AMENDMENT
TO
CUSTODY AGREEMENT
This instrument dated as of September 10, 2002 is an Amendment to that
certain Custody Agreement between Hussman Investment Trust (the "Trust") and US
Bank, N.A. (the "Custodian"), formerly Firstar Bank, N.A., originally entered
into as of July 20, 2000 (the "Custody Agreement").
WHEREAS, the Trust has introduced a new series, the Hussman Strategic Total
Return, and the parties are desirous of extending the terms of the Custody
Agreement to cover such new series; and
WHEREAS, the parties desire to amend the Custody Agreement to implement
arrangements to maintain custody of foreign securities and related assets with
banks and securities depositories in foreign jurisdictions in accordance with
the provisions of Rule 17f-5 and Rule 17f-7 under the Investment Company Act of
1940 (the "1940 Act"); and
WHEREAS, the Trust desires to appoint the Custodian to serve as its Foreign
Custody Manager, as that term is defined in Rule 17f-5(a)(3), and the Custodian
is willing to serve in such capacity;
NOW, THEREFORE, the parties agree that the Agreement shall be amended as
follows:
1. The Custody Agreement, as amended herein, shall apply both to Hussman
Strategic Total Return Fund and Hussman Strategic Growth Fund (referred to
herein individually as a "Fund" and collectively as the "Funds"), each a series
of the Trust. Each Fund shall be treated as a separate party to the Custody
Agreement for all purposes, as though each has entered into a separate agreement
with the Custodian.
2. The following definitions shall be added to Article I of the Custody
Agreement:
"Rule 17f-5" shall mean Rule 17f-5 under the 1940 Act.
"Rule 17f-7" shall mean Rule 17f-7 under the 1940 Act.
"Foreign Assets" shall mean any investments (including foreign currencies)
for which the primary market is outside the United States, and any cash or cash
equivalents that are reasonably necessary to effect a Fund's transactions in
those investments.
"Foreign Securities Depository" shall mean a system that (i) acts as or
operates a system for the central handling of Securities or equivalent
book-entries in the country
where it is incorporated, or a transnational system for the central handling of
Securities or equivalent book-entries; (ii) is regulated by a foreign financial
regulatory authority as defined by Section 2(a)(50) of the 1940 Act; (iii) holds
assets for the custodian that participates in the system under safekeeping
conditions no less favorable than the conditions that apply to other
participants; (iv) maintains records that identify the assets of each
participant and segregate the system's own assets from the assets of
participants; (v) provides periodic reports to its participants with respect to
safekeeping of assets, including notices of transfers to or from any
participant's account; and (vi) is subject to periodic examination by regulatory
authorities or independent accountants.
"Foreign Custodian" shall mean and include any Eligible Foreign Custodian,
as that term is defined in Rule 17f-5, having a written contract with the
Custodian or its agent(s) which the Custodian has determined will provide
reasonable care for Foreign Assets based upon the standards specified in Section
3.3B of this Agreement.
3. The following Sections shall be added to Article III of the Custody
Agreement:
3.3A. APPOINTMENT AND REMOVAL OF FOREIGN CUSTODIANS.
(a) The Custodian or its agent(s) may appoint one or more Foreign
Custodians to act as sub-custodian or sub-custodians to maintain custody of
Foreign Assets at any time held by each Fund, upon the terms and conditions
specified in this Agreement. The Custodian or its agent(s) shall oversee the
maintenance by any Foreign Custodian of custody of Securities or moneys of any
Fund.
(b) The contract between the Custodian (or its agent(s)) and each Foreign
Custodian acting hereunder shall contain the provisions set forth in paragraph
(c)(2)(i) of Rule 17f-5. The contract may contain, in lieu of any or all of the
provisions specified in Rule 17f-5(c)(2)(i), such other provisions that the
Custodian or its agent(s) determines will provide, in their entirety, the same
or a greater level of care and protection for Foreign Assets of the Funds as the
specified provisions, in their entirety.
(c) The Custodian or its agent(s) shall promptly take such steps as may be
required to remove any Foreign Custodian that has ceased to be an "Eligible
Foreign Custodian" as defined by Rule 17f-5, or has otherwise ceased to meet the
requirements under Rule 17f-5.
(d) The Custodian shall determine, after due inquiry, that the established
procedures to be followed by each Foreign Custodian in connection with the
safekeeping of property of a Fund pursuant to this Agreement afford reasonable
care for the safekeeping of such property based on the standards applicable in
the relevant market.
3.3B. DELEGATION OF FOREIGN CUSTODY MANAGEMENT.
(a) The Trust hereby appoints the Custodian as its Foreign Custody Manager
with respect to the responsibilities set forth in this Section 3.3B, in
accordance with Rule 17f-5 with respect to foreign custody arrangements for the
Funds.
(b) With respect to each arrangement with any Foreign Custodian regarding
the Foreign Assets of any Fund for which Custodian has responsibility under this
Section 3.3B, the Custodian hereby agrees to exercise reasonable care, prudence
and diligence such as a person having responsibility for the safekeeping of
Foreign Assets would exercise in performing the delegated responsibilities.
Custodian further agrees that in selecting a Foreign Custodian, the Custodian or
its agent(s) will first determine that:
(i) the Foreign Assets placed and maintained in the care of a Foreign
Custodian will be subject to reasonable care, based on the standards
applicable to custodians in the relevant market, after considering all
factors relevant to the safekeeping of such assets, including, but not
limited to, (i) the Foreign Custodian's practices, procedures and
internal controls, including, but not limited to, the physical
protections available for certificated Securities (if applicable),
method of keeping custodial records, and the security and data
protection practices; (ii) whether the Foreign Custodian has the
requisite financial strength to provide reasonable care for Foreign
Assets; (iii) the Foreign Custodian's general reputation and standing;
and (iv) whether the Trust will have jurisdiction over and be able to
enforce judgments against the Foreign Custodian, for example, by
virtue of the existence of offices of the Foreign Custodian in the
United States or the Foreign Custodian's consent to service of process
in the United States;
(ii) the written contract with such Foreign Custodian governing the
foreign custody arrangements shall comply with the requirements of
Rule 17f-5 and will provide reasonable care for the Trust's assets
based on the standards specified in clause (i) of this Section
3.3B(b);
(iii) the Custodian or its agent(s) shall have an established system
to monitor the appropriateness of maintaining Foreign Assets with such
Foreign Custodian and to monitor the performance of the contract with
such Foreign Custodian;
(iv) the Custodian or its agent(s) shall provide to the Board of
Trustees, at least annually, written reports notifying the Board of
the placement of the Trust's Foreign Assets with a particular Foreign
Custodian and periodic reports of any material changes to the Trust's
foreign custody arrangements; and
(v) the Custodian or its agent(s) shall withdraw the Trust's assets
from any Foreign Custodian as soon as reasonably practicable, if the
foreign custody arrangement with such Foreign Custodian no longer
meets the requirements of this Agreement or Rule 17f-5, and shall
notify the Board of Trustees under the reporting requirements in
clause (iv) of this Section 3.3B(b).
3.3C. USE OF FOREIGN SECURITIES DEPOSITORIES.
Foreign Assets of each Fund may be maintained by the Custodian in the
custody of a Foreign Securities Depository, subject to the following
requirements:
(a) Before any Securities are placed in a Foreign Securities Depository,
the Custodian or its agent(s) shall provide the Trust with an analysis of the
custody risks associated with maintaining assets with the Foreign Securities
Depository.
(b) The Custodian or it agent(s) shall monitor on a continuing basis the
custody risks associated with maintaining the Securities with a Foreign
Securities Depository and shall promptly notify the Trust of any material
changes in said risks.
(c) Only an entity that the Custodian or its agent(s) has determined
satisfies the requirements of Rule 17f-7 as an "Eligible Securities Depository"
will be utilized on behalf of the Trust. The Custodian shall give the Trust
prompt notice of any material change that would adversely effect the
determination that an entity is an Eligible Securities Depository. If a custody
arrangement with a Foreign Securities Depository no longer meets the
requirements of Rule 17f-7, the Funds' Foreign Assets must be withdrawn from the
Foreign Securities Depository as soon as reasonably practicable.
4. The following shall replace Section 8.2 of the Custody Agreement:
Section 8.2. INDEMNIFICATION BY CUSTODIAN. The Custodian will use
reasonable care, prudence and diligence with respect to its obligations under
this Agreement and the safekeeping of property of the Funds. The Custodian shall
be liable to, and shall indemnify and hold harmless the Trust from and against
any loss, damage, cost, expense (including attorneys' fees and disbursements) or
liability (including without limitation, liability arising under the Securities
Act of 1933, the 1934 Act, the 1940 Act, and any state or foreign securities
and/or banking laws) which shall occur as the result of: (a) the failure of the
Custodian or its agent(s) or a Foreign Custodian to exercise reasonable care,
prudence and diligence with respect to their respective obligations under this
Agreement and the safekeeping of such property; or (b) the failure of any agent
of the Custodian to satisfy the requirements of Section 3.3A, 3.3B or 3.3C. The
determination of whether the Custodian, its agent(s) or a Foreign Custodian has
exercised reasonable care in connection with the safekeeping of property of the
Funds shall be made in light of the standards applicable to a professional asset
custodian acting without negligence. The determination of whether the Custodian,
its agent(s) or a Foreign Custodian has exercised reasonable
care, prudence and diligence in connection with their other obligations under
this Agreement shall be made in light of prevailing standards applicable to
professional custodians in the jurisdiction in which such custodial services are
performed.
5. The Custody Fee Schedule attached as Exhibit C to the Custody Agreement
is amended, with respect to Foreign Assets of the Fund only, to incorporate the
Global Custody Fee Schedule attached to this Amendment to Custody Agreement.
6. In all other respects the Custody Agreement shall remain in full force
and effect as originally written.
IN WITNESS WHEREOF, the parties have executed this Amendment, intending it
to be effective as of the date written above.
HUSSMAN INVESTMENT TRUST
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
US BANK, N.A.
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President
