Investment Managers Series Trust II
07/05/2024 | Press release | Distributed by Public on 07/05/2024 10:26
Semi Annual Report by Investment Company Form N CSRS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22894
INVESTMENT MANAGERS SERIES TRUST II
(Exact name of registrant as specified in charter)
235 W. Galena Street
Milwaukee, WI 53212
(Address of principal executive offices) (Zip code)
Diane J. Drake
Mutual Fund Administration, LLC
2220 E. Route 66, Suite 226
Glendora, CA 91740
(Name and address of agent for service)
(626) 385-5777
Registrant's telephone number, including area code
Date of fiscal year end: October 31
Date of reporting period: April 30, 2024
Item 1. Report to Stockholders.
The registrant's semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the "Investment Company Act"), is as follows:
Arena Strategic Income Fund
Class I Shares
(Ticker Symbol: ACSIX)
SEMI-ANNUAL REPORT
April 30, 2024
Arena Strategic Income Fund
A series of Investment Managers Series Trust II
Table of Contents
| Shareholder Letter | 1 |
| Schedule of Investments | 4 |
| Statement of Assets and Liabilities | 12 |
| Statement of Operations | 13 |
| Statements of Changes in Net Assets | 14 |
| Financial Highlights | 15 |
| Notes to Financial Statements | 16 |
| Expense Examples | 27 |
This report and the financial statements contained herein are provided for the general information of the shareholders of the Arena Strategic Income Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
www.arenaca.com
April 30, 2024
To Our Shareholders:
We are pleased to report that for the fiscal semi-annual period ended April 30, 2024, the Arena Strategic Income Fund (the "Fund") returned 9.12% (At NAV Return Before Taxes). Over the same period, the Fund's primary benchmark, the Barclays U.S. High Yield 1-5 Year Cash Pay 2% Index, returned 7.35%.
The Fund grew to a more substantial size by the end of the period, allowing for the opportunity to build a more diversified portfolio. A slightly shorter duration stance as compared to the benchmark was a hindrance in the fourth quarter of 2023, but subsequently beneficial in the first quarter of 2024 as rates rose across the curve. Credit selection aided returns with several positive idiosyncratic credit moves with no material weak names or sectors. One detractor to results was a higher quality bias as CCC-rated securities materially outperformed other ratings buckets during the period.
Looking ahead, we continue to view the high yield investing environment as more yield capture, focusing on identifying early refinancing situations while remaining underweight lower credit quality. We continue to favor the yield advantage offered by higher-credit quality leveraged loans. This may include adding some rolling call or similar situations such as leveraged loan exposures that offer favorable yields compared to high yield yet are negatively convex due to the loan's callability. All the while, Arena stands ready to capitalize on market volatility and to identify attractive idiosyncratic opportunities.
The short duration high yield strategy developed at Arena remains the focus of the Fund. Our objective is to generate attractive risk-adjusted returns through bottom-up fundamental analysis and active management with an emphasis on capital preservation. There have been no changes to the investment team during the fiscal year. Arena remains stable, profitable and employee owned. Thank you for investing with us and for your continued confidence.
The Arena Team
Arena Capital Advisors, LLC | 12121 Wilshire Blvd, Suite 1010 | Los Angeles, CA 90025 | 310 806 6700 | [email protected]
Please refer to the GIPS Report at the end of this commentary for more information. Please see important disclosures - 1
1
IMPORTANT DISCLOSURES
These materials are provided for informational purposes and do not constitute an offer to sell or a solicitation of an offer to purchase any security and may not be relied upon in evaluating the merits of investing in the Arena Strategic Income Fund. An investment in the Fund is speculative and subject to a variety of risks and considerations that are detailed in the Fund's offering documents. No offer or solicitation will be made prior to the delivery of the offering documents and other materials relating to the Fund. Prospective investors are advised to review the Fund's offering documents and consult their own advisors regarding any potential investment in the Fund. This presentation is qualified in its entirety by the additional information in the Fund's offering documents.
The views in this letter were as of April 30, 2024 and may not necessarily reflect the same views on the date this letter is first published or any time thereafter. These views are intended to help shareholders in understanding the fund's investment methodology and do not constitute investment advice. Such views are subject to change at any point without notice. Some of the information provided herein is from third-party sources and/or compiled internally based on internal and/or external sources and are believed to be reliable at time of product but such information is not guaranteed for accuracy or completeness and was not independently verified. Arena is not responsible for any errors arising in connection with the preparation of the data provided herein. Information in this presentation is current as of the date or dates indicated, and Arena disclaims any duty or obligation to update the information or maintain the availability of such information.
Estimates are subject to market conditions and may be subject to change. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based on any information provided herein. No representation or warranty, express or implied, is made as to the accuracy, timeliness or completeness of the information contained herein, and nothing shall be relied upon as a promise or representation as to the future performance of the Fund described herein. Nothing in this presentation purports to address the financial objectives, situation or specific needs of any individual investor.
Fund holdings and sector allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security. Please see the Schedule of Investments in this report for a complete list of Fund holdings. There is a risk of loss from an investment in securities, including the risk of loss of principal. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor's financial situation or risk tolerance. Asset allocation and portfolio diversification cannot assure or guarantee better performance and cannot eliminate the risk of investment losses. Investments in non-investment grade debt securities ("high yield" bonds) may be subject to greater market fluctuations and risk default of loss of income and principal than debt securities in higher rated categories.
Derivative and FX Disclosure: The use of derivatives may be employed for purposes of currency hedging and or to equitize the cash position of the portfolios. A forward foreign currency exchange contract, which involves an obligation to purchase or sell a specific currency at a future date at a price set at the time of the contract, reduces a fund's exposure to changes in the value of the currency it will deliver and increases its exposure to changes in the value of the currency it will receive for the duration of the contract. Certain foreign currency transactions may also be settled in cash rather than the actual delivery of the relevant currency. The effect on the value of a fund is similar to selling securities denominated in one currency and purchasing securities denominated in another currency.
Investing in derivatives entails specific risks relating to liquidity, credit and leverage that may reduce and/or increase volatility.
This letter may make "forward-looking statements" by using words such as "may," "will," "should," "expects," "believes," "anticipates," "estimates," or others. You are cautioned that forward-looking statements are subject to a variety of uncertainties that could cause actual results to differ from the projected results. Because we cannot predict all factors that may affect future decisions, actions, events, policy decisions, or financial circumstances, what actually happens may be different than what is included in forward-looking statements.
Past performance is no guarantee of future results. All investments involve risk including loss of principal. It should not be assumed that the portfolio holdings discussed or investments made in the future will be profitable or will equal the performance of those discussed herein. The investment environment and market conditions may be markedly different in the future and investment returns will fluctuate in value.
Arena Capital Advisors, LLC | 12121 Wilshire Blvd, Suite 1010 | Los Angeles, CA 90025 | 310 806 6700 | [email protected]
Please refer to the GIPS Report at the end of this commentary for more information. Please see important disclosures - 2
2
Portfolios are actively managed and account characteristics will vary.
Net returns: Fund performance information since inception is presented net of all management fees, expenses and performance allocations. Performance includes the reinvestment of all income and earnings. Net returns do not include taxes allocable to individual investors. The net performance results assume an investor has been in the Fund since inception. Individual results may differ due to the effect of the timing of an investor's contributions and withdrawals and to the extent an investor has any different fee arrangements with the Fund. The net performance results represent past performance which does not guarantee or necessarily determine future results.
Benchmarks and Indices: Index returns are for illustrative purposes only. Index performance returns do not reflect the deduction of any management fees, transaction costs or expenses and assume that no cash was added to or assets withdrawn from the Index during the performance period shown. Unlike the Fund and managed accounts, which are actively managed and periodically may maintain a cash position, an index is unmanaged and fully invested. There is no correlation between the performances of the indices and the strategies employed in the management of the Fund or managed accounts and no representation is made that your portfolio will hold comparable securities or will have a risk profile similar to any index. Index returns are included to demonstrate general market trends for the periods so indicated and are not absolute benchmarks to compare an investor's performance. The Fund or managed account may be more or less volatile than the Index. Funds and accounts may be more or less volatile or less diversified than the index. Funds and accounts can contain holdings of derivatives and securities that are materially different from the indexes, which may result in material differences in performance. For example, certain past periods of outperformance and under performance against the indexes have been caused primarily by investing in a higher percentage of bank loans and/or non-USD (hedged) holdings than the Index. Information related to indices and benchmarks has been provided by, and/or is based on third party sources, and although believed to be reliable, has not been independently verified. No representation is made that any benchmark or index is an appropriate measure for comparison.
Barclays U.S. High Yield 1-5 Year Cash Pay 2%: The index is an unmanaged index comprised of U.S. dollar denominated below investment grade corporate debt securities publicly issued in the U.S. domestic market with remaining maturities of less than 5 years. Allocations to an individual issuer will not exceed 2%.
Distributed by IMST Distributors, LLC.
Arena Capital Advisors, LLC | 12121 Wilshire Blvd, Suite 1010 | Los Angeles, CA 90025 | 310 806 6700 | [email protected]
Please refer to the GIPS Report at the end of this commentary for more information. Please see important disclosures - 3
3
Arena Strategic Income Fund
SCHEDULE OF INVESTMENTS
As of April 30, 2024 (Unaudited)
|
Principal |
Value |
|||||||
| BONDS - 60.8% | ||||||||
| CORPORATE - 60.8% | ||||||||
| BASIC MATERIALS - 4.4% | ||||||||
| 60,000 |
First Quantum Minerals Ltd. 9.375%, 3/1/20292,3,4 |
$ | 62,200 | |||||
| 925,000 |
First Quantum Minerals, Ltd. 6.875%, 10/15/20272,3,4 |
890,660 | ||||||
| 100,000 |
SCIL IV LLC 9.500%, 7/15/20283 |
115,953 | ||||||
| 100,000 |
Stillwater Mining Company 4.500%, 11/16/20293 |
78,863 | ||||||
| 1,147,676 | ||||||||
| COMMUNICATIONS - 11.7% | ||||||||
| Altice France SA | ||||||||
| 100,000 | 8.125%, 2/1/20272,3,4 | 75,381 | ||||||
| 800,000 | 5.500%, 1/15/20282,3,4 | 544,031 | ||||||
| Directv Financing LLC | ||||||||
| 145,000 | 5.875%, 8/15/20272,3 | 135,286 | ||||||
| 750,000 | 8.875%, 2/1/20302,3 | 730,180 | ||||||
| 475,000 |
DISH Network Corp. 11.750%, 11/15/20272,3 |
480,191 | ||||||
| 125,000 |
Hughes Satellite Systems Corp. 5.250%, 8/1/2026 |
103,575 | ||||||
| 937,000 |
Qwest Corp. 7.250%, 9/15/2025 |
928,581 | ||||||
| 50,000 |
Victoria's Secret & Co. 4.625%, 7/15/20293 |
39,342 | ||||||
| 3,036,567 | ||||||||
| CONSUMER, CYCLICAL - 16.5% | ||||||||
| 75,000 |
Allegiant Travel Co. 7.250%, 8/15/20272,3 |
73,015 | ||||||
| 700,000 |
Allwyn Entertainment Financing UK PLC 7.875%, 4/30/20292,3,4 |
717,150 | ||||||
| 200,000 |
Connect Finco SARL / Connect U.S. Finco LLC 6.750%, 10/1/20262,3,4 |
193,890 | ||||||
| 69,000 |
Evergreen Acqco 1 LP / TVI, Inc. 9.750%, 4/26/20282,3 |
73,526 | ||||||
| 504,000 |
IRB Holding Corp. 7.000%, 6/15/20252,3 |
503,769 | ||||||
| 150,000 |
LSF9 Atlantis Holdings LLC / Victra Finance Corp. 7.750%, 2/15/20262,3 |
147,508 | ||||||
| 50,000 |
NMG Holding Co., Inc. / Neiman Marcus Group LLC 7.125%, 4/1/20262,3 |
49,723 | ||||||
| QVC, Inc. | ||||||||
| 1,350,000 | 4.750%, 2/15/20273 | 1,175,712 |
See accompanying Notes to Financial Statements.
4
Arena Strategic Income Fund
SCHEDULE OF INVESTMENTS - Continued
As of April 30, 2024 (Unaudited)
|
Principal |
Value |
|||||||
| BONDS (Continued) | ||||||||
| CORPORATE (Continued) | ||||||||
| CONSUMER, CYCLICAL (Continued) | ||||||||
| 350,000 | 4.375%, 9/1/20283 | $ | 269,527 | |||||
| 124,000 |
Rivian Holdings LLC/Rivian LLC/Rivian Automotive LLC 10.931% (6-Month USD Libor+602.83 basis points), 10/15/20262,3,5 |
122,760 | ||||||
| 13,000 |
Spirit Loyalty Cayman Ltd / Spirit IP Cayman Ltd 8.000%, 9/20/20252,3,4 |
10,161 | ||||||
| 1,137,000 |
Spirit Loyalty Cayman Ltd. / Spirit IP Cayman Ltd. 8.000%, 9/20/20252,3,4 |
888,727 | ||||||
| 88,000 |
United Airlines, Inc. 4.375%, 4/15/20262,3 |
84,681 | ||||||
| 4,310,149 | ||||||||
| CONSUMER, NON-CYCLICAL - 11.3% | ||||||||
| 100,000 |
Diversified Healthcare Trust 9.750%, 6/15/20253 |
100,310 | ||||||
| 21,000 |
Herbalife Nutrition Ltd. / HLF Financing, Inc. 7.875%, 9/1/20252,3,4 |
20,180 | ||||||
| HLF Financing Sarl LLC / Herbalife International, Inc. | ||||||||
| 550,000 | 12.250%, 4/15/20292,3 | 527,454 | ||||||
| 131,000 | 4.875%, 6/1/20292,3 | 77,077 | ||||||
| 25,000 |
KeHE Distributors LLC / KeHE Finance Corp. / NextWave Distribution, Inc. 9.000%, 2/15/20292,3 |
25,278 | ||||||
| 1,250,000 |
Providence Service Corp. 5.875%, 11/15/20252,3 |
1,221,316 | ||||||
| 1,050,000 |
Radiology Partners, Inc. 8.500%, 1/31/20292,3 |
969,937 | ||||||
| 2,941,552 | ||||||||
| ENERGY - 3.4% | ||||||||
| CITGO Petroleum Corp. | ||||||||
| 200,000 | 7.000%, 6/15/20252,3 | 199,839 | ||||||
| 112,000 | 6.375%, 6/15/20262,3 | 112,002 | ||||||
| 14,000 | 8.375%, 1/15/20292,3 | 14,503 | ||||||
| 100,000 |
Delek Logistics Partners LP / Delek Logistics Finance Corp. 7.125%, 6/1/20282,3 |
97,767 | ||||||
| 100,000 |
Enviva Partners LP / Enviva Partners Finance Corp. 6.500%, 1/15/20262,3,6 |
43,631 | ||||||
| 450,000 |
NextEra Energy Partners LP 2.500%, 6/15/20262,7 |
405,997 | ||||||
| 10,000 |
Talos Production, Inc. 9.000%, 2/1/20292,3 |
10,569 | ||||||
| 884,308 | ||||||||
| FINANCIAL - 5.7% | ||||||||
| 75,937 |
Avation Capital SA 9.000%, 10/31/20262,3,4 |
65,710 |
See accompanying Notes to Financial Statements.
5
Arena Strategic Income Fund
SCHEDULE OF INVESTMENTS - Continued
As of April 30, 2024 (Unaudited)
|
Principal |
Value |
|||||||
| BONDS (Continued) | ||||||||
| CORPORATE (Continued) | ||||||||
| FINANCIAL (Continued) | ||||||||
| 75,000 |
BGC Group, Inc. 8.000%, 5/25/20283 |
$ | 77,855 | |||||
| Icahn Enterprises LP / Icahn Enterprises Finance Corp. | ||||||||
| 140,000 | 5.250%, 5/15/20273 | 128,519 | ||||||
| 160,000 | 9.750%, 1/15/20292,3 | 166,171 | ||||||
| 100,000 |
Service Properties Trust 7.500%, 9/15/20253 |
100,900 | ||||||
| 50,000 |
StoneX Group, Inc. 7.875%, 3/1/20312,3 |
50,672 | ||||||
| 1,019,000 |
Uniti Group LP / Uniti Group Finance, Inc. / CSL Capital LLC 4.750%, 4/15/20282,3 |
894,799 | ||||||
| 1,484,626 | ||||||||
| INDUSTRIAL - 6.1% | ||||||||
| 245,000 |
Ardagh Packaging Finance PLC / Ardagh Holdings USA, Inc. 5.250%, 4/30/20252,3,4 |
243,068 | ||||||
| 500,000 |
Brundage-Bone Concrete Pumping Holdings, Inc. 6.000%, 2/1/20262,3 |
494,421 | ||||||
| 50,000 |
Likewize Corp. 9.750%, 10/15/20252,3 |
50,588 | ||||||
| 709,000 |
Manitowoc Co., Inc. 9.000%, 4/1/20262,3 |
711,801 | ||||||
| 100,000 |
Rocket Lab USA, Inc. 4.250%, 2/1/20292,7 |
98,062 | ||||||
| 1,597,940 | ||||||||
| TECHNOLOGY - 1.5% | ||||||||
| 350,000 |
Consensus Cloud Solutions, Inc. 6.500%, 10/15/20282,3 |
306,810 | ||||||
| 75,000 |
NCR Atleos Escrow Corp. 9.500%, 4/1/20292,3 |
79,785 | ||||||
| 386,595 | ||||||||
| UTILITIES - 0.2% | ||||||||
| 50,000 |
Evergy, Inc. 4.500%, 12/15/20272,7 |
50,069 | ||||||
| TOTAL CORPORATE | ||||||||
| (Cost $15,862,126) | 15,839,482 | |||||||
| TOTAL BONDS | ||||||||
| (Cost $15,862,126) | 15,839,482 |
See accompanying Notes to Financial Statements.
6
Arena Strategic Income Fund
SCHEDULE OF INVESTMENTS - Continued
As of April 30, 2024 (Unaudited)
|
Number |
Value |
|||||||
| COMMON STOCKS - 0.6% | ||||||||
| CONSUMER, NON-CYCLICAL - 0.2% | ||||||||
| 1,742 | Endo, Inc. | $ | 48,776 | |||||
| TECHNOLOGY - 0.4% | ||||||||
| 3,606 | Diebold Nixdorf, Inc. | 114,166 | ||||||
| TOTAL COMMON STOCKS | ||||||||
| (Cost $101,313) | 162,942 |
|
Principal |
||||||||
| CONVERTIBLE CORPORATE BONDS - 2.4% | ||||||||
| CORPORATE - 2.4% | ||||||||
| COMMUNICATIONS - 1.8% | ||||||||
| 655,000 |
DISH Network Corp. 0.000%, 12/15/2025*,7 |
479,787 | ||||||
| CONSUMER, CYCLICAL - 0.2% | ||||||||
| 75,000 |
DraftKings Holdings, Inc. 0.000%, 3/15/2028*,7 |
62,438 | ||||||
| UTILITIES - 0.4% | ||||||||
| 100,000 |
American Water Capital Corp. 3.625%, 6/15/20262,7 |
97,675 | ||||||
| TOTAL CORPORATE | ||||||||
| (Cost $616,519) | 639,900 | |||||||
| TOTAL CONVERTIBLE CORPORATE BONDS | ||||||||
| (Cost $616,519) | 639,900 | |||||||
| LEVERAGED LOANS - 18.8% | ||||||||
| AP Core Holdings II LLC | ||||||||
| 140,000 | 10.933% (1-Month USD Libor+550 basis points), 9/1/20273,5,8 | 135,730 | ||||||
| 525,000 | 10.945% (1-Month Term SOFR+550 basis points), 9/1/20273,5,8 | 510,037 | ||||||
| 124,680 |
ASP LS Acquisition Corp. 10.071% (3-Month Term SOFR+450 basis points), 5/7/20283,5,8 |
117,199 | ||||||
| Asurion LLC | ||||||||
| 725,000 | 10.404% (1-Month USD Libor+525 basis points), 2/3/20283,5,8 | 663,038 | ||||||
| 49,874 | 9.666% (1-Month Term SOFR+425 basis points), 8/19/20283,5,8 | 48,768 | ||||||
| 400,000 |
Delivery Hero SE 5.130%, 12/20/20293,5,8,9,10 |
401,142 | ||||||
| 109,200 |
Diebold Nixdorf, Inc. 11.500% (1-Month Term SOFR+750 basis points), 8/11/20285,8 |
111,930 | ||||||
| 100,000 |
DS Parent, Inc. 9.463% (1-Month Term SOFR+550 basis points), 12/16/20303,5,8 |
99,438 | ||||||
| 100,000 |
EG America LLC 9.577% (1-Month Term SOFR+425 basis points), 3/12/20263,5,8,9,10 |
100,125 | ||||||
| 789,000 |
Endo Finance Holdings, Inc. 4.500% (1-Month Term SOFR+450 basis points), 4/23/20313,5,8,9,10 |
787,915 |
See accompanying Notes to Financial Statements.
7
Arena Strategic Income Fund
SCHEDULE OF INVESTMENTS - Continued
As of April 30, 2024 (Unaudited)
|
Principal |
Value |
|||||||
| LEVERAGED LOANS (Continued) | ||||||||
| Enviva, Inc. | ||||||||
| 21,300 | 13.327%, 12/13/20243,5,8 | $ | 25,099 | |||||
| 35,500 | 13.327%, 12/13/20243,5,8 | - | ||||||
| 14,200 | 13.327%, 12/13/20243,5,8 | - | ||||||
| 100,000 | 4.000% (1-Month Term SOFR+400 basis points), 6/30/20275,6,8 | 102,500 | ||||||
| 100,000 | 7.577% (1-Month Term SOFR+225 basis points), 6/30/20275,6,8 | 101,250 | ||||||
| 900,000 |
Franchise Group, Inc. 10.437% (3-Month Term SOFR+475 basis points), 3/10/20263,5,8 |
769,500 | ||||||
| 250,000 |
Global Business Travel Holdings Ltd. 2.500% (1-Month USD Libor+250 basis points), 8/13/20253,4,5,8,9,10 |
250,000 | ||||||
| 100,000 |
HLF Financing Sarl LLC 2.500% (1-Month Term SOFR+250 basis points), 8/18/20253,5,8,9,10 |
99,640 | ||||||
| 99,746 |
LendingTree LLC 3.750% (1-Month Term SOFR+375 basis points), 9/15/20283,5,8 |
97,402 | ||||||
| 45,384 |
Radiology Partners, Inc. 9.587% (3-Month Term SOFR+350 basis points), 1/31/20295,8 |
43,664 | ||||||
| 99,244 |
Spirit AeroSystems, Inc. 9.580% (1-Month Term SOFR+450 basis points), 1/15/20273,5,8 |
99,958 | ||||||
| 112,589 |
Taboola, Inc. 9.430% (1-Month USD Libor+400 basis points), 9/1/20283,5,8 |
112,660 | ||||||
| 74,269 |
Tutor Perini Corp. 4.750% (1-Month Term SOFR+475 basis points), 8/18/20273,5,8 |
74,165 | ||||||
| Viasat, Inc. | ||||||||
| 99,242 | 9.816% (1-Month Term SOFR+450 basis points), 3/4/20293,5,8 | 95,358 | ||||||
| 49,750 | 9.936% (1-Month Term SOFR+450 basis points), 5/30/20303,5,8 | 47,778 | ||||||
| TOTAL LEVERAGED LOANS | ||||||||
| (Cost $4,863,655) | 4,894,296 |
|
Number |
||||||||
| SHORT-TERM INVESTMENTS - 22.5% | ||||||||
| 5,873,793 | Fidelity Institutional Government Portfolio Class I, 5.13%11 | $ | 5,873,793 | |||||
| TOTAL SHORT-TERM INVESTMENTS | ||||||||
| (Cost $5,873,793) | 5,873,793 | |||||||
| TOTAL INVESTMENTS - 105.1% | ||||||||
| (Cost $27,317,406) | $ | 27,410,413 | ||||||
| Liabilities in Excess of Other Assets - (5.1)% | (1,341,997 | ) | ||||||
| TOTAL NET ASSETS - 100.0% | $ | 26,068,416 |
LLC -Limited Liability Company
PLC -Public Limited Company
LP -Limited Partnership
| * | Non-income producing security. |
| 1 | Local currency. |
See accompanying Notes to Financial Statements.
8
Arena Strategic Income Fund
SCHEDULE OF INVESTMENTS - Continued
As of April 30, 2024 (Unaudited)
| 2 | Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities are restricted and may be resold in transactions exempt from registration normally to qualified institutional buyers. The total value of these securities is $12,818,020, which represents 49.17% of Total Net Assets. |
| 3 | Callable. |
| 4 | Foreign security denominated in U.S. dollars. |
| 5 | Floating rate security. |
| 6 | Security is in default. |
| 7 | Convertible security. |
| 8 | Bank loans generally pay interest at rates which are periodically determined by reference to a base lending rate plus a premium. All loans carry a variable rate of interest. These base lending rates are generally (i) the Prime Rate offered by one or more major United States banks, (ii) the lending rate offered by one or more European banks such as the London Interbank Offered Rate ("LIBOR"), (iii) the Certificate of Deposit rate, or (iv) Secured Overnight Financing Rate ("SOFR"). Bank Loans, while exempt from registration, under the Securities Act of 1933, contain certain restrictions on resale and cannot be sold publicly. Floating rate bank loans often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. |
| 9 | Denotes investments purchased on a when-issued or delayed delivery basis. |
| 10 | All or a portion of the loan is unfunded. |
| 11 | The rate is the annualized seven-day yield at period end. |
See accompanying Notes to Financial Statements.
9
Arena Strategic Income Fund
SUMMARY OF INVESTMENTS
As of April 30, 2024 (Unaudited)
| Security Type/Sector |
Percent of Total Net Assets |
| Bonds | 60.8% |
| Short-Term Investments | 22.5% |
| Leveraged Loans | 18.8% |
| Convertible Corporate Bonds | 2.4% |
| Common Stocks |
0.6% |
| Total Investments | 105.1% |
| Liabilities in Excess of Other Assets |
(5.1)% |
| Total Net Assets |
100.0% |
See accompanying Notes to Financial Statements.
10
Arena Strategic Income Fund
SCHEDULE OF INVESTMENTS - Continued
As of April 30, 2024 (Unaudited)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
| Purchase Contracts | Counterparty |
Currency Exchange |
Currency Amount Purchased |
Value At Settlement Date |
Value At April 30, 2024 |
Unrealized Appreciation (Depreciation) |
||||||||||||||||
| Euro | Pershing, LLC. | EUR per USD | 5/3/2024 | 110,000 | $ | 117,755 | $ | 117,410 | $ | (345 | ) | |||||||||||
| 117,755 | 117,410 | (345 | ) |
| Sale Contracts | Counterparty |
Currency Exchange |
Setlement Date |
Currency Amount Sold |
Value At Settlement Date |
Value At April 30, 2024 |
Unrealized Appreciation (Depreciation) |
|||||||||||||||
| Euro | Pershing, LLC. | EUR per USD | 5/3/2024 | (110,000 | ) | $ | (119,321 | ) | $ | (117,410 | ) | $ | 1,911 | |||||||||
| Euro | Pershing, LLC. | EUR per USD | 8/5/2024 | (110,000 | ) | (118,217 | ) | (118,217 | ) | - | ||||||||||||
| (237,538 | ) | (235,627 | ) | 1,911 | ||||||||||||||||||
| TOTAL FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | $ | (119,783 | ) | $ | (118,217 | ) | $ | 1,566 |
EUR - Euro
See accompanying Notes to Financial Statements.
11
Arena Strategic Income Fund
STATEMENT OF ASSETS AND LIABILITIES
As of April 30, 2024 (Unaudited)
| Assets: | ||||
| Investments, at value (cost $27,317,406) | $ | 27,410,413 | ||
| Foreign currency, at value (cost $5,296) | 5,219 | |||
| Cash | 1,672 | |||
| Segregated cash held by custodian for benefit of brokers for securities sold short and swap contracts | 1,870 | |||
| Receivables: | ||||
| Fund shares sold | 1,902 | |||
| Unrealized appreciation on forward foreign currency exchange contracts | 1,566 | |||
| Due from Advisor | 4,267 | |||
| Dividends and interest | 291,740 | |||
| Prepaid expenses | 20,397 | |||
| Total assets | 27,739,046 | |||
| Liabilities: | ||||
| Payables: | ||||
| Investment securities purchased | 1,636,010 | |||
| Advisory fees | 954 | |||
| Shareholder servicing fees (Note 6) | 2,115 | |||
| Fund accounting and administration fees | 2,199 | |||
| Transfer agent fees and expenses | 1,208 | |||
| Custody fees | 2,431 | |||
| Auditing fees | 8,467 | |||
| Trustees' deferred compensation (Note 3) | 4,597 | |||
| Trustees' fees and expenses | 2,432 | |||
| Chief Compliance Officer fees | 3,262 | |||
| Accrued other expenses | 6,955 | |||
| Total liabilities | 1,670,630 | |||
| Commitments and contingencies (Note 3) | ||||
| Net Assets | $ | 26,068,416 | ||
| Components of Net Assets: | ||||
| Paid-in capital (par value of $0.01 per share with an unlimited number of shares authorized) | $ | 25,637,296 | ||
| Total distributable earnings (accumulated deficit) | 431,120 | |||
| Net Assets | $ | 26,068,416 | ||
| Maximum Offering Price per Share: | ||||
| Class I: | ||||
| Net assets applicable to shares outstanding | 26,068,416 | |||
| Shares of beneficial interest issued and outstanding | 2,321,778 | |||
| Redemption price | $ | 11.23 |
See accompanying Notes to Financial Statements.
12
Arena Strategic Income Fund
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2024 (Unaudited)
| Investment Income: | ||||
| Interest | $ | 399,246 | ||
| Total investment income | 399,246 | |||
| Expenses: | ||||
| Advisory fees | 25,370 | |||
| Shareholder servicing fees (Note 6) | 3,839 | |||
| Fund accounting and administration fees | 32,892 | |||
| Transfer agent fees and expenses | 9,225 | |||
| Custody fees | 2,728 | |||
| Registration fees | 14,004 | |||
| Offering costs | 10,431 | |||
| Trustees' fees and expenses | 7,208 | |||
| Auditing fees | 6,243 | |||
| Chief Compliance Officer fees | 4,567 | |||
| Legal fees | 4,485 | |||
| Shareholder reporting fees | 2,648 | |||
| Insurance fees | 1,659 | |||
| Miscellaneous | 1,229 | |||
| Interest expense | 24 | |||
| Total expenses | 126,552 | |||
| Advisory fees waived | (25,370 | ) | ||
| Other expenses absorbed | (71,919 | ) | ||
| Net expenses | 29,263 | |||
| Net investment income (loss) | 369,983 | |||
| Realized and Unrealized Gain (Loss): | ||||
| Net realized gain (loss) on: | ||||
| Investments | 74,568 | |||
| Foreign currency transactions | 2,479 | |||
| Net realized gain (loss) | 77,047 | |||
| Net change in unrealized appreciation/depreciation on: | ||||
| Investments | 146,866 | |||
| Forward foreign currency exchange contracts | (2,442 | ) | ||
| Foreign currency translations | (52 | ) | ||
| Net change in unrealized appreciation/depreciation | 144,372 | |||
| Net realized and unrealized gain (loss) | 221,419 | |||
| Net Increase (Decrease) in Net Assets from Operations | $ | 591,402 |
See accompanying Notes to Financial Statements.
13
Arena Strategic Income Fund
STATEMENTS OF CHANGES IN NET ASSETS
|
For the |
For the Period |
|||||||
| Increase (Decrease) in Net Assets from: | ||||||||
| Operations: | ||||||||
| Net investment income (loss) | $ | 369,983 | $ | 159,113 | ||||
| Net realized gain (loss) on investments and foreign currency transactions | 77,047 | 30,270 | ||||||
| Net change in unrealized appreciation/depreciation on investments and foreign currency translations | 144,372 | (49,914 | ) | |||||
| Net increase (decrease) in net assets resulting from operations | 591,402 | 139,469 | ||||||
| Distributions to Shareholders: | ||||||||
| Distributions: | ||||||||
| Class I | (178,131 | ) | (121,619 | ) | ||||
| Total distributions to shareholders | (178,131 | ) | (121,619 | ) | ||||
| Capital Transactions: | ||||||||
| Net proceeds from shares sold: | ||||||||
| Class I | 26,174,083 | 4,966,142 | ||||||
| Reinvestment of distributions: | ||||||||
| Class I | 15,134 | 4,652 | ||||||
| Cost of shares redeemed: | ||||||||
| Class I | (5,503,185 | ) | (19,531 | ) | ||||
| Net increase in net assets from capital transactions | 20,686,032 | 4,951,263 | ||||||
| Total increase (decrease) in net assets | 21,099,303 | 4,969,113 | ||||||
| Net Assets: | ||||||||
| Beginning of period | 4,969,113 | - | ||||||
| End of period | $ | 26,068,416 | $ | 4,969,113 | ||||
| Capital Share Transactions: | ||||||||
| Shares sold: | ||||||||
| Class I | 2,336,613 | 462,010 | ||||||
| Shares reinvested: | ||||||||
| Class I | 1,343 | 429 | ||||||
| Shares redeemed: | ||||||||
| Class I | (476,804 | ) | (1,813 | ) | ||||
| Net increase (decrease) in capital share transactions | 1,861,152 | 460,626 |
| * | Commencement of operations. |
See accompanying Notes to Financial Statements.
14
Arena Strategic Income Fund
FINANCIAL HIGHLIGHTS
Class I
Per share operating performance.
For a capital share outstanding throughout each period.
|
For the |
For the Period
2022* |
|||||||
| Net asset value, beginning of period | $ | 10.79 | $ | 10.00 | ||||
| Income from Investment Operations: | ||||||||
| Net investment income (loss)1 | 0.53 | 0.72 | ||||||
| Net realized and unrealized gain (loss) | 0.45 | 0.35 | ||||||
| Total from investment operations | 0.98 | 1.07 | ||||||
| Less Distributions: | ||||||||
| From net investment income | (0.47 | ) | (0.28 | ) | ||||
| From net realized gain | (0.07 | ) | - | |||||
| Total distributions | (0.54 | ) | (0.28 | ) | ||||
| Net asset value, end of period | $ | 11.23 | $ | 10.79 | ||||
| Total return2 | 9.12 | %3 | 10.68 | %3 | ||||
| Ratios and Supplemental Data: | ||||||||
| Net assets, end of period (in thousands) | $ | 26,068 | $ | 4,969 | ||||
| Ratio of expenses to average net assets (including interest expense): | ||||||||
| Before fees waived and expenses absorbed | 3.25 | %4,5 | 11.35 | %4 | ||||
| After fees waived and expenses absorbed | 0.75 | %4,5 | 0.75 | %4 | ||||
| Ratio of net investment income (loss) to average net assets (including interest expense): | ||||||||
| Before fees waived and expenses absorbed | 6.99 | %4 | (2.72 | )%4 | ||||
| After fees waived and expenses absorbed | 9.49 | %4 | 7.88 | %4 | ||||
| Portfolio turnover rate | 29 | %3 | 76 | %3 |
| * | Commencement of operations. |
| 1 | Calculated based on average shares outstanding for the period. |
| 2 | Total returns would have been lower had certain expenses not been waived or absorbed by the Advisor. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares. |
| 3 | Not annualized. |
| 4 | Annualized. |
| 5 | If interest expense had been excluded, the expense ratios would have been lowered by 0.00% for the six months ended April 30, 2024. |
See accompanying Notes to Financial Statements.
15
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS
April 30, 2024 (Unaudited)
Note 1 - Organization
Arena Strategic Income Fund (the ''Fund'') is organized as a diversified series of Investment Managers Series Trust II, a Delaware statutory trust (the "Trust") which is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund's primary investment objective is to generate high income returns with a secondary objective of capital preservation. The Fund intends to primarily invest in income producing investments and leveraged loans. The Fund commenced investment operations on December 30, 2022.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 "Financial Services-Investment Companies".
Note 2 - Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates.
(a) Valuation of Investments
The Fund values equity securities at the last reported sale price on the principal exchange or in the principal over the counter ("OTC") market in which such securities are traded, as of the close of regular trading on the NYSE on the day the securities are being valued or, if the last-quoted sales price is not readily available, the securities will be valued at the last bid or the mean between the last available bid and ask price. Securities traded on the NASDAQ are valued at the NASDAQ Official Closing Price ("NOCP"). Investments in open-end investment companies are valued at the daily closing net asset value of the respective investment company. Debt securities are valued by utilizing a price supplied by independent pricing service providers. The independent pricing service providers may use various valuation methodologies including matrix pricing and other analytical pricing models as well as market transactions and dealer quotations. These models generally consider such factors as yields or prices of bonds of comparable quality, type of issue, coupon, maturity, ratings and general market conditions. If a price is not readily available for a portfolio security, the security will be valued at fair value (the amount which the Fund might reasonably expect to receive for the security upon its current sale). The Board of Trustees has designated the Advisor as the Fund's valuation designee (the "Valuation Designee") to make all fair value determinations with respect to the Fund's portfolio investments, subject to the Board's oversight. As the Valuation Designee, the Advisor has adopted and implemented policies and procedures to be followed when the Fund must utilize fair value pricing.
(b) Corporate Debt Securities
Corporate debt securities are fixed-income securities issued by businesses to finance their operations, although corporate debt instruments may also include bank loans to companies. Notes, bonds, bank loans, debentures and commercial paper are the most common types of corporate debt securities, with the primary difference being their maturities and secured or unsecured status. Commercial paper has the shortest term and is usually unsecured. The broad category of corporate debt securities includes debt issued by domestic or foreign companies of all kinds, including those with small-, mid- and large-capitalizations. Corporate debt may be rated investment grade or below investment grade and may carry variable or floating rates of interest.
Corporate debt securities carry credit risk, interest rate risk and prepayment risk. Credit risk is the risk that a fund could lose money if the issuer of a corporate debt security is unable to pay interest or repay principal when it is due. Some corporate debt securities that are rated below investment grade are generally considered speculative because they present a greater risk of loss, including default, than higher quality debt securities. The credit risk of a particular issuer's debt security may vary based on its priority for repayment.
16
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS - Continued
April 30, 2024 (Unaudited)
Interest rate risk is the risk that the value of certain corporate debt securities will tend to fall when interest rates rise. In general, corporate debt securities with longer terms tend to fall more in value when interest rates rise than corporate debt securities with shorter terms. Prepayment risk occurs when issuers prepay fixed rate debt securities when interest rates fall, forcing the Fund to invest in securities with lower interest rates. Issuers of debt securities are also subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors that may restrict the ability of the issuer to pay, when due, the principal of and interest on its debt securities.
(c) Bank Loans
The Fund may purchase participations in commercial loans. Such investments may be secured or unsecured. Loan participations typically represent direct participation, together with other parties, in a loan to a corporate borrower, and generally are offered by banks or other financial institutions or lending syndicates. The Fund may participate in such syndications, or can buy part of a loan, becoming a part lender. When purchasing indebtedness and loan participations, the Fund assumes the credit risk associated with the corporate borrower and may assume the credit risk associated with an interposed bank or other financial intermediary. The indebtedness and loan participations in which the Fund intends to invest may not be rated by any nationally recognized rating service.
Bank loans may be structured to include both term loans, which are generally fully funded at the time of investment and unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand, representing a potential financial obligation by the Fund in the future. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a senior floating rate interest. Commitment fees are processed as a reduction in cost.
d) Short Sales
Short sales are transactions under which the Fund sells a security they do not own in anticipation of a decline in the value of that security. To complete such a transaction, the Fund must borrow the security to make delivery to the buyer. The Fund then is obligated to replace the security borrowed by purchasing the security at market price at the time of replacement. The price at such time may be more or less than the price at which the security was sold by the Fund. When a security is sold short a decrease in the value of the security will be recognized as a gain and an increase in the value of the security will be recognized as a loss, which is potentially limitless. Until the security is replaced, the Fund is required to pay the lender amounts equal to dividend or interest that accrue during the period of the loan which is recorded as an expense. To borrow the security, the Fund also may be required to pay a premium or an interest fee, which are recorded as interest expense. Cash or securities are segregated for the broker to meet the necessary margin requirements. The Fund is subject to the risk that they may not always be able to close out a short position at a particular time or at an acceptable price.
(e) Futures Contracts
The Fund may enter into futures contracts (including contracts relating to foreign currencies, interest rates and other financial indexes), and purchase and write (sell) related options traded on exchanges designated by the Commodity Futures Trading Commission ("CFTC") or, consistent with CFTC regulations, on foreign exchanges. Upon entering into futures contracts, the Fund bears risks that it may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional risks include counterparty credit risk, the possibility of an illiquid market, and that a change in the value of the contract or option may not correlate with changes in the value of the underlying asset.
17
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS - Continued
April 30, 2024 (Unaudited)
A futures contract held by the Fund is valued daily at the official settlement price on the exchange on which it is traded. Variation margin does not represent borrowing or a loan by the Fund but is instead a settlement between the Fund and the broker of the amount one would owe the other if the futures contract expired. Upon entering into a futures contract, the Fund deposits cash or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be maintained at an established level over the life of the contract. Cash deposited as initial margin is recorded in the Statement of Assets and Liabilities as cash deposited with broker. Securities deposited as initial margin are designated in the Schedule of Investments. During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marked to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. The variation margin payments are equal to the daily change in the contract value and are recorded as variation margin receivable or payable and are offset in unrealized gains or losses. When the contracts are closed or expires, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract.
f) Swap Agreements and Swaptions
The Fund may enter into credit default swap agreements for investment purposes. A credit default swap agreement may have as reference obligations one or more securities that are not currently held by the Fund. The Fund may be either the buyer or seller in the transaction. Credit default swaps may also be structured based on the debt of a basket of issuers, rather than a single issuer, and may be customized with respect to the default event that triggers purchase or other factors. As a seller, the Fund would generally receive an upfront payment or a fixed rate of income throughout the term of the swap, which typically is between period and three years, provided that there is no credit event. If a credit event occurs, generally the seller must pay the buyer the full face amount of deliverable obligations of the reference obligations that may have little or no value. The notional value will be used to segregate liquid assets for selling protection on credit default swaps. If the Fund were a buyer and no credit event occurs, the Fund would recover nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference obligation that may have little or no value. The use of swap agreements by the Fund entail certain risks, which may be different from, or possibly greater than, the risks associated with investing directly in the securities and other investments that are the referenced asset for the swap agreement. Swaps are highly specialized instruments that require investment techniques, risk analyses, and tax planning different from those associated with stocks, bonds, and other traditional investments. The use of a swap requires an understanding not only of the referenced asset, reference rate, or index, but also of the swap itself, without the benefit of observing the performance of the swap under all the possible market conditions. Because some swap agreements have a leverage component, adverse changes in the value or level of the underlying asset, reference rate, or index can result in a loss substantially greater than the amount invested in the swap itself. Certain swaps have the potential for unlimited loss, regardless of the size of the initial investment.
The Fund may also purchase credit default swap contracts in order to hedge against the risk of default of the debt of a particular issuer or basket of issuers, in which case the Fund would function as the counterparty referenced in the preceding paragraph. This would involve the risk that the investment may expire worthless and would only generate income in the event of an actual default by the issuer(s) of the underlying obligation(s) (or, as applicable, a credit downgrade or other indication of financial instability). It would also involve the risk that the seller may fail to satisfy its payment obligations to the Fund in the event of a default. The purchase of credit default swaps involves costs, which will reduce each Fund's return.
The Fund may enter into total return swap contracts for investment purposes. Total return swaps are contracts in which one party agrees to make periodic payments based on the change in market value of the underlying assets, which may include a specified security, basket of securities or security indexes during the specified period, in return for periodic payments based on a fixed or variable interest rate of the total return from other underlying assets. Total return swap agreements may be used to obtain exposure to a security or market without owning or taking physical custody of such security or market, including in cases in which there may be disadvantages associated with direct ownership of a particular security. In a typical total return equity swap, payments made by the Fund or the counterparty are based on the total return of a particular reference asset or assets (such as an equity security, a combination of such securities, or an index). That is, one party agrees to pay another party the return on a stock, basket of stocks, or stock index in return for a specified interest rate. By entering into an equity index swap, for example, the index receiver can gain exposure to stocks making up the index of securities without actually purchasing those stocks. Total return swaps involve not only the risk associated with the investment in the underlying securities, but also the risk of the counterparty not fulfilling its obligations under the agreement.
18
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS - Continued
April 30, 2024 (Unaudited)
An option on a swap agreement, or a "swaption," is a contract that gives a counterparty the right (but not the obligation) to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. In return, the purchaser pays a "premium" to the seller of the contract. The seller of the contract receives the premium and bears the risk of unfavorable changes on the underlying swap. The Fund may write (sell) and purchase put and call swaptions. The Fund may also enter into swaptions on either an asset-based or liability-based basis, depending on whether the Fund is hedging its assets or its liabilities. The Fund may write (sell) and purchase put and call swaptions to the same extent it may make use of standard options on securities or other instruments. The Fund may enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its holdings, as a duration management technique, to protect against an increase in the price of securities the Fund anticipate purchasing at a later date, or for any other purposes, such as for speculation to increase returns. Swaptions are generally subject to the same risks involved in the Fund's use of options.
Depending on the terms of the particular option agreement, the Fund will generally incur a greater degree of risk when they write a swaption than they will incur when it purchases a swaption. When the Fund purchases a swaption, they risk losing only the amount of the premium they have paid should they decide to let the option expire unexercised. However, when the Fund writes a swaption, upon exercise of the option the Fund will become obligated according to the terms of the underlying agreement.
(g) Options Contracts
The Fund may write or purchase options contracts primarily to enhance each Fund's returns or reduce volatility. In addition, the Fund may utilize options in an attempt to generate gains from options premiums or to reduce overall portfolio risk. When the Fund writes or purchases an option, an amount equal to the premium received or paid by the Fund is recorded as a liability or an asset and is subsequently adjusted to the current market value of the option written or purchased. Premiums received or paid from writing or purchasing options which expire unexercised are treated by the Fund on the expiration date as realized gains or losses. The difference between the premium and the amount paid or received on effecting a closing purchase or sale transaction, including brokerage commissions, is also treated as a realized gain or loss. If an option is exercised, the premium paid or received is added to the cost of the purchase or proceeds from the sale in determining whether the Fund has realized a gain or a loss on investment transactions. The Fund, as a writer of an option, may have no control over whether the underlying securities may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the security underlying the written option.
(h) Forward Foreign Currency Exchange Contracts
The Fund may utilize forward foreign currency exchange contracts ("forward contracts") under which they are obligated to exchange currencies on specified future dates at specified rates, and are subject to the translations of foreign exchange rates fluctuations. All contracts are "marked-to-market" daily and any resulting unrealized gains or losses are recorded as unrealized appreciation or depreciation on foreign currency translations. The Fund records realized gains or losses at the time the forward contract is settled. Counter parties to these forward contracts are major U.S. financial institutions.
19
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS - Continued
April 30, 2024 (Unaudited)
(i) Investment Transactions, Investment Income and Expenses
Investment transactions are accounted for on the trade date. Realized gains and losses on investments are determined on the identified cost basis. Dividend income is recorded net of applicable withholding taxes on the ex-dividend date and interest income is recorded on an accrual basis. Withholding taxes on foreign dividends, if applicable, are paid (a portion of which may be reclaimable) or provided for in accordance with the applicable country's tax rules and rates and are disclosed in the Statement of Operations. Withholding tax reclaims are filed in certain countries to recover a portion of the amounts previously withheld. The Fund records a reclaim receivable based on a number of factors, including a jurisdiction's legal obligation to pay reclaims as well as payment history and market convention. Discounts on debt securities are accreted or amortized to interest income over the lives of the respective securities using the effective interest method. Premiums for callable debt securities are amortized to the earliest call date, if the call price was less than the purchase price. If the call price was not at par and the security was not called, the security is amortized to the next call price and date. Expenses incurred by the Trust with respect to more than one Fund are allocated in proportion to the net assets of each Fund except where allocation of direct expenses to each Fund or an alternative allocation method can be more appropriately made.
The Fund incurred offering costs of approximately $63,455, which are being amortized over a one-year period from December 30, 2022 (commencement of operations).
(j) Federal Income Taxes
The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its net investment income and any net realized gains to its shareholders. Therefore, no provision is made for federal income or excise taxes. Due to the timing of dividend distributions and the differences in accounting for income and realized gains and losses for financial statement and federal income tax purposes, the fiscal year in which amounts are distributed may differ from the year in which the income and realized gains and losses are recorded by the Fund.
Accounting for Uncertainty in Income Taxes (the "Income Tax Statement") requires an evaluation of tax positions taken (or expected to be taken) in the course of preparing a Fund's tax returns 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. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations.
The Income Tax Statement requires management of the Fund to analyze tax positions taken in the prior three open tax years, if any, any tax positions expected to be taken in the Fund's current tax year, as defined by the IRS statute of limitations for all major jurisdictions, including federal tax authorities and certain state tax authorities. As of and during the open period December 30, 2022 (commencement of operations) through April 30, 2024, the Fund did not have a liability for any unrecognized tax benefits. The Fund has no examination in progress and is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
20
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS - Continued
April 30, 2024 (Unaudited)
(k) Distributions to Shareholders
The Fund will make distributions of net investment income quarterly and net capital gains, if any, at least annually. Distributions to shareholders are recorded on the ex-dividend date. The amount and timing of distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
The character of distributions made during the year from net investment income or net realized gains may differ from the characterization for federal income tax purposes due to differences in the recognition of income, expense and gain (loss) items for financial statement and tax purposes.
(l) Illiquid Securities
Pursuant to Rule 22e-4 under the 1940 Act, the Fund has adopted a Liquidity Risk Management Program ("LRMP") that requires, among other things, that the Fund limits its illiquid investments that are assets to no more than 15% of net assets. An illiquid investment is any security which may not reasonably be expected to be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. If the Advisor, at any time, determines that the value of illiquid securities held by a Fund exceeds 15% of its net asset value, the Advisor will take such steps as it considers appropriate to reduce them as soon as reasonably practicable in accordance with the Fund's written LRMP.
Note 3 - Investment Advisory and Other Agreements
The Trust, on behalf of the Fund, entered into an Investment Advisory Agreement (the "Agreement") with Arena Capital Advisors, LLC (the "Advisor"). Under the terms of the Agreement, the Fund pays a monthly investment advisory fee to the Advisor at the annual rate of 0.65% of the Fund's average daily net assets. The Advisor has contractually agreed to waive its fees and/or pay for operating expenses of the Fund to ensure that total annual fund operating expenses (excluding any taxes, leverage interest, brokerage commissions, dividend and interest expenses on short sales, acquired fund fees and expenses (as determined in accordance with SEC Form N-1A), expenses incurred in connection with any merger or reorganization, and extraordinary expenses such as litigation expenses) do not exceed 0.95% of the average daily net assets of the Fund. This agreement is in effect until February 28, 2035, and it may be terminated before that date only by the Trust's Board of Trustees. Effective May 1, 2023, the Advisor has voluntarily agreed to further waive its fees and/or pay for operating expenses of the Fund to limit the Fund's total annual operating expenses to 0.75% of the Fund's average daily net assets through April 30, 2025. The Advisor may terminate this voluntary reduction at any time. The Advisor will not seek recoupment of any fees waived or payments made pursuant to this voluntary waiver.
For the six months ended April 30, 2024, the Advisor voluntarily waived its advisory fees and absorbed other expenses totaling $97,289 which was non-recoupable. The Advisor is permitted to seek reimbursement from the Fund, subject to certain limitations, of fees waived or payments made to the Fund for a period ending three years after the date of the waiver or payment. This reimbursement may be requested from the Fund if the reimbursement will not cause the Fund's annual expense ratio to exceed the lesser of (a) the expense limitation amount in effect at the time such fees were waived or payments made, or (b) the expense limitation amount in effect at the time of the reimbursement. The potential recoverable amount is noted as "Commitments and contingencies" as reported on the Statement of Assets and Liabilities. At April 30, 2024, the amount of these potentially recoverable expenses was $82,012. The Advisor may recapture all or a portion of this amount no later than October 31, of the year stated below:
| 2026 | $ | 82,012 | |||
| 2027 | - | ||||
| Total | $ | 82,012 |
21
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS - Continued
April 30, 2024 (Unaudited)
UMB Fund Services, Inc. ("UMBFS") serves as the Fund's fund accountant, transfer agent and co-administrator; and Mutual Fund Administration, LLC ("MFAC") serves as the Fund's other co-administrator. UMB Bank, n.a., an affiliate of UMBFS, serves as the Fund's custodian. The Fund's allocated fees incurred for fund accounting, fund administration, transfer agency and custody services for the six months ended April 30, 2024 are reported on the Statement of Operations.
IMST Distributors, LLC, a wholly owned subsidiary of Foreside Financial Group, LLC (d/b/a ACA Group), serves as the Fund's distributor (the "Distributor"). The Distributor does not receive compensation from the Fund for its distribution services; the Advisor pays the Distributor a fee for its distribution-related services.
Certain trustees and officers of the Trust are employees of UMBFS or MFAC. The Fund does not compensate trustees and officers affiliated with the Fund's co-administrators. For six months ended April 30, 2024, the Fund's allocated fees incurred to Trustees who are not affiliated with the Fund's co-administrators are reported on the Statement of Operations.
The Fund's Board of Trustees has adopted a Deferred Compensation Plan (the "Plan") for the Independent Trustees that enables Trustees to elect to receive payment in cash or the option to select various fund(s) in the Trust in which their deferred accounts shall be deemed to be invested. If a trustee elects to defer payment, the Plan provides for the creation of a deferred payment account. The Fund's liability for these amounts is adjusted for market value changes in the invested fund(s) and remains a liability to the Fund until distributed in accordance with the Plan. The Trustees Deferred compensation liability under the Plan constitutes a general unsecured obligation of the Fund and is disclosed in the Statement of Assets and Liabilities. Contributions made under the plan and the change in unrealized appreciation/depreciation and income are included in the Trustees' fees and expenses in the Statement of Operations.
Dziura Compliance Consulting, LLC provides Chief Compliance Officer ("CCO") services to the Trust. The Fund's allocated fees incurred for CCO services for the six months ended April 30, 2024 are reported on the Statement of Operations.
Note 4 - Federal Income Taxes
At April 30, 2024, gross unrealized appreciation and depreciation of investments, based on cost for federal income tax purposes were as follows:
| Cost of investments | $ | 27,317,406 | ||
| Gross unrealized appreciation | $ | 335,508 | ||
| Gross unrealized depreciation | (242,501 | ) | ||
| Net unrealized appreciation on investments | $ | 93,007 |
The difference between cost amounts for financial statement and federal income tax purposes is due primarily to timing differences in recognizing certain gains and losses in security transactions.
22
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS - Continued
April 30, 2024 (Unaudited)
As of October 31, 2023, the components of accumulated earnings (deficit) on a tax basis were as follows:
| Undistributed ordinary income | $ | 70,192 | ||
| Undistributed long-term capital gains | - | |||
| Distributable earnings | 70,192 | |||
| Accumulated capital and other losses | - | |||
| Unrealized appreciation (depreciation) on investments | (53,859 | ) | ||
| Currency Forwards and translations | 3,945 | |||
| Unrealized deferred compensation | (2,428 | ) | ||
| Total accumulated earnings (deficit) | $ | 17,850 |
The tax character of the distribution paid during the fiscal year ended October 31, 2023 are as follows:
| Distributions paid from: |
For the period Ended October 31, 2023 * |
|||
| Ordinary income | $ | 121,619 | ||
| Total distributions paid | $ | 121,619 |
| * | Commencement of operations on December 30, 2022. |
Note 5 - Investment Transactions
For the six months ended April 30, 2024, purchases and sales of investments, excluding short-term investments, were $18,664,271 and $1,890,075, respectively.
Note 6 - Shareholder Servicing Plan
The Trust, on behalf of the Fund, has adopted a Shareholder Servicing Plan to pay a fee at an annual rate of up to 0.10% of average daily net assets of shares serviced by shareholder servicing agents who provide administrative and support services to their customers.
For the six months ended April 30, 2024, shareholder servicing fees incurred are disclosed on the Statement of Operations.
Note 7 - Indemnifications
In the normal course of business, the Fund enters into contracts that contain a variety of representations, which provide general indemnifications. 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 to be remote.
Note 8 - Fair Value Measurements and Disclosure
Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. It also provides guidance on determining when there has been a significant decrease in the volume and level of activity for an asset or a liability, when a transaction is not orderly, and how that information must be incorporated into a fair value measurement.
Under Fair Value Measurements and Disclosures, various inputs are used in determining the value of the Fund's investments. These inputs are summarized into three broad Levels as described below:
23
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS - Continued
April 30, 2024 (Unaudited)
| ● | Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access. | |
| ● | Level 2 - Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. | |
| ● | Level 3 - Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund's own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
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.
The inputs used to measure fair value may fall into different Levels of the fair value hierarchy. In such cases, for disclosure purposes, the Level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest Level input that is significant to the fair value measurement in its entirety.
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities. The following is a summary of the inputs used, as of April 30, 2024, in valuing the Fund's assets carried at fair value:
| Level 1 | Level 2 | Level 3*** | Total | |||||||||||||
| Assets | ||||||||||||||||
| Investments | ||||||||||||||||
| Bonds* | $ | - | $ | 15,901,919 | $ | - | $ | 15,901,919 | ||||||||
| Common Stock | 114,166 | 48,776 | - | 162,942 | ||||||||||||
| Convertible Corporate Bonds* | - | 577,463 | - | 577,463 | ||||||||||||
| Leveraged Loans | - | 4,894,296 | - | 4,894,296 | ||||||||||||
| Short-Term Investments | 5,873,793 | - | - | 5,873,793 | ||||||||||||
| Total Investments | $ | 5,987,959 | $ | 21,422,454 | $ | - | $ | 27,410,413 | ||||||||
| Other Financial Instruments** | ||||||||||||||||
| Forward Contracts | - | 1,566 | - | 1,566 | ||||||||||||
| Total Assets | $ | 5,987,959 | $ | 21,424,020 | - | $ | 27,411,979 |
| * | All corporate bonds held in each Fund are Level 2 securities. For a detailed break-out by major sector classification, please refer to the Schedule of Investments for each Fund. |
| ** | Other financial instruments are derivative instruments such as futures contracts. Futures contracts, forward contracts, and swap contracts are valued at the unrealized appreciation (depreciation) on the instrument. |
| *** | The Funds did not hold any level 3 securities at period end. |
24
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS - Continued
April 30, 2024 (Unaudited)
Note 9 - Derivatives and Hedging Disclosures
Derivatives and Hedging requires enhanced disclosures about the Fund's derivative and hedging activities, including how such activities are accounted for and their effects on the Fund's financial position, performance and cash flows.
The effects of these derivative instruments on the Fund's financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations are presented in the tables below. The fair values of derivative instruments as of April 30, 2024 by risk category are as follows:
| Derivatives not designated as hedging instruments | ||||||||||||||||||||
|
Credit |
Equity |
Foreign Exchange Contracts |
Interest Rate Contracts |
Total |
||||||||||||||||
| Assets | ||||||||||||||||||||
| Unrealized appreciation on forward foreign currency exchange contracts | $ | - | $ | - | $ | 1,566 | $ | - | $ | 1,566 | ||||||||||
| $ | - | $ | - | $ | 1,566 | $ | - | $ | 1,566 |
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2024 are as follows:
|
Derivatives not designated as hedging instruments |
||||||||||||||||||||
| Net Change in Unrealized Appreciation (Depreciation) on Derivatives |
Credit Contracts |
Equity Contracts |
Foreign Exchange Contracts |
Interest Rate Contracts |
Total | |||||||||||||||
| Forward contracts | $ | - | $ | - | $ | (2,442 | ) | $ | - | $ | (2,442 | ) | ||||||||
| $ | - | $ | - | $ | (2,442 | ) | $ | - | $ | (2,442 | ) |
The notional amount and the number of contracts are included on the Schedule of Investments. The quarterly average volumes of derivative instruments as of April 30, 2024 are as follows:
| Derivatives not designated as hedging instruments | |||
| Forward contracts | Foreign exchange contracts | Notional amount | (114,500) |
Note 10 - Market Disruption and Geopolitical Risks
Certain local, regional or global events such as war, acts of terrorism, the spread of infectious illnesses and/or other public health issues, financial institution instability or other events may have a significant impact on a security or instrument. These types of events and other like them are collectively referred to as "Market Disruptions and Geopolitical Risks" and they may have adverse impacts on the worldwide economy, as well as the economies of individual countries, the financial health of individual companies and the market in general in significant and unforeseen ways. Some of the impacts noted in recent times include but are not limited to embargos, political actions, supply chain disruptions, bank failures, restrictions to investment and/or monetary movement including the forced selling of securities or the inability to participate impacted markets. The duration of these events could adversely affect the Fund's performance, the performance of the securities in which the Fund invests and may lead to losses on your investment. The ultimate impact of "Market Disruptions and Geopolitical Risks" on the financial performance of the Fund's investments is not reasonably estimable at this time. Management is actively monitoring these events.
25
Arena Strategic Income Fund
NOTES TO FINANCIAL STATEMENTS - Continued
April 30, 2024 (Unaudited)
Note 11- New Accounting Pronouncements and Regulatory Updates
Effective January 24, 2023, the SEC adopted rule and form amendments to require mutual funds and exchange-traded funds (ETFs) to transmit concise and visually engaging streamlined annual and semiannual reports to shareholders that highlight key information deemed important for retail investors to assess and monitor their fund investments. Other information, including financial statements, will no longer appear in the fund's streamlined shareholder reports but must be available online, delivered free of charge upon request, and filed on a semiannual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. At this time, management is evaluating the impact of these rule and form amendment changes on the content of the current shareholder report and the newly created annual and semiannual streamlined shareholder reports.
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices ("Rule 2a-5"). Rule 2a-5 establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 will permit fund boards to designate certain parties to perform fair value determinations, subject to board oversight and certain other conditions. Rule 2a-5 also defines when market quotations are "readily available" for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule 2a-5, the SEC also adopted related recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing of fund investments. The Fund has adopted procedures in accordance with Rule 2a-5.
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in the ASU provide optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of the London Interbank Offered Rate and other interbank-offered based reference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848) - Deferral of the Sunset Date of Topic 848, which extends the period through December 31, 2024. Management has reviewed the requirements and believes the adoption of these ASUs will not have a material impact on the financial statements.
Note 11 - Events Subsequent to the Fiscal Period End
The Fund has adopted financial reporting rules regarding subsequent events which require an entity to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet. Management has evaluated the Fund's related events and transactions that occurred through the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during this period that materially impacted the amounts or disclosures in the Fund's financial statements.
26
Arena Strategic Income Fund
EXPENSE EXAMPLE
For the Six Months Ended April 30, 2024 (Unaudited)
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees; and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2023 to April 30, 2024.
Actual Expenses
The information in the row titled "Actual Performance" of the table below provides actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate row, under the column titled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the row titled "Hypothetical (5% annual return before expenses)" of the table below provides hypothetical account values and hypothetical expenses based on the Fund's actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as redemption fees. Therefore, the information in the row titled "Hypothetical (5% annual return before expenses)" is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
|
Beginning Account Value 11/1/23 |
Ending Account Value 4/30/24 |
Expense Paid During Period 11/1/23 - 4/30/24* |
|
| Actual Performance | $1,000.00 | $1,091.20 | $3.90 |
| Hypothetical (5% annual return before expenses) | 1,000.00 | 1,021.13 | 3.77 |
| * | Expenses are equal to the Fund's annualized expense ratio of 0.75%, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the six month period). The expense ratios reflect an expense waiver. Assumes all dividends and distributions were reinvested |
27
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FUND INFORMATION
| TICKER | CUSIP | |
| Arena Strategic Income Fund | ACSIX | 46144X 594 |
Privacy Principles of the Fund for Shareholders
The Fund is committed to maintaining the privacy of its shareholders and to safeguarding its non-public personal information. The following information is provided to help you understand what personal information the Fund collects, how we protect that information and why, in certain cases, we may share information with select other parties.
Generally, the Fund does not receive any non-public personal information relating to its shareholders, although certain non-public personal information of its shareholders may become available to the Fund. The Fund does not disclose any non-public personal information about its shareholders or former shareholders to anyone, except as permitted by law or as is necessary in order to service shareholder accounts (for example, to a transfer agent or third party administrator).
This report is sent to shareholders of the Arena Strategic Income Fund for their information. It is not a Prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund or of any securities mentioned in this report.
Proxy Voting Policies and Procedures
A description of the Fund's proxy voting policies and procedures related to portfolio securities is available without charge, upon request, by calling the Fund at (877) 770-7760 or on the U.S. Securities and Exchange Commission's ("SEC") website at www.sec.gov.
Proxy Voting Record
Information regarding how the Fund voted proxies for portfolio securities, if applicable, during the most recent 12-month period ended June 30, is also available, without charge and upon request by calling (877) 770-7760 or by accessing the Fund's Form N-PX on the SEC's website at www.sec.gov.
Fund Portfolio Holdings
The Fund files a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the Fund's Form N-PORT on the SEC's website at www.sec.gov.
Householding
The Fund will mail only one copy of shareholder documents, including prospectuses and notice of annual and semi-annual reports availability and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called "householding" and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Fund at (877) 770-7760.
Arena Strategic Income Fund
P.O. Box 2175
Milwaukee, WI 53201
Toll Free: (877) 770-7760
Item 1. Report to Stockholders (Continued).
| (b) | Not Applicable |
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
| (a) | Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934). |
| (b) | Not applicable. |
Item 6. Schedule of Investments.
(a) Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
(b) Not Applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
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.
Item 11. Controls and Procedures.
| (a) | The Registrant's President and Principal Executive Officer and Treasurer and Principal Financial Officer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant's service provider. |
| (b) | There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) 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 open-end investment companies.
Item 13. Exhibits.
| (a) | (1) Any code of ethics or amendment thereto, that is subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Not Applicable. |
(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies.
(4) Change in the registrant's independent public accountant. There was no change in the registrant's independent public accountant for the period covered by this report.
| (b) | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Filed herewith. |
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.
| (Registrant) | Investment Managers Series Trust II | |
| By (Signature and Title) | /s/ Terrance Gallagher | |
| Terrance Gallagher, President and Principal Executive Officer | ||
| Date | 7/5/2024 |
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.
| By (Signature and Title) | /s/ Terrance Gallagher | |
| Terrance Gallagher, President and Principal Executive Officer | ||
| Date | 7/5/2024 | |
| By (Signature and Title) | /s/ Rita Dam | |
| Rita Dam, Treasurer and Principal Financial Officer | ||
| Date | 7/5/2024 |