Investment Policy
The Fund is an actively managed exchange-traded fund that, under ordinary market conditions, seeks daily investment results, before fees and expenses, that correlate to two times (2x) the daily performance of the KraneShares CSI China Internet ETF. For purposes of the Fund's name, Chinese Internet refers to Chinese internet equity exposure, primarily companies engaged in the internet and internet-related technology and services with substantial operations in or revenue exposure to China, including Hong Kong and U.S. listed Chinese issuers and variable interest entity structures, as represented by the Underlying ETF. The Fund seeks to achieve its objective on a single trading day basis only; returns for periods longer than one trading day will be the result of each day's returns compounded over the period and should not be expected to equal two times (2x) the cumulative performance of the Underlying ETF for the same period. To pursue its 2x Daily Objective, the Fund expects to obtain most of its exposure through derivatives, primarily through total return swap agreements with major financial institutions, whereby the Fund and the swap counterparty agree to exchange the return on a notional amount linked to the Underlying ETF or a basket of its constituents, calculated on a daily basis, to provide leveraged exposure equal to approximately 200% of the Fund's net assets. The Fund may also obtain leveraged exposure through exchange-traded equity futures contracts and exchange-traded options contracts, including standardized call and put options. The Fund will generally rebalance its exposure each trading day in order to seek to maintain approximately two times (2x) the daily performance of the Underlying ETF. In connection with its derivative positions, the Fund will maintain cash and cash equivalents, such as U.S. Treasury bills and repurchase agreements, for collateral, liquidity, and portfolio management. Under normal circumstances, the Fund will invest at least 80% of the value of its net assets, plus any borrowings for investment purposes, in financial instruments that, in the aggregate, provide leveraged exposure to Chinese internet equity securities equal to approximately two times (200%) the daily performance of such investments. The Fund currently obtains this exposure through instruments linked to the Underlying ETF. The Fund will provide shareholders with at least 60 days' prior notice of any change to the Fund's 80% investment policy.
