Strategy. Under normal circumstances, the Fund will invest at least 80% of its net assets (plus borrowings for investment purposes) in instruments in its Underlying Index or in instruments that have economic characteristics similar to those in the Underlying Index. The Underlying Index begins with the universe of stocks that Value Line ranks. All companies with an equity market capitalization of less than $1 billion, registered investment companies, American Depositary Receipts, limited partnerships and foreign securities not listed in the U.S. are eliminated from this universe. From this investable universe, the Underlying Index establishes a dividend target, which is the trailing 12-month dividend yield of stocks in the 25 th percentile of yield in this universe. Each company in the investable … Show more… Under normal circumstances, the Fund will invest at least 80% of its net assets (plus borrowings for investment purposes) in instruments in its Underlying Index or in instruments that have economic characteristics similar to those in the Underlying Index. The Underlying Index begins with the universe of stocks that Value Line ranks. All companies with an equity market capitalization of less than $1 billion, registered investment companies, American Depositary Receipts, limited partnerships and foreign securities not listed in the U.S. are eliminated from this universe. From this investable universe, the Underlying Index establishes a dividend target, which is the trailing 12-month dividend yield of stocks in the 25 th percentile of yield in this universe. Each company in the investable universe is assigned a score based on its Safety Rank and Timeliness Rank. ? The Value Line Safety Ranking System measures the total risk of a company relative to others in the universe based on Value Lines ranking of the companys price stability, financial strength and other factors. Companies with high Safety ranks may be larger and more financially sound and may have lower growth prospects. ? The Value Line Timeliness Ranking System ranks companies relative to each other in the universe for price performance during the next six to 12 months by using components such as historical stock-price performance, financial results, and earnings surprises. Each Ranking System ranks companies on a scale of 1 to 5 with 1 being the highest rank and 5 being the lowest rank. The Underlying Index assigns the highest scores to Rank 1 companies and the lower scores, progressively, to Rank 2 through 5 companies. The Underlying Index optimizes the weighting of companies using the score assigned to them to maximize the overall score for the Underlying Index while seeking a yield that will be no less than the dividend target. The weighting of a company can be zero and no individual company will be weighted more than 1.5% greater than its weighting in the broad-based large cap equity index. The Underlying Index is rebalanced during the first full week of each calendar month. The Fund may invest up to 20% of its assets in instruments that are not included in the Underlying Index, but that Funds adviser, Krane Funds Advisors, LLC (Krane or Adviser), believes will help the Fund track the Underlying Index. These investments may include equity securities of issuers whose securities are not components of the Underlying Index, derivative instruments (including swaps, futures, forwards, structured notes and options), other investment companies (including ETFs) and cash or cash equivalents (including money market funds). The other investment companies in which the Fund may invest may be advised, sponsored or otherwise serviced by Krane Funds Advisors, LLC (Krane or Adviser) and/or its affiliates. Although the Fund expects to replicate (or hold all constituents of) the Underlying Index, the Fund reserves the right to use representative sampling to track the Underlying Index. Representative sampling is a strategy that involves investing in a representative sample of securities that collectively have an investment profile similar to the Underlying Index. As of May 31, 2025, the Underlying Index included 79 securities of companies with a market capitalization range of approximately $2.4 billion to $3.4 billion and an average market capitalization of approximately $695 billion. The Fund is diversified. To the extent the Underlying Index is concentrated in a particular industry, the Fund is expected to be concentrated in that industry. As of May 31, 2025, issuers in the Information Technology sector (22.0%), Industrials sector (14.2%), and Financials sector (10.4%) represented significant portions of the Underlying Index. The Underlying Index is rebalanced and reconstituted monthly. The Underlying Index is provided by EULAV Asset Management (Index Provider), and the Underlying Index is calculated by Fuzzy Logix, Inc. (doing business as FastINDX). The Fund may engage in securities lending. Show less