Company: SVIX
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001013762-25-004207
Chunk: 4

Company: VS Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1
Chunk 4
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 how compounding impacts
a 2x daily rebalanced investment referencing an index over periods longer than one day. Areas shaded lighter represent those scenarios
where a hypothetical fund that seeks 2x daily returns of an index will return the same or outperform (i.e., return more than) 2x of the
index performance; conversely, areas shaded darker represent those scenarios where the hypothetical fund will underperform (i.e., return
less than) 2x of the index performance.

2

Principal Investment Strategies

In seeking to achieve each Fund’s investment
objective, the Commodity Sub-Adviser uses a mathematical approach to investing. Using this approach, the Commodity Sub-Adviser determines
the type, quantity and mix of investment positions that it believes, in combination, should produce daily returns consistent with each
Fund’s objective.

Each Fund intends to meet its investment objective
by investing all or substantially all of its assets in positions in first and second month VIX futures contracts, though it may invest
in any one of, or combinations of, Financial Instruments (e.g., futures contracts, options contracts and swap transactions), such that
a Fund typically has exposure intended to approximate the Index at the time of its NAV calculation. Under normal market conditions, SVIX’s
portfolio will comprise short positions, and UVIX’s portfolio will comprise long positions, on first- and second-month VIX futures
contracts. The number and type of these contracts will naturally change day-to-day as each Fund takes a daily rolling position in such
contracts.

In the event that accountability rules, price
limits, position limits, margin limits or other exposure limits are reached with respect to VIX futures contracts, the Sponsor may cause
a Fund to obtain exposure to the Index through the use of options contracts or swap transactions referencing the VIX futures contracts.
Each Fund may also invest in swaps if the market for a specific futures contract experiences emergencies (e.g., natural disaster,
terrorist attack or an act of God) or disruptions (e.g., a trading halt or a flash crash) or in situations where the Sponsor deems
it impractical or inadvisable to buy or sell futures contracts (such as during periods of market volatility or illiquidity).

Each Fund also may hold cash or cash equivalents
such as U.S. Treasury securities or other high credit quality, short-term fixed-income or similar securities (such as shares of money
market funds) as collateral for Financial Instruments and pending investment in Financial Instruments