Company: SVIX
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001213900-25-109885
Chunk: 309

Company: VS Trust
Filing Date: 2025-11-13
Form: 10-Q
Item: Part II, Item 8
Chunk 309
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 representations. The triggering of certain events or the default on certain terms of the
agreement could allow a party to terminate a transaction under the agreement and request immediate payment in an amount equal to the net
positions owed to the party under the agreement. This could cause a Fund to have to enter into a new transaction with the same counterparty,
enter into a transaction with a different counterparty or seek to achieve its investment objective through any number of different investments
or investment techniques.

Swap agreements involve, to varying degrees, elements
of market risk and exposure to loss in excess of the unrealized gain/loss reflected. The notional amounts reflect the extent of the total
investment exposure each Fund has under the swap agreement, which may exceed the NAV of each Fund. Additional risks associated with the
use of swap agreements are imperfect correlations between movements in the notional amount and the price of the underlying reference Index
and the inability of counterparties to perform. Each Fund bears the risk of loss of the amount expected to be received under a swap agreement
in the event of the default or bankruptcy of a swap agreement counterparty. A Fund will typically enter into swap agreements only with
major global financial institutions. The creditworthiness of each of the firms that is a party to a swap agreement is monitored by the
Sponsor. The Sponsor may use various techniques to minimize credit risk including early termination and payment, using different counterparties,
limiting the net amount due from any individual counterparty and generally requiring collateral to be posted by the counterparty in an
amount approximately equal to that owed to the Funds. Outstanding swap agreements contractually terminate within one month but may be
terminated without penalty by either party at any time. Upon termination, the Fund is obligated to pay or receive the “unrealized
appreciation or depreciation” amount.

The Funds, as applicable, collateralize swap agreements
by segregating or designating cash and/or certain securities as indicated on the Statements of Financial Condition or Schedules of Investments.
As noted above, collateral posted in connection with OTC derivative transactions is held for the benefit of the counterparty in a segregated
tri-party account at the Custodian to protect the counterparty against non-payment by the Funds. The collateral held in this account is
restricted as to its use. In the event of a default by the counterparty, the Funds will seek withdrawal of this collateral from the segregated
account and may incur certain costs in exercising its right with respect to the collateral. If a counterparty becomes bankrupt or