VICE FUND 2025 Q3 2025 COMMENTARY LETTER
The Vice Fund was up +7.08% in the third quarter of 2025 and is up +23.82% year-to-date, as of 9/30/2025.
Overall Backdrop
• U.S. large-cap equities delivered approximately +8% in Q3 2025, setting their strongest quarter since 2020.
• Macro uncertainties persist (labor softness, inflation/inflation expectations, trade/tariffs), but risk assets found footing on hopes of easing policy.
• Investors are rotating modestly: value / defensive sectors underperforming slightly the broader equity rally, but still garnering interest given income/yield attractiveness.
Defense / Aerospace (Large-cap U.S. & foreign)
• The global defense sector remains one of the stronger “vice”-adjacent pockets: heightened military spending among NATO and allied governments, plus demand for AI/sensor systems, is supporting large‐cap U.S. names and foreign peers.
• For example, RTX Corporation (US) reported Q3 sales growth of ~12 % and raised its full‐year outlook.
• Valuations are elevated in many cases, so the key risk is stretched expectations and program/timing slippages.
Casinos / Gaming
• Regional U.S. casino operators are benefitting from cautious consumer behavior: gamblers are shifting from high-cost destinations (e.g., Las Vegas) to local/regional venues.
• The big integrated resort / global casino names are showing mixed signals: some strong beats (e.g., Las Vegas Sands Corp. with ~24 % revenue growth in Q3), while others face margin/competition/tourism headwinds.
• The sector remains leveraged to consumer discretionary spending, tourism, regulation/licensing, and online gaming trends — meaning upside exists if macro holds, but downside if spending compresses.
Tobacco / Alcohol
• In the tobacco space, major players (e.g., Philip Morris International Inc.) beat expectations with solid revenue growth (~+9.4% YoY) in Q3, aided by pricing and smoke-free product momentum.
• But the underlying secular decline in cigarette consumption persists, and alcohol/brews face cost inflation, supply chain issues, and shifting consumer preferences.
• These are more defensive, dividend-oriented sectors: potentially attractive for income investors, less so for aggressive growth plays in this quarter.
Outlook & key themes for Q4 2025
• For defense: monitor contract awards, export approvals, and margin pressure from higher commodity/steel/titanium input costs.
• For casinos: focus on consumer spending trends, tourism recovery (especially international), regulatory changes, online gaming growth, and leverage/ debt structures.
• For tobacco/alcohol: dividend sustainability, innovation (e.g., heat-not-burn, smokeless), regulatory/tax risk, and cost control.
• Across all: with large-caps already up materially, any macro shock (inflation surprise, interest rate hawkish pivot, weaker consumer spending) could challenge valuations. From a “vice” sector lens, the balance is between income/defensive appeal and growth/risk-on appetite.
As always, we thank you for your continued trust and investment in the Vice Fund.
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 9/30/2025 Fund Inception (8/30/2002)
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 expenses are 2.15% 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, 2026, 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.
Top 10 Holdings as of 9/30/2025
SECURITY NAME % OF NET ASSETS OR MARKET VALUE
BAE SYSTEMS PLC 7.20%
PHILLIP MORRIS INTERNATIONAL, INC 6.67%
RTX CORPORATION 6.55%
BRITISH AMERICAN TOBACCO PLC 5.81%
ALIBABA GROUP HOLDING LTD. 5.82%
HEINEKEN NV 5.76%
HECLA MINING COMPANY 4.46%
NORTHROP GRUMMMAN CORP 4.41%
ANHEUSER-BUSCH INDEV SA 4.34%
DIAGEO PLC 4.09%
Holdings subject to change.
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.
Large-cap: Refers to a company with a market capitalization value of more than $10 billion.
