# EDGAR Filing Document

**Accession Number:** 0001754927
**File Stem:** 0001398344-23-000340
**Filing Date:** 2023-1
**Character Count:** 135875
**Document Hash:** d852e0d07f745547ef5db0ee28edc639
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001398344-23-000340.hdr.sgml**: 20230106

**ACCESSION NUMBER**: 0001398344-23-000340

**CONFORMED SUBMISSION TYPE**: N-CSR

**PUBLIC DOCUMENT COUNT**: 9

**CONFORMED PERIOD OF REPORT**: 20221031

**FILED AS OF DATE**: 20230106

**DATE AS OF CHANGE**: 20230106

**EFFECTIVENESS DATE**: 20230106

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Axonic Alternative Income Fund
- **CENTRAL INDEX KEY:** 0001754927
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** NY
- **FISCAL YEAR END:** 1031

**FILING VALUES:**
- **FORM TYPE:** N-CSR
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-23385
- **FILM NUMBER:** 23515000

**BUSINESS ADDRESS:**
- **STREET 1:** C/O AXONIC CAPITAL, LLC
- **STREET 2:** 520 MADISON AVENUE, 42ND FLOOR
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10022
- **BUSINESS PHONE:** 212-259-0430

**MAIL ADDRESS:**
- **STREET 1:** C/O AXONIC CAPITAL, LLC
- **STREET 2:** 520 MADISON AVENUE, 42ND FLOOR
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10022

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

**FORM N-CSR**

**CERTIFIED SHAREHOLDER REPORT OF REGISTERED**

**MANAGEMENT INVESTMENT COMPANIES**

<u>Investment Company Act file number: 811-23385</u>

<u>Axonic Alternative Income Fund</u>

(exact name of registrant as specified in charter)

520 Madison Avenue, 42<sup>nd</sup> Floor

New York, NY 10022

(Address of principal executive offices) (Zip code)

Clayton DeGiacinto, President

c/o Axonic Capital LLC

520 Madison Avenue, 42<sup>nd</sup> 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: <u>(212) 259-0430</u>

Date of fiscal year end: <u>October 31</u>

Date of reporting period: <u>November 1, 2021 – October 31, 2022</u>

Item 1. **Report to Stockholders.**

**AXONIC ALTERNATIVE INCOME FUND**

**ANNUAL REPORT**

October 31, 2022

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| Shareholder Letter | 1 |
| Portfolio Update | 3 |
| Schedule of Investments | 5 |
| Statement of Assets and Liabilities | 9 |
| Statement of Operations | 10 |
| Statement of Changes in Net Assets | 11 |
| Financial Highlights | 12 |
| Notes to Financial Statements | 13 |
| Report of Independent Registered Public Accounting Firm | 21 |
| Additional Information | 22 |
| Trustees and Officers | 23 |
| Privacy Policy | 25 |

---

Axonic Alternative Income Fund Shareholder Letter

October 31, 2022 (Unaudited)

At the end of 2021, we suggested that 2022 would be a different kind of year. We anticipated that the economy's post-pandemic recovery would end only to be replaced by the battle against inflation and higher rates. Moreover, we proffered the idea that the effects of inflation and the consequent monetary policy response would begin to manifest in markets and the economy. We previously wrote: "inflation takes time to weave through the economy, and its impacts on asset class returns aren't uniform. For 2022, inflation is likely to create a dispersion in asset class returns. In what we expect to be a generally more volatile environment for equities, we believe that owning hard real estate assets, senior RMBS, CMBS and ABS bonds will continue to provide a margin of safety and risk-adjusted return profile available in few other asset classes." We believe this has generally been proven to be correct throughout 2022.

In August, we believed that inflation had peaked but was not about to disappear. We further suggested that the Federal Reserve (the "Fed") remained behind in its inflation fight and that, by the Taylor rule, Fed funds would need to rise above 5%. Within the context of a 1970s analogy, we further believed that the US treasury curve (3M10Y) would eventually experience at least a 100bps inversion. This strategic view manifested in portfolio repositioning that began early in the year. While we maintained our strategically negative view for US equities and corporate credit throughout the year, the fund avoided the use of leverage and allowed our cash position to grow. Unfortunately, we believe much of 2023 will remain volatile, not unlike what we saw in 1974. To date, the S&P 500 Index performance beginning in 2022 has closely tracked the period beginning in 1973. We believe the implication is for another leg lower in equities and another leg wider in corporate credit spreads.

Importantly, a new bull market in equities has never occurred without a normalization of an inverted yield curve (3M10Y). If we assume the Fed ends its hikes in February or March of 2023, and it then follows with a three to four month pause, that might imply a curve that remains inverted into mid-year. Until the leaves are once again off the trees, an upward sloping curve most likely won't be in the cards. This timing squares with the idea that the next bout of equity and corporate credit market volatility will stem from cash flow weakness and defaults rather than from the direct impact of an initial rates shock, which is what drove 2022 risk-asset volatility. In other words, the next bout of spread widening will not come as a second order of rates volatility but rather as the first order impact of defaults and lower earnings.

While inflation has likely peaked in goods, a risk remains to energy prices that could result in unwanted stagflation that persists for longer than expected. However, inflation often morphs into disinflation quickly. Complicating the backdrop, the war in Ukraine is far from over, and the impact on energy and food supply chains has not abated. SPR ("strategic petroleum reserve") releases and a falloff in demand have obfuscated the war's impact on energy prices. Precisely as we expected, however, inflation has remained sticky in services as goods inflation has abated. Money supply growth (M2) has collapsed. As we wrote previously, money supply changes (in either direction) are a symptom not a cause. This collapse is an indication that the specter of disinflation is rising as lending standards tighten and fiscal policy driven household savings deplete. It's the bouts of disinflation following inflationary episodes that are often the most difficult. While we expect a generally more volatile environment for equities and speculative grade corporate credit, we believe that owning hard real estate assets, senior RMBS, CMBS and ABS bonds will continue to provide a margin of safety and risk-adjusted return profile available in few other asset classes. We continue to run the portfolio without the use of leverage and hold a healthy cash position which allows us to be nimble in shifting portfolio positioning to take advantage of future dislocations across the structured credit market.

The Axonic Alternative Income Fund ("the Fund") was up +0.68% for the fiscal year ended October 31, 2022, on a price per share performance basis that compares to the Fund's benchmark, the Bloomberg U.S. Aggregate Bond Index (the Agg), returned -15.68% for the year to date ended October 31, 2022. The Fund returned negative performance on a relative dollar basis of approximately -$409,000 of net loss.

While we are cautious in the deployment of capital in the current market, we remain convinced that this environment is well suited to our investment style and asset class expertise. In particular, we continue to remain constructive on multifamily workforce housing assets. A continuation in a rising interest rate environment, should continue to make housing less affordable. Consequently, we believe multifamily rents will continue to remain strong. As more vulnerable parts of the capital markets continue to suffer, this may create opportunity for us to acquire cash flowing assets at even more attractive valuations. The Fund remains unlevered and maintains buying power to take advantage of further dislocations across the structured credit universe. The main contributor for the Fund was the CMBS strategy with losses experienced across equity and credit opportunistic, ABS and RMBS.

Annual Report \| October 31, 2022 1

Axonic Alternative Income Fund Shareholder Letter

October 31, 2022 (Unaudited)

We continue to believe the Fund will represent an attractive solution for income-oriented investors in a challenging environment for traditional fixed income strategies.

Thank you for your continued support.

![](fp0081409-1_02.jpg)

Clayton DeGiacinto

Managing Partner, Chief Investment Officer

Axonic Capital LLC

**An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. To obtain a prospectus containing this and other information, please call (212) 259-0430 or download the file from www.AxonicFunds.com. Please read the prospectus carefully before you invest.**

2 www.axonicfunds.com

Axonic Alternative Income Fund Portfolio Update

October 31, 2022 (Unaudited)

**Average Annual Total Returns *(as of October 31, 2022)***

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **1 Month** | **Quarter** | **6 Month** | **YTD** | **1 Year** | **3 Year** | **Since Inception\*** |
| Axonic Alternative Income Fund - NAV | -0.65% | -1.34% | -1.51% | -0.14% | 0.74% | 0.66% | 1.93% |
| Bloomberg US Aggregate Bond Index<sup>(a)</sup> | -1.30% | -8.23% | -6.86% | -15.72% | -15.68% | -3.77% | -0.73% |

---

**Past performance does not guarantee future results. Investment returns, and principal value of the Fund will fluctuate so that shares may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted above. For current performance information, please call 1-833-429-6642. Performance information is reported net of the Fund's fees and expenses. Class I gross expenses are 2.57% and net expenses are 2.37% (as reported in the February 28, 2022 Prospectus). 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 2.00% of the Fund's average daily net assets (the "Expense Limit") through February 28, 2023.**

\* Fund's inception date is December 28, 2018.

<sup>(a)</sup> The Bloomberg US 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.**

The Axonic Alternative Income Fund (the "Fund") is a continuously offered, non-diversified, closed-end management investment company that is operated as an interval fund. The Fund is suitable only for investors who can bear the risks associated with the Fund's limited liquidity and should be viewed as a long-term investment. The Fund's shares have no history of public trading, nor is it intended that our shares will be listed on a national securities exchange at this time, if ever. Investing in the Fund's shares may be speculative and involves a high degree of risk, including the risks associated with leverage. Investing in the Fund involves risk, including the risk that shareholders may receive little or no return on their investment or that shareholders may lose part or all of their investment.

**Performance of $10,000 Initial Investment *(as of October 31, 2022)***

![](fp0081409-1_03.jpg)

The graph shown above represents historical performance of a hypothetical investment of $10,000 in the Fund 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.

Annual Report \| October 31, 2022 3

Axonic Alternative Income Fund Portfolio Update

October 31, 2022 (Unaudited)

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

---

| | |
|:---|:---|
| FRESB Mortgage Trust, Series 2022-SB100, Class B | 8.28% |
| FRESB Mortgage Trust, Series 2022-SB98, Class B | 5.87% |
| FRESB Mortgage Trust, Series 2022-SB95, Class B | 5.13% |
| TPI RE-REMIC Trust, Series 2022-FRR1, Class EK34 | 5.11% |
| FREMF Mortgage Trust, Series 2022-KF144, Class CS | 5.01% |
| FREMF Mortgage Trust, Series 2016-K722, Class D | 4.17% |
| FRESB Mortgage Trust, Series 2021-SB93, Class B | 4.14% |
| Hudsons Bay Simon JV Trust, Series 2015-HB10, Class C10 | 3.94% |
| SMR 2022-IND Mortgage Trust, Series 22-IND, Class G | 3.17% |
| FREMF Mortgage Trust, Series 2021-KF122, Class CS | 3.10% |
| **Top Ten Holdings** | **47.92%** |

---

**Portfolio Composition** *(as a % of Net Assets)\**

---

| | |
|:---|:---|
| Commercial Mortgage-Backed Securities | 71.79% |
| Asset Backed Securities | 6.99% |
| Convertible Corporate Bonds | 4.85% |
| Residential Mortgage-Backed Securities | 4.59% |
| Preferred Stock-Financials | 3.09% |
| Corporate Bonds | 1.28% |
| Common Stocks-Financials | 0.74% |
| Cash, Cash Equivalents, & Liabilities in Excess of Other Net Assets | 6.67% |
|  | **100.00%** |

---

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

4 www.axonicfunds.com

Axonic Alternative Income Fund Schedule of Investments

October 31, 2022

---

| | | |
|:---|:---|:---|
| **Description** | **Shares** | **Value** |
| **COMMON STOCKS (0.73%)** |  |  |
| **Financials (0.73%)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;ACRES Commercial Realty Corp. REIT<sup>(a)</sup> | 17307 | $184839 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ladder Capital Corp. REIT | 22628 | 241441 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PennyMac Financial Services, Inc. REIT | 2610 | 139165 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Redwood Trust, Inc. REIT | 21780 | 155291 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rithm Capital Corp. REIT | 200 | 1686 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TPG RE Finance Trust, Inc. REIT | 1250 | 10588 |
|  |  | 733010 |
| **TOTAL COMMON STOCKS** |  |  |
| **(Cost $959,262)** |  | **733010** |
| **PREFERRED STOCKS (3.09%)** |  |  |
| **Financials (3.09%)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;ACRES Commercial Realty Corp., Series D, 7.88%<sup>(b)</sup> | 80000 | 1495200 |
| &nbsp;&nbsp;&nbsp;&nbsp;Granite Point Mortgage Trust, Inc., Series A, 1D US SOFR + 5.83%<sup>(b)(c)</sup> | 78310 | 1556020 |
| &nbsp;&nbsp;&nbsp;&nbsp;Rithm Capital Corp., 3M US L + 5.80%<sup>(b)(c)</sup> | 1690 | 31045 |
|  |  | 3082265 |
| **TOTAL PREFERRED STOCKS** |  |  |
| **(Cost $3,992,181)** |  | **3082265** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | <br>**Rate** | **Maturity**<br>**Date** | **Principal**<br>**Amount** | <br>**Value** |
| **ASSET-BACKED SECURITIES (6.99%)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Castlelake Aircraft Structured Trust, Series 2017-1R, Class C<sup>(d)</sup> | 6.50% | 08/15/25 | $665853 | $346244 |
| &nbsp;&nbsp;&nbsp;&nbsp;Castlelake Aircraft Structured Trust, Series 2021-1A, Class B<sup>(d)</sup> | 6.66% | 07/15/27 | 725290 | 558473 |
| &nbsp;&nbsp;&nbsp;&nbsp;CPS Auto Trust, Series 2021-D, Class E<sup>(d)</sup> | 4.06% | 11/15/25 | 2132000 | 1833520 |
| &nbsp;&nbsp;&nbsp;&nbsp;Horizon Aircraft Finance II, Ltd., Series 2019-1, Class C<sup>(d)</sup> | 6.90% | 07/15/26 | 953809 | 705819 |
| &nbsp;&nbsp;&nbsp;&nbsp;JPMorgan Chase Bank NA - Chase Auto Credit Linked Notes, Series 2021-2, Class G<sup>(d)</sup> | 8.48% | 07/25/25 | 1500000 | 1375650 |
| &nbsp;&nbsp;&nbsp;&nbsp;Sprite, Ltd., Series 2021-1, Class C<sup>(d)</sup> | 8.84% | 09/15/26 | 1738100 | 1546909 |
| &nbsp;&nbsp;&nbsp;&nbsp;Thunderbolt III Aircraft Lease, Ltd., Series 2019-1, Class B<sup>(d)</sup> | 4.75% | 11/15/26 | 939102 | 610417 |
| **TOTAL ASSET-BACKED SECURITIES** |  |  |  |  |
| **(Cost $7,817,119)** |  |  |  | **6977032** |
| **COMMERCIAL MORTGAGE-BACKED SECURITIES (71.79%)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Barclays Commercial Mortgage Securities LLC Mortgage Trust, Series 2022-C17, Class E<sup>(d)</sup> | 2.50% | 08/15/32 | 1764000 | 868946 |
| &nbsp;&nbsp;&nbsp;&nbsp;BX Trust, Series 2019-ATL, Class G<sup>(c)(d)</sup> | 1M US L + 3.49% | 10/15/36 | 1661008 | 1496236 |
| &nbsp;&nbsp;&nbsp;&nbsp;Credit Suisse Mortgage Capital Certificates, Series 2021-980M, Class G<sup>(c)(d)</sup> | 3.54% | 07/15/26 | 1788997 | 1352303 |
| &nbsp;&nbsp;&nbsp;&nbsp;FREMF Mortgage Trust, Series 2016-K722, Class D<sup>(d)(e)(f)</sup> | 0.00% | 05/25/23 | 4334211 | 4158242 |
| &nbsp;&nbsp;&nbsp;&nbsp;FREMF Mortgage Trust, Series 2018-KF44, Class C<sup>(c)(d)</sup> | 1M US L + 8.50% | 02/25/25 | 1707819 | 1764348 |
| &nbsp;&nbsp;&nbsp;&nbsp;FREMF Mortgage Trust, Series 2020-KF86, Class C<sup>(c)(d)(f)</sup> | 1M US L + 9.00% | 08/25/27 | 681042 | 716252 |
| &nbsp;&nbsp;&nbsp;&nbsp;FREMF Mortgage Trust, Series 2022-KF144, Class CS<sup>(c)(d)</sup> | 30D US SOFR + 6.00% | 09/25/32 | 5000000 | 5000000 |
| &nbsp;&nbsp;&nbsp;&nbsp;FREMF Mortgage Trust, Series 2021-KF122, Class CS<sup>(c)(d)(f)</sup> | 30D US SOFR + 6.40% | 09/25/31 | 3030303 | 3093333 |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Mortgage Trust, Series 2017-SB38, Class B<sup>(c)(d)(f)</sup> | 3.98% | 08/25/27 | 548187 | 495945 |

---

*See Notes to Financial Statements.*

Annual Report \| October 31, 2022 5

Axonic Alternative Income Fund Schedule of Investments

October 31, 2022

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | <br>**Rate** | **Maturity**<br>**Date** | **Principal**<br>**Amount** | <br>**Value** |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Mortgage Trust, Series 2020-SB74, Class B<sup>(c)(d)</sup> | 7.50% | 04/25/30 | $1379974 | $1296485 |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Mortgage Trust, Series 2020-SB76, Class B<sup>(c)(d)</sup> | 7.50% | 05/25/30 | 451547 | 420526 |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Mortgage Trust, Series 2020-SB81, Class B<sup>(c)(d)</sup> | 7.50% | 10/25/30 | 2624670 | 2424408 |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Mortgage Trust, Series 2021-SB83, Class X1<sup>(c)(g)</sup> | 0.87% | 01/25/41 | 9671793 | 404885 |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Mortgage Trust, Series 2021-SB90, Class B<sup>(c)(f)</sup> | 7.50% | 07/25/41 | 3295132 | 3051292 |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Mortgage Trust, Series 2021-SB93, Class B<sup>(c)(f)</sup> | 7.50% | 10/25/41 | 4449984 | 4128250 |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Mortgage Trust, Series 2022-SB100, Class B<sup>(c)</sup> | 7.50% | 05/25/42 | 8950061 | 8263591 |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Mortgage Trust, Series 2022-SB95, Class B<sup>(c)(d)(f)</sup> | 7.50% | 12/25/31 | 5506074 | 5119548 |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Mortgage Trust, Series 2022-SB98, Class B<sup>(c)(d)</sup> | 7.50% | 04/25/42 | 6336419 | 5861188 |
| &nbsp;&nbsp;&nbsp;&nbsp;FRESB Multifamily Structured Pass Through Certificates, Series 2021-SB86, Class B<sup>(c)(d)</sup> | 7.50% | 03/25/41 | 3130721 | 2889968 |
| &nbsp;&nbsp;&nbsp;&nbsp;Hudsons Bay Simon JV Trust, Series 2015-HB10, Class A10<sup>(d)</sup> | 4.15% | 08/05/34 | 2214207 | 1951159 |
| &nbsp;&nbsp;&nbsp;&nbsp;Hudsons Bay Simon JV Trust, Series 2015-HB10, Class C10<sup>(c)(d)</sup> | 5.45% | 08/05/34 | 5152596 | 3932977 |
| &nbsp;&nbsp;&nbsp;&nbsp;JP Morgan Chase Commercial Mortgage Securities Trust, Series 2008-C2, Class AM<sup>(c)</sup> | 6.83% | 02/12/51 | 3987359 | 2408764 |
| &nbsp;&nbsp;&nbsp;&nbsp;NCMF Trust, Series 2022-MFP, Class G<sup>(c)(d)</sup> | 1M US SOFR + 5.13% | 03/15/27 | 2400000 | 2285520 |
| &nbsp;&nbsp;&nbsp;&nbsp;SMR 2022-IND Mortgage Trust, Series 22-IND, Class G<sup>(c)(d)</sup> | 1M US SOFR + 7.50% | 02/15/24 | 3376067 | 3158986 |
| &nbsp;&nbsp;&nbsp;&nbsp;TPI RE-REMIC Trust, Series 2022-FRR1, Class EK34<sup>(d)(e)</sup> | 0.00% | 08/25/23 | 5600000 | 5095440 |
| **TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES** |  |  |  |  |
| **(Cost $72,981,982)** |  |  |  | **71638592** |
| **CONVERTIBLE CORPORATE BONDS (4.85%)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Granite Point Mortgage Trust, Inc.<sup>(d)(f)</sup> | 5.63% | 12/01/22 | 1094000 | 1090937 |
| &nbsp;&nbsp;&nbsp;&nbsp;Granite Point Mortgage Trust, Inc.<sup>(f)</sup> | 6.38% | 10/01/23 | 1897000 | 1836485 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Redwood Trust, Inc. | 4.75% | 08/15/23 | 1964000 | 1911365 |
| **TOTAL CONVERTIBLE CORPORATE BONDS** |  |  |  |  |
| **(Cost $4,854,959)** |  |  |  | **4838787** |
| **CORPORATE BONDS (1.28%)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;GKN Subordinated CTL Pass-Through Trust/Auburn MI<sup>(c)(d)(e)</sup> | 0.00% | 03/15/30 | 2280172 | 1276896 |
| **TOTAL CORPORATE BONDS** |  |  |  |  |
| **(Cost $1,370,645)** |  |  |  | **1276896** |
| **RESIDENTIAL MORTGAGE-BACKED SECURITIES (4.59%)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Countrywide Alternative Loan Trust, Series 2006-20CB, Class A6<sup>(c)</sup> | 1M US L + 0.50% | 07/25/36 | 86522 | 35309 |
| &nbsp;&nbsp;&nbsp;&nbsp;Countrywide Alternative Loan Trust, Series 2006-24CB, Class A19<sup>(c)</sup> | 1M US L + 0.50% | 08/25/36 | 67944 | 35088 |
| &nbsp;&nbsp;&nbsp;&nbsp;Countrywide Alternative Loan Trust, Series 2006-21CB, Class A7<sup>(c)</sup> | 1M US L + 0.70% | 07/25/36 | 72540 | 40088 |
| &nbsp;&nbsp;&nbsp;&nbsp;Countrywide Home Loans Mortgage Pass-Through Trust, Series 2006-21, Class A6<sup>(c)</sup> | 1M US L + 0.37% | 02/25/37 | 66763 | 29304 |
| &nbsp;&nbsp;&nbsp;&nbsp;HSI Asset Loan Obligation Trust, Series 2007-WF1, Class A2<sup>(c)</sup> | 0.56% | 12/25/36 | 4779855 | 1460877 |
| &nbsp;&nbsp;&nbsp;&nbsp;Lehman Mortgage Trust, Series 2007-5, Class 4A2<sup>(c)</sup> | 1M US L + 0.32% | 08/25/36 | 189161 | 133844 |
| &nbsp;&nbsp;&nbsp;&nbsp;LHOME Mortgage Trust, Series 2022-RTL2, Class M<sup>(d)(h)</sup> | 8.00% | 04/25/27 | 2042000 | 1986960 |
| &nbsp;&nbsp;&nbsp;&nbsp;MASTR Asset Securitization Trust, Series 2006-1, Class 2A1<sup>(c)</sup> | 1M US L + 0.45% | 05/25/36 | 115281 | 28342 |

---

*See Notes to Financial Statements.*

6 www.axonicfunds.com

Axonic Alternative Income Fund Schedule of Investments

October 31, 2022

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | <br>**Rate** | **Maturity**<br>**Date** | **Principal**<br>**Amount** | <br>**Value** |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential Accredit Loans, Inc. Trust, Series 2006-QS5, Class A7<sup>(c)</sup> | 1M US L + 0.30% | 05/25/36 | $38364 | $29036 |
| &nbsp;&nbsp;&nbsp;&nbsp;Washington Mutual Mortgage Pass-Through Certificates, Series 2006-AR10, Class A1<sup>(c)</sup> | 1M US L + 0.20% | 12/25/36 | 1626730 | 803728 |
| **TOTAL RESIDENTIAL MORTGAGE-BACKED SECURITIES** |  |  |  |  |
| **(Cost $6,804,181)** |  |  |  | **4582576** |

---

---

| | | | |
|:---|:---|:---|:---|
| | **7-Day**<br>**Yield** |<br>**Shares** |<br>**Value** |
| **SHORT-TERM INVESTMENTS - COMMON SHARES (21.53%)** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First American Government Obligations Fund | 2.91% | 20725750 | 20725750 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;JPMorgan US Treasury Plus Money Market Fund | 2.69% | 757382 | 757382 |
|  |  |  | 21483132 |
| **TOTAL SHORT-TERM INVESTMENTS** |  |  |  |
| **(Cost $21,483,132)** |  |  | **21483132** |
| **TOTAL INVESTMENTS (114.85%)** |  |  |  |
| **(Cost $120,263,461)** |  |  | $**114612290** |
| **Liabilities in Excess of Other Assets (-14.85%)** |  |  | (14823196) |
| **NET ASSETS (100.00%)** |  |  | $**99789094** |

---

<sup>(a)</sup> Non-income producing security.

<sup>(b)</sup> Perpetual maturity.

<sup>(c)</sup> Floating or variable rate security. The Reference Rates are described below. Interest rate shown reflects the rate in effect at October 31, 2022.

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.

<sup>(d)</sup> 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 $64,713,635, which represents 64.85% of net assets as of October 31, 2022.

<sup>(e)</sup> Issued with a zero coupon. Income is recognized through the accretion of discount.

<sup>(f)</sup> On October 31, 2022, securities valued at $23,690,284 were pledged as collateral for reverse repurchase agreements.

<sup>(g)</sup> Interest only securities.

<sup>(h)</sup> Step bond. Coupon changes periodically based upon a predetermined schedule. Interest rate disclosed is that which is in effect at October 31, 2022.

**Investment Abbreviations:**

LIBOR - London Interbank Offered Rate

REIT - Real Estate Investment Trust

SOFR - Secured Overnight Financing Rate

**Reference Rates:**

1M US L - 1 Month LIBOR as of October 31, 2022 was 3.80%

3M US L - 3 Month LIBOR as of October 31, 2022 was 4.46%

1D US SOFR - 1 Day US SOFR as of October 31, 2022 was 2.87%

1M US SOFR - 1 Month US SOFR as of October 31, 2022 was 3.73%

30D US SOFR - 30 Day US SOFR as of October 31, 2022 was 3.04%

See Notes to Financial Statements.

Annual Report \| October 31, 2022 7

Axonic Alternative Income Fund Schedule of Investments

October 31, 2022

**REVERSE REPURCHASE AGREEMENTS**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Counterparty** | **Interest Rate** | **Acquisition Date** | **Maturity Date** | **Amount** |
| Barclays Bank PLC |  |  |  |  |
|  | 4.48% | 08/23/2022 | 11/22/2022 | $2856000 |
|  | 4.48% | 08/23/2022 | 11/22/2022 | 1988000 |
| Royal Bank of Canada |  |  |  |  |
|  | 3.77% | 08/11/2022 | 11/10/2022 | 841000 |
|  | 3.77% | 08/11/2022 | 11/10/2022 | 1431000 |
|  | 4.57% | 08/11/2022 | 11/10/2022 | 662000 |
|  | 4.57% | 08/11/2022 | 11/10/2022 | 321000 |
|  | 4.57% | 08/11/2022 | 11/10/2022 | 2544000 |
|  | 4.82% | 08/18/2022 | 11/18/2022 | 1918000 |
|  | 4.82% | 08/18/2022 | 11/18/2022 | 2366000 |
|  |  |  |  | $**14927000** |

---

**All agreements can be terminated by either party on demand at value plus accrued interest.**

See Notes to Financial Statements.

8 www.axonicfunds.com

Axonic Alternative Income Fund Statement of Assets and Liabilities

October 31, 2022

**ASSETS:**

---

| | |
|:---|:---|
| Investments, at fair value (Cost $120,263,461) | $114612290 |
| Dividend receivable | 792 |
| Interest receivable | 502670 |
| Receivable for shares sold | 324855 |
| Prepaid expenses and other assets | 20722 |
| Total Assets | 115461329 |
| **LIABILITIES:** |  |
| Payable for reverse repurchase agreements (Cost $14,927,000) | 14927000 |
| Interest payable on reverse repurchase agreements | 123041 |
| Income distribution payable | 390320 |
| Accrued legal and audit fees payable | 86426 |
| Due to Adviser | 122864 |
| Accrued fund accounting and administration fees payable | 20501 |
| Accrued Chief Compliance Officer fee payable | 2083 |
| Total Liabilities | 15672235 |
| Net Assets | $99789094 |
| **COMPOSITION OF NET ASSETS:** |  |
| Paid-in capital | $105927376 |
| Total distributable earnings (accumulated deficit) | (6138282) |
| Net Assets | $99789094 |
| **PRICING OF SHARES:** |  |
| Net Assets | $99789094 |
| Shares of beneficial interest outstanding (unlimited number of shares, no par value common share authorized) | 4917274 |
| Net Asset Value and redemption price per share | $20.29 |

---

See Notes to Financial Statements.

Annual Report \| October 31, 2022 9

Axonic Alternative Income Fund Statement of Operations

For the Year Ended October 31, 2022

**INVESTMENT INCOME:** 

---

| | |
|:---|:---|
| Dividends | $466476 |
| Interest | 7114492 |
| Total Investment Income | 7580968 |
| **EXPENSES:** |  |
| Advisory fees (Note 4) | 926265 |
| Audit and tax fees | 31940 |
| Chief Compliance Officer fee (Note 4) | 25000 |
| Custodian fees | 6949 |
| Fund accounting and administration fees (Note 4) | 61103 |
| Insurance expenses | 3054 |
| Interest on reverse repurchase agreements | 364767 |
| Legal fees | 89312 |
| Printing expenses | 17018 |
| Registration expenses | 33809 |
| Transfer agent fees (Note 4) | 55454 |
| Trustees' fees and expenses (Note 4) | 7590 |
| Other expenses | 26325 |
| Recoupment of previously waived fees | 204424 |
| Total expenses before waiver/reimbursement (Note 4) | 1853010 |
| Net expenses | 1853010 |
| **Net Investment Income** | 5727958 |
| **REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:** |  |
| Net realized loss on investments | (25706) |
| Net change in unrealized (depreciation) on investments | (6111626) |
| Net Realized and Unrealized Loss on Investments | (6137332) |
| **Net Decrease in Net Assets from Operations** | $(409374) |

---

See Notes to Financial Statements.

10 www.axonicfunds.com

Axonic Alternative Income Fund Statement of Changes in Net Assets

---

| | | |
|:---|:---|:---|
| | **For the Year Ended**<br> **October 31, 2022** | **For the Year Ended**<br> **October 31, 2021** |
| **FROM OPERATIONS:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net investment income | $5727958 | $2274520 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized gain/(loss) | (25706) | 424007 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in unrealized appreciation/(depreciation) | (6111626) | 48261 |
| **Net Increase/(Decrease) in Net Assets from Operations** | (409374) | 2746788 |
| **DISTRIBUTIONS TO SHAREHOLDERS:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From distributable earnings | (7150231) | (1700982) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From return of capital | (480562) | – |
| **Decrease in Net Assets from Distributions to Shareholders** | (7630793) | (1700982) |
| **CAPITAL SHARE TRANSACTIONS:** |  |  |
| Proceeds from sale of shares of beneficial interest | 76135860 | 20280699 |
| Distributions reinvested | 3691901 | 793295 |
| Disbursements for redemption of shares of beneficial interest | (5454926) | (1532155) |
| **Net Increase from Capital Share Transactions** | 74372835 | 19541839 |
| **Net Increase in Net Assets** | 66332668 | 20587645 |
| **NET ASSETS:** |  |  |
| Beginning of period | 33456426 | 12868781 |
| End of period | $99789094 | $33456426 |
| **OTHER INFORMATION:** |  |  |
| **CAPITAL SHARE TRANSACTIONS:** |  |  |
| Beginning shares | 1484199 | 612145 |
| Issued | 3516355 | 905035 |
| Distributions reinvested | 173084 | 35501 |
| Redeemed | (256364) | (68482) |
| Net increase in capital shares | 3433075 | 872054 |
| Ending shares | 4917274 | 1484199 |

---

See Notes to Financial Statements.

Annual Report \| October 31, 2022 11

Axonic Alternative Income Fund Financial Highlights

For a Share Outstanding Throughout the Period Presented

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the**<br> **Year Ended<br> October 31, 2022** | **For the**<br> **Year Ended**<br> **October 31, 2021** | **For the**<br> **Year Ended**<br> **October 31, 2020** | **For the Period** <br> **December 31, 2018**<br> **(Commencement of**<br> **Operations) to <br> October 31, 2019** |
| **OPERATING PERFORMANCE:** | | | | |
| Net asset value - beginning of period | $22.54 | $21.02 | $25.69 | $25.00 |
| **INCOME/(LOSS) FROM INVESTMENT OPERATIONS:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net investment income<sup>(a)</sup> | 1.64 | 2.57 | 0.53 | 0.74 |
| &nbsp;&nbsp;&nbsp;Net realized and unrealized gain/(loss) on investments | (1.46) | 0.85 | (3.80) | 0.63 |
| **Total Income/(Loss) from Investment Operations** | 0.18 | 3.42 | (3.27) | 1.37 |
| **DISTRIBUTIONS TO SHAREHOLDERS:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;From net investment income | (2.10) | (1.90) | (0.76) | (0.68) |
| &nbsp;&nbsp;&nbsp;From net realized gains | (0.18) |  | (0.64) |  |
| &nbsp;&nbsp;&nbsp;From return of capital | (0.15) |  |  |  |
| **Total Distributions to Shareholders** | (2.43) | (1.90) | (1.40) | (0.68) |
| Net asset value - end of period | $20.29 | $22.54 | $21.02 | $25.69 |
| **Total Investment Return - Net Asset Value**<sup>(b)</sup>** | 0.74% | 16.72% | (13.22%) | 5.52%<sup>(c)</sup> |
| **RATIOS AND SUPPLEMENTAL DATA:** |  |  |  |  |
| Net assets end of period (000s) | $99789 | $33456 | $12869 | $1787 |
| **Including Interest Expense** |  |  |  |  |
| Ratio of expenses to average net assets excluding reimbursement and recoupment of expenses<sup>(d)</sup> | 2.22% | 2.54% | N/A | N/A |
| Ratio of expenses to average net assets including reimbursement and recoupment of expenses<sup>(d)</sup> | 2.49% | 2.35% | N/A | N/A |
| **Excluding Interest Expense** |  |  |  |  |
| Ratio of expenses to average net assets excluding reimbursement and recoupment of expenses<sup>(d)</sup> | 1.73% | 2.19% | 12.00% | 60.30%<sup>(e)</sup> |
| Ratio of expenses to average net assets including reimbursement and recoupment of expenses<sup>(d)</sup> | 2.00% | 2.00% | 2.00% | 2.00%<sup>(e)</sup> |
| Ratio of net investment income to average net assets<sup>(d)</sup> | 7.70% | 11.51% | 2.55% | 3.49%<sup>(e)</sup> |
| Portfolio turnover rate | 50% | 41% | 56% | 48%<sup>(c)</sup> |
| **BORROWINGS AT END OF PERIOD** |  |  |  |  |
| Aggregate Amount Outstanding (000s) | $14927 | $8607 | N/A | N/A |
| Asset Coverage Per $1,000 (000s) | $7685 | $4887 | N/A | N/A |

---

 

*<sup>(a)</sup>* *Calculated using average shares method.*

*<sup>(b)</sup>* *Total returns would have been lower had certain expenses not been reimbursed during the period. 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.*

*<sup>(c)</sup>* *Not annualized.*

*<sup>(d)</sup>* *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.*

*<sup>(e)</sup>* *Annualized.*

See Notes to Financial Statements.

12 www.axonicfunds.com

Axonic Alternative Income Fund Notes to Financial Statements

October 31, 2022

1. ORGANIZATION

Axonic Alternative Income Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as a non-diversified, closed-end management investment company. The Fund was organized as a Delaware statutory trust on September 26, 2018 pursuant to a Declaration of Trust governed by the laws of the State of Delaware. The Fund engages in a continuous offering of shares and operates as an interval fund and makes quarterly offers to repurchase its shares at their net asset value (the "NAV") in accordance with Rule 23c-3 under the 1940 Act. 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-related assets issued by government agencies or other governmental entities or by private originators or issuers.

The Fund currently offers a single class of common shares of beneficial interest ("Shares"), which commenced operations on December 31, 2018. Shares are offered at NAV per share and are not subject to sales charges, though the Fund may, in the future, impose sales charges. The Fund may offer additional classes of shares in the future. The Fund has received exemptive relief from the Securities and Exchange Commission ("SEC") that permits the Fund to issue multiple classes of shares. However, until the Fund registers a new share class, the Fund will only offer one class of shares.

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". 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 values its investments at fair value. 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 include in quarterly written reports to the Board, confirmation that the policies and procedures provide fair and accurate prices. Securities listed on an exchange, including common stocks, 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.

Securities for which market prices are not "readily available" are valued in good faith by the Funds' Adviser as "valuation designee" under the oversight of the Fund's Board. The Adviser has adopted written policies and procedures for valuing securities and other assets in circumstances where market quotes are not readily available. In the event that market quotes are not readily available, and the security or asset cannot be valued pursuant to one of the valuation methods, the value of the security or asset will be determined in good faith by the Adviser pursuant to its policies and procedures. On a quarterly basis, the Adviser's fair valuation determinations will be reviewed by the Board. The Advisor may, in turn and subject to its oversight, delegate pricing of securities for which market prices are readily available to the Funds' administrator. All fair valuation determinations shall be made by the Fair Value Committee (the "Committee"), in accordance with policies and procedures established by the Adviser. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the security's trading has been halted or suspended; the security has been de-listed from a national exchange; the security's primary trading market is temporarily closed at a time when under normal conditions it would be open; the security has not been traded for an extended period of time; the security's primary pricing source is not able or willing to provide a price; a significant event with respect to a security or securities has occurred after the close of the market or exchange on which the security or securities principally trades and before the time the Fund calculates net asset value; or trading of the security is subject to local government-imposed restrictions. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee.

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. 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 services or dealer quotations that most accurately reflect the fair market value of the Structured Credit Security while taking into account the information utilized by the pricing services or dealers to formulate the quotation in addition to any other relevant factors.

Annual Report \| October 31, 2022 13

Axonic Alternative Income Fund Notes to Financial Statements

October 31, 2022

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.

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.

14 www.axonicfunds.com

Axonic Alternative Income Fund Notes to Financial Statements

October 31, 2022

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 October 31, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Investments in Securities at Value<sup>(a)(b)</sup>** | **Level 1 - <br> Quoted Prices** | **Level 2 - <br> Other Significant <br> Observable Inputs** | **Level 3 - <br> Significant <br> Unobservable Inputs** | **Total** |
| Common Stocks | $733010 | $– | $– | $733010 |
| Preferred Stocks | 3082265 |  |  | 3082265 |
| Asset-Backed Securities |  | 6977032 |  | 6977032 |
| Commercial Mortgage-Backed Securities |  | 71638592 |  | 71638592 |
| Convertible Corporate Bonds |  | 4838787 |  | 4838787 |
| Corporate Bonds |  | 1276896 |  | 1276896 |
| Residential Mortgage-Backed Securities |  | 4582576 |  | 4582576 |
| Short-Term Investments | 21483132 | – | – | 21483132 |
| &nbsp;&nbsp;&nbsp;Total | $25298407 | $89313883 | $– | $114612290 |

---

*<sup>(a)</sup>* *For detailed descriptions of industries, see the accompanying Schedule of Investments.*

*<sup>(b)</sup>* *For liabilities arising from reverse repurchase agreements, the carrying amount approximates fair value due to the relatively short-term maturity of these financial instruments.*

**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's 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 two banking institutions, which are 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.

As of and during the year ended October 31, 2022, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statement of Operations. 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 all open tax years since inception have incorporated no uncertain tax positions that require a provision for income taxes.

Annual Report \| October 31, 2022 15

Axonic Alternative Income Fund Notes to Financial Statements

October 31, 2022

**Distributions to Shareholders** – Distributions from the Fund's net investment income were accrued daily and paid quarterly through February 28, 2021. Effective March 1, 2021, distributions are accrued daily and 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.

**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. REVERSE REPURCHASE AGREEMENTS

The Fund may engage in reverse repurchase agreements. Reverse repurchase agreements are agreements that involve the sale of securities held by the Fund to financial institutions such as banks and broker-dealers, with an agreement that the Fund will repurchase the securities at an agreed upon price and date. During the reverse repurchase agreement period, the Fund continues to receive interest and principal payments on the securities sold. The Fund may employ reverse repurchase agreements (i) for temporary emergency purposes or to meet repurchase requests so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements; or (iii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction.

Reverse repurchase agreements involve the risk that the market value of securities to be purchased by the Fund may decline below the price at which the Fund is obligated to repurchase the securities, or that the other party may default on its obligation, so that the Fund is delayed or prevented from completing the transaction. At the time the Fund enters into a reverse repurchase agreement, it will segregate, and maintain, liquid assets having a dollar value equal to the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligations to repurchase the securities. Reverse repurchase agreements are considered borrowings by the Fund under the 1940 Act.

Cash received in exchange for securities delivered plus accrued interest payments to be made by the Fund to counterparties are reflected as a liability on the Statement of Assets and Liabilities. Interest payments made by the Fund to counterparties are recorded as a component of interest expense on the Statement of Operations. In periods of increased demand for the security, the Fund may receive a fee for use of the security by the counterparty, which may result in interest income to the Fund. The Fund will segregate assets determined to be liquid to cover its obligations under reverse repurchase agreements. The segregated assets are found on the Fund's Schedule of Investments as full or partially pledged securities. The total amount of securities pledged at October 31, 2022, was $23,690,284. As all agreements can be terminated by either party on demand, face value approximates fair value at October 31, 2022. This fair value is based on Level 2 inputs under the three-tier fair valuation hierarchy described above. For the year ended October 31, 2022, the average amount of reverse repurchase agreements outstanding was $1,658,556, at a weighted average interest rate of 4.49%.

The following table indicates the total amount of reverse repurchase agreements, reconciled to gross liability as October 31, 2022:

**Remaining contractual maturity of lending agreement**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Overnight &**<br> **Continuous** | **Up to 30 days** | **30-90 days** | **Greater than**<br> **90 days** | **Total** |
| Commercial Mortgage-Backed Securities | $– | $12655000 | $– | $– | $12655000 |
| Convertible Corporate Bonds | – | 2272000 | – | – | 2272000 |
| Gross Amount of unrecognized liabilities for reverse repurchase agreements | $– | $14927000 | $– | $– | $14927000 |

---

Offsetting Arrangements: Reverse repurchase agreements are executed under standardized netting agreements. A netting arrangement creates an enforceable right of set-off that becomes effective, and affects the realization of settlement on individual assets, liabilities and collateral amounts, only following a specified event of default or early termination. Default events may include the failure to make payments or deliver securities timely, material adverse changes in financial condition or insolvency, the breach of minimum regulatory capital requirements, or loss of license, charter or other legal authorization necessary to perform under the contract. These agreements mitigate counterparty credit risk by providing for a single net settlement with a counterparty of all financial transactions covered by the agreement in an event of default as defined under such agreement.

16 www.axonicfunds.com

Axonic Alternative Income Fund Notes to Financial Statements

October 31, 2022

**Offsetting of Derivatives Liabilities**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | | | | **Gross Amounts Not Offset in the** <br> **Statements of Assets and Liabilities** | **Gross Amounts Not Offset in the** <br> **Statements of Assets and Liabilities** | **Gross Amounts Not Offset in the** <br> **Statements of Assets and Liabilities** |
| |<br>**Gross Amounts of Recognized Liabilities** |<br>**Gross Amounts Offset in the Statements of Assets and Liabilities** |<br>**Net Amounts Presented in the Statements of Assets and Liabilities** | **Financial**<br> **Instruments**<br> **Available for Offset<sup>(a)</sup>** | **Cash Collateral Pledged<sup>(a)</sup>** | **Net Amount Payable** |
| **Axonic Alternative Income Fund** | | | | | | |
| <br>Reverse repurchase agreements | $(14927000) | $– | $(14927000) | $14927000 | $– | $– |
| Total | $(14927000) | $– | $(14927000) | $14927000 | $– | $– |

---

<sup>(a)</sup> These amounts are limited to the derivatives asset/liability balance and, accordingly, do not include excess collateral received/pledged.

4. ADVISORY FEES AND OTHER TRANSACTIONS WITH SERVICE PROVIDERS

**Advisory Fees** – Pursuant to the investment advisory agreement by and between 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 1.25% of the Fund's average daily net assets. For the year ended October 31, 2022, the Fund incurred $926,265 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 expenses after Fee Waiver/Expense Reimbursement to 2.00% of the Fund's average daily net assets (the "Expense Limit") through February 28, 2023. The Expense Limit excludes certain expenses and, consequently, the Fund's 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. 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 year ended October 31, 2022, the Fund repaid the Adviser previously waived fees and expenses of $204,424.

As of October 31, 2022, the following amounts were available for recoupment by the Adviser based upon their potential expiration dates:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Fund** | **Expires<br> 2023** | **Expires<br> 2024** | **Expires<br> 2025** | **Total** |
| Axonic Alternative Income Fund | $458930 | $78203 | $– $| 537133 |

---

**Chief Compliance Officer ("CCO")/Compliance Services** – The CCO is an affiliate of the Fund. For the year ended October 31, 2022, the total related amounts paid by the Fund for CCO fees are reflected 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.

Annual Report \| October 31, 2022 17

Axonic Alternative Income Fund Notes to Financial Statements

October 31, 2022

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 year ended October 31, 2022, 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 Axonic Funds, an open-end investment company for which Axonic Capital LLC also serves as the investment adviser. As of January 1, 2022 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 Strategic Income Fund pro rata based on assets under management: $30,000 annual retainer for each Independent Trustee, $5,000 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, 2022 the Trustees received an annual retainer of $25,000, $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. 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 year ended October 31, 2022, amounted to $96,559,424 and $35,681,554, 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.

For the year ended October 31, 2022, there were no permanent differences that resulted in adjustments to accumulated deficit or additional paid-in capital.

The tax character of distributions paid for the year ended October 31, 2022, was as follows:

---

| | |
|:---|:---|
| **2022** |  |
| Distributions Paid From: |  |
| &nbsp;&nbsp;&nbsp;Ordinary Income | $7150231 |
| &nbsp;&nbsp;&nbsp;Return of Capital | 480562 |
| Total | $7630793 |

---

The tax character of distributions paid for the year ended October 31, 2021, was as follows:

---

| | |
|:---|:---|
| **2021** |  |
| Distributions Paid From: |  |
| &nbsp;&nbsp;&nbsp;Ordinary Income | $1700982 |
| &nbsp;&nbsp;&nbsp;Return of Capital | – |
| Total | $1700982 |

---

As of October 31, 2022, the components of distributable earnings (accumulated deficit) on a tax basis were as follows:

---

| | |
|:---|:---|
| Accumulated net investment income | $– |
| Accumulated net realized loss | (96791) |
| Net unrealized depreciation | (5651171) |
| Dividends payable | (390320) |
| Total | $(6138282) |

---

18 www.axonicfunds.com

Axonic Alternative Income Fund Notes to Financial Statements

October 31, 2022

Under current law, capital losses maintain their character as short-term or long-term and are carried forward to the next tax year without expiration. As of the current fiscal year end, the following amounts are available as carry forwards to the next tax year:

---

| | |
|:---|:---|
| **Short Term** | **Long Term** |
| 96791 | 0 |

---

As of October 31, 2022, net unrealized appreciation/(depreciation) of investments based on the federal tax cost were as follows:

---

| | |
|:---|:---|
| Cost of investments for income tax purposes | $120263461 |
| Gross appreciation (excess of value over tax cost) | $1230820 |
| Gross depreciation (excess of tax cost over value) | (6881991) |
| Net unrealized depreciation | $(5651171) |

---

7. REPURCHASE OFFERS

Pursuant to Rule 23c-3 under the 1940 Act, the Fund offers shareholders on a quarterly basis the option of redeeming shares, at NAV, of no less than 5% and no more than 25% of its issued and outstanding shares as of the close of regular business hours on the New York Stock Exchange on the Repurchase Pricing Date. If shareholders tender for repurchase more than the Repurchase Offer Amount for a given repurchase offer, the Fund may, but is not required to, repurchase an additional amount of Shares not to exceed 2.00% of the outstanding shares on the Repurchase Request Deadline. If the Fund determines not to repurchase more than the Repurchase Offer Amount, or if Shareholders tender Shares in an amount exceeding the Repurchase Offer Amount plus 2.00% of the outstanding Shares on the Repurchase Request Deadline, the Fund will repurchase Shares on a pro rata basis. However, the Fund may accept all Shares tendered for repurchase by Shareholders who own less than one hundred Shares and who tender all of their Shares, before prorating other amounts tendered. There can be no assurance that the Fund will be able to repurchase all shares that each shareholder has tendered, even if all of the shares in a shareholder's account are tendered. In the event of an oversubscribed offer, you may not be able to tender all shares that you wish to tender and you may have to wait until the next quarterly repurchase offer to tender the remaining shares, subject to any proration. Subsequent repurchase requests will not be given priority over other shareholder requests.

During the year ended October 31, 2022, the Fund completed four quarterly repurchase offers. The results of the repurchase offers were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Repurchase Offer** | **Repurchase Offer** | **Repurchase Offer** | **Repurchase Offer** |
| Commencement Date | November 17, 2021 | February 23, 2022 | May 25, 2022 | August 24, 2022 |
| Repurchase Request Deadline | December 17, 2021 | March 23, 2022 | June 22, 2022 | September 21, 2022 |
| Repurchase Pricing Date | December 17, 2021 | March 23, 2022 | June 22, 2022 | September 21, 2022 |
| Net Asset Value as of Repurchase Offer Date: | $21.87 | $21.81 | $21.17 | $20.78 |
| Amount Repurchased: | $871156 | $781333 | $2571334 | $1231103 |

---

**8. LINE OF CREDIT**

On May 17, 2022, the Fund entered into a $15,000,000 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. The revolving line of credit agreement sets the maximum borrowing amount to the lesser of (i) $15,000,000, (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. The termination date is April 8, 2023. 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 year ended October 31, 2022.

Annual Report \| October 31, 2022 19

Axonic Alternative Income Fund Notes to Financial Statements

October 31, 2022

**9. 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 October 31, 2022, 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** | &nbsp;&nbsp;&nbsp;&nbsp;**Percentage** |
| Pershing LLC | &nbsp;&nbsp;&nbsp;&nbsp;34.56% |
| National Financial Services LLC | &nbsp;&nbsp;&nbsp;&nbsp;33.47% |
| Charles Schwab & Co | &nbsp;&nbsp;&nbsp;&nbsp;25.16% |

---

**10. SUBSEQUENT EVENTS**

Subsequent events after the date of the Statement of Assets and Liabilities have been evaluated through the date the financial statements were issued.

The Fund completed a quarterly repurchase offer on December 20, 2022, which resulted in 85,973 shares being repurchased for $1,719,490.

Management has determined that there were no other subsequent events to report through the issuance of these financial statements.

20 www.axonicfunds.com

Axonic Alternative Income Fund Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of

Axonic Alternative Income Fund

**Opinion on the Financial Statements**

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Axonic Alternative Income Fund (the "Fund") as of October 31, 2022, and the related statement of operations, the statements of changes in net assets, the related notes, and the financial highlights indicated below (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of October 31, 2022, the results of its operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four periods in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

---

| | | | |
|:---|:---|:---|:---|
| **Fund Name** | **Statements of Operations** | **Statements of Changes<br> in Net Assets** | **Financial Highlights** |
| Axonic Alternative Income Fund | For the year ended October 31, 2022 | For the years ended October 31, 2022 and 2021 | For the years ended October 31, 2022, 2021, 2020 and for the period December 31, 2018 (Commencement of Operations) to October 31, 2019 |

---

**Basis for Opinion**

These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2022, by correspondence with the custodian and counterparties. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Fund's auditor since 2019.

![](fp0081409-1_04.jpg)

COHEN & COMPANY, LTD.

Cleveland, Ohio

December 28, 2022

Annual Report \| October 31, 2022 21

Axonic Alternative Income Fund Additional Information

October 31, 2022 (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 (833-4Axonic), 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 Fund's website at https://www.axonicfunds.com and the SEC's Website at http://www.sec.gov.

22 www.axonicfunds.com

Axonic Alternative Income Fund Trustees and Officers

October 31, 2022 (Unaudited)

The shareholders of the Fund, pursuant to a written consent to action, elected Mr. Joshua M. Barlow, Mr. Charles D. Mires and Mr. Thomas S. Vales to the Board of Trustees of the Trust effective April 15, 2020. The Board is responsible for the oversight of the management of the Fund, including general supervision and review of the service providers that perform the investment activities of the Fund. The Board, in turn, elects the officers of the Fund, 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 c/o Axonic Capital LLC, 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 <br> Year of Birth** | **Position with <br> the Fund** | **Position with <br> the Fund** | **Position with <br> the Fund** | **Position with <br> the Fund** | **Position with <br> 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 FUND** | **INDEPENDENT TRUSTEES OF THE FUND** | **INDEPENDENT TRUSTEES OF THE FUND** | **INDEPENDENT TRUSTEES OF THE FUND** | **INDEPENDENT TRUSTEES OF THE FUND** | **INDEPENDENT TRUSTEES OF THE FUND** | **INDEPENDENT TRUSTEES OF THE FUND** | **INDEPENDENT TRUSTEES OF THE FUND** | | |
| Joshua M. Barlow <br> 1978 | Joshua M. Barlow <br> 1978 | Independent Trustee | Independent Trustee | Independent Trustee | Indefinite Term; Since April 15, 2020 | Indefinite Term; Since April 15, 2020 | 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 Funds |
| Charles D. Mires<br> 1960 | Charles D. Mires<br> 1960 | Independent Trustee | Independent Trustee | Independent Trustee | Indefinite Term; Since April 15, 2020 | Indefinite Term; Since April 15, 2020 | 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 Funds; CIB Marine Bancshares, Inc. |
| Thomas S. Vales<br> 1964 | Thomas S. Vales<br> 1964 | Independent Trustee | Independent Trustee | Independent Trustee | Indefinite Term; Since April 15, 2020 | 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 Funds |
| **INTERESTED TRUSTEE OF THE FUND\*\*** | **INTERESTED TRUSTEE OF THE FUND\*\*** | **INTERESTED TRUSTEE OF THE FUND\*\*** | **INTERESTED TRUSTEE OF THE FUND\*\*** | **INTERESTED TRUSTEE OF THE FUND\*\*** | **INTERESTED TRUSTEE OF THE FUND\*\*** | **INTERESTED TRUSTEE OF THE FUND\*\*** |  |  |  |
| Clayton DeGiacinto\*\*<br> 1972 | Clayton DeGiacinto\*\*<br> 1972 | Clayton DeGiacinto\*\*<br> 1972 | Trustee, President (Principal Executive Officer) | Indefinite Term; Since Inception | Indefinite Term; Since Inception | Indefinite Term; Since Inception | Managing Member and Chief Investment Officer, Axonic Capital LLC (2010 – present). | 2 | Axonic Funds |

---

Annual Report \| October 31, 2022 23

Axonic Alternative Income Fund Trustees and Officers

October 31, 2022 (Unaudited)

---

| | | | |
|:---|:---|:---|:---|
| **Name and <br> Year of Birth** | **Position with<br> the Fund** | **Term of Office and <br> Length of Time Served** | **Principal Occupation(s) During Past 5 Years** |
| **OFFICERS OF THE FUND** | **OFFICERS OF THE FUND** | | |
| John Kelly <br> 1978 | Treasurer (Principal Financial Officer) | Indefinite Term; Since 2019 | 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 <br> 1980 | Secretary (Chief Compliance Officer) | Indefinite Term; Secretary; Since Inception, Chief Compliance Officer; Since 2019 | 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). |

---

\* *The Fund Complex consists of the Fund and the Axonic Strategic Income Fund, the sole series of the Axonic Funds, a registered open-end investment company for which Axonic Capital LLC also serves as the investment adviser.*

\*\* *The Interested Trustee is an Interested Trustee because he is the Managing Member and Chief Investment Officer of the Axonic Capital LLC.*

24 www.axonicfunds.com

Axonic Alternative Income Fund Privacy Policy

October 31, 2022 (Unaudited)

**DATA PRIVACY POLICY AND PROCEDURE**

**Policy Statement:**

Axonic Alternative 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 customers<sup>1</sup> from the following sources:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• account
 history, including information about the transactions and balances in a customer's account;
 and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Prior
 written consent is received.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The
 Fund believes the recipient to be the customer of the Fund or such Fund customer's authorized
 representative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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.

*<sup>1</sup>* *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.*

Annual Report \| October 31, 2022 25

Axonic Alternative Income Fund Privacy Policy

October 31, 2022 (Unaudited)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Any
 data privacy related questions, concerns or breaches will be brought to the attention
 of the Fund's CCO.

**Procedures:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. 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 19, 2018*

26 www.axonicfunds.com

*Page Intentionally Left Blank*

![](fp0081409-1_05.jpg)

**AXONIC ALTERNATIVE INCOME FUND**

**ANNUAL REPORT**

October 31, 2022

Item 2. **Code of Ethics.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The
 registrant, as of the end of the period covered by the report, has adopted a code of
 ethics that applies to the registrant's principal executive officer, principal
 financial officer, principal accounting officer or controller or any persons performing
 similar functions on behalf of the registrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Not
 applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) During
 the period covered by this report, no amendments were made to the provisions of the code
 of ethics adopted in Item 2(a) above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) During
 the period covered by this report, no implicit or explicit waivers to the provision of
 the code of ethics adopted in Item 2(a) above were granted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Not
 applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The
 registrant's Code of Ethics is attached as Exhibit 13.A.1 hereto.

Item 3. **Audit Committee Financial Expert.**

The registrant's Board of Trustees has determined that the registrant has at least one audit committee financial expert serving on its audit committee. The Board of Trustees has designated Joshua M. Barlow as the registrant's "audit committee financial expert." Joshua M. Barlow is "independent" as defined in paragraph (a)(2) of Item 3 to Form N-CSR.

Item 4. **Principal Accountant Fees and Services.**

(a) <u>Audit Fees</u>: For the registrant's last two fiscal years ended October 31, 2021 and
 October 31, 2022, the aggregate fees billed for professional services rendered by the
 principal accountant for the audit of the registrant's annual financial statements
 or services that are normally provided by the accountant in connection with statutory
 and regulatory filings or engagements were $20,000 and $22,000, respectively.

(b) <u>Audit-Related Fees</u>: For the registrant's last two fiscal years ended October 31, 2021 and
 October 31, 2022, the aggregate fees billed for assurance and related services by the
 principal accountant that are reasonably related to the performance of the audit of the
 registrant's financial statements and not otherwise reported under paragraph (a)
 of Item 4 of this report were $0 and $0, respectively.

(c) <u>Tax Fees</u>: For the registrant's last two fiscal years ended October 31, 2021 and
 October 31, 2022, the aggregate fees billed for professional services rendered by the
 principal accountant for tax compliance, tax advice and tax planning, which were comprised
 of the preparation of excise filings and income tax returns for the registrant, were
 $5,000 and $5,500 respectively.

(d) <u>All Other Fees</u>: For the registrant's last two fiscal years ended October 31, 2021
 and October 31, 2022, the aggregate fees billed for products and services, provided by
 the principal accountant, other than the services reported in paragraphs (a) through
 (c) of Item 4 of this report, were $0 and $0, respectively.

(e)(1) <u>Audit Committee Pre-Approval Policies and Procedures</u>: All services to be performed by the Registrant's principal auditors must be pre-approved by the registrant's audit committee.

(e)(2) There were no non-audit services approved or required to be approved by the registrant's audit committee pursuant to (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not
 applicable.

(g) The
 aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser, and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the registrant for the last two fiscal years ended October 31, 2021
and October 31, 2022 were $0 and $0, respectively.

(h) Not
 applicable.

Item 5. **Audit Committee of Listed Registrants.** 

Not applicable to Registrant.

Item 6. **Investments.**

&nbsp;&nbsp;&nbsp;&nbsp;(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.

&nbsp;&nbsp;&nbsp;&nbsp;(b) Not
 applicable.

Item 7. **Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.** 

The Board has adopted Proxy Voting Policies and Procedures (the "Policies") on behalf of the Fund, which delegate the responsibility for voting proxies to the Adviser, subject to the Board's continuing oversight. The Policies require that the Adviser vote proxies received in a manner consistent with the best interests of the Fund and its shareholders. The Policies also require the Adviser to present to the Board, at least annually, the Adviser's Proxy Policies (as defined below) and a record of each proxy voted by the Adviser on behalf of the Fund, including a report on the resolution of all proxies identified by the Adviser as involving a conflict of interest. The Adviser has also adopted the following Proxy Voting Policies and Procedures ("Adviser's Proxy Policies").

In its role as investment adviser to the Fund, the Adviser has adopted those proxy voting policies adopted by the Fund. To the extent that the Fund's policies do not cover potential voting issues with respect to proxies received by the Fund, the Fund has delegated to the Adviser the authority to act on its behalf to promote the Fund's investment objective, subject to the provisions of the Trust's policies regarding resolution of a conflict of interest with respect to the Adviser.

The Adviser will vote proxies in the best interests of the Fund. The Adviser will generally vote in favor of routine corporate housekeeping proposals such as the election of directors and the selection of auditors, absent conflicts of interest (e.g., an auditor's provision of non-audit services). The Adviser will generally vote against proposals that cause board members to become entrenched or cause unequal voting rights. In reviewing proposals, the Adviser may also consider the opinion of management, the effect on management, the effect on shareholder value and the issuer's business practices.

The Adviser recognizes that under certain circumstances it may have a conflict of interest in voting proxies on behalf of the Fund. A "conflict of interest," means any circumstance when the Adviser (including officers, directors, agents and employees) knowingly does business with, receives compensation from, or sits on the board of, a particular issuer or closely affiliated entity, and, therefore, may appear to have a conflict of interest between its own interests and the interests of Fund shareholders in how proxies of that issuer are voted. The Adviser has adopted the Fund's procedures as they relate to the resolution of conflicts of interest with respect to voting shares of the Fund.

Item 8. **Portfolio Managers of Closed-End Management Investment Companies.**

**(a)(1) Portfolio Managers as of January 1, 2023**

**Clayton DeGiacinto** 

Managing Partner, Chief Investment Officer

Prior to forming Axonic in 2010, Mr. DeGiacinto was responsible for building out the mortgage investment platform at Tower Research Capital LLC and was the Senior Portfolio Manager for Split Level LLC, the predecessor fund to the Axonic Credit Opportunities Funds. He previously led a mortgage trading desk in the Fixed Income, Currency and Commodities division at Goldman Sachs & Co. Mr. DeGiacinto's duties included the securitization and retention of bonds backed by adjustable rate and negatively amortizing residential mortgages. He was also responsible for running the RMBS credit book for all prime, alt-A and negatively amortizing structures. Mr. DeGiacinto previously served as a Captain in the U.S. Army in the 25th Infantry Division (Hawaii) after completing the U.S. Army Ranger School, Airborne School and Air Assault Course. He is a graduate of the United States Military Academy at West Point and holds an M.B.A. from the Wharton School at the University of Pennsylvania.

**Matthew Weinstein**

Partner, Head of Credit

Mr. Weinstein joined Axonic in 2012 and oversees the Firm's investment team. In his role, alongside the CIO, Mr. Weinstein oversees Axonic's asset allocation, sector allocation, trading and investment management. Mr. Weinstein was responsible for the firm's build out of its commercial mortgage-backed securities ("CMBS") and commercial real estate equity and debt businesses, and he serves as Head of the Real Estate Investment Committee. Prior to joining the Firm, Mr. Weinstein was a Vice President at Macquarie Capital where he managed a CMBS principal investment strategy from 2010 through 2012. From 2003 to 2008, he was an Associate Director in the CMBS group at Bear Stearns & Co. Mr. Weinstein received his MBA in Finance at the New York University Stern School of Business and graduated from Cornell University with a BS in Industrial Labor Relations.

**(a)(2) As of October 31, 2022, the Portfolio Managers listed above are also responsible for the day-to-day management of the following:**

**<u>Clayton DeGiacinto</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which <br> Advisory Fee is Performance Based** | **Number and Assets of Accounts for which <br> Advisory Fee is Performance Based** | **Number and Assets of Accounts for which <br> Advisory Fee is Performance Based** |
| Registered Investment Companies | Other Pooled <br> Investment Vehicles | Other<br> Accounts | Registered Investment Companies | Other Pooled <br> Investment Vehicles | Other Accounts |
| 1<br>| 13<br>| 0<br>| 1<br>| 13<br>| 0<br>|
| $1378220397 | $8298414568 | $0 | $1378220397 | $8298414568 | $0 |

---

**<u>Matthew Weinstein</u>**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Other Accounts** | **Number and Assets of Accounts for which <br> Advisory Fee is Performance Based** | **Number and Assets of Accounts for which <br> Advisory Fee is Performance Based** | **Number and Assets of Accounts for which <br> Advisory Fee is Performance Based** |
| Registered Investment Companies | Other Pooled <br> Investment Vehicles | Other<br> Accounts | Registered Investment Companies | Other Pooled <br> Investment Vehicles | Other Accounts |
| 1 | 13 | 0 | 1 | 13 | 0 |
| $1378220397 | $8298414568 | $0 | $1378220397 | $8298414568 | $0 |

---

<u>Potential Conflicts of Interest</u>: Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or other account. For example, the management of multiple accounts may result in a portfolio manager devoting unequal time and attention to the management of each account. Investment decisions for client accounts are also made consistent with a client's individual investment objective and needs. Accordingly, there may be circumstances when purchases or sales of securities for one or more client accounts will have an adverse effect on other clients. The Adviser may seek to manage such competing interests by: (1) having a portfolio manager focus on a particular investment discipline; (2) utilizing a quantitative model in managing accounts; and/or (3) reviewing performance differences between similarly managed accounts on a periodic basis to ensure that any such differences are attributable to differences in investment guidelines and timing of cash flows. The Adviser also maintains a Code of Ethics to establish standards and procedures for the detection and prevention of activities by which persons having knowledge of the investments and investment intentions of the Fund may abuse their fiduciary duties to the Fund.

If a portfolio manager identifies a limited investment opportunity that may be suitable for more than one client, the Fund may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible accounts. To deal with these situations, the Adviser has adopted procedures for allocating investment opportunities across multiple accounts in a manner that is fair and equitable over time.

With respect to securities transactions for clients, the Adviser determines which broker to use to execute each order. However, the Adviser may direct securities transactions to a particular broker/dealer for various reasons including receipt of research or participation interests in initial public offerings that may or may not benefit the Fund. To deal with these situations, the Adviser has adopted procedures to help ensure best execution of all client transactions.

Finally, the appearance of a conflict of interest may arise where the Adviser has an incentive, such as a performance-based management fee that relates to the management of one but not all accounts for which a portfolio manager has day-to-day management responsibilities.

**(a)(3) Portfolio Manager Compensation as of October 31, 2022**

Each Portfolio Manager is compensated solely based on their ownership interest in the Adviser. As owners of the Adviser, each PM receives a guaranteed payment from the Adviser and may receive distributions from the Adviser which may come from profits generated by the Adviser.

**(a)(4) Dollar Range of Securities Owned as of October 31, 2022**

---

| | |
|:---|:---|
| **Portfolio Manager** | **Dollar Range of Equity Securities in the Fund** |
| Clayton DeGiacinto | $500000-$1000000 |
| Matthew Weinstein | $100001-$500000 |

---

Item 9. **Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.**

None.

Item 10. **Submission of Matters to a Vote of Security Holders.** 

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees, where those changes were implemented after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K, or this Item.

Item 11. **Controls and Procedures.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(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 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 Registrant.

Item 13. **Exhibits.**

(a)(1) [The Code of Ethics that applies to the registrant's principal executive officer and principal financial officer is attached hereto as Exhibit 13.A.1.](fp0081409-1_ex99code.htm)

(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.](fp0081409-1_ex99cert.htm)

(a)(3) Not applicable to Registrant.

(a)(4) Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;(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.](fp0081409-1_ex99906cert.htm)

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 Alternative Income Fund

---

| | |
|:---|:---|
| By: | /s/ Clayton DeGiacinto |
|  | Clayton DeGiacinto (Principal Executive Officer) |
|  | Chief Executive Officer and President |
| Date: | January 6, 2023 |

---

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 Alternative Income Fund

---

| | |
|:---|:---|
| By: | /s/ Clayton DeGiacinto |
|  | Clayton DeGiacinto (Principal Executive Officer) |
|  | Chief Executive Officer and President |
| Date: | January 6, 2023 |
| By: | /s/ John R. Kelly |
|  | John R. Kelly (Principal Financial Officer) |
|  | Treasurer and Chief Financial Officer |
| Date: | January 6, 2023 |

---

## Ex-99.Code

**Sarbanes-Oxley Code of Ethics for Principal Executive and Financial Officers**

**I.** **Purpose of the Sarbanes-Oxley Code of Ethics** 

The Sarbanes-Oxley code of ethics of Axonic Strategic Income Fund (the "Fund") is intended to serve as the code of ethics described in Section 406 of the Sarbanes-Oxley and Item 2 of Form N-CSR (the "**Sarbanes-Oxley Code**"). This Sarbanes-Oxley Code shall be the sole code of ethics adopted by the Axonic Funds (the "**Trust**") for purposes of Section 406 of Sarbanes-Oxley and the rules and forms applicable to registered investment companies. Insofar as other policies or procedures of the Trust, Axonic Capital LLC ("Axonic"), the Trust's investment adviser, the trust's Principal Underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers (as defined below), who are subject to this Sarbanes-Oxley Code, they are superseded by this Sarbanes-Oxley Code to the extent that they overlap or conflict with the provisions of this Sarbanes-Oxley Code. The Trust's, Axonic's, and the Trust's Principal Underwriter's codes of ethics pursuant to Rule 17j-1 under the 1940 Act are separate requirements applying to the Covered Officers and others, and are not part of this Sarbanes-Oxley Code.

All Covered Officers must become familiar and fully comply with this Sarbanes-Oxley Code. Because this Sarbanes-Oxley Code cannot and does not cover every applicable law or provide answers to all questions that might arise, all Covered Officers are expected to use common sense about what is right and wrong, including a sense of when it is proper to seek guidance from others on the appropriate course of conduct.

The purpose of this Sarbanes-Oxley Code is to set standards for the Covered Officers that are reasonably designed to deter wrongdoing and to promote:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· honest and ethical conduct, including the ethical
handling of actual or apparent conflicts of interest between personal and professional relationships;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· full, fair, accurate, timely, and understandable
disclosure in reports and documents that the Trust file with, or submit to, the SEC and in any other public communications by the Trust;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· compliance with applicable governmental laws,
rules and regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the prompt internal reporting of violations of
the Sarbanes-Oxley Code to the appropriate persons as set forth in the Sarbanes-Oxley Code; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· accountability for adherence to the Sarbanes-Oxley
Code.

**II.** **C overed Officers** 

This Sarbanes-Oxley Code applies to the Trust's Principal Executive Officer, Principal Financial Officer, and any persons performing similar functions on behalf of the Trust (the "**Covered Officers**"). Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. Covered Officers are expected to act in accordance with the standards set forth in this Sarbanes-Oxley Code.

**III.** **Honest and Ethical Conduct** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Honesty, Diligence and Professional Responsibility** 

Covered Officers are expected to observe both the form and the spirit of the ethical principles contained in this Sarbanes-Oxley Code. Covered Officers must perform their duties and responsibilities for the Trust:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· with honesty, diligence, and a commitment to
professional and ethical responsibility;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· carefully, thoroughly and in a timely manner;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· in conformity with applicable professional and
technical standards.

Covered Officers who are certified public accountants are expected to carry out their duties and responsibilities in a manner consistent with the principles governing the accounting profession, including any guidelines or principles issued by the Public Company Accounting Oversight Board or the American Institute of Certified Public Accountants from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Objectivity/Avoidance of Undisclosed Conflicts of Interest** 

Covered Officers are expected to maintain objectivity and avoid undisclosed conflicts of interest. In the performance of their duties and responsibilities for the Trust, Covered Officers must not subordinate their judgment to personal gain and advantage, or be unduly influenced by their own interests or by the interests of others. Covered Officers must avoid participation in any activity or relationship that constitutes a conflict of interest unless that conflict has been completely disclosed to affected parties and waived by the Trustees on behalf of the Trust. Further, Covered Officers should avoid participation in any activity or relationship that could create the appearance of a conflict of interest.

A conflict of interest would generally arise if, for instance, a Covered Officer directly or indirectly participates in any investment, interest, association, activity or relationship that may impair or appear to impair the Covered Officer's objectivity or interfere with the interests of, or the Covered Officer's service to, the Trust.

Any Covered Officer who may be involved in a situation or activity that might be a conflict of interest or give the appearance of a conflict of interest must report such situation or activity using the reporting procedures set forth in Section VI of this Sarbanes-Oxley Code.

Each Covered Officer must not:

&nbsp;&nbsp;&nbsp;&nbsp;· use his or her personal influence or personal
relationships improperly to influence investment decisions or financial reporting by the Trust whereby the Covered Officer would benefit
personally to the detriment of the Trust;

&nbsp;&nbsp;&nbsp;&nbsp;· cause the Trust to take action, or fail to take
actions, for the individual personal benefit of the Covered Officer rather than the benefit of the Trust; or

&nbsp;&nbsp;&nbsp;&nbsp;· use material non-public knowledge of portfolio
transactions made or contemplated for the Trust to trade personally or cause others to trade personally in contemplation of the market
effect of such transactions.

Each Covered Officer is responsible for his or her compliance with this conflict of interest policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Preparation of Financial Statements** 

Covered Officers must not knowingly make any misrepresentations regarding the Trust's financial statements or any facts in the preparation of the Trust's financial statements, and must comply with all applicable laws, standards, principles, guidelines, rules and regulations in the preparation of the Trust's financial statements. This section is intended to prohibit:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· making, or permitting or directing another to
make, materially false or misleading entries in the Trust's financial statements or records;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· failing to correct the Trust's financial
statements or records that are materially false or misleading when he or she has the authority to record an entry; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· signing or permitting or directing another to
sign, a document containing materially false or misleading financial information.

Covered Officers must be scrupulous in their application of generally accepted accounting principles. No Covered Officer may (i) express an opinion or state affirmatively that the financial statements or other financial data of the Trust is presented in conformity with generally accepted accounting principles, or (ii) state that he or she is not aware of any material modifications that should be made to such statements or data in order for them to be in conformity with generally accepted accounting principles, if such statements or data contain any departure from generally accepted accounting principles then in effect in the United States.

Covered Officers must follow the laws, standards, principles, guidelines, rules and regulations established by all applicable governmental bodies, commissions or other regulatory agencies in the preparation of financial statements, records and related information. If a Covered Officer prepares financial statements, records or related information for purposes of reporting to such bodies, commissions or regulatory agencies, the Covered Officer must follow the requirements of such organizations in addition to generally accepted accounting principles.

If a Covered Officer and his or her supervisor have a disagreement or dispute relating to the preparation of financial statements or the recording of transactions, the Covered Officer should take the following steps to ensure that the situation does not constitute an impermissible subordination of judgment:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The Covered Officer should consider whether (i)
the entry or the failure to record a transaction in the records, or (ii) the financial statement presentation or the nature or omission
of disclosure in the financial statements, as proposed by the supervisor, represents the use of an acceptable alternative and does not
materially misrepresent the facts or result in an omission of a material fact. If, after appropriate research or consultation, the Covered
Officer concludes that the matter has authoritative support and/or does not result in a material misrepresentation, the Covered Officer
need do nothing further.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· If the Covered Officer concludes that the financial
statements or records could be materially misstated as a result of the supervisor's determination, the Covered Officer should follow
the reporting procedures set forth in Section VI of this Sarbanes-Oxley Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Obligations to the Independent Auditor of the Trust** 

In dealing with the Trust's independent auditor, Covered Officers must be candid and not knowingly misrepresent facts or knowingly fail to disclose material facts, and must respond to specific inquiries and requests by the Trust's independent auditor.

Covered Officers must not take any action, or direct any person to take any action, to fraudulently influence, coerce, manipulate or mislead the Trust's independent auditor in the performance of an audit of the Trust's financial statements for the purpose of rendering such financial statements materially misleading.

**IV.** **Full, Fair, Accurate, Timely and Understandable Disclosure** 

It is the Trust's policy to provide full, fair, accurate, timely, and understandable disclosure in reports and documents that the Trust files with, or submits to, the SEC and in any other public communications by the Trust. The Trust has designed and implemented Disclosure Controls and Procedures to carry out this policy.

Covered Officers are expected to familiarize themselves with the disclosure requirements generally applicable to the Trust, and to use their best efforts to promote, facilitate, and prepare full, fair, accurate, timely, and understandable disclosure in all reports and documents that the Trust files with, or submits to, the SEC and in any other public communications by the Trust.

Covered Officers must review the Trust's Disclosure Controls and Procedures to ensure they are aware of and carry out their duties and responsibilities in accordance with the Disclosure Controls and Procedures and the disclosure obligations of the Trust. Covered Officers are responsible for monitoring the integrity and effectiveness of the Trust's Disclosure Controls and Procedures.

**V.** **Compliance with Applicable Laws, Rules and Regulations** 

Covered Officers are expected to know, respect and comply with all laws, rules and regulations applicable to the conduct of the Trust's business. If a Covered Officer is in doubt about the legality or propriety of an action, business practice or policy, the Covered Officer should seek advice from the Covered Officer's supervisor or the Trust's legal counsel.

In the performance of their work, Covered Officers must not knowingly be a party to any illegal activity or engage in acts that are discreditable to the Trust.

Covered Officers are expected to promote the Trust's compliance with applicable laws, rules and regulations. To promote such compliance, Covered Officers may establish and maintain mechanisms to educate employees carrying out the finance and compliance functions of the Trust about any applicable laws, rules or regulations that affect the operation of the finance and compliance functions and the Trust generally.

**VI.** **Reporting and Accountability** 

All Covered Officers will be held accountable for adherence to this Sarbanes-Oxley Code. Each Covered Officer must, upon the Trust's adoption of this Sarbanes-Oxley Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he/she has received, read, and understands this Sarbanes-Oxley Code by signing the Acknowledgement Form attached hereto as **Appendix A**. Thereafter, each Covered Officer, on an annual basis, must affirm to the Board that he/she has complied with the requirements of this Sarbanes-Oxley Code.

Covered Officers may not retaliate against any other Covered Officer of the Trust or its affiliated persons for reports of potential violations that are made in good faith.

The Trust will follow these procedures in investigating and enforcing this Sarbanes-Oxley Code:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** Any Covered Officer who knows of any violation of this Sarbanes-Oxley Code or who questions whether a
situation, activity or practice is acceptable must immediately report such practice to the Trust's Audit Committee. The Audit Committee
shall take appropriate action to investigate any reported potential violations. If, after such investigation, the Audit Committee believes
that no violation has occurred, the Audit Committee is not required to take any further action. Any matter that the Audit Committee believes
is a violation will be reported to the Chairman of the Board. The Audit Committee shall respond to the Covered Officer within a reasonable
period of time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** If the Covered Officer is not satisfied with the response of the Audit Committee, the Covered Officer
shall report the matter to the Chairman of the Board. If the Chairman is unavailable, the Covered Officer may report the matter to any
other member of the Board. The person receiving the report shall consider the matter, refer it to the full Board if he or she deems appropriate,
and respond to the Covered Officer within a reasonable amount of time. If the Board concurs that a violation has occurred, it will consider
appropriate action, which may include review of and appropriate modifications to applicable policies and procedures or notification to
appropriate personnel of Axonic or its governing body.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.** If the Board determines that a Covered Officer violated this Sarbanes-Oxley Code, failed to report a known
or suspected violation of this Sarbanes-Oxley Code, or provided intentionally false or malicious information in connection with an alleged
violation of this Sarbanes-Oxley Code, the Board may take disciplinary action against any such Covered Officer to the extent the Board
deems appropriate. No Covered Officer will be disciplined for reporting a concern in good faith.

To the extent possible and as allowed by law, reports will be treated as confidential. The Trust may report violations of the law to the appropriate authorities.

**VII.** **Disclosure of this Sarbanes-Oxley Code** 

This Sarbanes-Oxley Code shall be disclosed to the public by at least one of the following methods in the manner prescribed by the SEC, unless otherwise required by law:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Filing a copy of this Sarbanes-Oxley Code as
an exhibit to the Trust's annual report on Form N-CSR;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Posting the text of this Sarbanes-Oxley Code
on the Trust's Internet website and disclosing, in its most recent report on Form N-CSR, its Internet address and the fact that
it has posted this Sarbanes-Oxley Code on its Internet website; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Providing an undertaking in the Trust's
most recent report on Form N-CSR to provide a copy of this Sarbanes-Oxley Code to any person without charge upon request, and explaining
the manner in which such a request may be made.

**VIII.** **Waivers** 

Any waiver of this Sarbanes-Oxley Code, including an implicit waiver, granted to a Covered Officer may be made only by the Board or a committee of the Board to which such responsibility has been delegated, and must be disclosed by the Trust in accordance with Item 2 of Form N-CSR under the Investment Company Act of 1940 and as set forth above in Section VII (Disclosure of this Sarbanes-Oxley Code).

**IX.** **Amendments** 

This Sarbanes-Oxley Code may be amended by the affirmative vote of a majority of the Board, including a majority of the Independent Trustees. Any amendment of this Sarbanes-Oxley Code must be disclosed by the Trust in accordance with Item 2 of Form N-CSR under the Investment Company Act of 1940 and as set forth above in Section VII (Disclosure of this Sarbanes-Oxley Code), unless such amendment is deemed to be technical, administrative, or otherwise non-substantive. Any amendments to this Sarbanes-Oxley Code will be provided to the Covered Officers.

**X.** **Confidentiality** 

All reports and records prepared or maintained pursuant to this Sarbanes-Oxley Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Sarbanes-Oxley Code, such matters shall not be disclosed to anyone other than the Board of the Trust, the Audit Committee, the legal counsel to the Trust, legal counsel to the Independent Trustees and such other persons as a majority of the Board, including a majority of the Independent Trustees, shall determine to be appropriate.

Adopted: December 19, 2019

**<u>Appendix A</u>**

**Axonic Funds**

**PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICER ANNUAL CERTIFICATE**

Pursuant to the requirements of the Sarbanes-Oxley Code for Principal Executive and Senior Financial Officers of the Trust, the undersigned hereby certifies as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have read the Trust's Sarbanes-Oxley Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. I understand the Sarbanes-Oxley Code and acknowledge that I am subject to it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. I affirm that I have complied with the requirements of this
Sarbanes-Oxley Code.

---

| | |
|:---|:---|
| Date | Print Name |
|  | Signature |

---

## Ex-99.Cert

**Exhibit 99.Cert**

I, Clayton DeGiacinto, President and Chief Executive Officer of the Axonic Alternative Income Fund, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I
 have reviewed this report on Form N-CSR of the Axonic Alternative Income Fund;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based
 on my knowledge, this report does not contain any untrue statement of a material fact
 or omit to state a material fact necessary to make the statements made, in light of the
 circumstances under which such statements were made, not misleading with respect to the
 period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based
 on my knowledge, the financial statements, and other financial information included in
 this report, fairly present in all material respects the financial condition, results
 of operations, changes in net assets, and cash flows (if the financial statements are
 required to include a statement of cash flows) of the Registrant as of, and for, the
 periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The
 Registrant's other certifying officer and I are responsible for establishing and
 maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the
 Investment Company Act of 1940) and internal control over financial reporting (as defined
 in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed
 such disclosure controls and procedures, or caused such disclosure controls and procedures
 to be designed under our supervision, to ensure that material information relating to
 the Registrant, including its consolidated subsidiaries, is made known to us by others
 within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Designed
 such internal control over financial reporting, or caused such internal control over
 financial reporting to be designed under our supervision, to provide reasonable assurance
 regarding the reliability of financial reporting and the preparation of financial statements
 for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated
 the effectiveness of the Registrant's disclosure controls and procedures and presented
 in this report our conclusions about the effectiveness of the disclosure controls and
 procedures, as of a date within 90 days prior to the filing date of this report based
 on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed
 in the report any change in the Registrant's internal control over financial reporting
 that occurred during 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; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The
 Registrant's other certifying officer and I have disclosed to the Registrant's
 auditors and the audit committee of the Registrant's board of directors (or persons
 performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All
 significant deficiencies and material weaknesses in the design or operation of internal
 control over financial reporting which are reasonably likely to adversely affect the
 Registrant's ability to record, process, summarize, and report financial information;
 and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Any
 fraud, whether or not material, that involves management or other employees who have
 a significant role in the Registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| By: | /s/ Clayton DeGiacinto |
|  | Clayton DeGiacinto (Principal Executive Officer) |
|  | President and Chief Executive Officer |
| Date: | January 6, 2023 |

---

I, John R. Kelly, Treasurer and Chief Financial Officer of the Axonic Alternative Income Fund, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I
 have reviewed this report on Form N-CSR of the Axonic Alternative Income Fund;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based
 on my knowledge, this report does not contain any untrue statement of a material fact
 or omit to state a material fact necessary to make the statements made, in light of the
 circumstances under which such statements were made, not misleading with respect to the
 period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based
 on my knowledge, the financial statements, and other financial information included in
 this report, fairly present in all material respects the financial condition, results
 of operations, changes in net assets, and cash flows (if the financial statements are
 required to include a statement of cash flows) of the Registrant as of, and for, the
 periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The
 Registrant's other certifying officer and I are responsible for establishing and
 maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the
 Investment Company Act of 1940) and internal control over financial reporting (as defined
 in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed
 such disclosure controls and procedures, or caused such disclosure controls and procedures
 to be designed under our supervision, to ensure that material information relating to
 the Registrant, including its consolidated subsidiaries, is made known to us by others
 within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Designed
 such internal control over financial reporting, or caused such internal control over
 financial reporting to be designed under our supervision, to provide reasonable assurance
 regarding the reliability of financial reporting and the preparation of financial statements
 for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated
 the effectiveness of the Registrant's disclosure controls and procedures and presented
 in this report our conclusions about the effectiveness of the disclosure controls and
 procedures, as of a date within 90 days prior to the filing date of this report based
 on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed
 in the report any change in the Registrant's internal control over financial reporting
 that occurred during 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; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The
 Registrant's other certifying officer and I have disclosed to the Registrant's
 auditors and the audit committee of the Registrant's board of directors (or persons
 performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All
 significant deficiencies and material weaknesses in the design or operation of internal
 control over financial reporting which are reasonably likely to adversely affect the
 Registrant's ability to record, process, summarize, and report financial information;
 and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Any
 fraud, whether or not material, that involves management or other employees who have
 a significant role in the Registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| By: | /s/ John R. Kelly |
|  | John R. Kelly (Principal Financial Officer) |
|  | Treasurer and Chief Financial Officer |
| Date: | January 6, 2023 |

---

## Exhibit 99.906

**Exhibit 99.906Cert**

This certification is furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the report on Form N-CSR for the period ended October 31, 2022 (the "Report") of the Axonic Alternative Income Fund (the "Registrant").

I, Clayton DeGiacinto, the President and Chief Executive Officer of the Registrant, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the
 Report fully complies with the requirements of Section 13(a) or Section 15(d), as
 applicable, of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the
 information contained in the Report fairly presents, in all material respects, the financial
 condition and results of operations of the Registrant.

---

| | |
|:---|:---|
| Dated: | January 6, 2023 |
| By: | /s/ Clayton DeGiacinto |
|  | Clayton DeGiacinto (Principal Executive Officer) |
|  | President and Chief Executive Officer |

---

This certification is furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the report on Form N-CSR for the period ended October 31, 2022 (the "Report") of the Axonic Alternative Income Fund (the "Registrant").

I, John R. Kelly, the Treasurer and Chief Financial Officer of the Registrant, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the
 Report fully complies with the requirements of Section 13(a) or Section 15(d), as
 applicable of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the
 information contained in the Report fairly presents, in all material respects, the financial
 condition and results of operations of the Registrant.

---

| | |
|:---|:---|
| Dated: | January 6, 2023 |
| By: | /s/ John R. Kelly |
|  | John R. Kelly (Principal Financial Officer) |
|  | Treasurer and Chief Financial Officer |

---