Capturing The China Internet & Technology Opportunity Through Hong Kong Listings

An Overview of the KraneShares Hang Seng Tech Index ETF (Ticker: KTEC)

Introduction to KraneShares

About KraneShares

Krane Funds Advisors, LLC is a specialist investment manager focused on China, Carbon, Climate, and other uncorrelated assets. KraneShares seeks to provide innovative, high conviction, and first to market strategies. The firm was founded in 2013 and manages for institutions and individuals globally. In 2017, KraneShares formed a strategic partnership with China International Capital Corporation (CICC) when they acquired a majority ownership stake. The firm is a signatory of the United Nations-supported Principles for Responsible Investment (UN PRI).

Product Suite

China Thematic Equity

• KWEB - Internet & E-Commerce*
• KURE - Healthcare
• KGRN - Clean Technology
• KSTR - STAR Market*
• KTEC - Hang Seng Tech

China Core Equity

• KBA - MSCI China A 50
• KCAI - China Onshore Alpha Index

Options Income

• KLIP - KWEB Covered Call
• KWIN - Wahed Alternative Income

Managed Futures

• KMLM - Mount Lucas Managed Futures

Global Equity

• KARS - Electric Vehicles & Future Mobility
• AGIX - Artificial Intelligence & Technology
• KOID - Humanoid & Embodied Intelligence*

EM Equity

• KEMX - MSCI Emerging Markets ex China
• KEMQ - Emerging Markets Consumer Tech
• KPHO - Dragon Capital Vietnam Growth

Levered

• KBAB - 2X Long BABA Daily
• KPDD - 2X Long PDD Daily
• KMLI - 2X Long MELI Daily
• KJD - 2X Long JD Daily
• KBDU - 2X Long Baidu Daily

Carbon

• KRBN - Global Carbon Strategy*
• KEUA - European Carbon Allowance
• KCCA - California Carbon Allowance

Fixed Income

• IVOL - Quadratic Interest Rate Volatility & Inflation Hedge
• BNDD - Quadratic Deflation ETF
• KHYB - Asia High Income USD Bond
• KCSH - Sustainable Ultra Short Duration

US Equity

• KSPY - Hedgeye Hedged Equity
• BUYO - Man Buyout Beta Index
• KVLE - Value Line® Dynamic Dividend Equity
• KIQQ - Nasdaq Hedge & Option Income

*Strategy also available in UCITS

KTEC

KraneShares Hang Seng Tech Index ETF

Investment Strategy:

KTEC seeks to track the performance of the Hang Seng Tech index, which captures the 30 largest companies in Hong Kong's rapidly growing technology sector.

KTEC features:

• Holistic exposure to Hong Kong's technology ecosystem, including E-Commerce, 5G, social media, healthcare IT, and more.
• Exposure to companies benefitting from increasing domestic consumption by China's growing middle class
• Exposure to Chinese internet and technology companies listed in Hong Kong

China Technology Sector Highlights:

• In 2024, about 26.8% of the total retail sales in China were made online, decreasing from 27.6 percent in 2023.
• China is a world leader in 5G spending and adoption. By 2025, China is projected to have over 1 billion 5G users, accounting for 38% of total global use.
• In 2024, Chinese companies accounted for 79.8% of the Hong Kong Stock Exchange's total market capitalization, with a combined value of $4.55 trillion.

Why did Hang Seng make the index?

Access to Hong Kong-listed technology companies

China is becoming a world leader in advanced Information Technology hardware production, focusing on 5G equipment and semiconductors. Many of the firms leading these developing industries in China list shares in Hong Kong.

Mainland investor opportunity

In 2024, Chinese companies accounted for 79.8% of the Hong Kong Stock Exchange's total market capitalization, with a combined value of $4.55 trillion.

Growing number of secondary listings

Internet giants like Alibaba, JD.com, and Baidu have chosen to pursue additional listings on the Hong Kong Stock Exchange to capitalize on its growing investor base from Mainland China.

Top IPO location

The Hong Kong Stock Exchange has remained one of the most popular IPO venues globally. In 2024, companies raised nearly USD 11.1 billion through initial public offerings on the exchange, marking a significant increase of almost 89 percent compared to the previous year.

The Hong Kong Stock Exchange is becoming a global leader for new IPOs and secondary listings.

The exchange is one of the most popular IPO venues globally. In 2024, companies raised a total of $83 billion by listing on the exchange.

• Multiple Chinese internet and technology companies listed in the US have pursued secondary listings in Hong Kong, including Alibaba, JD.com, Baidu, and NetEase.
• These companies believe they may receive higher valuations in Hong Kong because Asia-based investors have access to the market and know their businesses intimately.
• The investor base in Hong Kong is also less sensitive to US headline risk, which may improve volatility.

IPO Capital Raised

• 2018: $37.11 billion
• 2019: $40.32 billion
• 2020: $51.23 billion
• 2021: $42.1 billion
• 2022: $87.8 billion
• 2023: $123.2 billion
• 2024: $83 billion

Potential Future Secondary Listings

Company (Ticker)	Primary Business	Current US Market Capitalization ($ Billions)
Vipshop (VIPS US)	E-Commerce	8.5
Joyy Inc. (JOYY US)	Live Streaming	3.5

The 3-year average revenue growth rates for the internet and technology companies in the Hang Seng Tech Index are in line with those of comparable US businesses.

Top 10 Hang Seng Tech Index constituents vs. their U.S. equivalents as of 12/31/2025.

Top 10 Hang Seng Tech Index Constituents	Primary Business	Index Weight	China Internet Companies 3 Year Average Revenue Growth Rate	Comparable U.S. Business	U.S. Internet Companies 3 Year Average Revenue Growth Rate
MEITUAN-CLASS B	E-Commerce	9.49	21%	Grubhub	-17%
TENCENT HOLDINGS LTD	Social Media	8.62	10%	Facebook	17%
XIAOMI CORP-CLASS B	Smartphones	8.56	17%	Apple	3%
NETEASE INC	Social Media	8.48	5%	Facebook	17%
BYD CO LTD-H	Automobiles	8.45	40%	Ford	8%
BAIDU INC-CLASS A	Software	4.62	2%	Activision Blizzard	26%
KUAISHOU TECHNOLOGY	Video	4.49	15%	Roku	13%
ALIBABA GROUP HOLDING LTD	E-Commerce	4.47	6%	Amazon	11%
JD.COM INC-CLASS A	E-Commerce	4.47	8%	Amazon	2%
TRIP.COM GROUP LTD	Software	3.80	54%	Tripadvisor	17%
Total: 65%			Average: 18%		Average: 10%

Inflows into Hong Kong remain strong

• In 2023, the total market value of mainland Chinese companies listed on the Hong Kong Stock Exchange (HKSE) exceeded 24 trillion Hong Kong dollars. Companies based in Mainland China represented 76% of the total market capitalization on HKEX.
• As a result of this program, Mainland investors now represent approximately 8.5% of Hong Kong's free-float market capitalization. This number is projected to increase significantly in the coming years.

Cumulative Southbound Stock Connect Inflow Since 12/31/2016

• Since 12/31/2016: $472B
• 2024: $102.9B
• 2025: $140.4B

KTEC provides holistic exposure to Hong Kong's technology ecosystem

Companies included in KTEC have high business exposure to the following selected technology themes.

Key Technology Themes

• E-Commerce
• 5G
• Fintech
• Internet
• Semiconductors
• Cloud Computing
• Social Media
• Healthcare IT

KTEC Sector Breakdown

• Consumer Discretionary: 40%
• Communication Services: 39%
• Consumer Staples: 8%
• Financials: 2%
• Industrials: 7%
• Real Estate: 4%

Company Introductions

Information Technology

SUNNY OPTICAL TECHNOLOGY

• Founded in 1984, Sunny Optical Technology (Group) Co. Ltd.is a leading manufacturer of integrated optical components and products worldwide, best known for its smartphone camera lenses.
• At present, the Company operates in eight business sectors: mobile phone business, automobile business, security business, microscopes business, robot business, AR / VR business, industrial detection business and medical detection business.
• The likely expansion into Apple's supply chain and smartphone users' penchant for more advanced lenses may help Sunny Optical's revenue growth and margin stay above its peer group average over the next few years.
• The company's car-camera modules' deliver high margins and could benefit from the global transition toward electric vehicles.

XIAOMI

• Founded in 2010, Xiaomi is an electronics company and one of the top five smartphone vendors in the world. Additionally, Xiaomi makes laptops, appliances, consumer electronics, and many other products.
• Electric vehicles could become a major growth driver. At the Xiaomi EV Technology Launch, Xiaomi officially unveiled the five core technologies of its electric vehicle initiative: E-Motor, Battery, Xiaomi Hyper Die-Casting, Xiaomi Pilot Autonomous Driving, and Smart Cabin. Xiaomi EV is dedicated to redefining automotive technology through the development of foundational technologies and extensive independent research.
• Xiaomi profiting from Artificial Intelligence of Things (AIoT) in the 5G era. Xiaomi's core strategy of "Smartphone × AIoT" increased revenue by 12.5% quarter-over-quarter in the last quarter of 2022 to 3.0 billion. We are confident that their AIoT platform will continue to grow rapidly thanks to their strengths in connected device production.
• Increased investments in semiconductors by Xiaomi. Xiaomi wants to become a leading chip manufacturer, and their ambitions are beginning to bear fruit.

Company Introductions

Kingdee

• Kingdee International Software Group Company Ltd. is the second-largest enterprise resource planning (ERP) provider in China. It offers both traditional ERP software and cloud-based service to over 6.8mn corporate customers.
• Kingdee currently holds a more than 10% market share in China's ERP space but we believe there is much room for greater market share gains as Chinese companies increasingly favor domestic software.
• Kingdee has developed a comprehensive cloud product portfolio, addressing the needs of enterprises of all sizes, and a Platform-as-a-Service (PaaS) platform that drives ecosystem development.
• The company plans to turn its cloud business into a full subscription-based model in the future.

Technology Capabilities

AI: Robot K, the smart business assistant, and the Kingdee Finance RPA Robot

Blockchain: Financial chain for distributed financial accounting and blockchain invoices

5G: Kingdee and China Unicom jointly established Yundee

Cloud Computing: Kingdee cloud native SaaS+PaaS platform

IoT & Big Data: edge computing data box & cloud drive

BYD

• In 2023, BYD significantly expanded its global presence, recording a 337% increase in overseas sales of new energy passenger cars, which surpassed 240,000 units, making it the leading Chinese exporter of NEVs.
• BYD's new energy passenger vehicles are now available in 64 countries and regions, supported by strategic investments in manufacturing facilities in Thailand, Brazil, Uzbekistan, and Hungary.
• BYD sold more new energy vehicles (NEVs) than Tesla worldwide in 2023.

The interior of BYD's HAN luxury sedan

E-Commerce Ecosystem

JD.com

JD.com is China's largest online retailer and largest Internet company by revenue ($151.7 billion in 2022)

It has one of the largest fulfillment infrastructure operations across e-commerce companies globally

Alibaba Group

Global retail marketplace & more

Online retail

• Taobao
• Tmall
• Offline-online integration

International retail

• AliExpress
• Lazada (SE Asia E-Commerce)

Wholesale Marketplace

• Alibaba.com
• 1688

Other services

• Food delivery (ele.me)
• Video sharing (Youku)
• Workplace collaboration (DingTalk)
• Cloud suite (Alibaba Cloud)
• Smart logistics (Cainiao)

Meituan Dianping

China's one-stop app for food delivery, groceries, ticket reservations, ride-sharing, service appointments, and more

Company Introductions

Kuaishou Technology

Originally created as a GIF-maker, Kuaishou evolved into a short video social platform, similar to TikTok, where users can record videos to share their lives and personal stories. The company has additional apps for editing and producing photo and video content. Through partnerships with E-Commerce companies, users can purchase featured products within the app.

Baidu

Baidu was founded in 2000 initially as a search engine platform but subsequently became an early adopter of artificial intelligence to make content discovery on its internet platform more efficient. Currently, Baidu consists of an expansive mobile ecosystem, AI cloud platform, smart driving solutions, and more.

NetEase

Founded in 1997, NetEase, Inc. is a leading China-based internet technology company that develops and operates some of China's most popular online PC and mobile games as well as operates a range internet services such as online education, online music, internet media and others.

Tencent

• Gaming
• Social media & messaging (WeChat)
• E-Sports
• Film
• Music
• Blockchain
• Fintech

KraneShares Hang Seng TECH Index ETF

Investment Strategy:

KTEC seeks to track the performance of the Hang Seng TECH Index, which captures the 30 largest companies in Hong Kong's rapidly growing technology sector. The Index provides exposure to innovative companies with strong research & development investment, high revenue growth, and themes such as cloud, E-Commerce, fintech and internet. The Index is free-float market capitalization weighted with an 8% cap on individual constituent weighting.

Fund Details (Data as of 12/31/2025)

• Primary Exchange: NYSE Arca, Inc.
• CUSIP: 500767579
• ISIN: US5007675797
• Total Annual Fund Operating Expense: 0.69%
• Inception Date: 06/08/2021
• Distribution Frequency: Annual
• Underlying Index: Hang Seng TECH Index
• Net Assets: $56,802,097
• Number of Holdings: 37

Top 10 Holdings as of 12/31/2025 (Holdings are subject to change)

Company	Ticker	%
MEITUAN-CLASS B	3690	9.49
TENCENT HOLDINGS LTD	700	8.62
XIAOMI CORP-CLASS B	1810	8.56
NETEASE INC	9999	8.48
BYD CO LTD-H	1211	8.45
BAIDU INC-CLASS A	9888	4.62
KUAISHOU TECHNOLOGY	1024	4.49
ALIBABA GROUP HOLDING LTD	9988	4.47
JD.COM INC-CLASS A	9618	4.47
TRIP.COM GROUP LTD	9961	3.80

KTEC Performance History as of 12/31/2025:

Cumulative %

• 3 Mo: -14.74% (Fund NAV), -14.91% (Closing Price), -14.67% (Index)
• 6 Mo: 1.64% (Fund NAV), 0.59% (Closing Price), 5.13% (Index)
• Since Inception: -33.98% (Fund NAV), -34.49% (Closing Price), -28.62% (Index)

Average Annualized %

• 1 Yr: 19.78% (Fund NAV), 20.98% (Closing Price), 24.37% (Index)
• 3 Yr: 8.00% (Fund NAV), 7.97% (Closing Price), 11.16% (Index)
• 5 Yr: – (Fund NAV), – (Closing Price), – (Index)
• Since Inception: -8.69% (Fund NAV), -8.85% (Closing Price), -7.12% (Index)

Important Notes:

Carefully consider the Funds' investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds' full and summary prospectus, which may be obtained by visiting www.kraneshares.com/ktec/. Read the prospectus carefully before investing.

Risk Disclosures:

Investing involves risk, including possible loss of principal. There can be no assurance that a Fund will achieve its stated objectives. Indices are unmanaged and do not include the effect of fees. One cannot invest directly in an index.

This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change. Certain content represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results; material is as of the dates noted and is subject to change without notice.

The Fund may invest in derivatives, which are often more volatile than other investments and may magnify the Fund's gains or losses. A derivative (i.e., futures/forward contracts, swaps, and options) is a contract that derives its value from the performance of an underlying asset. The primary risk of derivatives is that changes in the asset's market value and the derivative may not be proportionate, and some derivatives can have the potential for unlimited losses. Derivatives are also subject to liquidity and counterparty risk. The Fund is subject to liquidity risk, meaning that certain investments may become difficult to purchase or sell at a reasonable time and price. If a transaction for these securities is large, it may not be possible to initiate, which may cause the Fund to suffer losses. Counterparty risk 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 the derivative.

The ability of the Fund to achieve its respective investment objectives is dependent, in part, on the continuous availability of A Shares and the ability to obtain, if necessary, additional A Shares quota. If the Fund is unable to obtain sufficient exposure to limited availability of A Share quota, the Fund could seek exposure to the component securities of the Underlying Index by investment in other types of securities. The Fund is subject to political, social or economic instability within China which may cause decline in value. Emerging markets involve heightened risk related to the same factors as well as increase volatility and lower trading volume. Fluctuations in currency of foreign countries may have an adverse effect to domestic currency values. The Fund may invest in Initial Public Offerings (IPOs). Securities issued in IPOs have no trading history, and information about the companies may be available for very limited periods. In addition, the prices of securities sold in IPOs may be highly volatile. In addition, as the Fund increases in size, the impact of IPOs on the Fund's performance will generally decrease.

Narrowly focused investments typically exhibit higher volatility. The Fund's assets are expected to be concentrated in a sector, industry, market, or group of concentrations to the extent that the Underlying Index has such concentrations. The securities or futures in that concentration could react similarly to market developments. Thus, the Fund is subject to loss due to adverse occurrences that affect that concentration. In addition to the normal risks associated with investing, investments in smaller companies typically exhibit higher volatility. KTEC is non-diversified.

ETF shares are bought and sold on an exchange at market price (not NAV) and are not individually redeemed from the Fund. However, shares may be redeemed at NAV directly by certain authorized broker-dealers (Authorized Participants) in very large creation/redemption units. The returns shown do not represent the returns you would receive if you traded shares at other times. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns. Beginning 12/23/2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn't available, the midpoint between the national best bid and national best offer ("NBBO") as of the time the ETF calculates the current NAV per share. Prior to that date, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time.

The KraneShares ETFs and KFA Funds ETFs are distributed by SEI Investments Distribution Company (SIDCO), 1 Freedom Valley Drive, Oaks, PA 19456, which is not affiliated with Krane Funds Advisors, LLC, the Investment Adviser for the Funds, or any sub-advisers for the Funds.

Index Definitions

Hang Seng Tech Index: The Hang Seng Tech Index represents the 30 largest technology companies listed in Hong Kong that have high business exposure to technology themes and pass the index's screening criteria. The index was launched on July 27, 2020.

Southbound Connect Flow: Denotes the daily value of stocks purchased on the Hong Kong Stock Exchange by investors with Mainland accounts through the Stock Connect program. (Ticker H1DBTO Index)

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