Company: SVIX
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001213900-25-075845
Chunk: 50

Company: VS Trust
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 1
Chunk 50
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 portfolio transactions; (10) accounting standards; and (11) differences caused by a Fund obtaining exposure
to only a representative sample of the components of a benchmark, over weighting or under weighting certain components of a benchmark
or obtaining exposure to assets that are not included in a benchmark.

A number of factors may affect a Fund’s ability
to achieve a high degree of correlation with its benchmark, and there can be no guarantee that a Fund will achieve a high degree of correlation.
Failure to achieve a high degree of correlation may prevent a Fund from achieving its investment objective. In order to achieve a high
degree of correlation with their underlying benchmarks, the Funds seek to rebalance their portfolios daily to keep exposure consistent
with their investment objectives. Being materially under- or over-exposed to the benchmark may prevent such Funds from achieving a high
degree of correlation with such benchmark. Market disruptions or closure, large amounts of assets into or out of the Funds, regulatory
restrictions, extreme market volatility, and other factors will adversely affect such Funds’ ability to adjust exposure to requisite
levels. The target amount of portfolio exposure is impacted dynamically by the benchmarks’ movements during each day. Other things
being equal, more significant movement in the value of its benchmark up or down will require more significant adjustments to a Fund’s
portfolio. Because of this, it is unlikely that the Funds will be perfectly exposed (i.e., --1x, -2x, as applicable) to its benchmark
at the end of each day, and the likelihood of being materially under- or over-exposed is higher on days when the benchmark levels are
volatile near the close of the trading day.

Each Fund seeks to rebalance its portfolio on a
daily basis. The time and manner in which a Fund rebalances its portfolio may vary from day to day depending upon market conditions and
other circumstances at the discretion of the Sponsor. Unlike other funds that do not rebalance their portfolios as frequently, each Fund
may be subject to increased trading costs associated with daily portfolio rebalancing in order to maintain appropriate exposure to the
underlying benchmarks.

Counterparty Risk

Each Fund may use derivatives such as swap agreements
and forward contracts (collectively referred to herein as “derivatives”) in the manner described herein as a means to achieve
their respective investment objectives. The use of derivatives by a Fund exposes the Fund to counterparty risks.

F-31

Regulatory Treatment

Derivatives are generally traded in OTC markets
and have only recently become subject