Company: SVIX
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001013762-25-004207
Chunk: 943

Company: VS Trust
Filing Date: 2025-03-28
Form: 10-K
Item: Item 7
Chunk 943
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anced. The Sponsor believes that a Fund will enter an extended rebalance period most often during periods
of extraordinary market conditions or illiquidity in VIX futures contracts. In the event that the Fund participates in an extended rebalance
period, the Fund represents that it will notify the Exchange and the SEC of such participation as soon as practicable, but no later than
9:00 a.m. ET on the trading day following the event.

Entry into swap agreements or forward contracts
may further impact liquidity because these contractual agreements are executed “off-exchange” between private parties and,
therefore, the time required to offset or “unwind” these positions may be greater 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