CUSTODIAN AGREEMENT

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     THIS AGREEMENT is made as of the 28/th/ day of June, 2002 by and between

(i) MORGAN STANLEY INSTITUTIONAL FUND OF HEDGE FUNDS LP, a Delaware limited

partnership with its principal place of business at One Tower Bridge, West

Conshohocken, Pennsylvania, U.S.A. (the "Partnership"), acting through its

general partner, MORGAN STANLEY ALTERNATIVE INVESTMENT PARTNERS LP, a Delaware

limited partnership with its principal place of business at One Tower Bridge,

100 Front Street, Suite 1100, West Conshohocken, Pennsylvania, U.S.A.(the

"General Partner"), and (ii) STATE STREET BANK AND TRUST COMPANY, a

Massachusetts trust company with its principal place of business at 225 Franklin

Street, Boston, Massachusetts 02110, U.S.A. (the "Custodian").



                              W I T N E S S E T H:



     WHEREAS, pursuant to the terms of the Private Placement Memorandum dated as

of April 5, 2002 (as the same may be amended, supplemented or otherwise modified

from time to time, the "Private Placement Memorandum") and the Amended and

Restated Agreement of Limited Partnership dated as of July 1, 2002 (the "Limited

Partnership Agreement"), the Partnership is authorized to offer certain of its

limited partnership interests ("Limited Partnership Interests") to certain

eligible investors and to invest the proceeds from such offering in pursuit of

the investment objectives and in accordance with the restrictions set forth in

the Private Placement Memorandum; and



     WHEREAS, pursuant to an Investment Advisory Agreement of even date herewith

between Morgan Stanley AIP GP LP (the "Investment Adviser") and the Partnership,

the General Partner on behalf of the Partnership has appointed the Investment

Adviser to manage the investment and reinvestment of the assets of the

Partnership; and



     WHEREAS, the General Partner desires to retain the Custodian to act as

custodian of the assets of the Partnership and the Custodian is willing to

provide such services to the Partnership upon the terms and conditions

hereinafter set forth;



     NOW THEREFORE, in consideration of the mutual covenants and agreements

hereinafter contained, the parties hereto agree as follows:



SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT.

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     Pursuant to the authority contained in the Limited Partnership Agreement,

the General Partner hereby employs the Custodian as the custodian of the assets

of the Partnership, including securities which the General Partner desires to be

held in places within the United States ("domestic securities") and securities

it desires to be held outside the United States ("foreign securities"). The

General Partner agrees to deliver or cause to be delivered to the Custodian or a

sub-custodian all investments and cash, all payments of interest, and payments

of principal or capital distributions received by it with respect to all

investments from time to time, and the cash consideration received



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by the Partnership for Limited Partnership Interests as may be issued or sold

from time to time. The Custodian shall not be responsible for any property of

the Partnership not received or held by it or which it has been instructed to

deliver to any third party and has so delivered such property in accordance with

the terms of this Agreement.



     Upon receipt of "Proper Instructions" (as such term is defined in Section 6

hereof), the Custodian shall from time to time employ one or more sub-custodians

located in the United States, but only in accordance with an applicable vote by

the Partnership's Board of Directors (the "Board"). The Custodian may employ as

sub-custodian for the Partnership's foreign securities the foreign banking

institutions and foreign depositories designated in Schedules A and B hereto,

but only in accordance with the applicable provisions of Sections 3 and 4. The

Custodian shall have no more or less responsibility or liability to the

Partnership or the General Partner on account of any actions or omissions of any

sub-custodian so employed than any such sub-custodian has to the Custodian. The

Custodian shall not be liable for losses arising from the bankruptcy, insolvency

or receivership of any non-Affiliated sub-custodian. For purposes hereof, the

term "Affiliate" shall mean an entity controlling, controlled by, or under

common control with, the Custodian.



SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PARTNERSHIP

           HELD BY THE CUSTODIAN IN THE UNITED STATES.

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     SECTION 2.1 HOLDING INVESTMENTS. The Custodian shall hold and segregate for

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the account of the Partnership all non-cash property, to be held by it in the

United States, including all domestic investments owned by the Partnership,

other than (a) investments which are maintained pursuant to Section 2.8 in a

clearing agency which acts as a securities depository or in the book-entry

system authorized by the U.S. Department of the Treasury and certain federal

agencies (each, a "U.S. Securities System") and (b) commercial paper of an

issuer for which the Custodian acts as issuing and paying agent ("Direct Paper")

which is deposited and/or maintained in the Direct Paper System of the Custodian

(the "Direct Paper System") pursuant to Section 2.9.



     SECTION 2.2 DELIVERY OF INVESTMENTS. The Custodian shall release and

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deliver U.S. investments owned by the Partnership held by the Custodian or in a

U.S. Securities System account of the Custodian or in the Custodian's Direct

Paper book entry system account ("Direct Paper System Account") only upon

receipt of Proper Instructions (as defined below), which may be continuing

instructions when deemed appropriate by the parties, and only in the following

cases:



     (1)  Upon sale of such investments for the account of the Partnership and

          receipt of payment therefor;



     (2)  Upon the receipt of payment in connection with any repurchase

          agreement related to such investments entered into on behalf of the

          Partnership;



     (3)  In the case of a sale effected through a U.S. Securities System, in

          accordance with the provisions of Section 2.8 hereof;



     (4)  To the depository agent, against a receipt, in connection with tender

          or other similar



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          offers for portfolio investments of the Partnership;



     (5)  To the issuer thereof or its agent, against a receipt, when such

          investments are called, redeemed, retired or otherwise become payable;

          provided that, in any such case, the cash or other consideration is to

          be delivered to the Custodian;



     (6)  To the issuer thereof, or its agent, against a receipt, for transfer

          into the name of the Partnership or into the name of any nominee or

          nominees of the Custodian or into the name or nominee name of any

          agent appointed pursuant to Section 2.7 or into the name or nominee

          name of any sub-custodian appointed pursuant to Section 1; or for

          exchange for a different number of bonds, certificates or other

          evidence representing the same aggregate face amount or number of

          units; provided that, in any such case, the new investments are to be

          delivered to the Custodian;



     (7)  Upon the sale of such investments for the account of the Partnership,

          to the broker or its clearing agent, against a receipt, for

          examination in accordance with "street delivery" custom; provided that

          in any such case, the Custodian shall have no responsibility or

          liability for any loss arising from the delivery of such investments

          prior to receiving payment for such investments except as may arise

          from the Custodian's own negligence or willful misconduct;



     (8)  For exchange or conversion pursuant to any plan of merger,

          consolidation, recapitalization, reorganization or readjustment of the

          investments of the issuer of such investments, or pursuant to

          provisions for conversion contained in such investments, or pursuant

          to any deposit agreement, against a receipt; provided that, in any

          such case, the new investments and cash, if any, are to be delivered

          to the Custodian;



     (9)  In the case of warrants, rights or similar investments, the surrender

          thereof in the exercise of such warrants, rights or similar

          investments or the surrender of interim receipts or temporary

          investments for definitive investments; provided that, in any such

          case, the new investments and cash, if any, are concurrently delivered

          to the Custodian or against a receipt;



     (10) For delivery in connection with any loans of investments made on

          behalf of the Partnership, but only against receipt of adequate forms

          of collateral as agreed upon from time to time by the Partnership or

          its delegate, which may be in the form of cash or obligations issued

          by the United States government, its agencies or instrumentalities,

          except that in connection with any loans for which collateral is to be

          credited to the Custodian's account in the book-entry system, the

          Custodian will not be held liable or responsible for the delivery of

          investments owned by the Partnership prior to the receipt of such

          collateral;



     (11) For delivery as security in connection with any borrowings by the

          Partnership requiring a pledge of assets of the Partnership, but only

          against receipt of amounts borrowed;



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     (12) For delivery in accordance with the provisions of any agreement among

          the Partnership, the Custodian and a broker-dealer which is a member

          of The National Association of Securities Dealers, Inc. ("NASD"),

          relating to compliance with the rules of The Options Clearing

          Corporation and of any registered national securities exchange, or of

          any similar organization or organizations, regarding escrow or other

          arrangements in connection with transactions by the Partnership;



     (13) For delivery in accordance with the provisions of any agreement among

          the Partnership, the Custodian, and a Futures Commission Merchant

          registered under the Commodity Exchange Act, relating to compliance

          with the rules of the Commodity Futures Trading Commission and/or any

          Contract Market, or any similar organization or organizations,

          regarding account deposits in connection with transactions by the

          Partnership; and



     (14) For any other proper corporate purpose, but only upon receipt of

          Proper Instructions, specifying the investments to be delivered, and

          naming the person or persons to whom delivery of such investments

          shall be made.



     SECTION 2.3 REGISTRATION OF INVESTMENTS. U.S. investments held by the

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Custodian (other than bearer investments) shall be registered in the name of the

Partnership or in the name of any nominee of the Partnership or of any nominee

of the Custodian which nominee shall be assigned exclusively to the Partnership,

or in the name or nominee name of any agent appointed pursuant to Section 2.7 or

in the name or nominee name of any sub-custodian appointed pursuant to Section

1. All investments accepted by the Custodian on behalf of the Partnership under

the terms of this Agreement shall be in "street name" or other good delivery

form. If, however, the General Partner directs the Custodian to maintain

investments in "street name", the Custodian shall utilize its best efforts only

to timely collect income due to the Partnership on such investments and to

notify the General Partner on a best efforts basis only of relevant corporate

actions including, without limitation, pendency of calls, maturities, tender or

exchange offers.



     SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate

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bank account or accounts in the United States in the name of the Partnership,

subject only to draft or order by the Custodian acting pursuant to the terms of

this Agreement, and shall hold in such account or accounts, subject to the

provisions hereof, all cash received by it from or for the account of the

Partnership, other than cash maintained by the Partnership in a bank account

established and used in accordance with Rule 17f-3 under the 1940 Act (as

defined below). Funds held by the Custodian for the Partnership may be deposited

by it to its credit as Custodian in the Banking Department of the Custodian or

in such other banks or trust companies as it may in its discretion deem

necessary or desirable. Such funds shall be deposited by the Custodian in its

capacity as Custodian and shall be withdrawable by the Custodian only in that

capacity.



     SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of Section 2.3,

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the Custodian shall collect on a timely basis all income and other payments with

respect to United States investments held hereunder to which the Partnership

shall be entitled either by law or pursuant to custom in the investments

business, and shall collect on a timely basis all income and



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other payments with respect to United States bearer investments if, on the date

of payment by the issuer, such investments are held by the Custodian or its

agent thereof and shall credit such income, as collected, to the Partnership's

custodian account. Without limiting the generality of the foregoing, the

Custodian shall detach and present for payment all coupons and other income

items requiring presentation as and when they become due and shall collect

interest when due on investments held hereunder. Income due on United States

investments of the Partnership loaned pursuant to the provisions of Section 2.2

(10) shall not be the responsibility of State Street Bank and Trust Company in

its capacity as Custodian under this Agreement. The Custodian will have no duty

or responsibility in connection therewith, other than to provide the Partnership

with such information or data as may be necessary to assist the Partnership in

arranging for the timely delivery to the Custodian of the income to which the

Partnership is properly entitled.



     SECTION 2.6 PAYMENT OF PARTNERSHIP MONIES. Upon receipt of Proper

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Instructions General Partner or the Investment Adviser, which may be continuing

instructions when deemed appropriate by the parties, the Custodian shall pay out

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