FIDELITY BOND ALLOCATION AGREEMENT
----------------------------------
AGREEMENT made as of this 10th day of September, 2002, by Hussman
Investment Trust, an open-end investment company registered under the Investment
Company Act of 1940, on behalf of Hussman Strategic Growth Fund and Hussman
Strategic Total Return Fund (collectively, with any additional future series of
Hussman Investment Trust, the "Funds").
WHEREAS, pursuant to the requirements of Rule 17g-1 under the Investment
Company Act of 1940 ("Rule 17g-1"), the Funds are required to maintain a
fidelity bond against larceny and embezzlement, covering certain of their
officers and employees; and
WHEREAS, the Funds have entered into a joint fidelity bond with Federal
Insurance Company in accordance with Rule 17g-1 (such joint fidelity bond as it
is currently constituted and as it may be amended from time to time being
hereinafter referred to as the "Bond"); and
WHEREAS, Rule 17g-1 provides that the amount of insurance coverage under a
joint fidelity bond shall be at least equal to the sum of the total amount of
coverage which each party to such bond would have been required under Rule 17g-1
to provide and maintain individually; and
WHEREAS, the Funds desire to provide for: (1) the method by which the
amount of coverage provided under the Bond will be determined from time to time
and (2) an equitable and proportionate allocation of any proceeds received under
the Bond in the event that two or more of the Funds suffer loss and consequently
are entitled to recover under the Bond;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, the Funds agree as follows:
I. Definitions
-----------
A. Minimum Coverage Requirement - the minimum amount of insurance coverage
required to be maintained on a current basis by each of the Funds, such amount
being based upon their respective gross assets and being determined as of the
close of the most recent fiscal quarter in accordance with the table set forth
in paragraph (d) of Rule 17g-1 as it may from time to time be amended by the
Securities and Exchange Commission).
B. Fidelity Coverage - the total amount of coverage provided under the Bond
to protect against losses arising from larceny or embezzlement committed by any
employee.
C. Actual Loss - the total amount of pecuniary loss suffered by a Fund
under circumstances covered by the terms of the Bond without regard to whether
the amount of Fidelity Coverage is sufficient to enable such Fund to recover the
total amount of such pecuniary loss.
D. Excess Coverage - the amount by which the Fidelity Coverage exceeds the
amount of the combined Minimum Coverage Requirements of the Funds suffering
Actual Loss.
II. The Amount of the Bond
----------------------
It shall be the intent of the Funds that the amount of the Fidelity
Coverage at all times shall be at least equal to the amount of the combined
Minimum Coverage Requirements of the Funds.
III. Allocation of Recovery Under the Bond
-------------------------------------
In the event Actual Loss is suffered by any two or more of the Funds, any
recovery under the Bond will be allocated among such Funds in the following
manner:
A. If the Fidelity Coverage exceeds or is equal to the amount of the
combined Actual Losses of the Funds suffering Actual Loss, then each such Fund
shall be entitled to recover the amount of its Actual Loss.
B. If the amount of Actual Loss of each Fund suffering Actual Loss exceeds
its Minimum Coverage Requirement and the amount of the Funds' combined Actual
Losses exceeds the
Fidelity Coverage, then each Fund shall be entitled to recover (i) its Minimum
Coverage Requirement, and (ii) to the extent there exists Excess Coverage, the
proportion of the Excess Coverage which its Minimum Coverage Requirement bears
to the amount of the combined Minimum Coverage Requirements of the Funds
suffering Actual Loss; provided, however, that if the Actual Loss of one of the
Funds is less than the sum of its Minimum Coverage Requirement plus the Excess
Coverage allocable to such Fund under (ii) of this section III.B., then the
remaining Excess Coverage shall be allocable to the other Fund or Funds in
proportion to their relative Minimum Coverage Requirements.
C. If (i) the amount of Actual Loss suffered by any Fund is less than or
equal to its Minimum Coverage Requirement, (ii) the amount of Actual Loss of
another Fund or other Funds exceeds its or their Minimum Coverage Requirement(s)
and (iii) the amount of the combined Actual Losses of the Funds exceeds the
Fidelity Coverage, then any Fund which has suffered an amount of Actual Loss
less than or equal to its Minimum Coverage Requirement shall be entitled to
recover its Actual Loss. If only one other Fund has suffered Actual Loss, it
shall be entitled to recover the amount of the Fidelity Coverage remaining. If
more than one other Fund has suffered Actual Loss in excess of the remaining
coverage, they shall allocate such remaining coverage in accordance with section
III.B. of this Agreement.
IN WITNESS WHEREOF, Hussman Investment Trust has executed this Agreement,
on behalf of the Funds, on the date above mentioned.
HUSSMAN STRATEGIC GROWTH FUND HUSSMAN STRATEGIC TOTAL RETURN FUND
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
---------------------------- ----------------------------
