Company: SVIX
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-044385
Chunk: 302

Company: VS Trust
Filing Date: 2025-05-15
Form: 10-Q
Item: Part II, Item 8
Chunk 302
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its counterparties for, among other things, creditworthiness and execution quality. In addition, the Sponsor periodically considers the
addition of new counterparties and the counterparties used by a Fund may change at any time. Each day, the Funds disclose their portfolio
holdings as of the prior Business Day. Each Fund’s portfolio holdings identifies its counterparties, as applicable. This portfolio
holdings information may be accessed through the web on the Sponsor’s website at www.volatilityshares.com.

Each counterparty and/or any of its affiliates
may be an Authorized Participant or shareholder of a Fund, subject to applicable law.

The counterparty risk for cleared derivatives transactions
is generally lower than for OTC derivatives. Once a transaction is cleared, the clearing organization is substituted and is a Fund’s
counterparty on the derivative. The clearing organization guarantees the performance of the other side of the derivative. Nevertheless,
some risk remains, as there is no assurance that the clearing organization, or its members, will satisfy its obligations to a Fund.

Leverage Risk

The Funds may utilize leverage in seeking to achieve
their respective investment objectives and will lose more money in market environments adverse to their respective daily investment objectives
than funds that do not employ leverage. The use of leveraged and/or inverse leveraged positions increases the risk of total loss of an
investor’s investment, even over periods as short as a single day.

For example, because UVIX includes a two times
(2x) multiplier, a single-day movement in the relevant benchmark approaching 50% at any point in the day could result in the total loss
or almost total loss of an investor’s investment if that movement is contrary to the investment objective of the Fund in which an
investor has invested, even if such Fund’s benchmark subsequently moves in an opposite direction, eliminating all or a portion of
the movement. This would be the case with downward single-day or intraday movements in the underlying benchmark of a Fund or upward single-day
or intraday movements in the benchmark of a Fund, even if the underlying benchmark maintains a level greater than zero at all times.

F-27

Liquidity Risk

Financial Instruments cannot always be liquidated
at the desired price. It is difficult to execute a trade at a specific price when there is a relatively small volume of buy and sell orders
in a market. A market disruption can also make it difficult to liquidate a position or find a swap or forward contract counterparty at
a reasonable cost.