VICE FUND: FEBRUARY 2025 – COMMENTARY LETTER
The Vice Fund ended the month of February with a return of +4.00%.
Market Review
Major U.S. equity indices were lower in February. Concerns around high growth stock valuations, increasing signs of “stagflation,” and ongoing tariff wars fueled the risk-off sentiment. The Federal Reserve maintained a cautious stance due to hotter-than-expected inflation data. We believe risks are mounting for a more meaningful sell-off this year.
On February 18th, the CBOE SKEW (SKEW) Index reached all-time highs. SKEW measures perceived tail-risk in the distributions of the S&P 500 returns over a 30-day horizon. In short, investors were hedging extreme downside risk more than taking opportunistic positions to the upside. But nervous investors are only the beginning of the story.
In the following two weeks after the SKEW all-time high, SKEW immediately dropped close to its lows of years. This may indicate investors closed out hedges aggressively AND added to existing long positions seeking upside opportunity. While this SKEW movement is common during selloffs over longer time periods, the magnitude of the flip-flop back to opportunistic so quickly is uncommon. Investors have been rewarded for nearly two decades buying dips. In this case, we believe investors may be too early on a bullish call.
The Vice Fund remains committed to its core belief that certain stocks are undervalued because certain factions of society deem them morally questionable. Our core holdings remain military defense, casino, alcohol, and tobacco stocks because they typically have an inelastic customer base that is unlikely to be swayed by whether the product price rises or falls.
Sincerely yours,
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 1-800-MUTUALS or visit our website at www.USAMutuals.com. Read the prospectus or summary prospectus carefully before investing.
Standardized performance as of (12/31/2024) Fund Inception (8/30/2002)
| 1 Year | 5 Year | 10 Year | Since Inception | |
| VICEX | 1.55% | 0.07% | 3.48% | 7.22% |
| MSCI World Index | 18.01% | 10.58% | 9.79% | 9.27% |
Investor Class performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-866-264-8783. Returns over one year are annualized. The Gross and Net expense are 1.91% and 1.73%. The Fund’s adviser, USA Mutuals Advisors, Inc. (the “Adviser”), has contractually agreed to reduce its fees and/or absorb expenses of the Fund, until July 31, 2025, to ensure that total annual fund operating expenses after fee waiver and reimbursement will not exceed 1.48% of the Fund’s average daily net assets for each share class.
DEFINITIONS:
The MSCI All Country World Index Total Return (“MSCI ACWI TR”): Captures large and mid-cap representation across 23 Developed Markets (DM) and 26 Emerging Markets (EM) countries.
The S&P 500 Index: An unmanaged composite of 500 large capitalization companies. Professional investors widely use this index as a performance benchmark for large-cap stocks. You cannot invest directly in an index.
SYMBOL: VICEX
