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 is a free float adjusted market capitalization weighted index (subject to the modifications described below) designed to meausure the equity market performance of Chinese companies engaged in Consumer-Related Industries -- namely, Consumer Electronics; Home decorations; Household appliances; Household appliances and special consumer goods; Leisure Products; Clothing, apparel and luxury; Footwear; Textile; Hotels, resorts and luxury cruises; restaurant; Computer and Electronics Retail; Beer; Liquor and wine; Soft drink; Food processing and meat; Household items; Personal items; Food retail; and … 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 is a free float adjusted market capitalization weighted index (subject to the modifications described below) designed to meausure the equity market performance of Chinese companies engaged in Consumer-Related Industries -- namely, Consumer Electronics; Home decorations; Household appliances; Household appliances and special consumer goods; Leisure Products; Clothing, apparel and luxury; Footwear; Textile; Hotels, resorts and luxury cruises; restaurant; Computer and Electronics Retail; Beer; Liquor and wine; Soft drink; Food processing and meat; Household items; Personal items; Food retail; and Leisure facilities. The securities that are eligible for inclusion in the Underlying Index at each semi-annual reconstitution include all types of publicly issued shares of companies that are domiciled in China and have majority of revenues from China, such as A-Shares, B-Shares, H-Shares, P-Chips and Red Chips, which are described below, provided that they have an average daily traded value of over $10 million Chinese renminbi (RMB). ADRs and the companies listed under the Stock Connect Programs in Hong Kong and China are also considered for inclusion in the Underlying Index. For the Underlying Index, Fuzzy Logix, Inc. (doing business as FastINDX) (Index Provider) ranks eligible companies by long term operating income, long term operating cash flow, market capitalization, long term return on equity and long-term gross profit. The top 30 stocks with the highest ranking are then included in the Underlying Index, weighted according to free-float market capitalizations with a cap to limit stocks of individual companies to no more than 15% of the Underlying Index. The Underlying Index is rebalanced quarterly. At each quarterly rebalance, if 50% of the Underlying Index consists of companies that are more than 5% of the Underlying Index, companies that are above 5% will be adjusted downward to 4.5% until 50% of the Underlying Index consists of companies that are less than 5%. During this process, the weighting of companies below 5% of the Underlying Index will be adjusted upward but will not exceed 5%. The Fund may invest up to 20% of its assets in instruments that are not included in the Underlying Index, but that the Funds investment adviser, Krane Funds Advisors, LLC (Krane or Adviser), believes will help the Fund track the Underlying Index. These investments may include equity securities and depositary receipts of issuers whose securities are not constituents of the Underlying Index, derivative instruments (including swaps, futures, forwards, structured notes and options), other investment companies (including exchange traded funds or 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 and/or its affiliates. The following China-related securities may be included in the Underlying Index and/or represent investments of the Fund: ? China A-Shares, which are shares of companies incorporated in mainland China that are traded on the Chinese exchanges and denominated in domestic renminbi. China A-Shares are primarily purchased and sold in the domestic Chinese market. To the extent the Fund invests in China A-Shares, it expects to do so through the trading and clearing facilities of a participating exchange located outside of mainland China (Stock Connect Programs). A Qualified Foreign Investor (QFI) license may also be acquired to invest directly in China A-Shares. ? China B-Shares, which are shares of companies listed on the Shanghai or Shenzhen Stock Exchange but quoted and traded in foreign currencies (such as Hong Kong Dollars or U.S. Dollars), which were primarily created for trading by foreign investors. ? China H-Shares, which are shares of companies incorporated in mainland China and listed on the Hong Kong Stock Exchange (H-Shares), where they are traded in Hong Kong dollars and may be traded by foreign investors. ? China N-Shares, which are shares of companies with business operations in mainland China and listed on an American stock exchange, such as NYSE or NASDAQ (N-Shares). ? P-Chips, which are shares of private sector companies with a majority of their business operations in mainland China and controlling private Chinese shareholders, which are incorporated outside of mainland China and traded on the Hong Kong Stock Exchange in Hong Kong dollars. ? Red Chips, which are shares of companies with a majority of their business operations in mainland China and controlled by the central, provincial or municipal governments of the PRC, whose shares are traded on the Hong Kong Stock Exchange in Hong Kong dollars. ? S-Chips, which are shares of companies with business operations in mainland China and listed on the Singapore Exchange. S-Chip shares are issued by companies incorporated anywhere, but many are registered in Singapore, the British Virgin Islands, the Cayman Islands, or Bermuda. Although the Fund reserves the right to replicate (or hold all constituents of) the Underlying Index, the Fund expects 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, 2023, the Underlying Index included securities of companies with a market capitalization range of approximately $2.24 billion to $288 billion and had an average market capitalization of approximately $28.42 billion. The Underlying Index is rebalanced quarterly and reconstituted semi-annually. The Fund is non-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, 2023, issuers in the Consumer Staples sector (60.5%) and Consumer Discretionary sector (38.6%) each represented a significant portion of the Underlying Index. The Fund may engage in securities lending. Show less