Institutional Investor Use Only - Not For Public Distribution

Transcription

1 Institutional Investor Use Only - Not For Public Distribution

2 VICE FUND HISTORY VICEX Investor Class Symbol $147,014, Assets under management as of 12/31/2018 Jordan Waldrep, CFA Portfolio Manager Thesis: A portfolio of vice stocks found in defense, tobacco, alcohol, and gaming industries can outperform the S&P 500 Index. Launched in 2002 Key Sector Attributes: - Natural barriers to competition or wide moats - Consumer demand regardless of economic conditions - High profit margins - Excess cash flow - Dividend potential Supported by historical analysis, academic research, and 15 years of application.

3 ANNUALIZED TOTAL RETURNS As of 12/31/ YEAR 3 YEARS 5 YEARS 10 YEARS SINCE INCEPTION* USA Mutuals Vice Fund Investor Class % 2.69% 2.28% 10.21% 8.42% S&P 500 TR Index -4.38% 9.26% 8.49% 13.12% 8.55% USA Mutuals Vice Fund Class A with Load % 0.63% 1.05% % USA Mutuals Vice Fund Class A without Load % 2.64% 2.25% % USA Mutuals Vice Fund Class C with Load % 1.95% 1.52% % USA Mutuals Vice Fund Class C without Load % 1.95% 1.52% % USA Mutuals Vice Fund Institutional Class % 3.01% % S&P 500 Index is considered to be generally representative of the U.S. large capitalization stock market as a whole. You cannot invest directly in an index. Unmanaged index returns do not reflect fees, expenses or sales charges. *Inception: 8/30/2002 (Investor), 12/08/2011 (Class A & C), 4/1/2014 (Institutional) Gross expense ratio Vice : Inst 1.28%, Investor- 1.53%, A 1.53%, C- 2.28% Net Expense Ratio Vice: Inst 1.24%, Investor 1.49%, A 1.49%, C-2.24% Contractual fee waivers through 7/31/19. Performance data quoted represents past performance and 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 In addition, performance for Class A shares may reflect a CDSC of 1.00% if certain conditions apply. Please see the fund prospectus for further details. Performance shown including load reflects the Class A Maximum Sales Charge of 5.75% and Class C Maximum Sales Charge of 1.00% as a on shares redeemed within 12 months of purchase.

4 GROWTH OF $10,000 VICEX S&P Total Return Index (S&P 500 TR Index) is considered to be generally representative of the US Large Capitalization stock market as a whole. You cannot invest directly in an index. This chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on August 30, 2002 following its inception. Assumes reinvestment of dividends and capital gains, but does not reflect the effect of any applicable sales charge or redemption fees. This chart does not imply any future performance.

5 WHY INVEST IN VICE? Four characteristics we believe allow Vice to outperform over the long term. Cheaper Stocks Predictable Customer Base Cash Cows Shareholder Oriented Socially frowned upon businesses that historically trade at cheaper valuations than the market in general. We believe we are getting them at a fundamental discount. Smokers, Drinkers, and Governments. They have historically purchased products regardless of the economic environment, and at a more predictable rate. These companies tend to have large, established businesses that generate sizable amounts of cash. Mature industries tend to buy back stock or send dividends our way.

6 INVESTMENT PROCESS 1. Quantitative Screen Identify: Domestic and international companies in the Tobacco, Alcohol, Gaming, and Aerospace/Defense Rank: Return on capital employed Debt leverage Dividend yield Market capitalization 2. Qualitative Screen Evaluate: Disciplined, experienced management High barriers to entry Debt service coverage Opportunities for the business to reinvest 3. Fundamental Valuation Evaluate: Past operations and future opportunities to develop an intrinsic valuation of the company Heavy emphasis on financial analysis to avoid red flags in financials

7 PORTFOLIO OPTIMIZATION Portfolio risk is optimized using non-traditional vice industry names in smaller positions. Following the primary statistical screen, these names pass through the same analysis as the core portfolio. 1. Statistical 2. Quantitative 3. Qualitative 4. Fundamental Valuation This process results in the addition of 8-10 high quality equities which: Add strategic diversification Seek to reduce overall volatility risk of the portfolio

8 PORTFOLIO MAINTENANCE Focused Diversification Disciplined Reallocation Strategic Options Industry target maximum weighting +20% Company target maximum weighting = 5% Monthly Reallocation Adjust for changes in volatility Tool for strategically rebalancing portfolio Sell short-term volatility in an attempt to generate portfolio income *Diversification does not assure a profit or protect against a loss in a declining market

9 VICE FUND PORTFOLIO 3 holdings in each core Vice Industry as of 12/31/2018. Galaxy Entertainment 5.10% Las Vegas Sands 4.99% Altria 5.34% Phillip Morris 2.81% Wynn Resorts 4.81% Japan Tobacco 2.79% Constellation Brands 4.69% Diageo 4.55% Brown Forman 4.46% Boeing 4.60% Raytheon 4.58% Lockheed Martin 3.75% Past performance is not a guarantee of future results

10 LONG TERM PERFORMANCE Total Returns Since Inception As of 12/31/2018 VICEX % S&P 500 TR Index % Past performance is not a guarantee of future results

11 LONG TERM PERFORMANCE 36 MONTH PERIODS S&P 500 TR VICE FUND Number of Periods Average Annualized Return 9.02% 9.92% Best Annualized Return 25.56% 29.45% Worst Annualized Return % % % Profitable Periods 83.00% 79.00% Average Profitable Return 12.47% 14.40% % Unprofitable Periods 18.00% 21.00% Average Unprofitable Return -7.25% -7.32% Past performance is not a guarantee of future results

12 INVESTMENT INFORMATION Minimum Investment: Taxable Accounts - $2,000 Retirement Accounts - $100 Distribution Schedule: Income Semi Annually Capital Gains - Annually Investment Advisor: USA Mutuals Advisor, Inc. SHARE CLASS TICKER INCEPTION EXPENSE RATIO CUSIP Investor VICEX 08/30/ % Class A VICAX 12/8/ % Class C VICCX 12/8/ % Institutional VICVX 4/1/ %

13 JORDAN WALDREP, CFA SENIOR PORTFOLIO MANAGER Mr. Waldrep has been a portfolio manager of the Vice Fund since Previously, Mr. Waldrep was a founder and principal at Blackfin Capital acting as the portfolio manager of two equity portfolios. He also served as a principal at Hourglass Capital where he was responsible for research and trading in a long/short hedge fund and several equity portfolios. Mr. Waldrep received his MBA from the University of Texas, McCombs School of Business in 2004 and his bachelor s degree from Texas A&M University in Mr. Waldrep is also a Chartered Financial Analyst.

14 Executive Management Contact Us Mike Loukas President Jordan Fletcher COO Ann Marie Swanson CCO MUTUALS 700 N. Pearl St. Suite 900 Dallas, TX N. Water St. Unit 541 Milwaukee, WI 53202

15 DISCLOSURES The Fund s investment objectives, risks, charges and expenses must be considered carefully before investing. The statutory and summary prospectuses contain this and other information about the investment company, and they may be obtained by contacting or go to Read it carefully before investing. The Vice Fund is distributed by Compass Distributors, LLC. Mutual fund investing involves risk; principal loss is possible. The Fund will concentrate its net assets in industries that have significant barriers to entry including the alcoholic beverages, tobacco, gaming and defense/aerospace industries, the Fund may be subject to the risks affecting those industries, including the risk that the securities of companies within those industries will underperform due to adverse economic conditions, regulatory or legislative changes or increased competition affecting those industries, more than would a fund that invests in a wide variety of industries. The Fund invests in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. The Fund invests in smaller companies, which involve additional risks, such as limited liquidity and greater volatility. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could result in losing more than the amount invested. If a security sold short increases in price, the Fund may have to cover its short position at a higher price than the short sale price, resulting in a loss.