N-CSRS 1 fp0066496_ncsrs.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-23483

Axonic Funds

(exact name of registrant as specified in charter)

520 Madison Avenue, 42nd Floor

New York, NY 10022

(Address of Principal Office)

Clayton DeGiacinto, President

c/o Axonic Capital LLC

520 Madison Avenue, 42nd Floor

New York, New York 10022

(Name and Address of Agent for Service)

Copies of information to:

Jeffrey Skinner

Kilpatrick Townsend & Stockton LLP

1001 West Fourth Street

Winston-Salem, NC 27101

Registrant’s telephone number, including area code: (212) 259-0430

Date of fiscal year end: October 31

Date of reporting period: November 1, 2020 – April 30, 2021

Item 1.

Report to Stockholders.

(a)

AXONIC STRATEGIC INCOME FUND

SEMI-ANNUAL REPORT

April 30, 2021

TABLE OF CONTENTS

Portfolio Update	1
Disclosure of Fund Expenses	3
Schedule of Investments	4
Statement of Assets and Liabilities	11
Statement of Operations	12
Statement of Changes in Net Assets	13
Financial Highlights	14
Notes to Financial Statements	16
Additional Information	23
Liquidity Risk Management Program	24
Trustees and Officers	25
Privacy Policy	27

Electronic Report Disclosure Beginning on November 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website www.axonicfunds.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by calling the Fund at (833) 429-6642, or submit a signed letter of instruction requesting paperless reports to PO Box 219445, Kansas City, MO 64121. If you own these shares through a financial intermediary, you may contact your financial intermediary to request your shareholder reports electronically.

You may elect to receive all future reports in paper free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by calling the Fund at (833) 429-6642, or by submitting a signed letter of instruction requesting paper reports to PO Box 219445, Kansas City, MO 64121. If you own these shares through a financial intermediary, contact the financial intermediary to request paper copies. Your election to receive reports in paper will apply to all funds held with the fund complex or your financial intermediary.

Axonic Strategic Income Fund

Portfolio Update

April 30, 2021 (Unaudited)

Average Annual Total Returns (as of April 30, 2021)

	1 Month	Quarter	6 Month	YTD	Since Inception*
Axonic Strategic Income Fund – A – NAV	0.57%	1.02%	5.09%	2.92%	7.38%
Axonic Strategic Income Fund – A – LOAD	-1.71%	-1.27%	2.76%	0.65%	4.96%
Axonic Strategic Income Fund – I – NAV	0.57%	1.22%	5.30%	3.12%	2.30%
Bloomberg Barclays US Aggregate Bond Index^(a)	0.79%	-1.91%	-1.52%	-2.61%	3.44%

The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when repurchased, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Fund performance current to the most recent month-end is available by calling (833) 429-6642 or by visiting www.axonicfunds.com.

*	Class A has an inception date of July 16, 2020. Class I has an Inception date of December 30, 2019.
^(a)	The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index which represents the U.S. investment-grade fixed-rate bond market (including government and corporate securities, mortgage pass-through securities and asset-backed securities). Investors cannot invest directly in an index or benchmark.

Excludes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value and total return for shareholder transactions reported to the market may differ from the net asset value for financial reporting purposes.

Performance data quoted represents past performance, which is not a guarantee of future results. Current performance may be lower or higher than the performance quoted. The principal value and investment return of an investment will fluctuate so that your shares, if repurchased, may be worth more or less than their original cost. Total return measures net investment income and capital gain or loss from portfolio investments. All performance shown assumes reinvestment of dividends and capital gains distributions. For the most current month-end performance please call 1-833-429-6642 (833-4Axonic) or download one at www.axonicfunds.com.

Performance of $10,000 Initial Investment (as of April 30, 2021)

The graph shown above represents historical performance of a hypothetical investment of $10,000 in the Institutional Class since inception. Past performance does not guarantee future results. All returns reflect reinvested dividends, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the repurchase of Fund shares.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund

Portfolio Update

April 30, 2021 (Unaudited)

Top Ten Holdings (as a % of Net Assets)*

SB Multifamily Repack Trust, Series 2020-FRR1, Class A	3.60 %
Clarus Securities, Inc., Series 2020-2	2.99 %
Hudsons Bay Simon JV Trust, Series 2015-HBFL, Class AFL	2.79 %
Ambac LSNI LLC	2.06 %
Ambac Assurance Corp.	2.02 %
Mercury Financial Credit Card Master Trust, Series 2021-1A, Class C	1.85 %
Granite Point Mortgage Trust, Inc.	1.84 %
JP Morgan Chase Commercial Mortgage Securities Trust, Series 2007-LD12, Class AJ	1.78 %
MFA Financial, Inc.	1.72 %
GAIA Aviation, Ltd., Series 2019-1, Class B	1.50 %
Top Ten Holdings	22.15 %

Portfolio Composition (as a % of Net Assets)*

Commercial Mortgage-Backed Securities	26.19 %
Residential Mortgage-Backed Securities	24.20 %
Asset-Backed Securities	19.66 %
Convertible Corporate Bond	5.76 %
Corporate Bond	4.49 %
Bank Loans	2.39 %
Collateralized Loan Obligations	1.30 %
Common Stocks- Financials	1.10 %
Preferred Stocks- Financials	0.39 %
Interest Rate Swap Contracts	0.02 %
Cash Equivalents & Other Net Assets	14.50 %
	100.00 %

*	Holdings are subject to change, and may not reflect the current or future position of the portfolio. Tables present indicative values only.

2	www.axonicfunds.com

Axonic Strategic Income Fund

Disclosure of Fund Expenses

April 30, 2021 (Unaudited)

As a shareholder of the Axonic Strategic Income Fund (the "Fund"), you will incur two types of costs: (1) transaction costs, including any applicable redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees (if applicable) and other Fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested on November 1, 2020 and held through April 30, 2021.

Actual Expenses

The first line under each class of 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 under the heading “Expenses Paid During Period 11/01/2020 – 4/30/2021” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line under each class of the table below provides information about hypothetical account values and hypothetical expenses based on the 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 to 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 redemption fees, if any. Therefore, the second line under each class of the table below is useful in comparing ongoing 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.

	Beginning Account Value November 1, 2020	Ending Account Value April 30, 2021	Expense Ratio^(a)	Expenses Paid During Period November 1, 2020 - April 30, 2021^(a)
Axonic Strategic Income Fund
Class A
Actual	$1,000.00	$1,050.90	1.50%	$7.63
Hypothetical (5% return before expenses)	$1,000.00	$1,017.36	1.50%	$7.50
Institutional
Actual	$1,000.00	$1,053.00	1.07%	$5.45
Hypothetical (5% return before expenses)	$1,000.00	$1,019.49	1.07%	$5.36

^(a)

Annualized, based on the Fund’s most recent fiscal half year expenses.

^(a)

Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (181), divided by 365.

See Notes to Financial Statements.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund

Schedule of Investments

April 30, 2021 (Unaudited)

Description	Shares		Value
COMMON STOCKS (1.10%) Financials (1.10%)
Granite Point Mortgage Trust, Inc. REIT		209,310	$	2,771,264
Ladder Capital Corp. REIT		438,400		5,212,576
New Residential Investment Corp. REIT		16,730		179,346
Nexpoint Real Estate Finance, Inc. REIT		7,182		148,380
PennyMac Mortgage Investment Trust REIT		109,107		2,187,595
TPG RE Finance Trust, Inc. REIT		44,360		552,726
				11,051,887
TOTAL COMMON STOCKS
(Cost $9,841,735)				11,051,887

PREFERRED STOCKS (0.39%)
Financials (0.39%)
KKR Real Estate Finance Trust, Inc., 6.50%, ^(a)		120,000	$	3,093,600
MFA Financial, Inc., 7.50%, ^(a)		30,789		752,175
New Residential Investment Corp., Series C, 3M US L + 4.97%, ^(a)(b)		2,000		45,540
				3,891,315
TOTAL PREFERRED STOCKS
(Cost $3,808,721)				3,891,315

	Rate		Maturity Date		Principal Amount		Value
ASSET-BACKED SECURITIES (19.66%)
American Credit Acceptance Receivables Trust, Series 2021-1, Class F^(c)		4.01%		05/13/24	$	900,000	$	910,620
Business Jet Securities, Series 2021-1A, Class C^(c)		5.07%		04/15/27		2,513,522		2,523,827
Castlelake Aircraft Securitization Trust, Series 2018-1, Class B^(c)		5.30%		06/15/25		2,823,520		2,648,180
Castlelake Aircraft Structured Trust 2019-1, Series 2019-1A, Class B^(c)		5.10%		04/15/26		2,820,869		2,605,355
Castlelake Aircraft Structured Trust, Series 2019-1A, Class A^(c)		3.97%		04/15/26		6,143,199		6,135,827
Castlelake Aircraft Structured Trust 2021-1, Series 2021-1A, Class B^(c)		6.66%		07/15/27		2,279,078		2,295,943
Castlelake Aircraft Structured Trust 2021-1, Series 2021-1A, Class C^(c)		7.00%		10/15/26		8,797,554		8,950,632
Clarus Securities, Inc., Series 2020-2		17.00%		12/10/27		30,000,000		30,003,000
Falcon Aerospace, Ltd., Series 2019-1, Class A^(c)		3.60%		09/15/26		879,956		880,396
Falcon Aerospace, Ltd., Series 2019-1, Class B^(c)		4.79%		09/15/26		1,803,467		1,693,997
First Investors Auto Owner Trust 2021-1, Series 2021-1A, Class F^(c)		5.37%		02/15/25		1,270,000		1,346,835
GAIA Aviation, Ltd., Series 2019-1, Class B^(c)(d)		5.19%		12/15/26		16,162,930		15,109,107
Hertz Vehicle Financing II LP, Series 2016-2A, Class C^(c)		4.99%		03/25/22		1,750,000		1,757,875
Hertz Vehicle Financing II LP, Series 2019-3A, Class D^(c)		5.00%		12/26/24		5,000,000		5,015,000
Hertz Vehicle Financing II LP, Series 2016-4A, Class C^(c)		5.06%		07/25/21		2,100,000		2,109,450
Hertz Vehicle Financing II LP, Series 2018-1A, Class D^(c)		5.86%		02/25/23		5,000,000		5,020,000
Horizon Aircraft Finance I, Ltd., Series 2018-1, Class A^(c)		4.46%		12/15/25		461,821		467,593
Horizon Aircraft Finance II LLC, Series 2019-1, Class B^(c)		4.70%		07/15/26		1,910,256		1,809,777
Horizon Aircraft Finance III, Ltd., Series 2019-2, Class A^(c)		3.43%		11/15/26		4,767,406		4,746,430
Horizon Aircraft Finance III, Ltd., Series 2019-2, Class B^(c)		4.46%		11/15/26		6,625,405		6,218,605
JOL Air, Ltd., Series 2019-1, Class B^(c)		4.95%		04/15/26		11,796,167		11,032,955
Kabbage Funding LLC, Series 2019-1, Class D^(c)		5.69%		03/15/22		5,281,605		5,282,661
LUNAR AIRCRAFT, Ltd., Series 2020-1A, Class A^(c)		3.38%		02/15/27		1,202,336		1,165,425

See Notes to Financial Statements.

4	www.axonicfunds.com

Axonic Strategic Income Fund

Schedule of Investments

April 30, 2021 (Unaudited)

	Rate		Maturity Date		Principal Amount		Value
LUNAR AIRCRAFT, Ltd., Series 2020-1A, Class B^(c)		4.34%		02/15/27	$	2,920,980	$	2,750,395
Mercury Financial Credit Card Master Trust, Series 2021-1A, Class C^(c)		4.21%		02/28/23		18,500,000		18,555,500
Mercury Financial Credit Card Master Trust, Series 2021-1A, Class D^(c)		6.26%		02/28/23		12,000,000		12,093,600
Pioneer Aircraft Finance, Ltd., Series 2019-1, Class A^(c)		3.97%		06/15/26		3,082,711		3,064,523
Pioneer Aircraft Finance, Ltd., Series 2019-1, Class B^(c)		4.95%		06/15/26		1,656,250		1,519,941
Project Silver, Series 2019-1, Class A^(c)		3.97%		07/15/26		8,431,589		8,383,529
Santander Consumer Auto Receivables Trust, Series 2021-AA, Class F^(c)		5.79%		07/15/25		1,370,000		1,443,843
START Ireland, Series 2019-1, Class A^(c)		4.09%		03/15/26		6,906,997		6,893,874
START Ireland, Series 2019-1, Class B^(c)		5.10%		03/15/26		3,061,441		2,893,368
Thunderbolt II Aircraft Lease, Ltd., Series 2018-A, Class B^(c)(d)		5.07%		09/15/38		3,491,964		3,217,845
Thunderbolt III Aircraft Lease, Ltd., Series 2019-1, Class A^(c)		3.67%		11/15/26		678,766		677,001
Thunderbolt III Aircraft Lease, Ltd., Series 2019-1, Class B^(c)		4.75%		11/15/26		10,868,487		9,859,891
Upstart Securitization Trust, Series 2021-1, Class C^(c)		4.06%		03/20/31		2,602,000		2,605,643
WAVE LLC, Series 2019-1, Class B^(c)		4.58%		09/15/27		4,141,773		3,809,602

TOTAL ASSET-BACKED SECURITIES
(Cost $193,226,887)								197,498,045

BANK LOAN (2.39%)
Fly Willow Funding, Ltd.^(b)		7.00%		10/15/25		11,992,500		12,022,481
KREF Holdings X LLC^(b)		5.75%		08/05/27		11,970,000		12,029,850

TOTAL BANK LOAN
(Cost $23,205,298)								24,052,331

COLLATERALIZED LOAN OBLIGATIONS (1.30%)
Golub Capital Partners TALF LP, Series 2020-1A, Class C^(b)(c)		3M US L + 3.65%		10/20/29		10,000,000		10,010,667
Trinitas CLO, Ltd., Series 2014-2A, Class D^(b)(c)		3M US L + 3.80%		07/15/26		3,051,335		3,059,568

TOTAL COLLATERALIZED LOAN OBLIGATIONS
(Cost $13,104,215)								13,070,235


COMMERCIAL MORTGAGE-BACKED SECURITIES (26.19%)
Atrium Hotel Portfolio Trust, Series 2017-ATRM, Class E^(b)(c)	1M US L + 3.05%	12/15/36	1,534,710	1,452,756
Banc of America Commercial Mortgage Trust, Series 2007-4, Class H^(b)(c)	5.87%	02/10/51	5,634,874	5,603,882
BBCMS Mortgage Trust, Series 2018-TALL, Class E^(b)(c)	1M US L + 2.44%	03/15/37	12,161,000	11,709,827
Beast Mortgage Trust, Series 2021-1818, Class F^(b)(c)	1M US L + 4.45%	03/15/26	3,125,000	3,144,688
BMD2 Re-Remic Trust, Series 2019-FRR1, Class 7A1^(c)	2.87%	05/25/52	1,362,394	1,356,703
BMD2 Re-Remic Trust, Series 2019-FRR1, Class 7A^(b)(c)	4.16%	05/25/52	6,823,850	6,819,084
Cantor Commercial Real Estate Lending, Series 2019-CF2, Class SWC^(c)	3.84%	09/15/29	5,890,000	5,022,403
Cantor Commercial Real Estate Lending, Series 2019-CF2, Class SWD^(c)	4.52%	09/15/29	4,988,052	4,255,307
CFK Trust, Series 2020-MF2, Class E^(b)(c)	3.57%	03/15/27	8,825,352	8,546,471
COBALT CMBS Commercial Mortgage Trust, Series 2007-C3, Class B^(b)	5.62%	07/15/17	8,221,618	8,242,172
CSMC, Series 2020-FACT, Class F^(b)(c)	1M US L + 6.16%	10/15/25	11,500,000	11,565,550

See Notes to Financial Statements.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund

Schedule of Investments

April 30, 2021 (Unaudited)

	Rate		Maturity Date	Principal Amount		Value
Freddie Mac Multifamily Structured Credit Risk, Series 2021-MN1, Class M2^(b)(c)		30D US SOFR + 3.75%	01/25/51	$	9,000,000	$	9,346,500
Freddie Mac Multifamily Structured Pass Through Certificates, Series 2018-Q008, Class X^(b)(e)		2.02%	12/25/24		83,936,732		2,459,346
Freddie Mac Multifamily Structured Pass Through Certificates, Series 2021-KG05, Class X3^(b)(e)		2.70%	01/25/34		12,100,000		2,451,460
FREMF Mortgage Trust, Series 2016-KF24, Class B^(b)(c)		1M US L + 5.00%	10/25/26		3,735,878		3,896,521
FREMF Mortgage Trust, Series 2020-KI05, Class B^(b)(c)		1M US L + 2.30%	07/25/22		791,955		780,155
FRESB Mortgage Trust, Series 2019-SB66, Class X1^(b)(e)		1.07%	07/25/29		47,541,607		3,461,029
FRESB Mortgage Trust, Series 2020-SB76, Class X1^(b)(e)		1.31%	05/25/30		14,378,582		1,015,128
FRESB Mortgage Trust, Series 2020-SB77, Class X1^(b)(e)		1.09%	06/25/27		20,705,018		1,277,500
FRESB Mortgage Trust, Series 2020-SB78, Class X1^(b)(e)		1.18%	06/25/30		35,414,841		2,829,646
FRESB Mortgage Trust, Series 2020-SB79, Class X1^(b)(e)		1.24%	07/25/40		17,267,601		1,272,622
FRESB Mortgage Trust, Series 2020-SB81, Class X1^(b)(e)		1.08%	10/25/30		24,441,054		1,960,173
FRESB Mortgage Trust, Series 2021-SB82, Class X1^(b)(e)		1.14%	10/25/40		60,587,012		4,647,024
FRESB Mortgage Trust, Series 2021-SB83, Class X1^(b)(e)		0.98%	12/25/30		33,078,166		2,302,240
FRESB Mortgage Trust, Series 2021-SB84, Class X1^(b)(e)		0.67%	01/25/31		34,230,439		1,718,368
FRESB Multifamily Structured Pass Through Certificates, Series 2020-SB80, Class X1^(b)(e)		1.15%	09/25/30		67,631,504		5,444,336
GKN Subordinated CTL Pass-Through Trust/Auburn MI^(b)(c)		0.00%	03/15/30		7,076,849		3,849,098
Government National Mortgage Association, Series 2018-16, Class IO^(b)(e)		0.63%	03/16/59		95,666,271		4,907,680
Government National Mortgage Association, Series 2017-50, Class IO^(b)(e)		0.72%	01/16/57		37,251,267		1,795,511
Government National Mortgage Association, Series 2020-161, Class IO^(b)(e)		1.05%	08/16/62		54,234,899		4,913,682
Hudsons Bay Simon JV Trust, Series 2015-HB7, Class A7^(c)		3.91%	08/05/22		3,000,000		2,820,600
Hudsons Bay Simon JV Trust, Series 2015-HBFL, Class AFL^(b)(c)		1M US L + 1.83%	08/05/34		29,521,000		28,044,950
JP Morgan Chase Commercial Mortgage Securities Corp., Series 2019-MARG, Class D^(b)(c)		1M US L + 2.11%	05/15/21		12,200,000		11,893,780
JP Morgan Chase Commercial Mortgage Securities Trust, Series 2007-LD12, Class AJ^(b)		6.50%	08/15/17		17,895,673		17,895,673
MRCD 2019-MARK Mortgage Trust, Series 2019-PARK, Class F^(c)		2.72%	12/15/24		4,373,000		4,208,575
MRCD 2019-MARK Mortgage Trust, Series 2019-PARK, Class G^(c)		2.72%	12/15/24		8,311,000		7,968,587
Multifamily Connecticut Avenue Securities, Series 2019-01, Class M10^(b)(c)		1M US L + 3.25%	10/15/49		7,583,364		7,656,164
SB Multifamily Repack Trust, Series 2020-FRR1, Class A^(c)		5.60%	05/27/26		35,866,965		36,175,421
Velocity Commercial Capital Loan Trust, Series 2019-2, Class M5^(b)(c)		4.93%	03/25/27		498,304		501,107
Velocity Commercial Capital Loan Trust, Series 2019-2, Class M6^(b)(c)		6.30%	02/25/28		908,522		917,039
Velocity Commercial Capital Loan Trust, Series 2018-1, Class M4^(c)		5.01%	11/25/29		1,118,305		1,131,278
Velocity Commercial Capital Loan Trust, Series 2019-1, Class M6^(b)(c)		6.79%	10/29/29		3,721,422		3,558,052
Velocity Commercial Capital Loan Trust, Series 2019-3, Class M5^(b)(c)		4.73%	08/25/28		477,184		477,518
Wells Fargo Re-REMIC Trust, Series 2013-FRR1, Class BK20^(c)(f)		0.00%	06/27/22		1,662,589		1,605,063

See Notes to Financial Statements.

6	www.axonicfunds.com

Axonic Strategic Income Fund

Schedule of Investments

April 30, 2021 (Unaudited)

	Rate	Maturity Date	Principal Amount		Value
Wells Fargo Re-REMIC Trust, Series 2013-FRR1, Class BK26^(c)(f)	0.00 %	12/27/22	$	10,867,466	$	10,304,531

TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES
(Cost $260,036,726)						263,205,200

CONVERTIBLE CORPORATE BOND (5.76%)
Granite Point Mortgage Trust, Inc.^(c)	5.63%	12/01/22		8,660,000		8,453,026
Granite Point Mortgage Trust, Inc.	6.38%	10/01/23		18,873,000		18,495,540
MFA Financial, Inc.	6.25%	06/15/24		16,734,000		17,319,690
Redwood Trust, Inc.	5.63%	07/15/24		3,563,000		3,596,136
RWT Holdings, Inc.	5.75%	10/01/25		10,000,000		9,965,000

TOTAL CONVERTIBLE CORPORATE BOND
(Cost $56,529,422)						57,829,392

CORPORATE BONDS (4.49%)
Ambac Assurance Corp.^(a)(c)	5.10%	12/31/49		14,888,509		20,304,204
Ambac LSNI LLC^(b)(c)	3M US L + 5.00%	02/12/23		20,628,172		20,731,313
Hawaiian Brand Intellectual Property, Ltd. / HawaiianMiles Loyalty, Ltd.^(c)	5.75%	01/20/26		1,000,000		1,056,250
Nexpoint Real Estate Finance, Inc.	5.75%	05/01/26		3,000,000		3,018,750

TOTAL CORPORATE BONDS
(Cost $44,206,402)						45,110,517

RESIDENTIAL MORTGAGE-BACKED SECURITIES (24.20%)
Accredited Mortgage Loan Trust, Series 2006-2, Class M2^(b)	1M US L + 0.29%	09/25/36		8,818,000		7,041,790
Ace Securities Corp., Series 2005-HE7, Class M2^(b)	1M US L + 0.69%	11/25/35		3,859,485		3,616,449
AlphaFlow Transitional Mortgage Trust, Series 2021-WL1, Class A2^(c)(d)	5.61%	07/25/23		1,000,000		1,005,415
Alternative Loan Trust, Series 2005-11CB, Class 3A2^(b)	1M US L + 0.50%	06/25/35		1,131,631		902,091
Alternative Loan Trust, Series 2006-41CB, Class 2A7^(b)	1M US L + 0.60%	01/25/37		3,801,842		1,968,501
Alternative Loan Trust, Series 2006-41CB, Class 2A8^(b)	1M US L + 0.65%	01/25/37		3,985,556		2,070,398
Alternative Loan Trust, Series 2007-2CB, Class 1A12^(b)	1M US L + 0.50%	03/25/37		2,083,499		1,046,596
BCAP LLC, Series 2014-RR2, Class 6A9^(b)(c)	1M US L + 0.24%	11/26/23		2,403,310		1,419,796
Bear Stearns ALT-A Trust, Series 2005-7, Class 1M1^(b)	1M US L + 0.72%	08/25/35		9,044,839		8,711,997
Bear Stearns Asset Backed Securities I Trust, Series 2007-HE3, Class 1A3^(b)	1M US L + 0.25%	04/25/37		1,340,223		1,571,678
Bear Stearns Asset Backed Securities I Trust, Series 2007-HE3,Class 1A4^(b)	1M US L + 0.35%	04/25/37		511,622		506,307
Bear Stearns Asset Backed Securities I Trust, Series 2007-HE7,Class M1^(b)	1M US L + 0.40%	10/25/37		3,986,727		3,230,618
Bear Stearns Mortgage Funding Trust, Series 2006-AR3, Class 1A2A^(b)	1M US L + 0.24%	10/25/36		432,839		502,191
Bear Stearns Mortgage Funding Trust, Series 2006-AR3, Class 1A2G^(b)	1M US L + 0.24%	10/25/36		3,459,688		4,013,911
Bear Stearns Mortgage Funding Trust, Series 2007-AR2, Class A2^(b)	1M US L + 0.20%	03/25/37		9,310,660		10,113,639
Bear Stearns Mortgage Funding Trust, Series 2007-AR4, Class G2AB^(b)	1M US L + 0.24%	04/25/37		8,825,450		9,546,645
Bear Stearns Mortgage Funding Trust, Series 2007-AR5, Class 1A2G^(b)	1M US L + 0.22%	06/25/37		1,152,013		1,097,917

See Notes to Financial Statements.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund	Schedule of Investments
	April 30, 2021 (Unaudited)

	Rate	Maturity Date	Principal Amount		Value
Bear Stearns Mortgage Funding Trust, Series 2007-AR5, Class 2A2^(b)	1M US L + 0.23%	06/25/37	$	3,100,954	$	3,078,111
Bellemeade Re, Ltd., Series 2020-2A, Class M2^(b)(c)	1M US L + 6.00%	08/26/30		2,406,753		2,524,307
Bellemeade Re, Ltd., Series 2020-3A, Class M1C^(b)(c)	1M US L + 3.70%	10/25/30		4,500,000		4,667,378
Bellemeade Re, Ltd., Series 2020-3A, Class B1^(b)(c)	1M US L + 6.35%	10/25/30		2,000,000		2,077,356
CHL Mortgage Pass-Through Trust, Series 2006-21, Class A10	5.75%	02/25/37		1,562,312		1,134,852
CHL Mortgage Pass-Through Trust, Series 2007-4, Class 1A51^(b)	1M US L + 0.60%	05/25/37		2,710,498		1,318,983
CitiMortgage Alternative Loan Trust, Series 2007-A2, Class 1A1^(b)	1M US L + 0.60%	02/25/37		2,024,585		1,644,681
COLT Mortgage Loan Trust, Series 2020-1R, Class B1^(b)(c)	4.31%	09/25/65		2,000,000		2,021,175
Connecticut Avenue Securities Trust, Series 2019-R01, Class 2B1^(b)(c)	1M US L + 4.35%	07/25/31		7,184,943		7,425,983
Connecticut Avenue Securities Trust, Series 2019-R02, Class 1B1^(b)(c)	1M US L + 4.15%	08/25/31		4,737,995		4,888,162
Connecticut Avenue Securities Trust, Series 2019-R03, Class 1B1^(b)(c)	1M US L + 4.10%	09/25/31		5,943,608		6,119,341
Connecticut Avenue Securities Trust, Series 2019-R05, Class 1B1^(b)(c)	1M US L + 4.10%	07/25/39		1,831,157		1,860,789
Countrywide Asset-Backed Certificates, Series 2006-25, Class M1^(b)	1M US L + 0.25%	02/25/36		3,328,977		2,804,151
Countrywide Asset-Backed Certificates, Series 2007-6, Class 2A4^(b)	1M US L + 0.31%	09/25/37		3,412,036		2,821,164
Deephaven Residential Mortgage Trust, Series 2020-2, Class B3^(b)(c)	5.90%	05/25/65		3,030,707		2,953,342
Deephaven Residential Mortgage Trust, Series 2021-1, Class B2^(b)(c)	3.96%	02/25/25		1,600,000		1,612,738
Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-OA4, Class 2A2^(b)	1M US L + 0.32%	08/25/47		4,008,582		3,296,421
Fannie Mae Connecticut Avenue Securities, Series 2018-C05, Class 1B1^(b)	1M US L + 4.25%	01/25/31		2,216,000		2,265,465
Freddie Mac Stacr Remic Trust, Series 2020-DNA4, Class B1^(b)(c)	1M US L + 6.00%	08/25/50		2,427,528		2,581,554
Freddie Mac Stacr Remic Trust, Series 2020-DNA5, Class B1^(b)(c)	4.81%	10/25/50		2,796,965		2,943,652
Freddie Mac Stacr REMIC Trust, Series 2020-DNA6, Class B2^(b)(c)	30D US SOFR + 5.65%	12/25/50		1,150,000		1,144,762
Freddie Mac Stacr Trust, Series 2018-HQA2, Class B1^(b)(c)	1M US L + 4.25%	10/25/48		2,000,000		2,064,164
Freddie Mac Stacr Trust, Series 2019-HQA1, Class B1^(b)(c)	1M US L + 4.40%	02/25/49		2,807,805		2,909,413
Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2021-DNA2, Class B1^(b)(c)	30D US SOFR + 3.40%	08/25/33		7,500,000		7,530,233
GS Mortgage-Backed Securities Trust, Series 2021-NQM1, Class B2^(b)(c)	4.21%	07/25/61		1,000,000		999,965
GSAMP Trust, Series 2006-HE7, Class M2^(b)	1M US L + 0.29%	10/25/36		637,865		632,007
Home Equity Asset Trust, Series 2005-6, Class M5^(b)(d)	1M US L + 0.95%	12/25/35		4,673,931		4,354,473
HSI Asset Securitization Corp. Trust, Series 2005-NC1, Class M4^(b)	1M US L + 0.99%	07/25/35		1,307,138		1,248,832
JP Morgan Alternative Loan Trust, Series 2006-A3, Class 1A1^(b)	1M US L + 0.32%	07/25/36		2,277,453		2,095,352
JP Morgan Mortgage Acquisition Corp., Series 2005-OPT1, Class M6^(b)	1M US L + 1.07%	06/25/35		1,513,980		1,274,148
L1C LLC, Series 2020-1^(c)	5.29%	07/25/21		8,000,000		8,043,986
Lehman Mortgage Trust, Series 2005-2, Class 2A1^(b)	1M US L + 0.68%	12/25/35		6,829,898		4,486,098
Lehman Mortgage Trust, Series 2005-2, Class 3A1^(b)	1M US L + 0.75%	12/25/35		1,679,889		979,017
Lehman Mortgage Trust, Series 2006-9, Class 1A5^(b)	1M US L + 0.60%	01/25/37		2,187,065		1,320,303
Lehman XS Trust, Series 2006-GP1, Class A3A^(b)	1M US L + 0.46%	05/25/46		3,280,735		3,567,019
LHOME Mortgage Trust, Series 2019-RTL2, Class M^(c)(d)	6.05%	03/25/22		500,000		505,625
LHOME Mortgage Trust, Series 2019-RTL1, Class A2^(c)(d)	4.95%	10/25/21		1,728,125		1,730,826
LHOME Mortgage Trust, Series 2019-RTL2, Class A2^(c)(d)	4.34%	03/25/22		1,091,000		1,102,509
LHOME Mortgage Trust, Series 2019-RTL3, Class A2^(c)(d)	4.34%	07/25/22		2,182,000		2,207,469

See Notes to Financial Statements.

8	www.axonicfunds.com

Axonic Strategic Income Fund

Schedule of Investments

April 30, 2021 (Unaudited)

	Rate	Maturity Date		Principal Amount		Value
LHOME Mortgage Trust, Series 2020-RTL2, Class M^(c)	7.87%	04/25/23	$	6,250,000	$	6,657,784
Long Beach Mortgage Loan Trust, Series 2005-1, Class M6^(b)	1M US L + 1.58%	02/25/35		2,264,381		2,056,764
MASTR Alternative Loan Trust, Series 2007-1, Class 2A15^(b)	1M US L + 0.37%	10/25/36		1,102,449		283,033
MFA , Series 2020-NQM3, Class B1^(b)(c)	3.66%	01/26/65		1,250,000		1,271,332
Nationstar Home Equity Loan Trust, Series 2006-B, Class M4^(b)	1M US L + 0.44%	09/25/36		2,678,650		2,734,709
New Century Home Equity Loan Trust, Series 2005-3, Class M7^(b)	1M US L + 1.30%	07/25/35		820,145		796,142
Newcastle Mortgage Securities Trust, Series 2007-1, Class M1^(b)	1M US L + 0.50%	04/25/37		601,382		512,362
RAAC, Series 2007-SP1, Class M3^(b)	1M US L + 1.50%	03/25/37		2,789,133		2,519,292
RALI, Series 2005-QS12, Class A8^(b)	1M US L + 0.35%	08/25/35		433,868		353,354
RALI, Series 2006-QS2, Class 1A10^(b)	1M US L + 0.50%	02/25/36		1,408,821		1,058,702
RALI, Series 2006-QS8, Class A4^(b)	1M US L + 0.45%	08/25/36		1,562,225		1,159,965
RALI, Series 2007-QO5, Class A^(b)	12M US FED + 1.56%	08/25/47		10,276,180		2,854,120
RAMP, Series 2004-RS12, Class MII5^(b)	1M US L + 1.75%	12/25/34		2,217,052		1,787,871
RAMP, Series 2006-NC1, Class M2^(b)	1M US L + 0.40%	01/25/36		4,870,861		4,206,331
RAMP, Series 2006-RZ5, Class M1^(b)	1M US L + 0.36%	08/25/46		4,576,102		4,145,268
RASC, Series 2005-KS4, Class M5^(b)	1M US L + 1.20%	05/25/35		1,063,734		1,030,473
Saxon Asset Securities Trust, Series 2005-1, Class M4^(b)	1M US L + 1.13%	03/25/35		730,404		581,619
Saxon Asset Securities Trust, Series 2005-4, Class M4^(b)	1M US L + 0.93%	11/25/37		1,448,373		1,181,208
Soundview Home Equity Loan Trust, Series 2007-NS1, Class M1^(b)	1M US L + 0.35%	01/25/37		3,068,205		2,915,317
Specialty Underwriting & Residential Finance, Series 2005-BC1, Class B1^(b)	1M US L + 1.80%	12/25/35		1,904,074		1,904,468
Specialty Underwriting & Residential Finance, Series 2005-BC2, Class M4^(b)	1M US L + 1.07%	12/25/35		5,221,874		4,290,954
Structured Asset Mortgage Investments II Trust, Series 2007-AR1, Class 2A2^(b)	1M US L + 0.21%	01/25/37		1,936,547		2,460,251
Structured Asset Mortgage Investments II Trust, Series 2007-AR2, Class 1A2^(b)	1M US L + 0.19%	02/25/37		6,569,759		8,323,230
Structured Asset Securities Corporation, Series 2006‐EQ1A, Class M1(b)(c)	1M US L + 0.29%	07/25/36		6,708,619		6,933,397
Structured Asset Securities Corporation, Series 2005‐7XS, Class M1(b)	1M US L + 0.68%	04/25/35		2,267,000		2,113,861
Structured Asset Securities Corporation, Series 2005-AR1, Class M3(b)	1M US L + 0.75%	09/25/35		928,243		822,728
Toorak Mortgage Corp., Ltd., Series 2019-1, Class A2^(c)(d)	4.90%	11/25/21		10,000,000		10,072,504
Washington Mutual Mortgage Pass-Through Certificates WMALT, Series 2005-3, Class 1CB3^(b)	1M US L + 0.45%	05/25/35		1,734,298		1,415,783
TOTAL RESIDENTIAL MORTGAGE-BACKED SECURITIES
(Cost $230,123,905)						243,044,567
		7-Day Yield		Shares		Value
SHORT TERM INVESTMENTS - COMMON SHARES (14.13%)
First American Government Obligations Fund		0.04 %		141,905,220	$	141,905,220

TOTAL SHORT TERM INVESTMENTS
(Cost $141,905,220)						141,905,220

See Notes to Financial Statements.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund	Schedule of Investments
	April 30, 2021 (Unaudited)

	Value
TOTAL INVESTMENTS (99.61%)
(Cost $975,988,531)	$	1,000,658,709

Other Assets In Excess Of Liabilities (0.39%)		3,956,140
NET ASSETS (100.00%)	$	1,004,614,849

^(a)

Perpetual maturity.

^(b)

Floating or variable rate security. The Reference Rate is described below. Interest rate shown reflects the rate in effect at April 30, 2021. For securities based on a published reference rate and spread, the reference rate and spread are indicated in the description above. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description above.

^(c)

Security exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may normally be sold to qualified institutional buyers in transactions exempt from registration. The total value of Rule 144A securities amounts to $522,996,640, which represents 52.06% of net assets as of April 30, 2021.

^(d)

Step bond. Coupon changes periodically based upon a predetermined schedule. Interest rate disclosed is that which is in effect at April 30, 2021.

^(e)

Interest only securities.

^(f)

Issued with a zero coupon. Income is recognized through the accretion of discount.

Investment Abbreviations:

REIT - Real Estate Investment Trust

LIBOR - London Interbank Offered Rate

SOFR - Secured Overnight Financing Rate

FED - Federal Funds Rate

Libor Rates:

1M US L - 1 Month LIBOR as of April 30, 2021 was 0.11%

3M US L - 3 Month LIBOR as of April 30, 2021 was 0.18%

12M US FED - 12 Month US FED as of April 30, 2021 was 0.07%.

30D US SOFR - 30 Day US SOFR as of April 30, 2021 was 0.01%.

INTEREST RATE SWAP CONTRACTS (CENTRALLY CLEARED)
Pay/Receive Floating Rate^*	Clearing House	Floating Rate	Expiration Date	Notional Amount^**	Currency	Fixed Rate		Fair Value		Unrealized Appreciation
Receive	LCH Ltd.	3 M US L	04/24/2028	15,000,000	USD	1.23%	$	72,367	$	72,367
Receive	LCH Ltd.	3 M US L	04/22/2031	15,000,000	USD	1.56%		99,159		99,159
							$	171,526	$	171,526

^*	Interest rate swaps receive interest quarterly and pay interest semiannually.

^**	The notional amount of each interest rate swap contract is stated in the currency in which the derivative is denominated.

See Notes to Financial Statements.

10	www.axonicfunds.com

Axonic Strategic Income Fund

Statement of Assets and Liabilities

April 30, 2021 (Unaudited)

ASSETS:
Investments, at fair value (Cost $975,988,531)	$	1,000,658,709
Receivable for investment securities sold		56,591
Dividend receivable		797
Interest receivable		2,808,376
Receivable for shares sold		8,460,226
Deposit held with broker for interest rate swap contracts		2,179,449
Deferred offering costs (Note 2)		15,476
Prepaid expenses and other assets		161,887
Total Assets		1,014,341,511

LIABILITIES:
Payable for investment securities purchased		3,067,659
Income distribution payable		3,605,278
Variation margin payable for interest rate swap contracts		17,615
Capital shares payable		2,033,241
Accrued legal and audit fees payable		100,973
Due to Adviser		680,175
Accrued fund accounting and administration fees payable		136,977
Distribution and shareholder service fees payable		8,881
Accrued Trustees’ fees payable		756
Other payables and accrued expenses		75,107
Total Liabilities		9,726,662
Net Assets	$	1,004,614,849

COMPOSITION OF NET ASSETS:
Paid-in capital	$	958,731,643
Total distributable earnings		45,883,206
Net Assets	$	1,004,614,849

PRICING OF SHARES:
Class A
Net Assets	$	27,515,373
Shares of beneficial interest outstanding (unlimited number of shares, no par value common share authorized)		2,772,975
Net Asset Value and redemption price per share	$	9.92
Institutional Class
Net Assets		977,099,476
Shares of beneficial interest outstanding (unlimited number of shares, no par value common share authorized)		98,181,888
Net Asset Value and redemption price per share		9.95

See Notes to Financial Statements.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund

Statement of Operations

For the Six Months Ended April 30, 2021 (Unaudited)

INVESTMENT INCOME:
Dividends	$	332,910
Interest		26,077,489
Total Investment Income		26,410,399

EXPENSES:
Offering costs (Note 2)		56,474
Fund accounting and administration fees (Note 4)		305,200
Legal fees		107,325
Audit and tax fees		18,513
Shareholder service fees
Class A		18,361
Distribution fees
Class A		30,602
Insurance expenses		27,377
Transfer agent fees (Note 4)		65,672
Advisory fees (Note 4)		3,520,002
Custodian fees		41,578
Trustees’ fees and expenses (Note 4)		42,013
Printing expenses		11,381
Registration expenses		56,040
Recoupment of previously waived fees
Institutional Class		206,652
Chief Compliance Officer fee (Note 4)		18,573
Other expenses		4,980
Total expenses before waiver/reimbursement (Note 4)		4,530,743
Expense waiver/reimbursement (Note 4)		(27,202	)
Net expenses		4,503,541
Net Investment Income		21,906,858

REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain on investments		15,384,428
Net realized loss on interest rate swap contracts		(9,599	)
Net change in unrealized appreciation on investments		4,007,965
Net change in unrealized appreciation on interest rate swap contracts		171,526
Net Realized and Unrealized Gain on Investments		19,554,320
Net Increase in Net Assets from Operations	$	41,461,178

See Notes to Financial Statements.

12	www.axonicfunds.com

Axonic Strategic Income Fund

Statement of Changes in Net Assets

	For the Six Months Ended April 30, 2021 (Unaudited)			For the Period December 31, 2019 (Commencement of Operations) to October 31, 2020
FROM OPERATIONS:
Net investment income	$	21,906,858		$	5,789,284
Net realized gain		15,374,829			3,792,942
Net change in unrealized appreciation		4,179,491			20,662,213
Net Increase in Net Assets from Operations		41,461,178			30,244,439

DISTRIBUTIONS TO SHAREHOLDERS:
From distributable earnings
Institutional Class		(19,734,154	)		(5,303,262	)
Class A		(616,370	)		(168,760	)
Decrease in Net Assets from Distributions to Shareholders		(20,350,524	)		(5,472,022	)

CAPITAL SHARE TRANSACTIONS:
Class A
Proceeds from sale of shares of beneficial interest		6,014,257			22,873,405
Distributions reinvested		615,163			168,700
Disbursements for redemption of shares of beneficial interest		(2,196,033	)		(776,228	)
Institutional Class
Proceeds from sale of shares of beneficial interest		391,214,184			616,565,142
Distributions reinvested		12,922,798			3,263,343
Disbursements for redemption of shares of beneficial interest		(63,201,499	)		(28,831,454	)
Net Increase from Capital Share Transactions		345,368,870			613,262,908
Net Increase in Net Assets		366,479,524			638,035,325

NET ASSETS:
Beginning of period		638,135,325			100,000
End of period	$	1,004,614,849		$	638,135,325

OTHER INFORMATION:
CAPITAL SHARE TRANSACTIONS:
Class A
Beginning shares		2,323,971			–
Issued		609,647			2,386,963
Distributions reinvested		62,505			17,487
Redeemed		(223,148	)		(80,479	)
Institutional Class
Beginning shares		63,550,117			10,000
Issued		39,721,369			66,211,177
Distributions reinvested		1,308,910			339,007
Redeemed		(6,398,508	)		(3,010,067	)
Net increase in capital shares		35,080,775			65,864,088
Ending shares		100,954,863			65,874,088

See Notes to Financial Statements.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund Class A

Financial Highlights

For a Share Outstanding Throughout the Period Presented

	For the Six Months Ended April 30, 2021 (Unaudited)			For the Period July 17, 2020 (Commencement of Operations) to October 31, 2020
OPERATING PERFORMANCE:
Net asset value - beginning of period	$	9.68		$	9.55
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment income^(a)		0.23			0.06
Net realized and unrealized gain on investments^(b)		0.26			0.15
Total Income from Investment Operations		0.49			0.21

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(0.20	)		(0.08	)
From net realized gains		(0.05	)		–
Total Distributions to Shareholders		(0.25	)		(0.08	)

Net asset value - end of period	$	9.92		$	9.68

Total Investment Return - Net Asset Value^(c)		5.09	%^(d)(e)		2.17	%^(d)(e)

RATIOS AND SUPPLEMENTAL DATA:
Net assets end of period (000s)	$	27,515		$	22,495
Ratio of expenses to average net assets excluding reimbursement^(f)		1.72	%^(g)		1.84	%^(g)
Ratio of expenses to average net assets including reimbursement^(f)		1.50	%^(g)		1.50	%^(g)
Ratio of net investment income to average net assets^(f)		4.81	%^(g)		2.28	%^(g)
Portfolio turnover rate		35	%^(d)		54	%^(d)

^(a)	Calculated using average shares method.
^(b)	Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period and may not reconcile with the aggregate gains and losses in the Statement of Operations due to share transactions for the period.

^(c)

Total returns are for the period indicated and have not been annualized. During periods in which certain expenses were reimbursed, total returns would have been lower. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Returns shown exclude applicable sales charges.

^(d)

Not Annualized.

^(e)

Includes adjustments in accordance with accounting principles generally accepted in the United States of America and, consequently, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions.

^(f⁾

Expenses and net investment income/(loss) amounts used to calculate the ratios above include amounts allocated to investors. An individual investor’s results may vary based on a variety of factors and the timing of capital transactions.

^(g)

Annualized.

See Notes to Financial Statements.

14	www.axonicfunds.com

Axonic Strategic Income Fund Institutional Class

Financial Highlights

For a Share Outstanding Throughout the Period Presented

	For the Six Months Ended April 30, 2021 (Unaudited)			For the Period December 31, 2019 (Commencement of Operations) to October 31, 2020
OPERATING PERFORMANCE:
Net asset value - beginning of period	$	9.69		$	10.00
INCOME/(LOSS) FROM INVESTMENT OPERATIONS:
Net investment income^(a)		0.26			0.19
Net realized and unrealized gain on investments^(b)		0.25			(0.40	)
Total Income/(Loss) from Investment Operations		0.51			(0.21	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(0.20	)		(0.10	)
From net realized gains		(0.05	)		–
Total Distributions to Shareholders		(0.25	)		(0.10	)

Net asset value - end of period	$	9.95		$	9.69

Total Investment Return - Net Asset Value^(c)		5.30	%^(d)(e)		(2.11	%)^(d)(e)

RATIOS AND SUPPLEMENTAL DATA:
Net assets end of period (000s)	$	977,099		$	615,640
Ratio of expenses to average net assets excluding reimbursement^(f)		1.07	%^(g)		1.19	%^(g)
Ratio of expenses to average net assets including reimbursement^(f)		1.07	%^(g)		1.10	%^(g)
Ratio of net investment income to average net assets^(f)		5.29	%^(g)		2.40	%^(g)
Portfolio turnover rate		35	%^(d)		54	%^(d)

^(a)

Calculated using average shares method.

^(b)

Realized and unrealized gains and losses per share in this caption are balancing amounts necessary to reconcile the change in net asset value per share for the period and may not reconcile with the aggregate gains and losses in the Statement of Operations due to share transactions for the period.

^(c)

^(d)

Not Annualized.

^(e)

^(f)

^(g)

Annualized.

See Notes to Financial Statements.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund

Notes to Financial Statements

April 30, 2021 (Unaudited)

1. ORGANIZATION

Axonic Strategic Income Fund (the “Fund”), is a non-diversified series of the Axonic Funds (the “Trust”), which is registered under the Investment Company Act of 1940, as amended (“1940 Act”) as an open-end management investment company. The Trust was organized as a Delaware statutory trust on October 17, 2019 pursuant to a Declaration of Trust governed by the laws of the State of Delaware. Axonic Capital LLC (the “Adviser”) acts as the Fund’s investment adviser. The Adviser is a registered investment adviser and is responsible for making the investment decisions for the Fund’s portfolio. The Fund’s investment objective is to seek total return. The Fund’s portfolio will be deemed to be non-diversified under the 1940 Act, meaning it may invest a greater percentage of its assets in a single or limited number of issuers than a diversified fund. Under normal circumstances, the Fund will concentrate its investments (i.e., invest 25% or more of its total assets (measured at the time of purchase)) in Mortgage-Backed Securities (“MBS”) and other mortgage-related securities (such as CMOs), which the Fund treats as investments in a group of industries.

The Fund currently offers Class A and Class I shares. Class A shares commenced operations on July 17, 2020 and Class I commenced operations on December 31, 2019. Class A shares are offered subject to a maximum sales charge of 2.25%. Class I shares are offered at NAV and are not subject to sales charges. The Fund may offer additional classes of shares in the future.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the Fund in preparation of its financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Fund is considered an investment company for financial reporting purposes under GAAP. The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 946 “Financial Services – Investment Companies” including FASB Accounting Standard Update (“ASU”) 2013-08. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates.

Securities Valuation – The Fund’s Board of Trustees (the “Board”) has approved pricing policies and procedures and fair valuation policies and procedures pursuant to which the Fund will value its investments. The Adviser has appointed an independent Administrator of the Fund, pursuant to the administration agreement, under which the Administrator independently calculates the daily Net Asset Value per share (“NAV”) of the Fund. In doing so, the Administrator, on a daily basis, in compliance with the policies and procedures described above, independently values the investment positions within the Fund’s portfolio. The Administrator at its discretion may notify the Fund or the Board of any valuation conflicts and/or non-compliance with the policies and procedures. The Administrator and the Adviser will include in quarterly written reports to the Board confirmation that the policies and procedures provide fair and accurate prices. Securities listed on an exchange are valued at the last reported sale price at the close of the regular trading session of the exchange on the business day the value is being determined. Investments in shares of funds, including money market funds, that are not traded on an exchange are valued at the end of day net asset value (“NAV”) per share of such fund.

Structured credit and other similar debt securities including, but not limited to, asset-backed securities, collateralized debt obligations, collateralized loan obligations, collateralized mortgage obligations, mortgage-backed securities, commercial mortgage-backed security, and other securitized investments backed by certain debt or other receivables (collectively, “Structured Credit Securities”), are valued on the basis of valuations provided by independent pricing services and /or dealers in those instruments recommended by the Adviser and approved by the Board. Interest Rate Swaps are valued by an independent pricing service as approved by the Board. For centrally cleared swaps, the daily change in valuation and upfront payments, if any, are recorded as a receivable or payable for variation margin on the statement of assets and liabilities. In determining fair value, pricing services and dealers will generally use information with respect to transactions in the securities being valued, quotations from other dealers, market transactions in comparable securities, analyses and evaluations of various relationships between securities, and yield to maturity information. The Adviser will, based on its reasonable judgment, select the pricing service or dealer quotation that most accurately reflects the fair market value of the Structured Credit Security while taking into account the information utilized by the pricing service or dealer to formulate the quotation in addition to any other relevant factors.

When price quotations for certain securities are not readily available, or if the available quotations are not believed to be reflective of market value by the Adviser, those securities will be valued at “fair value” as determined in good faith by the Adviser’s Valuation Committee using the fair valuation policies and procedures adopted by, and under the supervision of, the Board. There can be no assurance that the Fund could purchase or sell a portfolio security at the price used to calculate the Fund’s NAV.

The fair valuation policies and procedures may be used to value a substantial portion of the assets of the Fund. The Fund may use the fair value of a security to calculate its NAV when, for example, (1) a portfolio security is not traded in a public market or the principal market in which the security trades is closed, (2) trading in a portfolio security is suspended and has not resumed prior to the normal market close, (3) a portfolio security is not traded in significant volume for a substantial period, or (4) the Adviser determines that the quotation or price for a portfolio security provided by an independent pricing service and broker-dealer is inaccurate.

See Notes to Financial Statements.

16	www.axonicfunds.com

Axonic Strategic Income Fund

Notes to Financial Statements

April 30, 2021 (Unaudited)

The “fair value” of securities may be difficult to determine and thus judgment plays a greater role in the valuation process. The fair valuation methodology may include or consider the following guidelines, as appropriate: (1) evaluation of all relevant factors, including but not limited to, pricing history, current market level and supply and demand of the respective security; (2) comparison to the values and current pricing of securities that have comparable characteristics; (3) knowledge of historical market information with respect to the security; and (4) other factors relevant to the security which would include, but not be limited to, duration, yield, fundamental analytical data, the Treasury yield curve and credit quality.

Fair Value Measurements – A three-tier hierarchy has been established to classify fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available. In accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value.

Various inputs are used in determining the value of the Fund’s investments as of the reporting period end. These inputs are categorized in the following hierarchy under applicable financial accounting standards:

Level 1 –

Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that the Fund has the ability to access at the measurement date;

Level 2 –

Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability at the measurement date; and

Level 3 –

Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity for the asset or liability at the measurement date.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.

An investment level within the fair value hierarchy is based on the lowest level input, individually or in the aggregate, that is significant to fair value measurement. To the extent practicable, the Adviser generally endeavors to maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs are to be used when available.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund

Notes to Financial Statements

April 30, 2021 (Unaudited)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk or liquidity associated with investing in those securities. The following is a summary of the inputs used in valuing the Fund’s investments as of April 30, 2021:

Investments in Securities at Value^(a)	Level 1 - Quoted Prices		Level 2 - Other Significant Observable Inputs		Level 3 - Significant Unobservable Inputs		Total
Common Stocks	$	11,051,887	$	–	$	–	$	11,051,887
Preferred Stocks		3,891,315		–		–		3,891,315
Asset-Backed Securities		–		197,498,045		–		197,498,045
Bank Loan		–		24,052,331		–		24,052,331
Collateralized Loan Obligations		–		13,070,235		–		13,070,235
Commercial Mortgage-Backed Securities		–		263,205,200		–		263,205,200
Convertible Corporate Bond		–		57,829,392		–		57,829,392
Corporate Bonds		–		45,110,517		–		45,110,517
Residential Mortgage-Backed Securities		–		243,044,567		–		243,044,567
Short Term Investments		141,905,220		–		–		141,905,220
Total	$	156,848,422	$	843,810,287	$	–	$	1,000,658,709
Other Financial Instruments^(b)
Assets:
Interest Rate Swap Contracts	$	–	$	171,526	$	–	$	171,526
Total	$	–	$	171,526	$	–	$	171,526

^(a)	For detailed descriptions of industries, see the accompanying Schedule of Investments.
^(b)	Other financial instruments are derivative instruments reflected in the Schedule of Investments. The derivatives shown in this table are reported at their unrealized appreciation/(depreciation) at measurement date, which represents the change in the contract’s value.

Securities Transactions and Investment Income – Investment security transactions are accounted for on a trade date basis. Cost is determined and gains and losses are based upon the specific identification method for both financial statement and federal income tax purposes. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Dividend income from REITs is recognized on the ex-dividend date. It is common for distributions from REITs to exceed taxable earnings and profits, resulting in the excess portion of such dividends being designated as a return of capital. The calendar year-end amounts of ordinary income, capital gains, and return of capital included in distributions received from the Fund’ investment in REITs are reported to the Fund after the end of the calendar year; accordingly, the Fund estimates these amounts for accounting purposes until the characterization of REIT distributions is reported to the Fund after the end of the calendar year. Estimates are based on the most recent REIT distribution information available.

Premium and Discount Amortization/Paydown Gains and Losses – All premiums and discounts on fixed-income securities are amortized/accreted over the estimated lives of such securities for financial statement purposes using the effective interest method. Gains and losses realized on principal payments of mortgage-backed securities (paydown gains and losses) are classified as part of interest income.

Concentration of Credit Risk – The Fund places its cash with one banking institution, which is insured by Federal Deposit Insurance Corporation (“FDIC”). The FDIC limit is $250,000. At various times throughout the year, the amount on deposit may exceed the FDIC limit and subject the Fund to a credit risk. The Fund does not believe that such deposits are subject to any unusual risk associated with investment activities.

Federal and Other Taxes – No provision for income taxes is included in the accompanying financial statements, as the Fund intends to distribute to shareholders all taxable investment income and realized gains and otherwise comply with Subchapter M of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies.

The Fund evaluates tax positions taken (or expected to be taken) in the course of preparing the Fund’s tax provisions to determine whether these positions meet a “more-likely-than-not” standard that, based on the technical merits, have a more than fifty percent likelihood of being sustained by a taxing authority upon examination. A tax position that meets the “more-likely-than-not” recognition threshold is measured to determine the amount of benefit to recognize in the financial statements.

18	www.axonicfunds.com

Axonic Strategic Income Fund

Notes to Financial Statements

April 30, 2021 (Unaudited)

As of and during the period ended April 30, 2021, the Fund did not have a liability for any unrecognized tax benefits. The Fund files U.S. federal, state and local tax returns as required. The Fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations which is generally three years after the filing of the tax return for federal purposes and four years for most state returns. Tax returns for the initial period have incorporated no uncertain tax positions that require a provision for income taxes.

Distributions to Shareholders – Distributions from the Fund’s net investment income are accrued daily and typically paid monthly. However, there can be no assurances that the Fund will achieve any level of distribution to its Shareholders. The Fund intends to make sufficient distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. The character of income and gains to be distributed is determined in accordance with income tax regulations, which may differ from GAAP.

Offering Costs – Offering costs incurred by the Fund were treated as deferred charges until operations commenced and are being amortized over a 12-month period using the straight line method. During the period ended April 30, 2021, $56,474 in offering costs were amortized. Unamortized amounts are included in deferred offering costs in the Statement of Assets and Liabilities.

Indemnification – The Fund indemnifies its officers and trustees for certain liabilities that may arise from the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties which provide general indemnities. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund expects the risk of loss due to these warranties and indemnities to be remote.

3. SWAPS

The Fund may transact in credit default swaps, total return swaps, interest rate swaps, equity swaps, currency swaps and other types of swaps. Such transactions are subject to market risk, liquidity risk, risk of default by the other party to the transaction, known as “counterparty risk,” regulatory risk and risk of imperfect correlation between the value of such instruments and the underlying assets and may involve commissions or other costs.

Swap agreements are primarily entered into by institutional investors and the value of such agreements may be extremely volatile. Certain swap agreements are traded OTC between two parties, while other more standardized swaps must be transacted through a futures commission merchant and centrally cleared or exchange-traded. While central clearing and exchange-trading are intended to reduce counterparty credit and liquidity risk, they do not make a swap transaction risk-free. The current regulatory environment regarding swap agreements is subject to change. The Adviser will continue to monitor these developments, particularly to the extent regulatory changes affect the Fund’s ability to enter into or close out swap agreements.

The swap market has matured in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid; however there is no guarantee that the swap market will continue to provide liquidity and may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell. The absence of liquidity may also make it more difficult for the Fund to ascertain a market value for such instruments. The inability to close derivative positions also could have an adverse impact on the Fund’s ability to effectively hedge its portfolio. If the Adviser is incorrect in its forecasts of market values, interest rates or currency exchange rates, the investment performance of the Fund would be less favorable than it would have been if these investment techniques were not used. In a total return swap, the Fund pays the counterparty a floating short-term interest rate and receives in exchange the total return of underlying loans or debt securities. The Fund bears the risk of default on the underlying loans or debt securities, based on the notional amount of the swap and, therefore, incurs a form of leverage. The Fund would typically have to post collateral to cover this potential obligation.

The Fund will “cover” its swap positions by segregating an amount of cash and/or liquid securities as required by the 1940 Act and applicable SEC interpretations and guidance from time to time.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund

Notes to Financial Statements

April 30, 2021 (Unaudited)

The table below is a summary of the fair valuations of interest rate swaps:

Risk Exposure	Statement of Assets and Liabilities Location	Asset Derivatives Gross Unrealized Appreciation		Liability Derivatives Gross Unrealized Depreciation
Axonic Strategic Income Fund
Interest Rate Risk (Swap Contracts)	Unrealized appreciation/depreciation on interest rate swap contracts^(a)	$	171,526	$	–
Total		$	171,526	$	–

^(a)	The value presented includes cumulative gain/(loss) on swap contracts; however, the value reflected on the accompanying Statement of Assets and Liabilities is the unsettled variation margin receivable/(payable) and/or unrealized appreciation/(depreciation) as of April 30, 2021.

The average notional value of interest rate swap contracts from the period of initial investment to April 30, 2021 was $30,000,000.

The effect of interest rate swap contracts on the Statement of Operations for the period ended April 30, 2021 is shown in the table below.

Risk Exposure	Statement of Operations Location	Net Realized Gain/(Loss)			Net Change in Unrealized Appreciation/ (Depreciation)
Axonic Strategic Income Fund
Interest Rate Risk (Swap Contracts)	Net realized loss on interest rate swap contracts/Net change in unrealized appreciation on interest rate swap contracts	$	(9,599	)	$	171,526
Total		$	(9,599	)	$	171,526

4. ADVISORY FEES AND OTHER TRANSACTIONS WITH SERVICE PROVIDERS

Advisory Fees – Pursuant to the investment advisory agreement by and between the Trust, on behalf of the Fund, and the Adviser (the “Investment Advisory Agreement”), and in consideration of the advisory services provided by the Adviser to the Fund, the Adviser is entitled to a management fee equal to 0.85% of the Fund’s average daily net assets. For the period ended April 30, 2021, the Fund incurred $3,520,002 in Advisory fees.

The Adviser has contractually agreed to waive its fees and/or reimburse certain expenses (inclusive of organizational and offering costs, but exclusive of any taxes, interest on borrowings, dividends on securities sold short, brokerage commissions, 12b-1 fees, acquired fund fees and expenses, expenses incurred in connection with any merger or reorganization and extraordinary expenses) to limit the Fund’s Total Annual Fund Operating Expenses after Fee Waiver/Expense Reimbursement to 1.10% of the Fund’s average daily net assets (the “Expense Limit”) through December 31, 2021. The Expense Limit excludes certain expenses and, consequently, the Fund’s Total Annual Fund Operating Expenses after Fee Waiver/Expense Reimbursement may be higher than the Expense Limit. The contractual waiver and expense reimbursement may be changed or eliminated at any time by the Board of Trustees, on behalf of the Fund, upon 60 days’ written notice to the Adviser. The contractual fee waiver and expense reimbursement may not be terminated by the Adviser without the consent of the Board of Trustees. The Adviser may recoup from the Fund any waived amount or reimbursed expenses pursuant to this agreement if such recoupment does not cause the Fund to exceed the current Expense Limit or the Expense Limit in place at the time of the waiver or reimbursement (whichever is lower) and the recoupment is made within three years after the end of the month in which the Adviser incurred the expense. During the period ended April 30, 2021, the Adviser reimbursed expenses to the Fund of $27,202 all of which was attributable to Class A, and the Fund repayed the Adviser previously waived fees and expenses of $206,652, all of which was attributable to Class I.

20	www.axonicfunds.com

Axonic Strategic Income Fund

Notes to Financial Statements

April 30, 2021 (Unaudited)

As of April 30, 2021, the following amounts were available for recoupment by the Adviser based upon their potential expiration dates:

	Expires		Expires
Fund	2023		2024
Axonic Strategic Income Fund Class A	$	19,140	$	27,202

Chief Compliance Officer (“CCO”) Services – The CCO of the Fund is an affiliate of the Fund. For the period ended April 30, 2021, the total related amounts paid by the Fund for CCO fees are included in Chief Compliance Officer fees on the Fund’s Statement of Operations.

Fund Accounting and Administration Fees and Expenses – ALPS Fund Services, Inc. (“ALPS”) serves as the Fund’s administrator and accounting agent (the “Administrator”) and receives customary fees from the Fund for such services.

Transfer Agent – DST Systems Inc., an affiliate of ALPS, serves as transfer, dividend paying and shareholder servicing agent for the Fund

(“Transfer Agent”).

Distributor – The Fund has entered into a distribution agreement with ALPS Distributors, Inc. (the “Distributor”) to provide distribution services to the Fund. There are no fees paid to the Distributor pursuant to the distribution agreement.

The Distributor acts as the Fund’s principal underwriter in a continuous public offering of the Fund’s shares. The Distributor is an affiliate of ALPS. During the period ended April 30, 2021, no fees were retained by the Distributor.

Trustees – Officers of the Trust and the Trustees who are “interested persons” of the Trust or the Adviser receive no salary from the Trust. The Independent Trustees also serve as independent trustees on the Board of Trustees of the Axonic Alternative Income Fund, a closed-end interval fund for which Axonic Capital LLC also serves as the investment adviser. As of January 1, 2021 for their service on the Board and the Board of Trustees of Axonic Alternative Income Fund, the Independent Trustees receive the following fees, which are split between the Fund and the Axonic Alternative Income Fund pro rata based on assets under management: $25,000 annual retainer for each Independent Trustee, $3,000 annually for each of the Valuation Committee Chair, Audit Committee Chair and Nominating and Governance Committee Chair, $5,000 for each quarterly meeting, and $1,000 for each special meeting. Prior to January 1, 2021 the Trustees received an annual retainer of $4,000 and a fee of $2,000 for each Board meeting attended in person and $1,000 for each Board meeting attended by telephone. The Fund reimburses each Trustee and officer of the Trust for his or her travel and other expenses relating to attendance at Board or committee meetings.

5. INVESTMENT TRANSACTIONS

The cost of purchases and proceeds from the sale of securities, other than short-term securities, for the period ended April 30, 2021, amounted to $540,883,298 and $247,392,981, respectively.

6. TAX BASIS INFORMATION

Distributions are determined in accordance with federal income tax regulations, which differ from GAAP, and, therefore, may differ significantly in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character but are not adjusted for temporary differences. The amounts and characteristics of tax basis distributions and composition of distributable earnings/(accumulated losses) are finalized at fiscal year-end.

As of April 30, 2021, net unrealized appreciation/(depreciation) of investments based on the federal tax cost were as follows:

Cost of investments for income tax purposes	$	976,103,999
Gross appreciation (excess of value over tax cost)	$	32,154,735
Gross depreciation (excess of tax cost over value)		(7,428,499	)
Net unrealized appreciation	$	24,726,236

Semi-Annual Report | April 30, 2021 21

Axonic Strategic Income Fund

Notes to Financial Statements

April 30, 2021 (Unaudited)

7. LINE OF CREDIT

On June 10, 2020, the Fund entered into a $40,000,000 uncommitted, secured, revolving line of credit agreement (“Credit Agreement”) with U.S. Bank National Association for redemption purposes, subject to annual renewal and other limitations of the 1940 Act for borrowings. On January 15, 2021, the revolving line of credit agreement was amended to increase the maximum borrowing amount to $90,000,000. Borrowings under the Credit Agreement bear interest of the lender’s prime rate at the time of borrowing. Borrowings under the Credit Agreement are secured by a perfected, first priority security interest in the assets of the Fund. The Fund had no borrowings during the period ended April 30, 2021.

8. SIGNIFICANT SHAREHOLDERS

The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates a presumption of control of the Fund under Section 2(a)(9) of the 1940 Act. As of April 30, 2021, the following entities owned beneficially more than 25% of the Fund’s outstanding shares. The shares may be held under omnibus accounts (whereby the transactions of two or more shareholders are combined and carried in the name of the originating broker rather than designated separately). Any transaction by these investors could have a material impact on the share class.

Name	Percentage
National Financial Services LLC	49.18%
Charles Schwab & Co Inc	44.64%

9. SUBSEQUENT EVENTS

On June 17, 2021, the revolving line of credit agreement was amended to increase the maximum borrowing amount to the lesser of (i) $200,000,000.00), (ii) 15% of the gross market value of the Fund, and (iii) 33.33% of the market value of the unencumbered assets of the Fund.

22 www.axonicfunds.com

Axonic Strategic Income Fund

Additional Information

April 30, 2021 (Unaudited)

PROXY VOTING POLICIES AND VOTING RECORD

A description of the policies and procedures that the Fund uses to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 888-926-2688, or on the SEC’s website at http://www.sec.gov. Information regarding how the Fund voted proxies relating to its portfolio securities during the most recent 12-month period ended June 30th is available without charge upon request by calling toll-free 833-429-6642, or on the SEC’s website at http://www.sec.gov.

QUARTERLY PORTFOLIO HOLDINGS

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT; the Fund’s Form N-PORT reports are available on the SEC’s Website at http://www.sec.gov.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund

Liquidity Risk Management Program

April 30, 2021 (Unaudited)

The Fund has adopted and implemented a written liquidity risk management program (the “Program”) as required by Rule 22e-4 (the “Liquidity Rule”) under the Investment Company Act of 1940, as amended. The Program is reasonably designed to assess and manage the Fund’s liquidity risk, taking into consideration, among other factors, the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions; its short- and long-term cash flow projections; and its cash holdings and access to other funding sources. The Fund’s Board of Trustees (the “Board”) approved the appointment of the Liquidity Administrator Committee, comprising of certain employees of the Fund’s Adviser and certain Trust officers, to be responsible for the Program’s administration and oversight and for reporting to the Board on at least an annual basis regarding the Program’s operation and effectiveness. The annual written report assessing the Program (the “Report”) was presented to the Board at the December 10, 2020 Board meeting and covered the period from October 31, 2019 to October 31, 2020 (the “Review Period”).

During the Review Period, the Fund did not experience unusual stress or disruption to its operations related to purchase and redemption activity. Also, during the Review Period, the Fund held adequate levels of cash and highly liquid investments to meet shareholder redemption activities in accordance with applicable requirements. The Report concluded that the Program is reasonably designed to prevent violation of the Liquidity Rule and the Program has been effectively implemented.

24	www.axonicfunds.com

Axonic Strategic Income Fund

Trustees and Officers

April 30, 2021 (Unaudited)

The Board is responsible for the overall management of the Trust, including general supervision and review of the investment activities of the Fund. The Board, in turn, elects the officers of the Trust, who are responsible for administering the day-to-day operations of the Fund. Unless otherwise indicated in the table below, the address of each Trustee and officer of the Fund is 520 Madison Avenue, 42nd Floor, New York, New York 10022. Information about the Trustees and officers of the Fund is provided in the table below. Additional information about members of the Board of Trustees and Officers of the Trust is available in the Statement of Additional Information, which is available, without charge, upon request, by calling the Funds (toll-free) at 1-833-429-6642 (833-4Axonic).

Name and Year of Birth	Position with the Fund	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Portfolios in Fund Complex* Overseen by Trustee	Other Directorships Held During the Past 5 Years
INDEPENDENT TRUSTEES OF THE TRUST
Joshua M. Barlow 1978	Independent Trustee	Indefinite Term; Since Inception	Managing Director, Valhalla Fiduciary (June 2018 – present); Head of Operational Due Diligence and Accounting and other positions, PAAMCO (Pacific Alternative Asset Management Company, LLC) (March 2006 – June 2018).	2	Axonic Alternative Income Fund
Charles D. Mires 1960	Independent Trustee	Indefinite Term; Since Inception	Director CIB Marine Bancshares, Inc. (2010 – present); Retired from full time employment December, 2015; Director of Fixed Income, Alternative Strategies, and Third Party Mandates, Franklin Street Partners (2011- 2015).	2	Axonic Alternative Income Fund; CIB Marine Bancshares, Inc.
Thomas S. Vales 1964	Independent Trustee	Indefinite Term; Since April 15, 2020	Chief Executive Officer, TMC Bonds LLC (an alternative trading system for fixed income) (2000 – 2019); Member, FINRA Fixed Income Advisory Committee (2016-2018).	2	Axonic Alternative Income Fund
INTERESTED TRUSTEE OF THE TRUST^**
Clayton DeGiacinto 1972	Trustee, President(Principal Executive Officer)	Indefinite Term; Since Inception	Managing Member and Chief Investment Officer, Axonic Capital LLC (2010 – present).	2	Axonic Alternative Income Fund

*	The Fund complex consists of the Fund and the Axonic Alternative Income Fund, a registered closed-end interval fund for which Axonic Capital LLC also serves as the investment adviser.
**	Clayton DeGiacinto is an Interested Trustee because he is the Managing Member and Chief Investment Officer of the Adviser.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund

Trustees and Officers

April 30, 2021 (Unaudited)

Name and Year of Birth	Position with the Fund	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years
OFFICERS OF THE TRUST
John Kelly 1978	Treasurer (Principal Financial Officer)	Indefinite Term; Since Inception	Chief Financial Officer, Axonic Capital LLC (2017 – present); Controller, J. Goldman & Co. LP (June 2015- 2017); Manager of Financial Reporting, Moore Capital Management LP (2003 – 2015).
Joseph Grogan 1980	Secretary; Chief Compliance Officer	Indefinite Term; Since Inception	Chief Compliance Officer, Axonic Capital LLC (February 2018 – present); Chief Compliance Officer, Claren Road Asset Management, LLC (January 2015 – February 2018); Director of Compliance, Claren Road Asset Management, LLC (July 2011 – January 2015).

26	www.axonicfunds.com

Axonic Strategic Income Fund

April 30, 2021 (Unaudited)

DATA PRIVACY POLICY AND PROCEDURE

Policy Statement:

Axonic Strategic Income Fund (the “Fund”) has in effect the following policy (the “Data Privacy Policy”) with respect to nonpublic personal information about its customers.

The Fund collects nonpublic personal information about its customers¹ from the following sources:

	●	account applications and other forms, which may include a customer’s name, address, social security number, and information about a customer’s investment goals and risk tolerance;
	●	account history, including information about the transactions and balances in a customer’s account; and
	●	correspondence, written, or telephonic, between a customer and the Fund or service providers to the Fund.

In addition, the Fund may obtain consumer information about its customers from consumer reports.

The Fund will not release nonpublic personal or consumer information about its customers or their accounts unless one of the following conditions is met:

●

Prior written consent is received.

●

The Fund believes the recipient to be the customer of the Fund or such Fund customer’s authorized representative.

●

The Fund is required by law to release information to the recipient.

The Fund does not give or sell nonpublic personal or consumer information about its customers or their fund accounts to any other company, individual, or group.

The Fund will only use nonpublic personal or consumer information about its customers and their accounts to attempt to better serve their investment needs or to suggest services or educational materials that may be of interest to them.

The Fund restricts access to nonpublic personal and consumer information about customers to those employees who need to know that information in order to provide products or services. The Fund may also share personal information with companies that it hires to provide support services. When the Fund or its Transfer Agent shares nonpublic personal or consumer information with other service providers, it protects that information with a strict confidentiality agreement. The Fund also maintains reasonable physical, electronic and procedural safeguards that comply with federal standards to protect against unauthorized access to and properly dispose of customers’ nonpublic personal and consumer information.

The Fund will adhere to the policies and practices described in this notice for current and former shareholders of the Fund.

II. Physical, Electronic and Procedural Safeguards

The following includes a list of the primary physical, electronic and procedural safeguards employed by the Transfer Agent to ensure against unauthorized access and proper disposal of customers’ nonpublic personal and consumer information.

●

The Fund shall distribute this Data Privacy Policy annually to shareholders through the Fund’s annual report to shareholders to ensure compliance with shareholder notification requirements mandated by Regulation S-P.

●

Should a change in this Data Privacy Policy occur during the year that requires a change to this Data Privacy Policy, the Principal Underwriter or Transfer Agent will provide existing customers of the Fund with an updated Data Privacy Policy.

●

The Transfer Agent shall maintain a third-party list that identifies any non-affiliated third-parties that do business with the Transfer Agent, the type(s) of service(s) provided, whether there is an exchange of non-public personal information, and whether these relationships fall outside of any exceptions and/or exemptions to the opt-out requirements afforded under Regulation S-P. Appropriate confidentiality language must exist in the contractual arrangements with each of these relations.

¹	For purposes of this Data Privacy Policy, the terms “*customer” or “customers*” includes both shareholders of the Fund and individuals who provide nonpublic personal information to the Fund, but do not invest in Fund shares.

Semi-Annual Report | April 30, 2021

Axonic Strategic Income Fund

April 30, 2021 (Unaudited)

●

The Transfer Agent, the Administrator, the Fund Accounting Agent, the Principal Underwriter, and Investment Adviser shall maintain procedures related to the security of nonpublic personal information and consumer information (including physical, electronic and procedural safeguards) and properly disposal of such information.

●

Any data privacy related questions, concerns or breaches will be brought to the attention of the Fund’s CCO.

Procedures:

The Fund’s CCO will determine that the policies and procedures of the Transfer Agent, Principal Underwriter and the Fund’s other service providers are reasonably designed to safeguard customer information and require only appropriate and authorized access to, and use of, customer information through the application of appropriate administrative, technical, physical, and procedural safeguards that comply with applicable federal standards and regulations.

The Fund’s CCO will continually monitor applicable regulations that may cause policies of the Fund and/or its service providers subject to the requirements of Regulation S-P to change.

Annually, the Fund’s CCO will review any independent reviews applicable to data security at its service providers who have access to or otherwise obtain nonpublic personal information in fulfilling their obligations to the Fund.

Annually, the Fund’s CCO will inquire and review, where applicable, any related data privacy issues reported by the Fund’s service providers who have access to or otherwise obtain nonpublic personal information in fulfilling their obligations to the Fund.

Adopted: December 31, 2019

28	www.axonicfunds.com

AXONIC STRATEGIC INCOME FUND

SEMI-ANNUAL REPORT

April 30, 2021

(b)

Not applicable.

Item 2.

Code of Ethics.

Not applicable to semi-annual report.

Item 3.

Audit Committee Financial Expert.

Not applicable to semi-annual report.

Item 4.

Principal Accountant Fees and Services.

Not applicable to semi-annual report.

Item 5.

Audit Committee of Listed Registrants.

Not applicable to the Registrant.

Item 6.

Investments.

(a)

Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the Report to Stockholders filed under Item 1 of this Form N-CSR.

(b)

Not applicable to the Registrant.

Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to the Registrant.

Item 8.

Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to the Registrant.

Item 9.

Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable to the Registrant.

Item 10.

Submission of Matters to a Vote of Security Holders.

The Nominating Committee, comprised of all the Independent Trustees, is responsible for seeking and reviewing candidates for consideration as nominees for Trustees. The Nominating Committee generally will not consider nominees recommended by shareholders of the Trust.

Item 11.

Controls and Procedures.

(a)

The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective as of a date within 90 days of the filing date of this report.

(b)

There was no change in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12.

Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

Not applicable to the Registrant.

Item 13.

Exhibits.

(a)(1)

Not applicable.

(a)(2)

The certifications required by Rule 30a-2(a) of the Investment Company Act of 1940, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99.Cert.

(a)(3)

Not applicable to the Registrant.

(a)(4)

Not applicable.

(b)

The certifications by the Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(b) of the Investment Company Act of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99.906Cert.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Axonic Funds

By:	/s/ Clayton DeGiacinto
	Clayton DeGiacinto (Principal Executive Officer)
	Chief Executive Officer and President

Date:	July 2, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Axonic Funds

By:	/s/ Clayton DeGiacinto
	Clayton DeGiacinto (Principal Executive Officer)
	Chief Executive Officer and President

Date:	July 2, 2021

By:	/s/ John R. Kelly
	John R. Kelly (Principal Financial Officer)
	Treasurer and Chief Financial Officer

Date:	July 2, 2021