,464 |
) |
|
|
(327,318 |
) |
| Post
October Losses |
|
|
(28,733 |
) |
|
|
— |
|
| Unrealized
Appreciation on Investments and Foreign Currency |
|
|
16,694 |
|
|
|
7,240 |
|
| Other
Temporary Differences |
|
|
(448,353 |
) |
|
|
1 |
|
| Total
Distributable Earnings/(Loss) |
|
$ |
(634,856 |
) |
|
$ |
183,514 |
|
Notes
to Financial Statements (continued)
Qualified
late year ordinary and Post-October capital losses (including currency and specified gain/loss items) represent losses realized from January 1,
2026 through March 31, 2026 and November 1, 2025 through March 31, 2026, respectively, that in accordance with federal
income tax regulations, the Funds have elected to defer and treat as having arisen in the following fiscal year.
Other
temporary differences primarily consist of late year, specified loss deferrals, and swap transactions not recognized for tax.
The
Funds have capital loss carryforwards as follows:
| |
|
Short-Term
Loss |
|
|
Total |
|
| KraneShares
2x Long BABA Daily ETF |
|
$ |
1,419,232 |
|
|
$ |
1,419,232 |
|
| KraneShares
2x Long PDD Daily ETF |
|
|
3,726,208 |
|
|
|
3,726,208 |
|
| KraneShares
2x Long MELI Daily ETF |
|
|
798,679 |
|
|
|
798,679 |
|
| KraneShares
2x Long JD Daily ETF |
|
|
174,464 |
|
|
|
174,464 |
|
| KraneShares
2x Long BIDU Daily ETF |
|
|
327,318 |
|
|
|
327,318 |
|
The
differences between book and tax-basis unrealized appreciation and depreciation are attributable primarily to the tax deferral of losses
on swaps. The federal tax cost and aggregate gross unrealized appreciation and depreciation on investments held by the Funds at March 31,
2026 were as follows:
| |
|
Federal
Tax
Cost |
|
|
Aggregated
Gross
Unrealized
Appreciation |
|
|
Aggregated
Gross
Unrealized
Depreciation |
|
|
Net
Unrealized
Appreciation
(Depreciation) |
|
| KraneShares
2x Long BABA Daily ETF |
|
$ |
(607,642 |
) |
|
$ |
— |
|
|
$ |
(16,459 |
) |
|
$ |
(16,459 |
) |
| KraneShares
2x Long PDD Daily ETF |
|
|
1,492,237 |
|
|
|
— |
|
|
|
50,076 |
|
|
|
50,076 |
|
| KraneShares
2x Long MELI Daily ETF |
|
|
(474,807 |
) |
|
|
— |
|
|
|
79,609 |
|
|
|
79,609 |
|
| KraneShares
2x Long JD Daily ETF |
|
|
419,644 |
|
|
|
— |
|
|
|
16,694 |
|
|
|
16,694 |
|
| KraneShares
2x Long BIDU Daily ETF |
|
|
(7,460 |
) |
|
|
— |
|
|
|
7,240 |
|
|
|
7,240 |
|
The
Funds did not pay any federal or state and local income taxes.
7.
PRINCIPAL RISKS
As
with all exchange-traded funds (“ETFs”), shareholders of the Funds are subject to the risk that their investment could lose
money. Each Fund is subject to certain of the principal risks noted below, any of which may adversely affect a Fund’s NAV, trading
price, yield, total return and ability to meet its investment objective. A more complete description of principal risks is included in
each Fund’s prospectus under the heading “Principal Risks”.
CHINA
RISK — The Chinese economy is generally considered an emerging market and can be significantly affected by economic and political
conditions in the People’s Republic of China (“China” or the “PRC”) and surrounding Asian countries and
may demonstrate significantly higher volatility from time to time in comparison to developed markets. Investments in Chinese securities,
Notes
to Financial Statements (continued)
including
those that are Hong Kong-listed and U.S.-listed securities, subject the Fund to risks specific to China. China may be subject to considerable
degrees of economic, political and social instability. Over the last few decades, the Chinese government has undertaken reform of economic
and market practices and has expanded the sphere of private ownership of property in China. However, Chinese markets generally continue
to experience inefficiency, volatility and pricing anomalies resulting from governmental influence, a lack of publicly available information
and/ or political and social instability. Chinese companies are also subject to the risk that Chinese authorities can intervene in their
operations and structure. In addition, the Chinese economy is export-driven and highly reliant on trading with key partners. A downturn
in the economies of China’s primary trading partners could slow or eliminate the growth of the Chinese economy and adversely impact
the Fund’s investments. The Chinese government strictly regulates the payment of foreign currency denominated obligations and sets
monetary policy. The RMB is not freely convertible, but rather is subject to approval of PRC authorities. Although Chinese authorities
have indicated an intent to move to a freely convertible RMB, there is no assurance that repatriation restrictions will not continue.
The Chinese government may introduce new laws and regulations that could have an adverse effect on the Fund. Although China has begun
the process of privatizing certain sectors of its economy, privatized entities may lose money and/or be re-nationalized.
Internal
social unrest or confrontations with other neighboring countries, including military conflicts in response to such events, may also disrupt
economic development in China and result in a greater risk of currency fluctuations, currency convertibility, interest rate fluctuations
and higher rates of inflation. China has experienced security concerns, such as terrorism and strained international relations. Incidents
involving China’s or the region’s security may cause uncertainty in Chinese markets and may adversely affect the Chinese economy
and the Fund’s investments.
In
the Chinese securities markets, a small number of issuers may represent a large portion of the entire market. The Chinese securities markets
are subject to more frequent trading halts, low trading volume and price volatility. Recent developments in relations between the United
States and China have heightened concerns of increased tariffs and restrictions on trade between the two countries. An increase in tariffs
or trade restrictions, or even the threat of such developments, could lead to a significant reduction in international trade, which could
have a negative impact on China’s export industry and a commensurately negative impact on the Fund. In addition, worsening trade
relations between the two countries could adversely impact the Fund, particularly to the extent that the Chinese government restricts
foreign investments in on-shore Chinese companies or the U.S. government restricts investments by U.S. investors in China. This may also
result in market volatility and volatility in the price of Fund shares.
In
recent years, Chinese entities have incurred significant levels of debt and Chinese financial institutions currently hold relatively large
amounts of non-performing debt. Thus, there exists a possibility that widespread defaults could occur, which could trigger a financial
crisis, freeze Chinese debt and finance markets and make Chinese securities illiquid.
Disclosure
and regulatory standards in emerging market countries, such as China, are in many respects less stringent than U.S. standards. There is
substantially less publicly available information about Chinese issuers than there is about U.S. issuers. Chinese companies with securities
listed on U.S. exchanges may be delisted if they do not meet U.S. accounting standards and auditor oversight requirements or due to worsening
relations between the U.S. and China, which would significantly decrease the liquidity and value of the securities.
Notes
to Financial Statements (continued)
The
tax laws and regulations in China are somewhat unclear and are subject to change, possibly with retroactive effect. The interpretation,
application and enforcement of such laws and regulations by the applicable authorities may vary over time and from region to region, and
could have an adverse effect on the Fund and its shareholders, particularly in relation to tax imposed upon foreign investors’ capital
gains. Uncertainties in Chinese tax rules could result in unexpected tax liabilities for the Fund.
CONCENTRATION
RISK — The Funds’ assets are expected to be concentrated in the particular industry to which its Underlying Stock is assigned.
The securities of companies in an industry or group of industries could react similarly to market developments. Thus, the Funds are subject
to loss due to adverse occurrences that affect one industry or group of industries or sector. While the Funds’ sector and industry
exposure may vary over time based on the particular industry to which its Underlying Stock is assigned, the Funds are currently subject
to Consumer Discretionary Sector Risk and Consumer Distribution and Retail Industry Risk.
DERIVATIVES
RISK — The use of derivatives (including swaps, futures, forwards, structured notes and options) may involve leverage, which includes
risks that are different from, and greater than, the risks associated with investing directly in a reference asset, because a small investment
in a derivative can result in a large impact on the Funds and may cause the Funds to be more volatile. Derivatives may at times be highly
illiquid, and the Funds may not be able to close out or sell a derivative at a particular time or at an anticipated price. Derivatives
can be difficult to value and valuation may be more difficult in times of market turmoil. There may be imperfect correlation between the
derivative and that of the reference asset, resulting in unexpected returns that could materially adversely affect the Funds. Certain
derivatives (such as swaps and options) are bi-lateral agreements that expose the Funds to counterparty risk, which is the risk of loss
in the event that the counterparty to an agreement fails to make required payments or otherwise comply with the terms of derivative. In
that case, the Funds may suffer losses potentially equal to, or greater than, the full value of the derivative if the counterparty fails
to perform its obligations. That risk is generally thought to be greater with over-the-counter (OTC) derivatives than with derivatives
that are exchange traded or centrally cleared. Counterparty risks are compounded by the fact that there are only a limited number of ways
available to invest in certain reference assets and, therefore, there may be few counterparties to swaps or options based on those reference
assets.
SWAP
RISK — Swaps are subject to tracking risk because they may not be perfect substitutes for the instruments they are intended to hedge
or replace. Over the counter swaps are subject to counterparty default. Leverage inherent in derivatives will tend to magnify the Fund’s
losses.
MARKET
RISK — The values of the Funds’ holdings could decline generally or could underperform other investments. In addition, there
is a risk that policy changes by the U.S. Government, Federal Reserve, and/or other government actors, including those in foreign countries,
or changes in global trade relationships could cause volatility in global financial markets, negative sentiment and higher levels of Fund
redemptions, which could have a negative impact on the Funds and could result in losses. Geopolitical and other risks, including environmental
and public health risks may add to instability in world economies and markets generally. Changes in value may be temporary or may last
for extended periods. Further, the Funds are susceptible to the risk that certain investments may be difficult or impossible to sell at
a favorable time or price. Market developments may also cause the Funds’ investments to become less liquid and subject to erratic
price movements.
Notes
to Financial Statements (concluded)
NEW
FUND RISK — If the Fund does not grow in size, it will be at greater risk than larger funds of wider bid-ask spreads for its shares,
trading at a greater premium or discount to NAV, liquidation and/or a trading halt.
NON-DIVERSIFIED
FUND RISK — Because a Fund is non-diversified and may invest a greater portion of its assets in fewer issuers than a diversified
fund, changes in the market value of a single portfolio holding could cause greater fluctuations in the Fund’s share price than
would occur in a diversified fund. This may increase the Fund’s volatility and cause the performance of a single portfolio holding
or a relatively small number of portfolio holdings to have a greater impact on the Fund’s performance.
UNDERLYING
STOCK RISK — The Underlying Stock is subject to many risks that can negatively impact its revenue and viability including, but are
not limited to price volatility risk, management risk, inflation risk, global economic risk, growth risk, supply and demand risk, operations
risk, regulatory risk, environmental risk, terrorism risk and the risk of natural disasters. The Underlying Stock performance may be affected
by trends in commerce, and cloud computing, changes in the economic conditions in China and globally, international trade policies, the
company’s investment transactions and changes in governmental regulations. The Fund’s daily returns may be affected by many
factors but will depend on the performance and volatility of the Underlying Stock.
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.
RECENT ACCOUNTING PRONOUNCEMENT
In
this reporting period, the Funds adopted FASB issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic
740) Improvements to Income Tax Disclosures, which amends quantitative and qualitative income tax disclosure requirements in order to
increase disclosure consistency, bifurcate income tax information by jurisdiction and remove information that is no longer beneficial.
Adoption of the new standard impacted financial statement disclosures only and did not affect any Funds’ financial position or the
results of its operations.
10.
SUBSEQUENT EVENTS
The
Funds have evaluated the need for additional disclosures and/or adjustments resulting from subsequent events through the date the financial
statements were issued.
Based
on this evaluation, no additional disclosures or adjustments were required to the financial statements as of the date the financial statements
were issued.
Report
of Independent Registered Public Accounting Firm
To
the Shareholders and Board of Trustees
KraneShares
Trust:
Opinion
on the Financial Statements
We
have audited the accompanying statements of assets and liabilities of the funds listed in the Appendix, five of the funds comprising KraneShares
Trust (collectively, the Funds), including the schedules of investments, as of March 31, 2026, the related statements of operations
for the year or period listed in the Appendix, the statements of changes in net assets for each of the years or periods in the two-year
period listed in the Appendix, and the related notes (collectively, the financial statements) and the financial highlights for each of
the years or periods listed in the Appendix. In our opinion, the financial statements and financial highlights present fairly, in all
material respects, the financial position of each of the Funds as of March 31, 2026, the results of their operations for the year
or period listed in the Appendix, the changes in their net assets for each of the years or periods in the two-year period listed in the
Appendix, and the financial highlights for each of the years or periods listed in the Appendix, in conformity with U.S. generally accepted
accounting principles.
Basis
for Opinion
These
financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and
financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining,
on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Such procedures
also included confirmation of securities owned as of March 31, 2026, by correspondence with custodian and brokers or by other appropriate
auditing procedures when replies from brokers were not received. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights.
We believe that our audits provide a reasonable basis for our opinion.
We
have served as the auditor of one or more KraneShares investment companies since 2017.
Philadelphia,
Pennsylvania
May 29,
2026
Report
of Independent Registered Public Accounting Firm (concluded)
Appendix
Funds
with inception during the year ended March 31, 2026:
KraneShares
2x Long BABA Daily ETF
KraneShares
2x Long PDD Daily ETF
Statements
of operations for the year ended March 31, 2026
Statements
of changes in net assets for the year ended March 31, 2026 and the period from March 11, 2025 (inception) through March 31,
2025
Financial
highlights for the year ended March 31, 2026 and the period from March 11, 2025 (inception) through March 31, 2025
Funds
with inception during the year ended March 31, 2026:
KraneShares
2x Long MELI Daily ETF
Statements
of operations and changes in net assets and the financial highlights for the period from June 11, 2025 (inception) through March 31,
2026
KraneShares
2x Long JD Daily ETF
Statements
of operations and changes in net assets and the financial highlights for the period from October 14, 2025 (inception) through March 31,
2026
KraneShares
2x Long BIDU Daily ETF
Statements
of operations and changes in net assets and the financial highlights for the period from November 19, 2025 (inception) through March 31,
2025
Notice
To Shareholders (Unaudited)
For
shareholders that do not have a March 31, 2026 tax year end, this notice is for informational purposes only. For shareholders with
a March 31, 2026 tax year end, please consult your tax advisor as to the pertinence of this notice. For the fiscal year ended March 31,
2026, the Funds are designating the following items with regard to distributions paid during the year.
| Return
of Capital(1) |
|
|
Long-Term
Capital Gain
Distributions |
|
|
Ordinary
Income
Distributions |
|
|
Total
Distributions |
|
|
Qualifying
for
Corporate
Dividends
Received
Deduction(2) |
|
|
Qualifying
Dividend
Income(3) |
|
|
U.S.
Government
Interest(4) |
|
|
Interest
Related
Dividends(5) |
|
|
Short
Term
Capital Gain
Dividends(6) |
|
|
Foreign
Tax
Credit(7) |
|
| KraneShares
2x Long BABA Daily ETF |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
0.00 |
% |
|
|
0.00 |
% |
|
|
100.00 |
% |
|
|
100.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
9.96 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
| KraneShares
2x Long PDD Daily ETF |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
0.00 |
% |
|
|
0.00 |
% |
|
|
100.00 |
% |
|
|
100.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
7.08 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
| KraneShares
2x Long MELI Daily ETF |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
0.00 |
% |
|
|
0.00 |
% |
|
|
100.00 |
% |
|
|
100.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
28.52 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
| KraneShares
2x Long JD Daily ETF |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
| KraneShares
2x Long BIDU Daily ETF |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
0.00 |
% |
|
|
100.00 |
% |
|
|
100.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
2.49 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
(1) |
Return
of capital is a payment received from the fund that is not considered to be taxable income. The return of capital distribution is considered
to be a return of the investor’s original investment and reduces the investor’s cost basis in the fund. |
|
(2) |
Qualifying
dividends represent dividends which qualify for the corporate dividends received deduction and are reflected as a percentage of ordinary
income distributions (the total of short term capital gain and net investment income distributions). |
|
(3) |
The
percentage in this column represents the amount of “Qualifying Dividend Income” as created by the Jobs and Growth Relief Reconciliation
Act of 2003 and is reflected as a percentage of ordinary income distributions (the total of short term capital gain and net investment
income distributions). It is the intention of each of the aforementioned funds to designate the maximum amount permitted by law. |
|
(4) |
“U.S.
Government Interest” represents the amount of interest that was derived from U.S. Government obligations and distributed during
the fiscal year. Generally, interest from direct U.S. Government obligations is exempt from state income tax. However, for shareholders
who are residents of California, Connecticut and New York, the statutory threshold requirements were not satisfied to permit exemption
of these amounts from state income. |
|
(5) |
The
percentage in this column represents the amount of “Interest Related Dividends” and is reflected as a percentage of ordinary
income distributions that is exempt from U.S. withholding tax when paid for foreign investors. |
|
(6) |
The
percentage in this column represents the amount of “Short Term Capital Gain Dividends” and is reflected as a percentage of
short term capital gain distributions that is exempt from U.S. withholding tax when paid for foreign investors. |
|
(7) |
The
allocable share of foreign tax credit will be reported on Form 1099-DIV. |
OTHER
INFORMATION (FORM N-CSR ITEMS 8-11) (Unaudited)
Item
8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not
applicable.
Item
9. Proxy Disclosures for Open-End Management Investment Companies.
On
May 7, 2026, at a joint special meeting (the “Special Meeting”) of the respective shareholders of each series of the
Trust, the approval of a new investment advisory agreement between the Adviser and the Trust on behalf of each Fund, to be voted on separately
by the shareholders of each Fund, was submitted to the shareholders of each Fund. The Special Meeting has been adjourned to June 4,
2026, as the requisite number of votes had not been cast, and may be further adjourned at the June 4 adjournment.
Item
10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies.
Remuneration
is shown on the Statements of Operations of the financial statements included in Item 7.
Item
11. Statement Regarding Basis for Approval of Investment Advisory Contract.
Effective
March 31, 2026, Krane Fund Advisors, LLC (“Krane”) entered into an agreement with China International Capital Corporation
Limited (“CICC”) whereby Krane’s officers and certain of its employees, among others, through KFA Two Holdings, LLC,
will acquire a majority interest in Krane from CICC, resulting in a change of control of Krane (the “Transaction”). Under
the Investment Company Act of 1940, as amended (the “1940 Act”), the closing of the Transaction (“Closing”) will
result in an “assignment” and termination of the current investment advisory agreement between Krane and the Trust, on behalf
of each Fund. The Transaction is expected to close no later than June 30, 2026.
To
ensure that the management of each Fund (as defined below) will continue without any interruption following the Closing, at a meeting
held on February 20, 2026, the Board of Trustees (the “Board”) of the Trust, including all of the Trustees who are not
“interested persons” of the Trust, as that term is defined in the 1940 Act, (the “Independent Trustees”), considered
and approved a new Investment Advisory Agreement (the “New KFA Agreement”) between Krane and the Trust on behalf of each of
the following separate series of the Trust (each, a “Fund” and collectively, the “Funds”):
|
● |
KraneShares
2x Long PDD Daily ETF (KPDD); |
|
● |
KraneShares
2x Long BABA Daily ETF (KBAB); |
|
● |
KraneShares
2x Long MELI Daily ETF (KMLI); |
|
● |
KraneShares
2x Long JD Daily ETF (KJD); and |
|
● |
KraneShares
2x Long BIDU Daily ETF (KBDU). |
At
the same meeting, the Board also considered and approved an Interim Advisory Agreement (the “Interim Advisory Agreement”)
between Krane and the Trust on behalf of each Fund. The New KFA Agreement and the Interim Advisory Agreement are collectively referred
to herein as the “Advisory Agreements.”
OTHER
INFORMATION (FORM N-CSR ITEMS 8-11) (Unaudited) (continued)
In
advance of the meeting, and at a separate meeting of the Independent Trustees in executive session held on February 20, 2026, the
Board received and considered information provided by Krane in response to the Independent Trustees’ written requests for information
regarding the Funds and the Advisory Agreements.
The
Board considered that its evaluation process with respect to Krane is an ongoing one, and the Board considers information at each of its
regularly scheduled meetings related to, among other matters, the services provided to each Fund by Krane. The Board considered that the
Independent Trustees also receive additional information outside of regularly scheduled Board meetings and at executive sessions held
by the Independent Trustees.
In
evaluating the Advisory Agreements with respect to the Funds, the Board considered, among other matters: (1) the nature, extent, and quality
of the services to be provided to each Fund by Krane; (2) the proposed compensation to be paid by each Fund under the Advisory Agreements;
(3) the costs of the services to be provided by Krane and the profitability expectations of Krane with respect to its relationship with
the Funds; (4) the extent to which economies of scale could be realized as the Funds grow and whether the unitary fee charged under the
Advisory Agreements will enable investors in the Funds to share in any such economies of scale; and (5) other benefits Krane will receive
from its relationship with the Funds.
|
A. |
Nature, Extent and Quality of
Services |
Based
on written and oral reports received by the Board prior to and at the February 20, 2026 executive session of the Independent Trustees
and the February 20, 2026 meeting of the Board, the Board considered the nature, quality, and extent of the overall services to be
provided by Krane to the Funds under the Advisory Agreements. The Board considered that the services currently provided by Krane will
continue under the Advisory Agreements, and that there will be no change to the Krane personnel providing such services to the Funds.
The Board considered the responsibilities of Krane with respect to each Fund under the Advisory Agreements.
The
Board took note of the qualifications, background and responsibilities of personnel at Krane who provide services to the Funds. The Board
noted management’s representation that Krane will retain its investment, compliance and operational personnel after the Transaction.
Based
on the foregoing, the Board concluded that each Fund is likely to benefit from the nature, extent and quality of the services provided
and to be provided by Krane under the Advisory Agreements.
|
B. |
Investment Performance |
The
Board noted that, because the Funds have not yet commenced investment operations, they have no investment performance. The Board considered
that once the Funds commence operations, the Board will receive regular reports regarding the performance of the Funds relative to a Morningstar
peer group, and potentially a select group of peers identified by Krane. The Board also considered that at its regular meetings, it will
receive information regarding the performance of each Fund against the performance of its respective underlying index.
OTHER
INFORMATION (FORM N-CSR ITEMS 8-11) (Unaudited) (continued)
The
Board considered that the unitary fee paid by each Fund will be unchanged after the Transaction. The Board considered that under the unitary
fee arrangement, Krane will continue to be responsible for paying most of each Fund’s expenses, including those of its principal
service providers. The Board considered the information provided by Krane regarding the fees to be paid by each Fund in light of the nature,
quality and extent of the services to be provided by Krane.
The
Board noted that the management fees paid by certain of the Funds are higher than the median management fee within their respective Morningstar
peer groups. The Board considered that the Funds offer unique investment exposure for investors in U.S. registered funds and considered
the operational costs and entrepreneurial risks that will continue to be incurred by Krane under the Advisory Agreements.
The
Board considered that, under the Interim Advisory Agreement, fees paid to Krane by a particular Fund would be escrowed. The Board noted
that the advisory fee and total expense ratio of each Fund will not change as a result of the Transaction.
|
D. |
Costs and Profitability |
The
Board noted that, because the Funds have not yet launched, it is difficult to estimate how profitable they will be to Krane, although
the Board recognized that the Funds will leverage procedures and systems put in place in connection with management of other series of
the Trust. The Independent Trustees also considered information from Krane regarding its overall profitability and discussed with Krane’s
management how the Funds could impact such profitability. The Board noted Krane’s continuing commitment to operating the Trust and
its continued use of a unitary fee structure under which it will bear many of the expenses of the Funds. Based on these and other considerations,
the Board considered that the profitability of the Funds was not a material factor in its consideration of the Advisory Agreements.
The
Board considered the extent to which Krane could derive ancillary benefits from the operations of the Funds. The Board noted that certain
members of management will participate in ownership of Krane subsequent to the Transaction. The Board did not observe any other specific
benefits to be realized by Krane or its management as a result of the Transaction.
The
Board considered whether fees under the Advisory Agreements reflect the potential for economies of scale for the benefit of Fund shareholders.
The Board determined that, at present, economies of scale are not a material factor for the Board to consider in connection with the Advisory
Agreements.
The
Board did not identify any single factor as being of paramount importance, and different Trustees may have given different weight to different
factors in their review of the Advisory Agreements. The Board reviewed a memorandum from Independent Trustee counsel discussing the legal
standards and judicial precedent applicable to its consideration of the Advisory Agreements. Based on its review, including consideration
of each of the factors referenced above, the Board determined, in the exercise of its reasonable business judgment, that the advisory
arrangements, as outlined in the Advisory Agreements, were reasonable in light of the factors considered by the Board.
OTHER
INFORMATION (FORM N-CSR ITEMS 8-11) (Unaudited) (continued)
Approval
of the Advisory Agreement
At
a meeting held on December 4, 2024, the Board of Trustees (the “Board”) of KraneShares Trust (the “Trust”),
including all of the Trustees who are not “interested persons” of the Trust, as that term is defined in the Investment Company
Act of 1940, as amended (the “Independent Trustees”), approved the existing investment advisory agreement (the “Advisory
Agreement”) between Krane and the Trust, on behalf of each of the following separate series of the Trust (each individually, a “Fund”
and collectively, the “Funds”):
|
● |
KraneShares
2x Long JD Daily ETF (KJD); and |
| |
● |
KraneShares
2x Long BIDU Daily ETF (KBDU). |
In
advance of the meeting, and at a separate meeting of the Independent Trustees in executive session held on December 4, 2024, the
Board received and considered information provided by Krane in response to the Independent Trustees’ written requests for information
regarding the Funds and the Advisory Agreement.
The
Board considered that its evaluation process with respect to Krane is an ongoing one, and the Board will consider information at each
of its regularly scheduled meetings related to, among other matters, the services provided to each Fund by Krane. The Board considered
that the Independent Trustees also receive additional information outside of regularly scheduled Board meetings and at executive sessions
held by the Independent Trustees.
In
evaluating the Advisory Agreement with respect to the Funds, the Board considered, among other matters: (1) the nature, extent, and quality
of the services to be provided to each Fund by Krane; (2) the proposed compensation to be paid by each Fund under the Advisory Agreement;
(3) the costs of the services to be provided by Krane and the profitability expectations of Krane with respect to its relationship with
the Funds; (4) the extent to which economies of scale could be realized as the Funds grow and whether the unitary fee charged under the
Advisory Agreement will enable investors in the Funds to share in any such economies of scale; and (5) other benefits Krane will receive
from its relationship with the Funds.
|
A. |
Nature, Extent and Quality of
Services |
Based
on written and oral reports received by the Board prior to and at the December 4, 2024 executive session of the Independent Trustees
and the December 4, 2024 meeting of the Board, the Board considered the nature, quality, and extent of the overall services to be
provided by Krane to the Funds under the Advisory Agreement. The Board considered that each of the Funds will invest at least 80% of their
net assets in the identified underlying stock and certain financial instruments, such as swap agreements and options, that, in combination,
provide investment exposure to 2 times (200%) the performance of their respective underlying stock. The Board took note of the qualifications,
background and responsibilities of personnel at Krane who will provide services to the Funds, in particular that the primary portfolio
manager of each Fund has more than 20 years of experience working with equity derivatives in trading, capital markets, and fund management
capacities.
Based
on the foregoing, the Board concluded that each Fund is likely to benefit from the nature, extent and quality of the services to be provided
by Krane under the Advisory Agreement.
OTHER
INFORMATION (FORM N-CSR ITEMS 8-11) (Unaudited) (continued)
|
B. |
Investment Performance |
The
Board noted that, because the Funds have not yet commenced investment operations, they have no investment performance. The Board considered
that once the Funds commence operations, the Board will receive regular reports regarding each Fund’s performance relative to a
broad Morningstar peer group, and potentially a select group of peers identified by Krane. The Board also considered that at its regular
meetings it will receive information regarding the performance of each Fund against the performance of its respective underlying index.
The Board recognized that there may be limited peers available for the Funds.
The
Board considered that, pursuant to the Advisory Agreement, Krane will enter into a unitary advisory fee arrangement for each Fund. The
Board also considered that Krane structured the proposed fees for the Funds in a manner that is consistent with other series of the Trust.
The Board took note that under the unitary fee arrangement, Krane will be responsible for paying most of the expenses incurred by the
Funds, including those of the principal service providers, and that Krane takes the risk that the Funds may not be successful in raising
sufficient assets to enable Krane to cover the cost of such expenses.
The
Board considered the proposed fee for the Funds compared to their respective Morningstar universe, noting that the proposed fees and expenses
for each Fund are higher than the median of the peer group. The Board noted that the management fees to be paid by the Funds are higher
than the median management fee within their respective Morningstar peer groups. The Board considered Krane’s representation that
the Funds present highly differentiated strategies because most peer funds focus exclusively on levered U.S. equities, and the Funds will
provide leveraged funds in the thematic China strategy. The Board noted the operational costs and entrepreneurial risks that will be incurred
by Krane under the Advisory Agreement.
|
D. |
Costs and Profitability |
The
Board considered pro-forma projected profit and loss statements for the Funds. The Board recognized that, because the Funds have not yet
launched, it is difficult to estimate how profitable they will be to Krane, although the Board recognized that the Funds will leverage
procedures and systems put in place in connection with management of other series of the Trust. The Independent Trustees also considered
information from Krane regarding its overall profitability and discussed with Krane’s management how launching the Funds could impact
such profitability. The Board noted Krane’s continuing commitment to operating the Trust and its continued use of a unitary fee
structure under which it will bear many of the expenses of the Funds. Based on these and other considerations, the Board considered that
the profitability of the Funds was not a material factor in its consideration of the Advisory Agreement.
The
Board considered the extent to which Krane could derive ancillary benefits from the operations of the Funds. The Board considered that
Krane could benefit if the Funds participate in the Trust’s securities lending program or if Krane could use each Fund’s assets
to engage in soft dollar transactions. The Board determined that, at present, it did not observe any specific benefits to be realized
by Krane as a result of launching the Funds.
OTHER
INFORMATION (FORM N-CSR ITEMS 8-11) (Unaudited) (concluded)
The
Board considered whether fees under the Advisory Agreement reflect the potential for economies of scale for the benefit of Fund shareholders.
The Board determined that, at present, economies of scale are not a material factor for the Board to consider in connection with the Advisory
Agreement.
The
Board did not identify any single factor as being of paramount importance, and different Trustees may have given different weight to different
factors in their review of the Advisory Agreement. The Board reviewed a memorandum from Independent Trustee counsel discussing the legal
standards and judicial precedent applicable to its consideration of the Advisory Agreement. Based on its review, including consideration
of each of the factors referenced above, the Board determined, in the exercise of its reasonable business judgment, that the advisory
arrangements, as outlined in the Advisory Agreement, were reasonable in light of the factors considered by the Board.
KraneShares
Trust:
280
Park Avenue, 32nd Floor
New
York, NY 10017
KRS-SA-007-0200
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Included under Item 7.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Included under Item 7.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies.
Included under Item 7.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
Included under Item 7.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to the Registrant.
Item 15. 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 16. 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 Securities Exchange Act of 1934 (17 CFR § 240.13a-15(b) or § 240.15d-15(b)).
(b) There has been no change in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR § 270.30a-3(d))) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable to the Registrant.
Item 18. Recovery of Erroneously Awarded Compensation.
(a) Not applicable to the Registrant.
(b) Not applicable to the Registrant.
Item 19. Exhibits.
(a)(1) Code of Ethics filed herewith.
(a)(2) Not applicable to the Registrant.
(a)(3) 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 Act (17 CFR § 270.30a-2(a)), is filed herewith.
(a)(4) Not applicable to the Registrant.
(a)(5) Not applicable to the Registrant.
(b) Officer certifications as required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), is filed herewith.
The certification furnished pursuant to Rule 30a-2(b) under the Act and Section 906 of the Sarbanes-Oxley Act will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
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 |
| |
Principal Executive Officer |
Date: June 8, 2026
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 |
| |
Principal Executive Officer |
Date: June 8, 2026
| By (Signature and Title) |
/s/ Jonathan Krane |
| |
Jonathan Krane |
| |
Principal Financial Officer |
Date: June 8, 2026
