Horizon Kinetics ETFs

Horizon Kinetics Inflation Beneficiaries ETF (INFL)

Horizon Kinetics Blockchain Development ETF (BCDF)

Horizon Kinetics Medical ETF (MEDX)

Horizon Kinetics SPAC Active ETF (SPAQ)

Horizon Kinetics Energy and Remediation ETF (NVIR)

ANNUAL REPORT

December 31, 2023

Horizon Kinetics ETFs

Table of Contents

1

Horizon Kinetics Inflation Beneficiaries ETF

Shareholder Letter

December 31, 2023 (Unaudited)

INFL Shareholder Letter

Market Inflections & Echoes of 1972

Discussions of economic indicators tend to be focused on the rate of change, rather than aggregate levels. Rate of change analysis is relevant for certain measures, such as corporate earnings and GDP, as the measures are evaluated based on growth. Aggregate levels are more relevant for variables that have a continuing impact based on an absolute level, such as money supply, debt, and prices. Of course, the rate of change is also relevant, but the context provided by considering the aggregate or cumulative data is at least equally important.

Aggregate price levels (as measured by the Consumer Price Index¹) are approximately 20% higher compared to the outset of 2020, while overnight borrowing rates (SOFR²) in the United States are approximately 400 basis points higher. These shifts are even more pronounced if recent readings are compared to the period immediately following the pandemic, during which the U.S. had a brief period of deflation, and rates had plummeted to zero. Recent deceleration in the rates of change for these variables obscure these enormous aggregate changes. We argue that these levels are already sufficient for structural regime shift, effectively ending the prolonged era of low interest rates, low inflation and synchronized global economic growth. To be sure, our secular inflation thesis refers to levels well above the pre-2020 trend of approximately 2%, and a run-rate inflation level of as low as 3-4% is adequate.

This view was largely validated by market prices throughout 2021 (when the Fund launched) and 2022; however, markets turned decidedly back to “pre-2020” posture in 2023. A contributing factor was presumably the market’s fixation on the rate of change, as opposed to the cumulative change of price levels and rates, as noted above. Various measures of inflation growth have moderated from unsustainably high peak levels, but the rate of change remains both positive and above trend.

This deceleration has prompted a belief that global central banks will reduce interest rates. Recall that the market has been consistently wrong in the belief that rates would cause a recession and force a so-called “pivot” in policy (more on this later). However, the current belief (hope) of rate cuts appears to have been validated at the December FOMC³ Meeting. Simply reference the relative market price action following this meeting through year-end, and the (equity) market is “partying like its 2019” all over again. This view is echoed by the bond market as the average yield on a U.S. non-investment grade bond has fallen from 9.4% to approximately 8%. This move has been almost exclusively driven by a compression in risk premiums for high yield bonds relative to investment grade, which at approximately 3.5% today, is over 100 basis points tighter than in non-recession months dating back to 1996.

These moves are part of a broader market zeitgeist shift, which occurred abruptly this year, reverting back to near euphoric conditions surrounding nascent technological developments such as artificial intelligence (“AI”) and language learning models (“LLMs”). We are not experts in the field whatsoever, but our judgment suggests that the potential productivity gains from such technologies will come largely at the expense of employment, hence the net impact on economic growth and overall consumption is ambiguous. The exuberance surrounding technology has a subtle, but pernicious impact on capital markets. Broad stock and bond indexes, ergo passive investing, suffered its worst year of performance in 2022, as richly valued equities fell in tandem with rising interest rates. Stock and bond correlations proved to be positive and diversification added little benefit. We posited that this could be the inflection point for passive dominated market flows. This proved to be wishful thinking, as passive equity strategies surged higher in 2023, almost making the modest bond losses irrelevant. More importantly, the rebound reinforced the narrative of passive investing for the long-term.

2

Horizon Kinetics Inflation Beneficiaries ETF

Shareholder Letter

December 31, 2023 (Unaudited)

We may still be waiting for the passive inflection point to materialize but believe that a market inflection point has already commenced and is merely paused for the moment. In the balance of the letter we will detail why we believe that we have already reached the inflection point for markets, how our portfolio is positioned and performed over the past year.

Inflation Cycle & Commodities

The consensus opinion is that there has been an “immaculate disinflation” whereby inflation is rapidly returning to target without any commensurate damage to economic growth or employment. This has been largely credited to higher interest rate policies implemented by the Federal Reserve. There is a clear fact pattern which includes annual CPI inflation falling to a 3.3% rate in December, U.S. annual 2023 GDP growth estimated to be 2.4%⁴ and U.S. broad unemployment (total non-farm payrolls) near a record low of 3.7% in November. In the eyes of many, a “soft landing” has thus been engineered thanks to the wizardry of central bankers.

Not so fast. The entire premise of monetary policy is that aggregate demand—hence economic cycles—can be managed via interest rates. Higher interest rates reduce marginal consumption and investment—all else equal—which curtails economic growth. This aggregate demand drop should also be manifested in goods, services and ultimately labor demand, all working to reduce price levels. The problem with this logic is that various measures, particularly in the commodity markets, suggest record levels of demand. For example, the International Energy Agency (IEA) recently reported that global oil consumption is on track for an all-time peak level of 101.7 million barrels per day this year. The same rings true, unfortunately, for global coal consumption, which is estimated to have, at a minimum, sustained its 2022 record demand level of 8.3 billion tons. Coal is amongst the most carbon intensive fossil fuels, estimated to be approximately 2x worse than natural gas in terms of carbon emissions. As such, the world has been scheduled to wean off coal—both for power generation and steel making—for nearly a decade, yet the consumption persists.

Similar data abounds for nearly every raw material, and this is consistent with global growth and rising per capita incomes in lower income parts of the world. Demand growth is resilient despite a moribund economic recovery in China, which was amongst the largest demand drivers for these markets over the past 20 years. The demand data clearly contradicts the monetary driven disinflation narrative, as do the prevailing lackluster price levels. So what else could be at play?

One underappreciated variable has been the U.S. Dollar. The ICE U.S. Dollar Index rallied a full 25% from its nadir in 2021 to its peak in 2022, which corresponds, with a lag, to U.S. leadership in the global rate hiking cycle. The Dollar, despite the myriad recent challenges to its global hegemon status, remains the transactional currency for an overwhelming amount of global commerce and commodity trade. Thus, the rising Dollar makes commodity prices in local currency more expensive for foreign buyers. This dynamic was insufficient to impede demand growth but appears to have been highly effective in suppressing commodity prices for the time being. This begs the question of whether this dynamic is repeatable or sustainable in suppressing price levels and inflation. While there is no definitive answer, the Dollar Index fell 2.5% in two weeks following the dovish December Federal Reserve meeting, perhaps indicating an inflection.

The coal consumption data might be surprising to many, particularly with the political and investment emphasis on environmental factors. A significant, but nonessential component of the secular inflation thesis is the “green” investment initiative. The motivation for renewable oriented spending is admirable, even if data suggests that the net benefits are ambiguous at best from an environmental standpoint. These investments are objectively more expensive than traditional energy sources, and have an added cost in the sense that they divert investment in traditional energy sources, thus limiting supply and driving long-term costs up. Coal demand is indicative of a broader trend in 2023, where governments “paused” green spending and embraced (lower cost and more reliable) traditional energy, as the world sought to quell high inflation levels.

In conjunction with the “green pause,” there has been substantial global destocking of raw material inventories. This is logical behavior for a multitude of reasons. Firstly, as interest rates rose, so did the cost to finance working capital of inventories, thus incentivizing destocking. Secondarily, experts were in near unanimous agreement that the global economy would fall into recession at some point in 2023, which would surely impact demand (price) at the margin, also incentivizing destocking. There is also a smaller factor that can be attributed to inventory levels destocking as a function of normalization compared to

3

Horizon Kinetics Inflation Beneficiaries ETF

Shareholder Letter

December 31, 2023 (Unaudited)

the pandemic era, when supply was universally scarce. One lesser recognized driver of destocking has been deregulation, or pseudo-deregulation. The U.S. (and other western nations) technically have trade restrictions on raw materials sourced from Russia, Iran, Venezuela and others. These countries were all able to get large quantities of inventories of stockpiled products (namely oil) onto global markets last year largely unabetted. As we analyze the likelihood of further destocking, deregulation and “de-greening,” these variables all appear to be unrepeatable and suggestive of an inflection.

Fundamentals can change very rapidly, particularly in commodity markets. It was not long ago that many market pundits theorized a “commodity supercycle,” an ambiguous term that refers to a protracted upward demand/price cycle of significant magnitude relative to previous cycles. If we use oil as a proxy for the fundamentals of this thesis, there have been two profound developments (in addition to those mentioned above) that have impacted the market balance: i.) the withdrawal of approximately 300 million barrels (46%) of oil from the U.S. Strategic Petroleum Reserve (“SPR”) since 2020 and ii.) a lackluster economic recovery in China. The former added substantial, albeit unsustainable supply to the global market, preventing commercial inventories from reaching critically low levels. The latter reduced global demand at the margin, although the true extent is subjective due to poor data availability for People’s Republic of China (PRC) consumption and inventories. While the fundamentals may have changed, the drivers of the shift appear temporary and unsustainable.

Today, we believe that commodities are in a consolidation phase, or a pause in the longer uptrend. This is also the case for broader inflation, although we don’t believe that it will return to peak growth in the near to intermediate term. While this belief is backed by granular supply and demand data, it is also supported by the previous commodity and inflation cycles. History also suggests that markets are often overly focused on short-term variables which can obscure the longer-term trend. There is no shortage of short-term factors that are creating temporary headwinds to prices, but this creates an opportunity for long-term investors.

Performance Review

The Fund generated modestly positive returns for the year despite a challenging backdrop for hard asset prices, hence hard asset companies. The Bloomberg Commodity Total Return Index returned -6.99% for the year, which as compared to the 21.46% for the MSCI ACWI Index, represented a considerable headwind. The relative strength of the U.S. Dollar, which rose 27.17% as measured by the ICE Dollar Index contributed to the soft hard asset prices.

The notable outlier in positive exposure in the portfolio was to the world’s largest uranium company, that nearly doubled in value with surging uranium prices. Uranium is a critical fuel for nuclear power generation, but has supply been very limited following the Fukushima nuclear accident. Uranium prices fell below the global mining break-even price, which prompted mine closers and curtailments. However, demand has been resilient, and supply is very constrained, including a considerable portfolio of global capacity in Kazakhstan. While is an extreme example of supply leading to scarcity, we see similar dynamics developing across various hard asset markets.

The Fund also benefited from strong rebounds in land and real estate related companies that rose in value along with their end markets. The broader real estate, homebuilding, land and infrastructure market is very sensitive to interest rates – and benefitted from the signaled policy shift in December. We own capital light companies, with far less long-term rate sensitivity.

Global financial exchanges exposure in the Fund broadly kept pace with the market, rising nearly 24% on average. Financial activity continues to grow, but pro and counter cyclically, which makes these ideal full-cycle positions. However, the exchanges can and should decoupled from broader markets during counter cyclical growth experienced during various inflationary environments.

The two largest allocations in the Fund - energy and precious metals companies – declined in aggregate for the year, acting as the largest drag on returns. We are confident that energy prices are simply in a temporary lull, and that prevailing prices reflect no “risk premium” related to the myriad of potential unexpected supply disruptions developing. Fundamentally, the dearth of investment for the past decade will begin to reveal itself, likely as sooner as the middle or end of this year. Precious metals prices have combatted rising real bond yield and a strong U.S. Dollar. However, gold ended the year near its all-time high price. The root of this is an enigma, but we recognize the rapidly deteriorating U.S. (global) fiscal situation, geopolitical conflict and potential for resurgent inflation as strong cases for owning the metal.

4

Horizon Kinetics Inflation Beneficiaries ETF

Shareholder Letter

December 31, 2023 (Unaudited)

2023 was a challenging year to be sure, but the setup for 2024 and beyond appears promising. As we look ahead, we believe that the Fund is well-positioned to benefit from the changing economic environment. However, markets remain unpredictable, and we cannot predict when conditions might change in our favor. In the interim, we are invested in companies with strong operating results, with the potential to perform well in a variety of economic environments.

5

Horizon Kinetics Blockchain Development ETF

Shareholder Letter

December 31, 2023 (Unaudited)

Market Update:

When observing a perceived imbalance, where the price of an asset is markedly affected, it is common to evaluate whether a change in meaningful variables led to the situation. This is a logical approach, as understanding how the environment has been altered can help pinpoint any fundamental changes that may require a re-assessment or prudent action on the part of the investor. The causes of the most recent blips on a performance chart are typically the most obvious, but not necessarily the most important for long-term decision-making. While this thinking may provide fodder for commentary on the current state of things, it often misses the forest for the trees.

Bitcoin, specifically, has been the subject of two events that highlight the myopia of the markets when it comes to digital assets. The first was this month’s approval of spot Bitcoin ETFs in the United States. This is the culmination of a more than 10-year battle since the original spot Bitcoin ETF application by the Winklevoss twins back in 2013. There is wide speculation, and general optimism, that the offering of a spot Bitcoin ETF will open the doors to institutional adoption, contributing to a higher price by lowering the barriers to demand. Investors that were restricted from holding Bitcoin through digital wallets are now able to through more traditional brokerage means, and the asset itself becomes a readily available option for new portfolio allocations across the wealth management world.

This event truly is a meaningful step in the evolution and adoption of Bitcoin, as investors have been attempting to replicate exposure through equities, derivatives, and other products. Merely holding a portion of treasury assets in Bitcoin classified some companies as “crypto-related”, bringing the benefits of a premium valuation in some circumstances, and a complete blockage by association from some platforms. A layer of red tape has been removed.

The next event has not yet happened but is expected to occur towards the end of April 2024. This event is known as the halving, a development that reduces the Bitcoin block mining reward by half, from 6.25 to 3.125. There are generally two ways to procure Bitcoin. One way is to mine it, providing infrastructure for the blockchain by competing for each block reward. The second is to purchase from someone who has already procured the coins. In either case, following the halving, there will be less marginal supply available to service those that demand it.

The current Bitcoin environment is filled with participants that seem focused on holding and growing their bitcoin balances. 31% of Bitcoin in circulation hasn’t moved on the blockchain in over 5 years. 43% hasn’t moved in over 3 years. 70% hasn’t moved in over 1 year (Glassnode, Supply Last Active, 12/31/23). This is not to say that there is limited transactional activity in Bitcoin. In fact, it is quite the opposite. 365-day average change-adjusted transfer volume on-chain amounted to about $9.3 billion as of December 31, 2023 (Glassnode, Change-Adjusted Transfer Volume, 12/31/23). This is comparable to even the most liquid blue-chip stocks in the world, and it doesn’t include the substantial transaction volume that occurs off-chain. The point here is that liquid Bitcoin supply is depleting as a percentage of the total coins outstanding. Gresham’s law¹ is playing out in real-time, as fiat debasement is driving hard money out of circulation.

Both the spot ETF approval and the halving are consequential, but viewing them as fundamental changes worthy of revaluation is myopic, in our view. Because for anyone with a truly long-term outlook and an understanding of the asset, these events were (largely) expected.

The halving, specifically, is spelled out in the code. Every 210,000 blocks, which is expected to be about every 4 years, a new halving event occurs, reducing the Bitcoin inflation rate by half. This isn’t a surprise, but it is rarely talked about until it is perceived as a near-term catalyst for the asset. Just like the next halving is expected at the end of April, the subsequent halving is expected 4 years after, and so on. If the halving was the only vector that affected the bitcoin market, a rational investor may treat this as an asset closer to an amortizing bond. Assuming constant demand, every day is a step closer towards the inevitable supply reduction. The final token issuance becomes closer. The digital scarcity becomes more pronounced. To the extent that participants either ignore or misunderstand this fact, the benefit accrues to the long-term holders, as they are positioned for all subsequent halvings instead of just the most recent one.

6

Horizon Kinetics Blockchain Development ETF

Shareholder Letter

December 31, 2023 (Unaudited)

Of course, we have no insight into the inner workings of the SEC or the ETF approval process. It is probably better to say that “adoption” was expected, as opposed to saying an “ETF” was expected, but the latter is just the most recent iteration of the former. Assets with true scarcity are rare, and the excesses of government spending and debasement all too prevalent and appear to be on a self-reinforcing inflationary path. Given the premiums placed on equities tied to bitcoin, and the premium/discount mechanics of the few products that did provide exposure to Bitcoin in the US, there was one thing easy to ascertain: Investors want digital asset access in their brokerage accounts.

Given enough time, we maintained the belief that the regulators’ questions preventing access would be answered, and that progress would prevail. Bitcoin will become harder to ignore as time goes on. And had the most recent batch of spot ETFs been denied, the asset itself is designed to operate in an ecosystem non reliant on traditional rails, so the regulatory impediment would likely not have had a significant long-term effect on the adoption of digital assets.

In some cases, pivotal events in cryptocurrency don’t need to be predicted. They are announced years in advance or imbedded in their encoded protocols. In other cases, the realization of a positive event is merely a step in the direction of eventual long-term value realization. These developments, while exciting, show why is it so important to have a long-term (and informed) view as it relates to digital assets. We remain optimistic on the future for digital assets, and will continue to invest with the goal of compounding value for our clients over the long-term.

Portfolio Update:

The portfolio exhibited positive performance in 2023, largely driven by a recovery in the cryptocurrency markets that had collapsed in the prior year. And in similar fashion, the portfolio exhibited a large deviation between those companies that are more widely considered “crypto companies” and those that are not. To be clear, we view all of the companies in the portfolio as eventual beneficiaries of blockchain technology, though we are nonetheless happy that many of our positions appreciated alongside the recovery of the digital asset markets.

The large cash position was a detractor from performance when compared to the broader markets, but we are comfortable maintaining such an allocation as we believe “dry powder” is an important tool when investing in a nascent technology. As confident as we feel about our current positioning, we will look to deploy cash as we see new opportunities arise. Companies that have established business models unrelated to crypto, or that have only recently introduced blockchains as an enhancement to their current operations, were not afforded the same recognition by the market. Even so, these legacy businesses continue to grow as their blockchain initiatives take hold.

Whether their operations are established or developing, we have chosen to focus on companies that will be able to grow synergistically with digital assets like bitcoin, as opposed to the myriad companies that may eventually become displaced by the underlying blockchain technology. In our view, the croupiers known as regulated exchanges present the greatest opportunity, and the greatest optionality on top of a proven business model. The events discussed in the body of this commentary have been noted as catalysts for digital assets but have largely been ignored, thus far, as a catalyst for these companies. There are now 11 Bitcoin ETFs trading on United States exchanges, with the group as a whole breaking records in terms of flows and volumes since their debut. Bitcoin ETF trading has already accrued to the regulated exchanges, and as we’ve discussed previously, trading begets more trading. New products and new exposures create the need for expanded hedging and derivatives use. On top of that, the availability of liquid spot bitcoin continues to be drained by the expecting halvings and the propensity for participants to maintain positions for the long-term. Synthetic exposure through derivatives may present an opportunity to participate in markets far in excess than what is able to be done in the spot market. CME, as an example, currently has the largest open interest for Bitcoin futures contracts in the world. NYSE, Nasdaq, and CBOE have applied for a rule change that would allow them to list options on their new Bitcoin ETFs. We are confident about the strong fundamentals of these companies and await the realization of these new initiatives.

7

Horizon Kinetics Medical ETF

Shareholder Letter

December 31, 2023 (Unaudited)

Kinetics Medical ETF is pleased to mark the conclusion of its first year as an ETF. The Kinetics Medical ETF began 25 years ago as The Medical Fund, a 1940 act mutual fund. On January 27, 2023, the mutual fund was reorganized into the Horizon Kinetics Medical ETF, in order to increase liquidity for the vehicle and its shareholders. The ETF structure reflects the investing patterns and needs of the Fund’s clients, and, in our view, is also better suited to the changes in the pharmaceutical industry.

The pharmaceutical and biotech industry has become an innovation juggernaut, collectively spending $100 billion a year on R&D. The list of therapeutic innovations of late is long—one need only observe advertisements to be convinced, as novel treatments are brought to market for seemingly every known condition. This this isn’t new, but it does seem to be accelerating. Accordingly, the Fund hopes to utilize its flexibility and agility in deploying capital in order to position the portfolio to capture the rewards of this innovation.

The past year was not one of the best for the MEDX. Innovation does not progress linearly, and 2023 proved challenging for some of our established companies, as well as smaller, pure innovation companies. For example, Pfizer recorded lower revenues from covid vaccines and treatments. Shares also fell after an obesity drug trial was discontinued due to adverse effects among trial participants. However news-sensitive these companies may be, their underlying research has value—we believe that investing in this sector requires the same long-term investment horizon that is embodied by Horizon Kinetics as a whole, and that patience will see us rewarded. Looking at current valuations across the market cap spectrum, one can find deep discounts and opportunity.

Of note is Eli Lilly, a company that experienced a very successful year, returning more than 70% between the launch of the Fund and year-end. The company’s weight loss drug, Zepbound, was approved by the FDA this fall, joining a number of other recently launched drugs in the growing category. Lilly may serve as a model for the new pharmaceutical. They have continued to innovate and grow with great rapidity. After doubling its market cap this year, Lilly is still paying a 5% dividend. The company is also advancing gene therapy, an area long in development but that represented profound milestone in medical care.

It is against this background of relentless innovation that the Fund seeks to identify attractive investment opportunities. The portfolio structure is intended to reflect the rate of research and development in the industry. As demonstrated by Lilly, the stale concept of stodgy pharmaceuticals no longer applies. Nor does the model of high-growth biotech companies—indeed, some of our biotech holdings now pay dividends. The two halves of the biopharma complex have converged to the same business model, rooted in innovation. We continue to view the yet-to-be-profitable companies in the portfolio as public traded venture capital, an important component, but judiciously allocated.

As always, we anticipate the future eagerly as will we all be beneficiaries of these discoveries.

8

Horizon Kinetics SPAC Active ETF

Shareholder Letter

December 31, 2023 (Unaudited)

SPAC Commentary for Annual Report

The Horizon Kinetics SPAC ETF launched a new strategy on January 27, 2023. The Fund, which is actively managed, seeks to generate realized capital gains in excess of short-term interest rates on a risk-adjusted basis. The Fund pursues this investment objective primarily by investing, under normal circumstances, in special purpose acquisition companies, or SPACs, that Ryan Heritage, LLP, the Fund’s investment sub-adviser, believes will generate net realized capital gains in excess of the income derived from bank certificates of deposit with similar maturities and with comparable safety of principal. The Fund currently has a diversified portfolio of publicly-traded SPACs seeking a merger or business combination.

What is a SPAC?

A SPAC is a publicly traded corporation with a typical life span of 12 to 24 months whose purpose is to complete a merger or business combination with a privately held business, thereby taking that company public. Most SPAC IPOs are priced at $10 per unit. In addition, the sponsor, i.e., the SPAC’s management team, generally buys restricted warrants and/or equity in the SPAC prior to the IPO—generally between 2% and 4% of the value of the IPO. All the funds raised in the IPO, along with the deferred investment banking underwriting fees and management’s equity investment, are held in a trust account at a major bank and are forfeited by the sponsor if the SPAC is liquidated. Therefore, the initial trust account is often more than $10 per share and is held at a major bank and released only when a merger or acquisition is consummated (or, at the latest when the SPAC’s deadline occurs). The trust account earns interest at treasury-bill rates after taxes (approximately 5% per annum as of year-end 2023).

The search and merger process is managed by the sponsor. If the sponsor fails to find and close a business combination by the pre-determined deadline, the SPAC dissolves and the cash in the trust account is distributed solely to the public shareholders.

SPACs have been around in various forms for decades to provide private operating companies with what is generally considered to be a quicker and less complicated route to the public markets compared to the traditional IPO process. They offer investors and target companies alternative financing opportunities that compete with venture capital, private equity, direct listings, and the traditional IPO market. The sponsor of a successful SPAC stands to make multiples of its initial investment, but risks losing it entirely if it fails to complete a business combination by the deadline.

A SPAC IPO is typically issued as a unit consisting of one common share and a warrant (or fraction thereof) to purchase a share. The warrants are exercisable only after an operating company is acquired by the SPAC. Warrants are a critical ingredient in the risk-alignment between SPAC sponsors and public investors, as they expire worthless if the SPAC does not acquire an operating company by its pre-determined deadline and liquidates. Initially, SPACs trade only as units. However, shortly after the SPAC IPO the shares and the warrants can be separated and the units, shares and warrants each trade separately. Typically, a SPAC must obtain shareholder approval of the proposed combination by its deadline. Otherwise it will be forced to dissolve and return the cash held in the trust fund solely to the public stockholders.

For our ETF’s purposes, the most important feature of SPACs is that the public shareholders can convert their shares into a pro rata share of the cash in the trust fund by tendering or redeeming their shares and retain any warrants they may still hold. This is the critical provision that makes SPACs attractive to risk averse investors. Without this protection, we believe the SPAC market would virtually disappear.

The sponsor of a SPAC typically receives 20% of its total equity for its investment. From the sponsor’s point of view, a SPAC is a high-risk investment since it loses its entire investment, i.e., all of its warrants and stock, if the SPAC liquidates. On the other hand, it stands to make many times its investment on its 20% equity position and warrants if a successful acquisition is consummated. For example, for a $60 million SPAC, we estimate that management will make $12 million if a deal gets done and lose $3 million if it liquidates. Hence, SPAC management is highly motivated to get a deal done.

How we Invest

Our Fund invests in SPAC units either through IPOs or the purchase of units or common stock in the secondary market and before the completion of the business combination.

9

Horizon Kinetics SPAC Active ETF

Shareholder Letter

December 31, 2023 (Unaudited)

After the sponsor announces an agreement with a target, we may choose to hold our shares, knowing that we can redeem them for a pro rata share of the trust account (which continues to earn interest) just prior to the shareholder vote, or sell all or some of our SPAC securities. If we decide to sell or redeem our common stock, we can sell our warrants or keep them and retain what is essentially a low-risk opportunity to capture upside performance of the combined company going forward.

Unlike “fundamental” SPAC investors that oftentimes are looking to profit from remaining invested in the merged company, we do not intend to risk our principal on the long-term performance of the business combination itself. Therefore, as a rule, we will not retain any common equity exposure in the de-SPAC’d business combination. If we retain any warrants, they are generally nominal positions and sold in the relative near-term post-merger.

How to Enhance Returns on SPACs?

There are a few ways to get more value with a portfolio of SPACs without materially increased risk.

SPAC Market Outlook

2023 was a challenging year for the SPAC market: the average SPAC IPO size fell 21% from 2022, and 53% from 2021.¹ Furthermore, many SPACs launched in 2021 struggled to close a deal in the allotted timeframe.

However, there are signs of stabilization in the SPAC market. Ninety-eight companies listed via SPAC merger in 2023, down from 2022, but higher than any prior year other than 2021. Liquidations have steadied, and there is a significant merger pipeline, with more than 130 public SPACs seeking targets and more than 140 SPACs with pending mergers.

While the IPO market for SPACs ebbs and flows, we expect there will always be sponsors willing to risk it all for enormous gains—they are risk seeking, and if they are successful, they can do very well over the long run. They need our capital to succeed. In contrast to their high risk – high return approach, our operating model is more like a casino. We want to make steady gains above what we could earn in virtually riskless investments (if held to maturity).

Performance Overview

Despite weakness in the SPAC market in 2023, the Fund’s investment strategy allows it to generate returns in such an environment. In fact, the Fund recorded a return of 4.71% (NAV) or 4.94% (price) from its strategy launch on January 27 through December 31, in line with the T-bill rate for the period.

Should the SPAC market pick up, the Fund has the potential to generate higher returns in the year ahead. However, even if activity remains muted, as prevailing interest rates rise, the Fund should earn higher returns from funds held in trust accounts and remains positioned to generate returns above the risk-free rate, in our view.

10

Horizon Kinetics Energy and Remediation ETF

Shareholder Letter

December 31, 2023 (Unaudited)

NVIR 2023 Overview

Since its inception on February 21, 2023, the Horizon Kinetics Energy & Remediation ETF (NVIR) provided a positive return of 6.39% in 2023, based on the net asset value. The Fund is unique in that it has a dual mandate: to invest in traditional hydrocarbon energy companies, as well as what we consider remediation companies. These provide solutions that mitigate the negative consequences from the exploration, production and transportation of hydrocarbons. While one might presume that the remediation companies consist of development-stage businesses, in point of fact, almost every company in the Fund is profitable and, based on Wall Street consensus forecasts, are expected to produce, collectively, meaningful earnings growth.

In 2023, more than two-thirds of the return was generated by the remediation companies, with the hydrocarbon segment accounting for approximately one-third. The performance of the remediation companies in the Fund—which were more than 10% in 2023¹—stands in sharp contrast to many ESG,² “green,” and renewable energy-focused indices which, generally, did not perform well during the year. The intent of providing exposure to the remediation companies is similar to that of the aforementioned indices—to “do good” for the environment—but there are many companies, perhaps the majority in this sector, that are not profitable, nor cash flow positive, and whose long-term solvency is in question. In contrast, the remediation companies in this Fund, having positive earnings, do not possess the same level of financial risk, and could be viewed as an alternative avenue in which to invest in environmental solutions.

The price of West Texas Intermediate (WTI) crude oil declined 11% in 2023, which contributed to the weakness in some hydrocarbon-related equities. This was the first yearly decline in WTI in three years, after appreciating 55% in 2021 and a further 7% in 2022.³ To a degree, oil prices have been suppressed from the release of 238 million barrels from the Strategic Petroleum Reserve (SPR) over the past two years.⁴ However, that issue now appears to be vacated since the SPR has slowly begun to restore its reserves—although only 8 million barrels have been added back since the 40-year low in reserves was recorded last summer.

The price of natural gas fell 27% in 2023, after appreciating 62% in 2021, followed by a decline of 8% in 2022. Consequently, it is evident that the prices of the commodities often do fluctuate greatly from one year to the next. Although the Fund’s energy holdings would benefit from higher prices, they could also flourish via increased consumption. In that regard, the U.S. produced a record amount of oil in 2023, at approximately 12.92 million barrels per day, on average. That was an increase of 8.4% compared to 2022. The Energy Information Administration (EIA) expects crude oil production to reach 13.2 million barrels per day in 2024 and more than 13.4 million in 2025, driven by increases in well efficiency⁵ and demand from developing countries, such as India.

Although current energy prices are lower (relative to the recent past), the Fund’s portfolio companies are nevertheless profitable. Many are using their cash flow to undertake shareholder-friendly actions, such as repurchasing stock, reducing debt, and paying dividends. Collectively, these measures should increase shareholder value, even in the absence of higher energy prices.

11

Horizon Kinetics Energy and Remediation ETF

Shareholder Letter

December 31, 2023 (Unaudited)

Production of hydrocarbons increases with rising demand, and the demand has been improving steadily over the past few decades, particularly since countries such as China and India are raising their standard of living. As more of the world’s population joins the middle class, they tend to use increasing amounts of energy. The hydrocarbon companies should benefit from a continuation of this trend. As the chart below outlines, over the past 20 years, world energy consumption has expanded by around 42.7%, or around 1.79% per year.

Source: ourworldindata.org

Counting only the traditional fossil fuel sources (coal, oil and natural gas), the expansion has been on the order of 40.5% over the 20-year period, or 1.71% annualized. Consequently, their rate of expansion is virtually the same as the overall energy market, despite increasing production of wind power and solar power.

Then there are the uses for hydrocarbons that are not usually discussed. Fossil fuels are used to produce electricity, as well as fuels for transportation and to generate heat, for industrial applications as well as home/office heating solutions. But perhaps equally important, approximately half of the world’s population relies on synthetic fertilizers produced mainly from natural gas. There is no cost-effective solution to replace natural gas-based fertilizers for food production, as Sri Lanka realized recently when it tried to do so. Therefore, it is perhaps no exaggeration to assert that half of the world’s population would be at risk of starvation should the world completely ‘transition’ away from fossil fuels. The chart below from Our World in Data depicts this from a historical perspective.

Source: ourworldindata.org

12

Horizon Kinetics Energy and Remediation ETF

Shareholder Letter

December 31, 2023 (Unaudited)

Fund Holdings and Drivers of 2023 Results

For the most part, the Fund’s performance will be correlated with the energy market. However, there have been some notable developments that have occurred during the year. One such involves ExxonMobil Corp. (XOM). While ExxonMobil was not an original holding in the Fund, it entered the portfolio through the acquisition of Denbury Inc. (DEN). Denbury was a noteworthy Fund holding, as it was an energy company that also had an active remediation business, owning 1,300 miles of carbon dioxide pipelines, and offering carbon capture services. It was Denbury’s carbon capture operations that ExxonMobil desired. The acquisition price made Denbury one of the better-performing equities in the Fund with a gain of approximately 10%.⁶

ExxonMobil is also in the process of acquiring another Fund holding, Pioneer Natural Resources (PNR), for a price of around $60 billion (at the time of announcement). The acquisition is expected to close in June 2024, at which point ExxonMobil would become the largest component in the Fund, at approximately 7.3%, based on recent prices. Although ExxonMobil was deemed to be slightly expensive at the Fund’s inception, its current valuation is more attractive: approximately 9.6x earnings, 1.9x tangible book value and a 3.8% dividend yield.

The Fund’s performance was most adversely affected by two royalty companies, San Juan Basin Royalty Trust (SJT) and Permian Basin Trust (PBT), with declines of 40%-45%. While their production generally increased year-over-year, the lower realized prices for oil, and in particular natural gas, led to a considerable contraction in profitability. In addition, both companies invested greater amounts into capital expenditures, which resulted in lower free cash flow and, in turn, lower dividends. It would appear that investors focused on the reduced dividend payouts. However, these capital expenditures should lead to higher future production and, if coupled with steady or improving energy prices, result in greater profitability over time. Despite the volatility, we still believe that they remain undervalued, and therefore intend to maintain the positions in the Fund.

The best performing equities in the Fund include Itron Inc. (ITRI) and Trican Well Service Ltd. (TSX: TCW). Itron is a technology and service company that provides solutions for energy and water-related industries. The shares ended 2023 36% above the initial purchase price. Trican provides sustainable service solutions to the energy industry, including fracturing, cementing and coiled tubing. Both companies were able to expand their revenues, net income and free cash flow in 2023.

In observance of our long-investment-horizon philosophy, the Fund’s turnover in 2023 was just slightly in excess of 1%. During the year, we exited our position in Danaher (DHR), due to its spin-off of Veralto Corp. (VLTO). The conglomerate Danaher was originally purchased for its remediation business, now embodied in Veralto. However, care of the spin-off, we were afforded the ability to hold the pure-play remediation business, and therefore divested Danaher.

13

Horizon Kinetics ETFs

Shareholder Expense Example

(Unaudited)

As a shareholder of the Funds you incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing costs, including management fees and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars and cents) of investing in the Funds and to compare these costs with the ongoing costs of investing in other funds. The examples are based on an investment of $1,000 invested at the beginning of the period and held throughout the entire period (July 1, 2023 to December 31, 2023).

ACTUAL EXPENSES

The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second line in the table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line in the table is useful in comparing ongoing Fund costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

14

Horizon Kinetics Inflation Beneficiaries ETF

Performance Overview

December 31, 2023 (Unaudited)

Hypothetical Growth of $10,000 Investment
(Since Commencement through 12/31/2023)

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than the performance data quoted. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. For the most recent month-end performance, please call (800) 617-0004. You cannot invest directly in an index. Shares are bought and sold at market price (closing price), not net asset value (“NAV”), and are not individually redeemed from the Fund. Market performance is determined using the bid/ask midpoint at 4:00 p.m. Eastern time when the NAV is typically calculated. Brokerage commissions will reduce returns. Returns shown include the reinvestment of all dividends and distribution. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The MSCI ACWI All Cap Index covers more than 14,000 securities and includes large, mid, small, and micro-cap size segments. The S&P GSCI is the commodity equivalent of stock indexes, such as the S&P 500 and Dow Jones. The S&P 500 Index is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the Index proportionate to its market value.

The S&P 500 Index has replaced the MSCI ACWI All Cap Index as the primary index due to the Adviser’s determination that the S&P 500 Index is an appropriate broad-based securities market index for comparison to the performance of the Fund.

This chart illustrates the performance of a hypothetical $10,000 investment made on January 11, 2021 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The chart assumes reinvestment of capital gains and dividends. It is not possible to invest directly in an index.

The accompanying notes are an integral part of the financial statements.

15

Horizon Kinetics Blockchain Development ETF

Performance Overview

December 31, 2023 (Unaudited)

Hypothetical Growth of $10,000 Investment
(Since Commencement through 12/31/2023)

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than the performance data quoted. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. For the most recent month-end performance, please call (800) 617-0004. You cannot invest directly in an index. Shares are bought and sold at market price (closing price), not net asset value (“NAV”), and are not individually redeemed from the Fund. Market performance is determined using the bid/ask midpoint at 4:00 p.m. Eastern time when the NAV is typically calculated. Brokerage commissions will reduce returns. Returns shown include the reinvestment of all dividends and distribution. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The NASDAQ Composite Total Return Index covers more than 3,700 equity securities including common stocks, ordinary shares, American depository receipts (ADRs), units of real estate investment trusts (REITs), publicly traded partnerships, and tracking stocks. The S&P 500 Index is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the Index proportionate to its market value.

The S&P 500 Index has replaced the NASDAQ Composite Total Return Index as the primary index due to the Adviser’s determination that the S&P 500 Index is an appropriate broad-based securities market index for comparison to the performance of the Fund.

This chart illustrates the performance of a hypothetical $10,000 investment made on August 1, 2022 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The chart assumes reinvestment of capital gains and dividends. It is not possible to invest directly in an index.

The accompanying notes are an integral part of the financial statements.

16

Horizon Kinetics Medical ETF

Performance Overview

December 31, 2023 (Unaudited)

Hypothetical Growth of $10,000 Investment
(Since Commencement through 12/31/2023)

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than the performance data quoted. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. For the most recent month-end performance, please call (800) 617-0004. You cannot invest directly in an index. Shares are bought and sold at market price (closing price), not net asset value (“NAV”), and are not individually redeemed from the Fund. Market performance is determined using the bid/ask midpoint at 4:00 p.m. Eastern time when the NAV is typically calculated. Brokerage commissions will reduce returns. Returns shown include the reinvestment of all dividends and distribution. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The S&P 500 Index is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the Index proportionate to its market value.

This chart illustrates the performance of a hypothetical $10,000 investment made on September 30, 1999 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The chart assumes reinvestment of capital gains and dividends. It is not possible to invest directly in an index.

Since Inception returns are as of September 30, 1999. Effective 7:01 p.m. Eastern Time on January 27, 2023, The Medical Fund (“Predecessor Fund”) was reorganized into the Horizon Kinetics Medical ETF and first listed on the exchange on January 30, 2023. The returns shown for periods ending on or prior to January 27, 2023 are those of the predecessor fund. Returns of the ETF will be different from the returns of the predecessor fund as they have different expenses.

The accompanying notes are an integral part of the financial statements.

17

Horizon Kinetics SPAC Active ETF

Performance Overview

December 31, 2023 (Unaudited)

Hypothetical Growth of $10,000 Investment
(Since Commencement through 12/31/2023)

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than the performance data quoted. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. For the most recent month-end performance, please call (800) 617-0004. You cannot invest directly in an index. Shares are bought and sold at market price (closing price), not net asset value (“NAV”), and are not individually redeemed from the Fund. Market performance is determined using the bid/ask midpoint at 4:00 p.m. Eastern time when the NAV is typically calculated. Brokerage commissions will reduce returns. Returns shown include the reinvestment of all dividends and distribution. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

This chart illustrates the performance of a hypothetical $10,000 investment made on January 27, 2023 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The chart assumes reinvestment of capital gains and dividends. It is not possible to invest directly in an index.

The accompanying notes are an integral part of the financial statements.

18

Horizon Kinetics Energy and Remediation ETF

Performance Overview

December 31, 2023 (Unaudited)

Hypothetical Growth of $10,000 Investment
(Since Commencement through 12/31/2023)

The performance data quoted represents past performance. Past performance does not guarantee future results. Current performance may be lower or higher than the performance data quoted. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. For the most recent month-end performance, please call (800) 617-0004. You cannot invest directly in an index. Shares are bought and sold at market price (closing price), not net asset value (“NAV”), and are not individually redeemed from the Fund. Market performance is determined using the bid/ask midpoint at 4:00 p.m. Eastern time when the NAV is typically calculated. Brokerage commissions will reduce returns. Returns shown include the reinvestment of all dividends and distribution. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The S&P 500 Index is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation, with each stock’s weight in the Index proportionate to its market value.

This chart illustrates the performance of a hypothetical $10,000 investment made on February 21, 2023 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The chart assumes reinvestment of capital gains and dividends. It is not possible to invest directly in an index.

The accompanying notes are an integral part of the financial statements.

19

Horizon Kinetics Inflation Beneficiaries ETF

Schedule of Investments

December 31, 2023

The accompanying notes are an integral part of the financial statements.

20

Horizon Kinetics Inflation Beneficiaries ETF

Schedule of Investments

December 31, 2023 (Continued)

Percentages are stated as a percent of net assets.

The accompanying notes are an integral part of the financial statements.

21

Horizon Kinetics Blockchain Development ETF

Schedule of Investments

December 31, 2023

Percentages are stated as a percent of net assets.

The accompanying notes are an integral part of the financial statements.

22

Horizon Kinetics Blockchain Development ETF

Schedule of Investments

December 31, 2023 (Continued)

The accompanying notes are an integral part of the financial statements.

23

Horizon Kinetics Medical ETF

Schedule of Investments

December 31, 2023

Percentages are stated as a percent of net assets.

The accompanying notes are an integral part of the financial statements.

24

Horizon Kinetics Medical ETF

Schedule of Investments

December 31, 2023 (Continued)

The accompanying notes are an integral part of the financial statements.

25

Horizon Kinetics SPAC Active ETF

Schedule of Investments

December 31, 2023

Percentages are stated as a percent of net assets.

The accompanying notes are an integral part of the financial statements.

26

Horizon Kinetics SPAC Active ETF

Schedule of Investments

December 31, 2023 (Continued)

The accompanying notes are an integral part of the financial statements.

27

Horizon Kinetics Energy and Remediation ETF

Schedule of Investments

December 31, 2023

The accompanying notes are an integral part of the financial statements.

28

Horizon Kinetics Energy and Remediation ETF

Schedule of Investments

December 31, 2023 (Continued)

Percentages are stated as a percent of net assets.

The accompanying notes are an integral part of the financial statements.

29

Horizon Kinetics ETFs

Statements of Assets and Liabilities

December 31, 2023

The accompanying notes are an integral part of the financial statements.

30

Horizon Kinetics ETFs

Statements of Assets and Liabilities

December 31, 2023 (Continued)

The accompanying notes are an integral part of the financial statements.

31

Horizon Kinetics ETFs

Statements of Operations

For the Year Ended December 31, 2023

The accompanying notes are an integral part of the financial statements.

32

Horizon Kinetics ETFs

Statements of Operations

For the Year or Period Ended December 31, 2023 (Continued)

The accompanying notes are an integral part of the financial statements.

33

Horizon Kinetics Inflation Beneficiaries ETF

Statements of Changes in Net Assets