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 modified, free float adjusted market capitalization weighted index designed to measure the equity performance of companies in developed markets from global luxury-related sectors. The Underlying Index includes companies classified by the FactSet Revere Business Industry Classification system (“RBICS”) as being in the travel & leisure, premium ware and apparel, luxury goods, and premium consumer goods industries that include certain luxury-related business descriptions. Solactive AG (“Index Provider”) defines developed countries as the following countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom, or United States.

The Index Provider applies various screens so that the securities included in the Underlying Index, at the time of each reconstitution: (1) are issued by companies with a minimum free float market capitalization of $2 billion; (2) have been listed for at least one month and have a minimum average daily trading volume of $2 million as measured over the last one-month and six-month periods; and (3) are listed in a developed country as defined by the Index Provider. Eligible securities of the Underlying Index are ranked as of each reconstitution based on their free float market capitalization as determined by the Index Provider with the top 25 securities in each industry eligible for inclusion in the Underlying Index. The top five ranked securities are assigned weights of 10%, 9%, 8%, 7%, and 6% respectively. The remaining securities are capped at weights of 4.5%. Any excess weights are redistributed pro rata among the remaining securities. The Underlying Index is reconstituted annually and rebalanced semi-annually.

Under normal market conditions, the Fund will invest at least 40% of its total assets in securities that (1) are organized or located outside the United States; (2) trade primarily in a market located outside the United States; or (3) derive at least 50% of their revenue or profits from business outside the United States or have at least 50% of their assets outside the United States.

The Fund may invest up to 20% of its assets in instruments that are not included in the Underlying Index, but that the Fund’s 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). Certain other investment companies in which the Fund may invest may be advised, sponsored or otherwise serviced by Krane and/or their affiliates.

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 August 23, 2023, the Underlying Index included 46 securities of companies with a capitalization range of approximately $1.9 billion to $470.6 billion and an average market capitalization of approximately $41.4 billion.

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 August 23, 2023, issuers in the Consumer Discretionary sector (63%) and Consumer Staples sector (32%) represented significant portions of the Underlying Index. The Fund may engage in securities lending.