Company: SVIX
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001013762-25-004207
Chunk: 647

Company: VS Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 4
Chunk 647
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 than that for exchange-traded instruments.
This potential delay could be exacerbated to the extent a counterparty is not a United States person.

The large size of the positions in which a Fund
may acquire increases the risk of illiquidity by both making their positions more difficult to liquidate and increasing the losses incurred
while trying to do so. Any type of disruption or illiquidity will potentially be exacerbated due to the fact that the Funds will typically
invest in Financial Investments related to one benchmark, which in many cases is highly concentrated.

Because each Fund may enter into swaps and may
trade futures and forward contracts, its capital is at risk due to changes in the value of these contracts (market risk) or the inability
of counterparties to perform under the terms of the contracts (credit risk).

Market Risk

Trading in derivatives contracts involves each
Fund entering into contractual commitments to purchase or sell a commodity, currency or spot volatility product underlying such Fund’s
benchmark at a specified date and price, should it hold such derivative contract into the deliverable period. Should a Fund enter into
a contractual commitment to sell a physical commodity, currency or spot volatility product, it would be required to make delivery of
that commodity, currency or spot volatility product at the contract price and then repurchase the contract at prevailing market prices
or settle in cash. Since the repurchase price to which the value of a commodity, currency or spot volatility product can rise is unlimited,
entering into commitments to sell commodities, currencies or spot volatility products would expose a Fund to theoretically unlimited
risk.

For more information, see “Item 7A. Quantitative
and Qualitative Disclosures About Market Risk” in this Annual Report on Form 10-K.

Credit Risk

When a Fund enters into swap agreements, futures
contracts or forward contracts, the Fund is exposed to credit risk that the counterparty to the contract will not meet its obligations.

The counterparty for futures contracts traded
on United States and most foreign futures exchanges as well as certain swaps is the clearing house associated with the particular exchange.
In general, clearing houses are backed by their corporate members who may be required to share in the financial burden resulting from
the nonperformance by one of their members and, as such, should significantly reduce this credit risk. In cases where the clearing house
is not backed by the clearing members (i.e., some foreign exchanges, which may become applicable in the future), it may be backed by
a consortium of banks or other financial institutions.

Certain swap and forward