0001716885 2026-02-01 2026-07-31 0001716885 aoscf:AssetBackedAndMortgageBackedSecuritiesAndWholeLoanRisksMember 2026-02-01 2026-07-31 0001716885 aoscf:ClassFIMember 2026-02-01 2026-07-31 0001716885 aoscf:FuturesContractsMember 2026-02-01 2026-07-31 0001716885 aoscf:InstitutionalClassMember 2026-02-01 2026-07-31 0001716885 aoscf:MacroeconomicRisksMember 2026-02-01 2026-07-31 0001716885 aoscf:SecondLienRiskMember 2026-02-01 2026-07-31 0001716885 aoscf:StructuredProductsMember 2026-02-01 2026-07-31 0001716885 aoscf:SubordinatedDebtOfBanksAndDiversifiedFinancialCompaniesMember 2026-02-01 2026-07-31 0001716885 aoscf:SwapsMember 2026-02-01 2026-07-31 0001716885 aoscf:ClassFIMember 2026-07-31 0001716885 aoscf:InstitutionalClassMember 2026-07-31 iso4217:USD shares shares 0001716885 false N-CSRS Angel Oak Strategic Credit Fund <div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;">The investment objective of Angel Oak Strategic Credit Fund is to seek total return. </div> 1096780 20.65 2837863 20.64 <div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;font-weight:bold;">NOTE 3. RISKS ASSOCIATED WITH PORTFOLIO ASSETS </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Asset-Backed and Mortgage-Backed Securities and Whole Loan Risks:</span> Prepayment risk is associated with MBS and ABS, including CLOs, and whole loans. If interest rates fall, the underlying debt may be repaid ahead of schedule, reducing the value of the Fund’s investments. If interest rates rise, there may be fewer prepayments, which would cause the average bond maturity to rise, increasing the potential for the Fund to lose money. The value of these investments may be significantly affected by changes in interest rates, the market’s perception of issuers, and the creditworthiness of the parties involved. The ability of the Fund to successfully utilize these instruments may depend on the ability of the Fund’s Adviser to forecast interest rates and other economic factors correctly. These investments may have a structure that makes their reaction to interest rate changes and </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"> other factors difficult to predict, making their value highly volatile. Certain MBS may be secured by pools of mortgages on single-family, multi-family properties, as well as commercial properties. Similarly, ABS may be secured by pools of loans, such as corporate loans, student loans, automobile loans and credit card receivables. Whole loans are sold in their entirety rather than being pooled with other mortgages. Whole loans are mortgage loans, including HELOCs, sold to an investor in a secondary market. The investor purchasing the loan assumes full responsibility of the loan and all the contractual terms and rights associated with the funds. The credit risk on such loans is affected by homeowners or borrowers defaulting on their loans. The values of assets underlying mortgage-backed and ABS, including CLOs, may decline and therefore may not be adequate to cover underlying investors. To the extent the Fund focuses its investments in particular types of MBS or ABS, including CLOs, and whole loans, the Fund may be more susceptible to risk factors affecting such types of investments. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Subordinated Debt of Banks and Diversified Financial Companies: </span>The Fund may invest in subordinated debt securities, sometimes also called “junior debt,” which are debt securities for which the issuer’s obligations to make principal and interest payments are secondary to the issuer’s payment obligations to more senior debt securities. Such investments will consist primarily of debt issued by community banks or savings institutions (or their holding companies), which are subordinated to senior debt issued by the banks and deposits held by the bank, but are senior to trust preferred obligations, preferred stock and common stock issued by the bank. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Structured Products:</span> The Fund may invest in certain structured products, including community bank debt securitizations. Normally, structured products are privately offered and sold (that is, they are not registered under the securities laws); however, an active dealer market may exist for structured products that qualify for Rule 144A transactions. The risks of an investment in a structured product depend largely on the type of the collateral securities and the class of the structured product in which the Fund invests. In addition to the normal interest rate, default and other risks of fixed-income securities, structured products carry additional risks, including the possibility that distributions from collateral securities will not be adequate to make interest or other payments, the quality of the collateral may decline in value or default, the Fund may invest in Structured Products that are subordinate to other classes, values may be volatile and disputes with the issuer may produce unexpected investment results. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Futures Contracts: </span>The Fund may enter into futures contracts to hedge various investments for risk management as well as speculative purposes. Initial margin deposits are made upon entering into futures contracts and can be either cash or securities. Secondary margin limits are required to be maintained while futures are held, as defined by each contract. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;">During the period a futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by “marking‑to‑market” on a daily basis to reflect the fair value of the contract at the end of each day’s trading. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the proceeds from the closing transaction and the Fund’s cost of entering into a contract. The use of futures contracts involves the risk of illiquid markets or imperfect correlation between the value of the instruments and the underlying securities, or that the counterparty will fail to perform its obligations. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;">Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Should market conditions move unexpectedly, the Fund may not achieve the anticipated benefits of the futures contract and may realize a loss. See Note 4 for information on futures contract activity during the period ended July 31, 2026. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Swaps:</span> The Fund may invest in credit default swaps, total return swaps, interest rate swaps, equity swaps, currency swaps and other types of swaps. During the year, the Fund used centrally cleared credit default swaps to hedge credit spread risk on its portfolio. Such transactions are subject to market risk, liquidity risk, risk of default by the other party to the transaction, known as “counterparty risk,” regulatory risk and risk of imperfect correlation between the value of such instruments and the underlying assets and may involve commissions or other costs. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;">A credit default swap agreement may reference one or more debt securities or obligations that are not currently held by the Fund. The Fund is permitted to enter into a credit default swap as either the protection buyer or seller in the discretion of the Adviser. When buying protection under a credit default swap, the Fund is generally obligated to pay the protection seller an upfront or periodic stream of payments over the term of the contract until a credit event occurs, such as a default of the reference obligation. If no credit event occurs, the Fund may recover nothing if the swap is held through the termination date. </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"> However, if a credit event does occur, the Fund may receive the full notional value of the swap in exchange for the face amount of the obligations underlying the swap, the value of which may have significantly decreased. When selling protection under a credit default swap, the Fund receives an upfront or periodic stream of payments over the term of the contract provided that a credit event does not occur. However, as the seller of protection, the Fund effectively adds leverage to its portfolio because it gains exposure to the notional amount of the swap. Entering into a credit default swap may subject the Fund to greater risk than if the Fund had invested in the reference obligation directly. In addition to general market risks, credit default swaps also involve illiquidity risk, counter-party risk (for OTC swaps) and credit risk. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;">Swap agreements are primarily entered into by institutional investors and the value of such agreements may be extremely volatile. Certain swap agreements are traded OTC between two parties, while other more standardized swaps must be transacted through a Futures Commission Merchant and centrally cleared and exchange traded. While central clearing and exchange-trading are intended to reduce counterparty credit and liquidity risk, they do not make a swap transaction risk-free. The current regulatory environment regarding swap agreements is subject to change. The Adviser will continue to monitor these developments, particularly to the extent regulatory changes affect the Fund’s ability to enter into swap agreements. See Note 4 for information on swap activity during the period ended July 31, 2026. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Second Lien Risk</span><span style="font-weight:bold">:</span><span style="font-weight:bold"> </span>Second lien loans, which may include certain HELOC loans, are generally subject to similar drivers of delinquency and default as those associated with investments in senior loans. However, the risk of loss associated with second lien loans are higher than that of loans with first priority over the collateral, because in the event of default on a second lien loan, the first priority lien holder has first claim to the underlying collateral of the loan. It is possible that no collateral recovery value would remain for the second priority lien holder and therefore result in a loss of investment to the Fund. Second lien loans also generally have greater price volatility than senior loans and may be less liquid. Second lien loans are generally of below investment grade quality, and therefore share the same risks as other below investment grade securities. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Macroeconomic Risks:</span> Developments such as public health crises, armed conflict, changing interest rates, inflation, supply chain disruptions, geopolitical risks, natural or environmental disasters, economic sanctions, and tariffs may disrupt economic markets and the prolonged economic impacts of these types of developments are uncertain. The operational and financial performance of the issuers of securities in which the Fund invests depends on future developments, including the duration, spread, and conclusion of global events, and such uncertainty may in turn impact the value of the Fund’s investments. </div> <div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Asset-Backed and Mortgage-Backed Securities and Whole Loan Risks:</span> Prepayment risk is associated with MBS and ABS, including CLOs, and whole loans. If interest rates fall, the underlying debt may be repaid ahead of schedule, reducing the value of the Fund’s investments. If interest rates rise, there may be fewer prepayments, which would cause the average bond maturity to rise, increasing the potential for the Fund to lose money. The value of these investments may be significantly affected by changes in interest rates, the market’s perception of issuers, and the creditworthiness of the parties involved. The ability of the Fund to successfully utilize these instruments may depend on the ability of the Fund’s Adviser to forecast interest rates and other economic factors correctly. These investments may have a structure that makes their reaction to interest rate changes and </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"> other factors difficult to predict, making their value highly volatile. Certain MBS may be secured by pools of mortgages on single-family, multi-family properties, as well as commercial properties. Similarly, ABS may be secured by pools of loans, such as corporate loans, student loans, automobile loans and credit card receivables. Whole loans are sold in their entirety rather than being pooled with other mortgages. Whole loans are mortgage loans, including HELOCs, sold to an investor in a secondary market. The investor purchasing the loan assumes full responsibility of the loan and all the contractual terms and rights associated with the funds. The credit risk on such loans is affected by homeowners or borrowers defaulting on their loans. The values of assets underlying mortgage-backed and ABS, including CLOs, may decline and therefore may not be adequate to cover underlying investors. To the extent the Fund focuses its investments in particular types of MBS or ABS, including CLOs, and whole loans, the Fund may be more susceptible to risk factors affecting such types of investments. </div> <div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Subordinated Debt of Banks and Diversified Financial Companies: </span>The Fund may invest in subordinated debt securities, sometimes also called “junior debt,” which are debt securities for which the issuer’s obligations to make principal and interest payments are secondary to the issuer’s payment obligations to more senior debt securities. Such investments will consist primarily of debt issued by community banks or savings institutions (or their holding companies), which are subordinated to senior debt issued by the banks and deposits held by the bank, but are senior to trust preferred obligations, preferred stock and common stock issued by the bank. </div> <div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Structured Products:</span> The Fund may invest in certain structured products, including community bank debt securitizations. Normally, structured products are privately offered and sold (that is, they are not registered under the securities laws); however, an active dealer market may exist for structured products that qualify for Rule 144A transactions. The risks of an investment in a structured product depend largely on the type of the collateral securities and the class of the structured product in which the Fund invests. In addition to the normal interest rate, default and other risks of fixed-income securities, structured products carry additional risks, including the possibility that distributions from collateral securities will not be adequate to make interest or other payments, the quality of the collateral may decline in value or default, the Fund may invest in Structured Products that are subordinate to other classes, values may be volatile and disputes with the issuer may produce unexpected investment results. </div> <div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Futures Contracts: </span>The Fund may enter into futures contracts to hedge various investments for risk management as well as speculative purposes. Initial margin deposits are made upon entering into futures contracts and can be either cash or securities. Secondary margin limits are required to be maintained while futures are held, as defined by each contract. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;">During the period a futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by “marking‑to‑market” on a daily basis to reflect the fair value of the contract at the end of each day’s trading. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the proceeds from the closing transaction and the Fund’s cost of entering into a contract. The use of futures contracts involves the risk of illiquid markets or imperfect correlation between the value of the instruments and the underlying securities, or that the counterparty will fail to perform its obligations. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;">Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Should market conditions move unexpectedly, the Fund may not achieve the anticipated benefits of the futures contract and may realize a loss. See Note 4 for information on futures contract activity during the period ended July 31, 2026. </div> <div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Swaps:</span> The Fund may invest in credit default swaps, total return swaps, interest rate swaps, equity swaps, currency swaps and other types of swaps. During the year, the Fund used centrally cleared credit default swaps to hedge credit spread risk on its portfolio. Such transactions are subject to market risk, liquidity risk, risk of default by the other party to the transaction, known as “counterparty risk,” regulatory risk and risk of imperfect correlation between the value of such instruments and the underlying assets and may involve commissions or other costs. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;">A credit default swap agreement may reference one or more debt securities or obligations that are not currently held by the Fund. The Fund is permitted to enter into a credit default swap as either the protection buyer or seller in the discretion of the Adviser. When buying protection under a credit default swap, the Fund is generally obligated to pay the protection seller an upfront or periodic stream of payments over the term of the contract until a credit event occurs, such as a default of the reference obligation. If no credit event occurs, the Fund may recover nothing if the swap is held through the termination date. </div><div style="margin-top:0pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"> However, if a credit event does occur, the Fund may receive the full notional value of the swap in exchange for the face amount of the obligations underlying the swap, the value of which may have significantly decreased. When selling protection under a credit default swap, the Fund receives an upfront or periodic stream of payments over the term of the contract provided that a credit event does not occur. However, as the seller of protection, the Fund effectively adds leverage to its portfolio because it gains exposure to the notional amount of the swap. Entering into a credit default swap may subject the Fund to greater risk than if the Fund had invested in the reference obligation directly. In addition to general market risks, credit default swaps also involve illiquidity risk, counter-party risk (for OTC swaps) and credit risk. </div><div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;">Swap agreements are primarily entered into by institutional investors and the value of such agreements may be extremely volatile. Certain swap agreements are traded OTC between two parties, while other more standardized swaps must be transacted through a Futures Commission Merchant and centrally cleared and exchange traded. While central clearing and exchange-trading are intended to reduce counterparty credit and liquidity risk, they do not make a swap transaction risk-free. The current regulatory environment regarding swap agreements is subject to change. The Adviser will continue to monitor these developments, particularly to the extent regulatory changes affect the Fund’s ability to enter into swap agreements. See Note 4 for information on swap activity during the period ended July 31, 2026. </div> <div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Second Lien Risk</span><span style="font-weight:bold">:</span><span style="font-weight:bold"> </span>Second lien loans, which may include certain HELOC loans, are generally subject to similar drivers of delinquency and default as those associated with investments in senior loans. However, the risk of loss associated with second lien loans are higher than that of loans with first priority over the collateral, because in the event of default on a second lien loan, the first priority lien holder has first claim to the underlying collateral of the loan. It is possible that no collateral recovery value would remain for the second priority lien holder and therefore result in a loss of investment to the Fund. Second lien loans also generally have greater price volatility than senior loans and may be less liquid. Second lien loans are generally of below investment grade quality, and therefore share the same risks as other below investment grade securities. </div> <div style="margin-top:12pt;margin-bottom:0pt;font-size:10pt;font-family:arial;"><span style="font-weight:bold">Macroeconomic Risks:</span> Developments such as public health crises, armed conflict, changing interest rates, inflation, supply chain disruptions, geopolitical risks, natural or environmental disasters, economic sanctions, and tariffs may disrupt economic markets and the prolonged economic impacts of these types of developments are uncertain. The operational and financial performance of the issuers of securities in which the Fund invests depends on future developments, including the duration, spread, and conclusion of global events, and such uncertainty may in turn impact the value of the Fund’s investments. </div>