Company: SVIX
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001013762-25-004207
Chunk: 17

Company: VS Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1
Chunk 17
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Collateral posted by a Fund to a counterparty
in connection with uncleared derivatives transactions is generally held for the benefit of the counterparty in a segregated tri-party
account at a third-party custodian to protect the counterparty against non-payment by the Fund. In the event of a default by a Fund where
the counterparty is owed money in the uncleared swap transaction, such counterparty will seek withdrawal of this collateral from the
segregated account.

8

Collateral posted by the
counterparty to a Fund is typically held for the benefit of the Fund in a segregated tri-party account at a third-party custodian. In
the event of a default by the counterparty where the Fund is owed money in the uncleared swap transaction, the Fund will seek withdrawal
of this collateral from the segregated account. The Fund may incur certain costs exercising its right with respect to the collateral.

Notwithstanding the use of collateral arrangements,
to the extent any collateral provided to a Fund is insufficient or there are delays in accessing the collateral, a Fund will be exposed
to counterparty risk as described above, including possible delays in recovering amounts as a result of bankruptcy proceedings.

Money Market Instruments

Money market instruments are short-term debt
instruments that have a remaining maturity of 397 days or less and exhibit high quality credit profiles. Money market instruments may
include U.S. government securities, securities issued by governments of other developed countries and repurchase agreements.

U.S. Derivatives Exchanges

Derivatives exchanges, including swap execution
facilities that are required under the Dodd-Frank Act, provide centralized market facilities for trading derivatives in which multiple
persons have the ability to execute or trade contracts by accepting bids and offers from multiple participants. Members of, and trades
executed on, a particular exchange are subject to the rules of that exchange. Among the principal exchanges in the United States are
the CBOE (which includes the CBOE Futures Exchange (the “CFE”)), the Chicago Mercantile Exchange (“CME”) (which
includes, among others, the Chicago Board of Trade (“CBOT”) and the New York Mercantile Exchange (the “NYMEX”)
and the Intercontinental Exchange (“ICE”)).

Each derivatives exchange in the United States
has an associated “clearing house.” Clearing houses provide services designed to transfer credit risk and ensure the integrity
of trades. Once trades between members of an exchange have been confirmed and/or cleared, the clearing house becomes substituted for