CUSTODIAN CONTRACT

                                     Between

                        LEGG MASON INVESTMENT TRUST, INC.

                                       and

                       STATE STREET BANK AND TRUST COMPANY
















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                               CUSTODIAN CONTRACT
                               ------------------

      This Contract  between Legg Mason  Investment  Trust,  Inc., a corporation
organized  and  existing  under the laws of the State of  Maryland,  having  its
principal  place of  business at 100 Light  Street,  Baltimore,  Maryland  21202
hereinafter  called the  "FUND",  and State  Street  Bank and Trust  Company,  a
Massachusetts  trust  company,  having its  principal  place of  business at 225
Franklin  Street,   Boston,   Massachusetts,   02110,   hereinafter  called  the
"CUSTODIAN,"

                                   WITNESSETH:

      WHEREAS,  the Fund is authorized to issue shares in separate series,  with
each such series  representing  interests in a separate  portfolio of securities
and other assets; and

      WHEREAS, the Fund intends to initially offer shares in one (1) series, the
Legg  Mason  Opportunity  Trust  (such  series  together  with all other  series
subsequently  established  by the Fund  and made  subject  to this  Contract  in
accordance with paragraph 17, being herein referred to as the "PORTFOLIO(S)");

      NOW THEREFORE,  in  consideration  of the mutual  covenants and agreements
hereinafter contained, the parties hereto agree as follows:

1.    Employment of Custodian and Property to be Held by It
      -----------------------------------------------------

      The Fund hereby  employs the  Custodian as the  custodian of the assets of
the Portfolios of the Fund,  including  securities  which the Fund, on behalf of
the applicable  Portfolio  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")  pursuant to the  provisions  of the Articles of
Incorporation.  The Fund on behalf of the Portfolio(s)  agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of  principal or capital  distributions  received by it with respect to
all  securities  owned  by the  Portfolio(s)  from  time to  time,  and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund representing  interests in the Portfolios,  ("Shares") as may be issued
or sold from  time to time.  The  Custodian  shall  not be  responsible  for any
property of a Portfolio  held or received by the  Portfolio and not delivered to
the Custodian.

      Upon receipt of "Proper  Instructions"  (within the meaning of Section 5),
the Custodian shall on behalf of the applicable  Portfolio(s)  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 Board of  Directors  of the Fund on
behalf of the  applicable  Portfolio(s),  and provided that the Custodian  shall
have no more or less  responsibility  or liability to the Fund on account of any
actions  or  omissions  of  any   sub-custodian   so  employed   than  any  such
sub-custodian has to the Custodian;  provided,  however,  that (a) the Custodian
will be liable to the Fund for the  Custodian's  own negligence in  transmitting
any  instructions  received  by it from  the Fund  and for the  Custodian's  own
negligence  in  connection  with the delivery of any  securities,  cash or other
assets held by it to any  sub-custodian and (b) in the event of any loss, damage
or expense  suffered or incurred by the Fund caused by or resulting from actions


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or omissions for which the Custodian  would be liable  pursuant to this section,
the Custodian shall promptly  reimburse the Fund in the amount of any such loss,
damage or expense.  The  Custodian  may employ as  sub-custodian  for the Fund's
foreign securities on behalf of the applicable  Portfolio(s) the foreign banking
institutions and foreign securities depositories designated in Schedule A hereto
but only in accordance  with the  provisions of Section 3. The Fund may instruct
the Custodian,  through Proper Instructions,  to cease the employment of any one
or more  sub-custodians  for  maintaining  custody of the Fund's assets,  and to
cause the prompt delivery of such assets to another sub-custodian  acceptable to
the Fund and the Custodian.


2.    Duties of the  Custodian  with Respect to Property of the Fund Held By the
      --------------------------------------------------------------------------
      Custodian in the United States
      ------------------------------

2.1   Holding Securities.  The Custodian shall hold and physically segregate for
      the account of each Portfolio all non-cash  property,  to be held by it in
      the  United  States  including  all  domestic  securities  owned  by  such
      Portfolio,  other than (a)  securities  which are  maintained  pursuant to
      Section 2.10 in a clearing agency which acts as a securities depository or
      in a 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  State  Street  Bank and Trust
      Company  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 2.11.

2.2   Delivery of Securities.  The Custodian shall release and deliver  domestic
      securities  owned  by a  Portfolio  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  from the Fund on behalf of the applicable
      Portfolio, which may be continuing instructions when deemed appropriate by
      the parties, and only in the following cases:

      1)   Upon sale of such  securities  for the account of the  Portfolio  and
           receipt of payment therefor;

      2)   Upon the  receipt  of  payment  in  connection  with  any  repurchase
           agreement related to such securities entered into by the Portfolio;

      3)   In the case of a sale effected through a U.S.  Securities  System, in
           accordance with the provisions of Section 2.10 hereof;

      4)   To the  depository  agent in connection  with tender or other similar
           offers for securities of the Portfolio;

      5)   To the issuer  thereof or its agent when such  securities 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;


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      6)   To the issuer  thereof,  or its agent,  for transfer into the name of
           the  Portfolio  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  2.9 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  securities  are to be
           delivered to the Custodian;

      7)   Upon the sale of such securities for the account of the Portfolio, 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  securities  prior to
           receiving  payment for such  securities  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  securities  of the issuer of such  securities,  or  pursuant  to
           provisions for conversion  contained in such securities,  or pursuant
           to any deposit  agreement;  provided  that, in any such case, the new
           securities and cash, if any, are to be delivered to the Custodian;

      9)   In the case of warrants, rights or similar securities,  the surrender
           thereof  in  the  exercise  of  such  warrants,   rights  or  similar
           securities  or  the  surrender  of  interim   receipts  or  temporary
           securities  for  definitive  securities;  provided  that, in any such
           case, the new securities and cash, if any, are to be delivered to the
           Custodian;

      10)  For delivery in connection  with any loans of securities  made by the
           Portfolio,  but only against receipt of adequate collateral as agreed
           upon from time to time by the Custodian and the Fund on behalf of the
           Portfolio,  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
           authorized by the U.S. Department of the Treasury, the Custodian will
           not be held liable or  responsible  for the  delivery  of  securities
           owned by the Portfolio prior to the receipt of such collateral;

      11)  For delivery as security in  connection  with any  borrowings  by the
           Fund on behalf of the  Portfolio  requiring a pledge of assets by the
           Fund on behalf of the Portfolio,  but only against receipt of amounts
           borrowed;

      12)  For delivery in accordance with the provisions of any agreement among
           the  Fund  on  behalf  of  the   Portfolio,   the   Custodian  and  a
           broker-dealer  registered  under the Securities  Exchange Act of 1934
           (the  "EXCHANGE  ACT") and a member of The  National  Association  of
           Securities  Dealers,  Inc. ("NASD"),  relating to compliance with the


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           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 Portfolio of the Fund;

      13)  For delivery in accordance with the provisions of any agreement among
           the Fund on behalf of the  Portfolio,  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 Portfolio of the Fund;

      14)  Upon  receipt of  instructions  from the  transfer  agent  ("TRANSFER
           AGENT") for the Fund,  for delivery to such Transfer  Agent or to the
           holders of shares in connection with distributions in kind, as may be
           described from time to time in the currently effective prospectus and
           statement  of  additional  information  of the Fund,  related  to the
           Portfolio  ("PROSPECTUS"),  in satisfaction of requests by holders of
           Shares for repurchase or redemption; and

      15)  For any other proper corporate purpose,  but only upon receipt of, in
           addition  to  Proper  Instructions  from  the Fund on  behalf  of the
           applicable  Portfolio,  a certified copy of a resolution of the Board
           of Directors or of the  Executive  Committee  signed by an officer of
           the Fund and  certified by the  Secretary or an Assistant  Secretary,
           specifying the  securities of the Portfolio to be delivered,  setting
           forth the  purpose for which such  delivery is to be made,  declaring
           such purpose to be a proper corporate purpose,  and naming the person
           or persons to whom delivery of such securities shall be made.

2.3   Registration  of  Securities.  Domestic  securities  held by the Custodian
      (other  than bearer  securities)  shall be  registered  in the name of the
      Portfolio  or in the  name of any  nominee  of the Fund on  behalf  of the
      Portfolio  or of any  nominee  of the  Custodian  which  nominee  shall be
      assigned  exclusively to the Portfolio,  unless the Fund has authorized in
      writing  the  appointment  of a nominee  to be used in common  with  other
      registered  investment companies having the same investment adviser as the
      Portfolio,  or in the name or nominee name of any agent appointed pursuant
      to  Section  2.9 or in the  name  or  nominee  name  of any  sub-custodian
      appointed pursuant to Section 1. All securities  accepted by the Custodian
      on behalf of the Portfolio  under the terms of this  Contract  shall be in
      "street name" or other good delivery form. If,  however,  the Fund directs
      the Custodian to maintain securities in "street name", the Custodian shall
      utilize its best  efforts  only to timely  collect  income due the Fund on
      such  securities  and to notify the Fund on a best  efforts  basis only of
      relevant  corporate actions  including,  without  limitation,  pendency of
      calls, maturities, tender or exchange offers.

2.4   Bank  Accounts.  The  Custodian  shall open and  maintain a separate  bank
      account or accounts in the United States in the name of each  Portfolio of
      the Fund,  subject only to draft or order by the Custodian acting pursuant


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      to the terms of this Contract, 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 Portfolio, other than cash maintained by the Portfolio in a
      bank account  established and used in accordance with Rule 17f-3 under the
      Investment  Company  Act  of  1940.  Funds  held  by the  Custodian  for a
      Portfolio 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;  provided,  however,
      that  every  such bank or trust  company  shall be  qualified  to act as a
      custodian under the Investment Company Act of 1940 and that each such bank
      or trust  company  and the  funds to be  deposited  with each such bank or
      trust company shall on behalf of each applicable  Portfolio be approved by
      vote of a majority of the Board of Directors of the Fund. Such funds shall
      be  deposited by the  Custodian in its capacity as Custodian  and shall be
      withdrawable by the Custodian only in that capacity.

2.5   Availability of Federal Funds.  Upon mutual agreement  between the Fund on
      behalf of each  applicable  Portfolio  and the  Custodian,  the  Custodian
      shall, upon the receipt of Proper  Instructions from the Fund on behalf of
      a  Portfolio,  make  federal  funds  available  to  such  Portfolio  as of
      specified  times  agreed  upon  from  time  to time  by the  Fund  and the
      Custodian  in the amount of checks  received in payment for Shares of such
      Portfolio which are deposited into the Portfolio's account.

2.6   Collection  of Income.  Subject to the  provisions  of  Section  2.3,  the
      Custodian shall collect,  and shall require any  sub-custodian to collect,
      on a timely basis all income and other payments with respect to registered
      domestic  securities  held  hereunder  to which  each  Portfolio  shall be
      entitled  either by law or pursuant to custom in the securities  business,
      and shall  collect on a timely  basis all income and other  payments  with
      respect to bearer  domestic  securities  if, on the date of payment by the
      issuer, such securities are held by the Custodian or its agent thereof and
      shall  promptly  credit such income,  as  collected,  to such  Portfolio'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 securities held  hereunder.  Income due each
      Portfolio on securities  loaned  pursuant to the provisions of Section 2.2
      (10) shall be the  responsibility  of the Fund. The Custodian will have no
      duty or responsibility in connection therewith,  other than to provide the
      Fund with such  information or data as may be necessary to assist the Fund
      in  arranging  for the timely  delivery to the  Custodian of the income to
      which the Portfolio is properly  entitled.  The Custodian  shall  promptly
      notify the Fund by facsimile  transmission  or in such other manner as the
      Fund and the  Custodian  may agree in writing if any amount  payable  with
      respect to Shares of the Fund or other  assets of the Fund is not received
      by the Custodian when due.

2.7   Payment of Fund Monies.  Upon receipt of Proper Instructions from the Fund
      on  behalf  of  the   applicable   Portfolio,   which  may  be  continuing
      instructions when deemed  appropriate by the parties,  the Custodian shall
      pay out monies of a Portfolio in the following cases only:

      1)   Upon the purchase of domestic securities,  options, futures contracts
           or options on futures  contracts for the account of the Portfolio but


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           only (a) against the delivery of such securities or evidence of title
           to such options, futures contracts or options on futures contracts to
           the  Custodian  (or any bank,  banking  firm or trust  company  doing
           business in the United States or abroad which is qualified  under the
           Investment Company Act of 1940, as amended, to act as a custodian and
           has been  designated  by the Custodian as its agent for this purpose)
           registered  in the name of the  Portfolio or in the name of a nominee
           of the Custodian  referred to in Section 2.3 hereof or in proper form
           for transfer;  (b) in the case of a purchase  effected through a U.S.
           Securities  System,  in accordance  with the  conditions set forth in
           Section  2.10  hereof;  (c) in the case of a purchase  involving  the
           Direct Paper System,  in accordance  with the conditions set forth in
           Section 2.11; (d) in the case of repurchase  agreements  entered into
           between the Fund on behalf of the  Portfolio  and the  Custodian,  or
           another  bank,  or a  broker-dealer  which is a member  of NASD,  (i)
           against  delivery of the  securities  either in  certificate  form or
           through an entry  crediting  the  Custodian's  account at the Federal
           Reserve Bank with such  securities  or (ii)  against  delivery of the
           receipt  evidencing  purchase by the Portfolio of securities owned by
           the  Custodian  along with written  evidence of the  agreement by the
           Custodian to repurchase such securities from the Portfolio or (e) for
           transfer to a time deposit  account of the Fund in any bank,  whether
           domestic or foreign;  such transfer may be effected  prior to receipt
           of a confirmation  from a broker and/or the applicable  bank pursuant
           to Proper Instructions from the Fund as defined in Section 5;

      2)   In connection  with  conversion,  exchange or surrender of securities
           owned by the Portfolio as set forth in Section 2.2 hereof;

      3)   For the redemption or repurchase of Shares issued by the Portfolio as
           set forth in Section 4 hereof;

      4)   For  the  payment  of  any  expense  or  liability  incurred  by  the
           Portfolio,  including but not limited to the  following  payments for
           the  account  of  the   Portfolio:   interest,   taxes,   management,
           accounting,  transfer agent and legal fees, and operating expenses of
           the  Fund  whether  or not such  expenses  are to be in whole or part
           capitalized or treated as deferred expenses;

      5)   For the payment of any dividends on Shares of the Portfolio  declared
           pursuant to the governing documents of the Fund;

      6)   For  payment  of the  amount of  dividends  received  in  respect  of
           securities sold short;

      7)   For any other proper  purpose,  but only upon receipt of, in addition
           to Proper  Instructions  from the Fund on behalf of the Portfolio,  a
           certified  copy of a  resolution  of the Board of Directors or of the
           Executive  Committee of the Fund signed by an officer of the Fund and
           certified by its Secretary or an Assistant Secretary,  specifying the
           amount of such  payment,  setting  forth the  purpose  for which such


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           payment is to be made, declaring such purpose to be a proper purpose,
           and naming the person or persons to whom such payment is to be made.

2.8   Liability  for  Payment in Advance  of  Receipt of  Securities  Purchased.
      Except as specifically stated otherwise in this Contract, in any and every
      case where payment for purchase of domestic  securities for the account of
      a  Portfolio  is  made by the  Custodian  in  advance  of  receipt  of the
      securities  purchased in the absence of specific written instructions from
      the Fund on behalf of such  Portfolio to so pay in advance,  the Custodian
      shall be  absolutely  liable to the Fund for such  securities  to the same
      extent as if the securities had been received by the Custodian.

2.9   Appointment  of  Agents.  The  Custodian  may at any  time or times in its
      discretion  appoint  (and may at any time  remove) any other bank or trust
      company  which is itself  qualified  under the  Investment  Company Act of
      1940, as amended, to act as a custodian, as its agent to carry out such of
      the  provisions  of this Section 2 as the  Custodian may from time to time
      direct;  provided,  however,  that the  appointment of any agent shall not
      relieve the Custodian of its responsibilities or liabilities hereunder. In
      the event of any loss, damage or expense suffered or incurred by the Fund,
      caused by or  resulting  from the  actions or  omissions  of any agent for
      which  the  Custodian  would be liable  if said act or  omission  had been
      committed by the Custodian,  the Custodian  shall  promptly  reimburse the
      Fund in the amount of any such loss, damage or expense.

2.10  Deposit of Fund  Assets in U.S.  Securities  Systems.  The  Custodian  may
      deposit  and/or  maintain  securities  owned by a Portfolio  in a clearing
      agency  registered  with the  Securities  and  Exchange  Commission  under
      Section  17A of the  Securities  Exchange  Act of  1934,  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,  collectively
      referred  to  herein  as  "U.S.  SECURITIES  SYSTEM"  in  accordance  with
      applicable  Federal  Reserve Board and Securities and Exchange  Commission
      rules and regulations, if any, and subject to the following provisions:

      1)   The  Custodian  may  keep  securities  of  the  Portfolio  in a  U.S.
           Securities System provided that such securities are represented in an
           account  ("ACCOUNT") of the Custodian in the U.S.  Securities  System
           which shall not include any assets of the Custodian other than assets
           held as a fiduciary, custodian or otherwise for customers;

      2)   The  records  of the  Custodian  with  respect to  securities  of the
           Portfolio  which are  maintained  in a U.S.  Securities  System shall
           identify by book-entry those securities belonging to the Portfolio;

      3)   The Custodian  shall pay for securities  purchased for the account of
           the  Portfolio  upon (i) receipt of advice  from the U.S.  Securities
           System that such securities have been transferred to the Account, and
           (ii) the  making  of an  entry on the  records  of the  Custodian  to
           reflect such  payment and transfer for the account of the  Portfolio.


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           The Custodian  shall transfer  securities sold for the account of the
           Portfolio upon (i) receipt of advice from the U.S.  Securities System
           that payment for such securities has been transferred to the Account,
           and (ii) the making of an entry on the  records of the  Custodian  to
           reflect such  transfer and payment for the account of the  Portfolio.
           Copies of all advices from the U.S. Securities System of transfers of
           securities  for the  account  of the  Portfolio  shall  identify  the
           Portfolio,  be  maintained  for the Portfolio by the Custodian and be
           provided to the Fund at its  request.  Upon  request,  the  Custodian
           shall  furnish the Fund on behalf of the  Portfolio  confirmation  of
           each  transfer to or from the account of the Portfolio in the form of
           a written advice or notice and shall furnish to the Fund on behalf of
           the Portfolio  copies of daily  transaction  sheets  reflecting  each
           day's  transactions in the U.S.  Securities System for the account of
           the Portfolio.

      4)   The  Custodian  shall  provide  the Fund for the  Portfolio  with any
           report  obtained by the  Custodian  on the U.S.  Securities  System's
           accounting  system,  internal  accounting  control or procedures  for
           safeguarding securities deposited in the U.S. Securities System;

      5)   The  Custodian  shall  have  received  from the Fund on behalf of the
           Portfolio the initial certificate required by Section 14 hereof;

      6)   At the written  request of the Fund, the Custodian will terminate the
           use of any such Securities System as promptly as practicable;

      7)   Anything  to the  contrary  in  this  Contract  notwithstanding,  the
           Custodian  shall  be  liable  to the  Fund  for  the  benefit  of the
           Portfolio for any loss or damage to the Portfolio  resulting from use
           of  the  U.S.   Securities   System  by  reason  of  any  negligence,
           misfeasance or misconduct of the Custodian or any of its agents or of
           any of its or their employees or from failure of the Custodian or any
           such agent to enforce  effectively such rights as it may have against
           the U.S.  Securities System; at the election of the Fund, it shall be
           entitled to be subrogated to the rights of the Custodian with respect
           to any claim against the U.S.  Securities  System or any other person
           which the  Custodian  may have as a  consequence  of any such loss or
           damage  if and to the  extent  that the  Portfolio  has not been made
           whole  for  any  such  loss  or  damage.  In the  event  of any  such
           subrogation, the Custodian shall cooperate with the Fund in asserting
           such rights and shall take all actions reasonably necessary to enable
           the Fund to assert such rights.

2.11  Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
      deposit  and/or  maintain  securities  owned by a Portfolio  in the Direct
      Paper System of the Custodian subject to the following provisions:

      1)   No transaction relating to securities in the Direct Paper System will
           be effected in the  absence of Proper  Instructions  from the Fund on
           behalf of the Portfolio;


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      2)   The  Custodian  may keep  securities  of the  Portfolio in the Direct
           Paper System only if such  securities  are  represented in an account
           ("ACCOUNT")  of the  Custodian in the Direct Paper System which shall
           not include any assets of the  Custodian  other than assets held as a
           fiduciary, custodian or otherwise for customers;

      3)   The  records  of the  Custodian  with  respect to  securities  of the
           Portfolio  which are  maintained  in the Direct  Paper  System  shall
           identify by book-entry those securities belonging to the Portfolio;

      4)   The Custodian  shall pay for securities  purchased for the account of
           the  Portfolio  upon the  making  of an entry on the  records  of the
           Custodian to reflect such payment and transfer of  securities  to the
           account of the Portfolio.  The Custodian  shall  transfer  securities
           sold for the account of the Portfolio  upon the making of an entry on
           the records of the  Custodian to reflect such transfer and receipt of
           payment for the account of the Portfolio;

      5)   The  Custodian  shall  furnish  the Fund on behalf  of the  Portfolio
           confirmation  of  each  transfer  to  or  from  the  account  of  the
           Portfolio, in the form of a written advice or notice, of Direct Paper
           on the next business day following such transfer and shall furnish to
           the Fund on  behalf  of the  Portfolio  copies  of daily  transaction
           sheets  reflecting each day's  transaction in the Direct Paper System
           for the account of the Portfolio;

      6)   The Custodian  shall provide the Fund on behalf of the Portfolio with
           any report on its system of internal  accounting  control as the Fund
           may reasonably request from time to time.

2.12  Segregated   Account.   The   Custodian   shall  upon  receipt  of  Proper
      Instructions  from  the  Fund  on  behalf  of  each  applicable  Portfolio
      establish and maintain a segregated  account or accounts for and on behalf
      of each such Portfolio,  into which account or accounts may be transferred
      cash and/or securities,  including securities  maintained in an account by
      the Custodian  pursuant to Section 2.10 hereof, (i) in accordance with the
      provisions of any agreement among the Fund on behalf of the Portfolio, the
      Custodian  and a  broker-dealer  registered  under the  Exchange Act and a
      member of the NASD (or any futures  commission  merchant  registered under
      the Commodity Exchange Act),  relating to compliance with the rules of The
      Options  Clearing  Corporation and of any registered  national  securities
      exchange (or the Commodity  Futures  Trading  Commission or any registered
      contract  market),  or  of  any  similar  organization  or  organizations,
      regarding escrow or other  arrangements in connection with transactions by
      the  Portfolio,  (ii)  for  purposes  of  segregating  cash or  government
      securities in connection  with options  purchased,  sold or written by the
      Portfolio or commodity  futures  contracts or options thereon purchased or
      sold  by the  Portfolio,  (iii)  for the  purposes  of  compliance  by the
      Portfolio with the procedures  required by Investment  Company Act Release
      No. 10666,  or any  subsequent  release or releases of the  Securities and
      Exchange  Commission relating to the maintenance of segregated accounts by
      registered  investment  companies  and (iv)  for  other  proper  corporate


<PAGE>


      purposes,  but  only,  in the case of clause  (iv),  upon  receipt  of, in
      addition to Proper  Instructions from the Fund on behalf of the applicable
      Portfolio,  a certified  copy of a resolution of the Board of Directors or
      of the Executive  Committee signed by an officer of the Fund and certified
      by the Secretary or an Assistant  Secretary,  setting forth the purpose or
      purposes of such  segregated  account and  declaring  such  purposes to be
      proper corporate purposes.

2.13  Ownership  Certificates  for Tax Purposes.  The Custodian shall, and shall
      require  any  sub-custodian  to,  promptly  execute  ownership  and  other
      certificates  and  affidavits  for all federal  and state tax  purposes in
      connection  with  receipt  of income or other  payments  with  respect  to
      domestic  securities of each Portfolio  held by it and in connection  with
      transfers of securities.

2.14  Proxies. The Custodian shall, with respect to the domestic securities held
      hereunder,  cause to be promptly executed by the registered holder of such
      securities, if the securities are registered otherwise than in the name of
      the  Portfolio  or a  nominee  of  the  Portfolio,  all  proxies,  without
      indication of the manner in which such proxies are to be voted,  and shall
      promptly  deliver to the  Portfolio  such  proxies,  all proxy  soliciting
      materials and all notices relating to such securities.

2.15  Communications Relating to Portfolio Securities. Subject to the provisions
      of Section 2.3, the Custodian shall transmit promptly to the Fund for each
      Portfolio all written information (including, without limitation, pendency
      of calls and maturities of domestic  securities and  expirations of rights
      in  connection  therewith  and notices of exercise of call and put options
      written by the Fund on behalf of the Portfolio and the maturity of futures
      contracts  purchased or sold by the  Portfolio)  received by the Custodian
      from issuers of the securities being held for the Portfolio.  With respect
      to tender or exchange offers, the Custodian shall transmit promptly to the
      Portfolio all written  information  received by the Custodian from issuers
      of the  securities  whose  tender or exchange is sought and from the party
      (or his agents)  making the tender or  exchange  offer.  If the  Portfolio
      desires to take action with respect to any tender offer, exchange offer or
      any  other  similar   transaction,   the  Portfolio  shall  if  reasonably
      practicable notify the Custodian at least three business days prior to the
      date on which the  Custodian  is to take  such  action.  If the  Portfolio
      provides the Custodian  with such  notification  less than three  business
      days prior to the date on which the Custodian is to take such action,  the
      Custodian shall use best efforts only to take such action.

3.    Duties of the Custodian  with Respect to Property of the Fund Held Outside
      --------------------------------------------------------------------------
      of the United States
      --------------------

3.1   Appointment  of Foreign  Sub-Custodians.  The Fund hereby  authorizes  and
      instructs the Custodian to employ as  sub-custodians  for the  Portfolio's
      securities  and other  assets  maintained  outside  the United  States the
      foreign  banking   institutions   and  foreign   securities   depositories
      designated on Schedule A hereto ("FOREIGN  SUB-CUSTODIANS").  Upon receipt
      of  "Proper  Instructions",  as  defined  in  Section 5 of this  Contract,
      together with a certified resolution of the Fund's Board of Directors, the


<PAGE>


      Custodian  and the Fund may agree to amend  Schedule A hereto from time to
      time to designate  additional  foreign  banking  institutions  and foreign
      securities  depositories to act as  sub-custodian.  Upon receipt of Proper
      Instructions,  the Fund may instruct the Custodian to cease the employment
      of any one or more such  sub-custodians  for  maintaining  custody  of the
      Portfolio's  assets  and to  cause  the  delivery  of such  assets  to the
      Custodian  (if  reasonably   practicable)  or  to  another   sub-custodian
      acceptable to the Custodian and the Fund.

3.2   Assets to be Held.  The  Custodian  shall limit the  securities  and other
      assets  maintained  in the custody of the foreign  sub-custodians  to: (a)
      "FOREIGN  SECURITIES",  as defined in paragraph (c)(1) of Rule 17f-5 under
      the Investment  Company Act of 1940, and (b) cash and cash  equivalents in
      such amounts as the  Custodian or the Fund may  determine to be reasonably
      necessary to effect the Portfolio's foreign securities  transactions.  The
      Custodian  shall  identify  on its books as  belonging  to the  Fund,  the
      foreign securities of the Fund held by each foreign sub-custodian.

3.3   Foreign  Securities  Systems.  Except as may  otherwise  be agreed upon in
      writing by the Custodian and the Fund,  assets of the Portfolios  shall be
      maintained in a clearing  agency which acts as a securities  depository or
      in a  book-entry  system for the central  handling of  securities  located
      outside of the United  States (each a "FOREIGN  SECURITIES  SYSTEM")  only
      through  arrangements  implemented  by the  foreign  banking  institutions
      serving as sub-custodians pursuant to the terms hereof (Foreign Securities
      Systems and U.S. Securities Systems are collectively referred to herein as
      the "SECURITIES SYSTEMS"). Where possible, such arrangements shall include
      entry into  agreements  containing the provisions set forth in Section 3.5
      hereof.

3.4   Holding  Securities.  The Custodian may hold securities and other non-cash
      property  for all of its  customers,  including  the Fund,  with a foreign
      sub-custodian  in a single  account that is identified as belonging to the
      Custodian for the benefit of its customers, provided however, that (i) the
      records of the  Custodian  with respect to securities  and other  non-cash
      property of the Fund which are  maintained in such account shall  identify
      by book-entry  those securities and other non-cash  property  belonging to
      the Fund and (ii) the Custodian  shall require that  securities  and other
      non-cash property so held by the foreign  sub-custodian be held separately
      from any  assets of the  Custodian,  of the  foreign  sub-custodian  or of
      others.

3.5   Agreements  with  Foreign  Banking  Institutions.  Each  agreement  with a
      foreign  banking  institution  shall provide that:  (a) the assets of each
      Portfolio  will not be subject to any right,  charge,  security  interest,
      lien or claim of any kind in favor of the foreign  banking  institution or
      its  creditors or agent,  except a claim of payment for their safe custody
      or  administration;  (b)  beneficial  ownership  for  the  assets  of each
      Portfolio  will be freely  transferable  without  the  payment of money or
      value other than for custody or administration;  (c) adequate records will
      be  maintained  identifying  the assets as  belonging  to each  applicable
      Portfolio;   (d)   officers   of  or  auditors   employed   by,  or  other
      representatives of the Custodian,  including to the extent permitted under
      applicable law the  independent  public  accountants for the Fund, will be
      given access to the books and records of the foreign  banking  institution


<PAGE>


      relating to its actions under its agreement  with the  Custodian;  and (e)
      assets of the Portfolios held by the foreign sub-custodian will be subject
      only to the instructions of the Custodian or its agents.

3.6   Access of Independent  Accountants of the Fund.  Upon request of the Fund,
      the  Custodian  will use its best  efforts  to arrange  for the Fund,  its
      independent  accountants and/or its attorneys to be afforded access to the
      books and records of any foreign banking institution employed as a foreign
      sub-custodian  insofar as such books and records relate to the performance
      of  such  foreign  banking   institution  under  its  agreement  with  the
      Custodian.

3.7   Reports by Custodian.  The Custodian  will supply to the Fund from time to
      time, as mutually agreed upon, statements in respect of the securities and
      other assets of the Portfolio(s) held by foreign sub-custodians, including
      but not limited to an  identification of entities having possession of the
      Portfolio(s)  securities and other assets and advices or  notifications of
      any transfers of securities to or from each custodial  account  maintained
      by a  foreign  banking  institution  for the  Custodian  on behalf of each
      applicable  Portfolio   indicating,   as  to  securities  acquired  for  a
      Portfolio,  the identity of the entity having physical  possession of such
      securities.  The  Custodian  shall  also  provide  to the Fund such  other
      information  as may  be  reasonably  requested  by the  Fund  to  evidence
      compliance with Rule 17f-5 under the Investment Company Act of 1940.

3.8   Transactions in Foreign Custody Account.  (a) Except as otherwise provided
      in paragraph  (b) of this  Section 3.8, the  provision of Sections 2.2 and
      2.7 of  this  Contract  shall  apply,  mutatis  mutandis  to  the  foreign
      securities  of  the  Fund  held  outside  the  United  States  by  foreign
      sub-custodians.  (b) Notwithstanding any provision of this Contract to the
      contrary,  settlement and payment for securities  received for the account
      of each applicable Portfolio and delivery of securities maintained for the
      account of each  applicable  Portfolio may be effected in accordance  with
      the customary  established  securities  trading or  securities  processing
      practices  and  procedures  in the  jurisdiction  or  market  in which the
      transaction occurs, including,  without limitation,  delivering securities
      to the  purchaser  thereof or to a dealer  therefor  (or an agent for such
      purchaser or dealer)  against a receipt with the  expectation of receiving
      later  payment for such  securities  from such  purchaser  or dealer.  (c)
      Securities  maintained  in the custody of a foreign  sub-custodian  may be
      maintained in the name of such entity's  nominee to the same extent as set
      forth in Section  2.3 of this  Contract,  and the Fund  agrees to hold any
      such  nominee  harmless  from any  liability as a holder of record of such
      securities  (except  liability  for  failing  to  act in  accordance  with
      instructions).

3.9   Liability of Foreign Sub-Custodians.  Each agreement pursuant to which the
      Custodian employs a foreign banking institution as a foreign sub-custodian
      shall require the institution to exercise reasonable care and diligence in
      the  performance of its duties and to indemnify,  and hold  harmless,  the
      Custodian and each Fund from and against any loss, damage,  cost, expense,
      liability or claim arising out of or in connection with the  institution's
      performance of such obligations.  At the election of the Fund, it shall be
      entitled to be subrogated  to the rights of the Custodian  with respect to
      any claims against a foreign  banking  institution as a consequence of any
      such loss, damage, cost, expense,  liability or claim if and to the extent


<PAGE>


      that the Fund has not been made  whole for any such  loss,  damage,  cost,
      expense,  liability  or  claim.  In the  event  of such  subrogation,  the
      Custodian shall cooperate with the Fund in asserting such rights and shall
      take all actions  reasonably  necessary  to enable the Fund to assert such
      rights.

3.10  Liability  of  Custodian.  The  Custodian  shall be liable for the acts or
      omissions of a foreign banking institution to the same extent as set forth
      with respect to sub-custodians  generally in this Contract and, regardless
      of  whether  assets are  maintained  in the  custody of a foreign  banking
      institution, a foreign securities depository or a branch of a U.S. bank as
      contemplated  by paragraph 3.13 hereof,  the Custodian shall not be liable
      for any loss,  damage,  cost,  expense,  liability or claim resulting from
      nationalization,  expropriation,  currency restrictions, or acts of war or
      terrorism  or any loss where the  sub-custodian  has  otherwise  exercised
      reasonable care and diligence.

      In the event that any sub-custodian  appointed  pursuant to the provisions
      of this Section 3 fails to perform any of its obligations  under the terms
      and conditions of the applicable  sub-custodian  agreement,  the Custodian
      shall use its best efforts to cause such  sub-custodian  to fully  perform
      its  obligations.  In the event that the Custodian is unable to cause such
      sub-custodian to perform its obligations  thereunder,  the Custodian shall
      forthwith  notify  the Fund of the same  and,  upon  the  Fund's  request,
      terminate such sub-custodian as a sub-custodian for the Fund in accordance
      with the termination provisions of the applicable  sub-custodian agreement
      and, if requested by the Fund, appoint another sub-custodian acceptable to
      the Custodian and the Fund.

3.11  Reimbursement for Advances.  If the Fund requires the Custodian to advance
      cash  or  securities  for  any  purpose  for the  benefit  of a  Portfolio
      including  the purchase or sale of foreign  exchange or of  contracts  for
      foreign exchange,  or in the event that the Custodian or its nominee shall
      incur or be assessed any taxes, charges, expenses,  assessments, claims or
      liabilities in connection  with the  performance of this Contract,  except
      such  as may  arise  from  its  or its  nominee's  own  negligent  action,
      negligent failure to act or willful  misconduct,  any property at any time
      held for the  account of the  applicable  Portfolio,  having a fair market
      value not in excess of 125% of the advance,  shall be security therefor if
      specifically  identified as such by the Custodian and should the Fund fail
      to repay the  Custodian  promptly,  the  Custodian  shall be  entitled  to
      utilize  available  cash and to dispose of such  Portfolios  assets to the
      extent necessary to obtain  reimbursement.  For any property identified as
      security under this paragraph,  the Fund may substitute  other property of
      equivalent value upon permission of the Custodian,  which permission shall
      not be unreasonably withheld.

3.12  Monitoring  Responsibilities.  The Custodian shall furnish annually to the
      Fund,  during the month of June,  and as reasonably  requested by the Fund
      from  time to time,  information  concerning  the  foreign  sub-custodians
      employed by the Custodian.  Such information  shall be similar in kind and
      scope  to that  furnished  to the  Fund in  connection  with  the  initial
      approval of this Contract.  In addition,  the Custodian  shall monitor the
      performance  and  financial  condition of the foreign  sub-custodians  and
      foreign  securities  depositories  to  the  extent  practicable  and  will


<PAGE>


      promptly  inform  the Fund in the  event  that the  Custodian  learns of a
      material  adverse change in the  performance  or financial  condition of a
      foreign sub-custodian or any material loss of the assets of the Fund.

3.13  Branches  of U.S.  Banks.  (a)  Except  as  otherwise  set  forth  in this
      Contract,  the provisions  hereof shall not apply where the custody of the
      Portfolios  assets  are  maintained  in a  foreign  branch  of  a  banking
      institution  which  is a "bank"  as  defined  by  Section  2(a)(5)  of the
      Investment  Company  Act of 1940  meeting the  qualification  set forth in
      Section  26(a)  of said  Act.  The  appointment  of any such  branch  as a
      sub-custodian shall be governed by paragraph 1 of this Contract.  (b) Cash
      held  for  each  Portfolio  of the  Fund in the  United  Kingdom  shall be
      maintained in an interest  bearing  account  established for the Fund with
      the  Custodian's  London  branch,  which  account  shall be subject to the
      direction of the Custodian, State Street London Ltd. or both.

3.14  Tax Law.  Except as provided in Section 2.13, the Custodian  shall have no
      responsibility  or liability for any obligations now or hereafter  imposed
      on the Fund or the  Custodian  as  custodian of the Fund by the tax law of
      the  United  States  of  America  or any  state or  political  subdivision
      thereof.  It  shall  be the  responsibility  of the  Fund  to  notify  the
      Custodian  of the  obligations  imposed  on the Fund or the  Custodian  as
      custodian  of the Fund by the tax law of  jurisdictions  other  than those
      mentioned in the above sentence,  including responsibility for withholding
      and other taxes, assessments or other governmental charges, certifications
      and governmental reporting.  The sole responsibility of the Custodian with
      regard to such tax law shall be to use  reasonable  efforts  to assist the
      Fund with  respect to any claim for  exemption or refund under the tax law
      of jurisdictions for which the Fund has provided such information.


4.    Payments for Sales or Repurchases or Redemptions of Shares of the Fund
      ----------------------------------------------------------------------

      The Custodian  shall receive from the  distributor  for the Shares or from
the  Transfer  Agent of the Fund and  promptly  deposit  into the account of the
appropriate Portfolio such payments as are received for Shares of that Portfolio
issued or sold from time to time by the Fund.  The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.

      From such funds as may be  available  for the  purpose  but subject to the
limitations of the Articles of  Incorporation  and any  applicable  votes of the
Board of Directors of the Fund  pursuant  thereto,  the  Custodian  shall,  upon
receipt of  instructions  from the  Transfer  Agent,  make funds  available  for
payment to holders of Shares who have  delivered to the Transfer Agent a request
for redemption or repurchase of their Shares.  In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund,  the Custodian  shall honor checks drawn on
the  Custodian by a holder of Shares,  which  checks have been  furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such  procedures  and  controls  as are  mutually  agreed upon from time to time
between the Fund and the Custodian.


<PAGE>


5.    Proper Instructions
      -------------------

      Proper  Instructions  as used  throughout  this  Contract  means a writing
signed or  initialed  by one or more person or persons as the Board of Directors
shall have from time to time  authorized.  Each such writing shall set forth the
specific  transaction  or type of  transaction  involved,  including  a specific
statement of the purpose for which such action is requested.  Oral  instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction  involved.  The Fund shall cause all oral  instructions to be
confirmed in writing.  Proper Instructions may include  communications  effected
directly  between  electro-mechanical  or electronic  devices  provided that the
instructions are consistent with any security  procedures  agreed to by the Fund
and the  Custodian,  including  but not  limited  to,  the  security  procedures
selected  by the Fund on the  Funds  Transfer  Addendum  to this  Contract.  For
purposes  of  this  Section,  Proper  Instructions  shall  include  instructions
received by the Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.12.


6.    Actions Permitted without Express Authority
      -------------------------------------------

      The Custodian may in its discretion,  without  express  authority from the
Fund on behalf of each applicable Portfolio:

      1)   make  payments  to itself or others for minor  expenses  of  handling
           securities or other  similar items  relating to its duties under this
           Contract,  provided that all such payments  shall be accounted for to
           the Fund on behalf of the Portfolio;

      2)   surrender  securities in temporary  form for securities in definitive
           form;

      3)   endorse for collection, in the name of the Portfolio,  checks, drafts
           and other negotiable instruments; and

      4)   in general,  attend to all  non-discretionary  details in  connection
           with the sale, exchange,  substitution,  purchase, transfer and other
           dealings with the securities and property of the Portfolio  except as
           otherwise directed by the Board of Directors of the Fund.


7.    Evidence of Authority
      ---------------------

      The Custodian shall be protected in acting upon any instructions,  notice,
request,  consent,  certificate or other instrument or paper reasonably believed
by it to be genuine  and to have been  properly  executed by or on behalf of the
Fund.  The  Custodian  may receive and accept a certified  copy of a vote of the


<PAGE>


Board of Directors of the Fund as  conclusive  evidence (a) of the  authority of
any person to act in accordance with such vote or (b) of any determination or of
any action by the Board of Directors  pursuant to the Articles of  Incorporation
as described in such vote,  and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.


8.    Duties of Custodian  with Respect to the Books of Account and  Calculation
      --------------------------------------------------------------------------
      of Net Asset Value and Net Income
      ---------------------------------

      The Custodian shall cooperate with and supply necessary information to the
entity or entities  appointed  by the Board of Directors of the Fund to keep the
books of account of each Portfolio  and/or compute the net asset value per share
of the outstanding  shares of each Portfolio or, if directed in writing to do so
by the Fund on behalf of the Portfolio,  shall itself keep such books of account
and/or  compute such net asset value per share.  If so directed,  the  Custodian
shall also  calculate  daily the net income of the Portfolio as described in the
Fund's currently effective prospectus related to such Portfolio and shall advise
the Fund and the  Transfer  Agent daily of the total  amounts of such net income
and, if  instructed  in writing by an officer of the Fund to do so, shall advise
the  Transfer  Agent  periodically  of the division of such net income among its
various  components.  The  calculations of the net asset value per share and the
daily income of each Portfolio shall be made at the time or times described from
time  to time in the  Fund's  currently  effective  prospectus  related  to such
Portfolio. On each day that the Custodian computes the net asset value per share
of the Fund,  the Custodian  will provide  information  sufficient to permit the
Fund to verify  that  portfolio  transactions  are  reconciled  with the  Fund's
trading records.


9.    Records
      -------

      The Custodian shall with respect to each Portfolio create and maintain all
records  relating to its activities and obligations  under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940,  with  particular  attention  to Section 31 thereof and Rules 31a-1 and
31a-2  thereunder  and under  applicable  state and federal  tax laws.  All such
records  shall be the  property  of the Fund and shall at all times  during  the
regular business hours of the Custodian be open for inspection and audit by duly
authorized  officers,  employees,  agents and auditors of and  attorneys for the
Fund and employees and agents of the  Securities  and Exchange  Commission.  The
Custodian  shall,  at the Fund's  request,  supply the Fund with a tabulation of
securities  owned by each  Portfolio and held by the  Custodian and shall,  when
requested to do so by the Fund and for such compensation as shall be agreed upon
between  the  Fund  and  the  Custodian,  include  certificate  numbers  in such
tabulations.


10.   Opinion of Fund's Independent Accountant
      ----------------------------------------

      The Custodian shall take all reasonable  action,  as the Fund on behalf of
each applicable  Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent  accountants with respect to


<PAGE>


its activities  hereunder in connection  with the preparation of the Fund's Form
N-1A,  and Form N-SAR or other  annual  reports to the  Securities  and Exchange
Commission and with respect to any other requirements of such Commission.


11.   Reports to Fund by Independent Public Accountants
      -------------------------------------------------

      The Custodian  shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may  reasonably  require,  with reports by independent
public  accountants on the accounting  system,  internal  accounting control and
procedures for safeguarding cash,  securities,  futures contracts and options on
futures contracts, including cash, securities, and other assets deposited and/or
maintained  in a  Securities  System or with a  sub-custodian,  relating  to the
services  provided by the Custodian,  directly or through any agent,  under this
Contract;  such reports,  shall be of sufficient scope and in sufficient detail,
as may reasonably be required by the Fund to provide  reasonable  assurance that
any material inadequacies would be disclosed by such examination,  and, if there
are no such inadequacies, the reports shall so state.


12.   Compensation of Custodian
      -------------------------

      The  Custodian  shall  be  entitled  to  reasonable  compensation  for its
services and expenses as Custodian,  as agreed upon in writing from time to time
between the Fund on behalf of each applicable  Portfolio and the Custodian.  The
Custodian shall provide the Fund a written invoice for each such payment.


13.   Responsibility of Custodian
      ---------------------------

      So long as and to the  extent  that it is in the  exercise  of  reasonable
care,  the  Custodian  shall  not be  responsible  for the  title,  validity  or
genuineness  of any  property  or evidence  of title  thereto  received by it or
delivered by it pursuant to this  Contract and shall be held  harmless in acting
upon any notice,  request,  consent,  certificate or other instrument reasonably
believed  by it to be genuine  and to be signed by the proper  party or parties,
including  any futures  commission  merchant  acting  pursuant to the terms of a
three-party  futures or options  agreement.  The Custodian  shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without  liability to the Fund for any
action  taken or  omitted by it in good faith  without  negligence.  It shall be
entitled to rely on and may act upon  advice of counsel  (who may be counsel for
the  Fund)  on all  matters,  and  shall be  without  liability  for any  action
reasonably  taken or  omitted  pursuant  to such  advice  that such  actions  or
omissions  comply with the terms of the Contract and with all  applicable  laws,
provided the Custodian acts in good faith and without negligence.

      The  Custodian  shall be  liable  for the acts or  omissions  of a foreign
banking institution  employed as a sub-custodian to the same extent as set forth
with respect to sub-custodians generally in this Contract.


<PAGE>


      If the Fund on behalf of a Portfolio  requires  the  Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the  Custodian,  result in the  Custodian or
its nominee  assigned to the Fund or the Portfolio  being liable for the payment
of money or incurring  liability  of some other form,  the Fund on behalf of the
Portfolio,  as a  prerequisite  to requiring  the Custodian to take such action,
shall provide  indemnity to the Custodian in an amount and form  satisfactory to
it.

      If the Fund  requires  the  Custodian,  its  affiliates,  subsidiaries  or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the  Custodian  or its nominee  shall incur or be assessed any
taxes, charges, expenses,  assessments, claims or liabilities in connection with
the  performance  of this  Contract,  except  such as may arise  from its or its
nominee's or agent's own negligent  action,  negligent failure to act or willful
misconduct,  (collectively  referred to herein as a  "Liability"),  then in such
event  cash held for the  account  of the Fund and  securities  issued by United
States issuers or other  securities  selected by the Custodian equal in value to
not more than 125% of such  Advance and  accrued  interest on the Advance or the
anticipated  amount of such  Liability,  held at any time for the account of the
Fund by the  Custodian  or  sub-custodian,  shall be held as  security  for such
Liability  or for such  Advance and the accrued  interest  on the  Advance.  The
Custodian shall designate the security or securities  constituting  security for
an Advance or Liability (the  "Designated  Securities")  by notice in writing to
the  Fund  (which  may be  sent by  telefax).  In the  event  the  value  of the
Designated  Securities  shall  decline  to less than 110% of the  amount of such
Advance and accrued  interest on the Advance or the  anticipated  amount of such
Liability,  then the  Custodian  may  designate  in the same  manner  additional
securities to be held as security for such obligation ("Additional  Securities")
but  the  aggregate  value  of the  Designated  Securities  and  the  Additional
Securities  shall not be in excess of 125% of the amount of such Advance and the
accrued interest on the Advance or the anticipated amount of such Liability.  At
the request of the Fund, the Custodian shall agree to substitution of a security
or  securities  which  have a value  equal  to the  value of the  Designated  or
Additional Securities which the Fund desires to be released from their status as
security,  and such release from status as security  shall be effective upon the
Custodian and the Fund agreeing in writing as to the identity of the substituted
security or securities, which shall thereupon become Designated Securities.

      Notwithstanding  the above,  the  Custodian  shall,  at the request of the
Fund,  immediately  release  from  their  status as  security  any or all of the
Designated Securities or Additional Securities upon the Custodian's receipt from
such Fund of cash or cash equivalents in an amount equal to 100% of the value of
the Designated  Securities or Additional  Securities that the Fund desires to be
released from their status as security pursuant to this Section.  The Fund shall
reimburse  the  Custodian  in respect of a Liability  and shall pay any Advances
upon demand;  provided,  however,  that the Custodian first notified the Fund of
such demand for  repayment or  reimbursement.  If, upon  notification,  the Fund
shall fail to pay such  advance or interest  when due or shall fail to reimburse
the  Custodian  promptly in respect of a Liability,  the Fund  acknowledges  and
agrees  that the  Custodian  shall be  entitled  to apply cash held for the Fund
and/or  dispose of the Designated  Securities  and Additional  Securities to the
extent necessary to obtain repayment or reimbursement.  Interest,  dividends and
other distributions paid or received on the Designated  Securities or Additional


<PAGE>


Securities,  other than  payments  of  principal  or payments  upon  retirement,
redemption or  repurchase,  shall remain the property of the Fund, and shall not
be subject to this Section.  To the extent that the  dispositions  of the Fund's
property,  designated as security for such Advance or  Liability,  results in an
amount less than necessary to obtain repayment or reimbursement,  the Fund shall
continue to be liable to the Custodian for the  difference  between the proceeds
of the  dispositions  of the Fund's  property,  designated  as security for such
Advance or Liability,  and the amount of the repayment or  reimbursement  due to
the  Custodian  and the  Custodian  shall be  entitled to  designate  Additional
Securities  to secure the amount of the shortfall and shall have the same rights
with respect to such  Additional  Securities as are provided herein with respect
to Designated Securities generally.

      In no event  shall  the  Custodian  be liable  for  indirect,  special  or
consequential damages.


14.   Effective Period, Termination and Amendment
      -------------------------------------------

      This Contract shall become  effective as of its execution,  shall continue
in full  force and effect  until  terminated  as  hereinafter  provided,  may be
amended  at any  time by  mutual  agreement  of the  parties  hereto  and may be
terminated  by either  party by an  instrument  in writing  delivered or mailed,
postage prepaid to the other party,  such  termination to take effect not sooner
than  thirty (30) days after the date of such  delivery  or  mailing;  provided,
however  that the  Custodian  shall not with  respect to a  Portfolio  act under
Section 2.10 hereof in the absence of receipt of an initial  certificate  of the
Secretary or an Assistant  Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System by such Portfolio, as
required by Rule 17f-4 under the Investment  Company Act of 1940, as amended and
that the Custodian  shall not with respect to a Portfolio act under Section 2.11
hereof in the absence of receipt of an initial  certificate  of the Secretary or
an Assistant  Secretary that the Board of Directors has approved the initial use
of the Direct Paper System by such Portfolio;  provided further,  however,  that
the Fund shall not amend or  terminate  this  Contract in  contravention  of any
applicable  federal or state  regulations,  or any  provision of the Articles of
Incorporation,  and further provided,  that the Fund on behalf of one or more of
the  Portfolios  may at any  time  by  action  of its  Board  of  Directors  (i)
substitute  another bank or trust  company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the  appointment  of a conservator or receiver for the Custodian by
the  Comptroller  of the  Currency or upon the  happening of a like event at the
direction   of  an   appropriate   regulatory   agency  or  court  of  competent
jurisdiction.

      Upon  termination of the Contract,  the Fund on behalf of each  applicable
Portfolio  shall pay to the Custodian such  compensation as may be due as of the
date of such  termination  and shall  likewise  reimburse  the Custodian for its
costs, expenses and disbursements.


15.   Successor Custodian
      -------------------

      If a successor  custodian for the Fund,  of one or more of the  Portfolios
shall be appointed by the Board of Directors of the Fund,  the Custodian  shall,
upon termination,  promptly deliver to such successor custodian at the office of


<PAGE>


the  Custodian,  duly endorsed and in the form for transfer,  all securities and
funds, as well as all books and records, of each applicable  Portfolio then held
by it hereunder and shall transfer to an account of the successor  custodian all
of the securities of each such Portfolio held in a Securities System.

      If no such successor custodian shall be appointed, the Custodian shall, in
like  manner,  upon  receipt  of a  certified  copy  of a vote of the  Board  of
Directors  of the Fund,  deliver at the  office of the  Custodian  and  promptly
transfer such  securities,  funds,  books and records,  and other  properties in
accordance with such vote.

      In the event that no written order  designating  a successor  custodian or
certified copy of a vote of the Board of Directors  shall have been delivered to
the  Custodian  on or  before  the  date  when  such  termination  shall  become
effective, then the Custodian shall have the right to deliver to a bank or trust
company,  which is a "bank" as defined in the  Investment  Company  Act of 1940,
doing  business  in  Boston,  Massachusetts,  of its own  selection,  having  an
aggregate  capital,  surplus,  and  undivided  profits,  as  shown  by its  last
published report, of not less than $25,000,000,  all securities, funds and other
properties held by the Custodian on behalf of each applicable  Portfolio and all
instruments  held by the Custodian  relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such  successor  custodian  all of the  securities of each such
Portfolio held in any Securities System. Thereafter,  such bank or trust company
shall be the  successor of the  Custodian  under this  Contract.  The  Custodian
agrees to cooperate  with the successor  custodian and the Fund in the execution
of documents and performance of other actions necessary or desirable in order to
substitute the successor custodian for the Custodian.

      In the event that  securities,  funds and other  properties  remain in the
possession  of the  Custodian  after  the date of  termination  hereof  owing to
failure of the Fund to procure the certified  copy of the vote referred to or of
the Board of Directors to appoint a successor custodian,  the Custodian shall be
entitled  to fair  compensation  for its  services  during  such  period  as the
Custodian retains possession of such securities,  funds and other properties and
the  provisions of this Contract  relating to the duties and  obligations of the
Custodian shall remain in full force and effect.


16.   Interpretive and Additional Provisions
      --------------------------------------

      In connection  with the operation of this Contract,  the Custodian and the
Fund on behalf of each of the  Portfolios,  may from time to time  agree on such
provisions  interpretive of or in addition to the provisions of this Contract as
may in  their  joint  opinion  be  consistent  with  the  general  tenor of this
Contract.  Any such interpretive or additional  provisions shall be in a writing
signed  by both  parties  and shall be  annexed  hereto,  provided  that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Articles of Incorporation of the Fund.
No  interpretive  or  additional  provisions  made as provided in the  preceding
sentence shall be deemed to be an amendment of this Contract.


<PAGE>


17.   Additional Funds
      ----------------

      In the event  that the Fund  establishes  one or more  series of Shares in
addition  to Legg Mason  Opportunity  Trust with  respect to which it desires to
have the Custodian render services as custodian under the terms hereof, it shall
so notify the Custodian in writing,  and if the  Custodian  agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.


18.   Massachusetts Law to Apply
      --------------------------

      This Contract  shall be construed and the provisions  thereof  interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.


19.   Prior Contracts
      ---------------

      This Contract supersedes and terminates,  as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.


20.   Reproduction of Documents
      -------------------------

      This Contract and all  schedules,  exhibits,  attachments  and  amendments
hereto  may  be  reproduced  by  any   photographic,   photostatic,   microfilm,
micro-card,  miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original  is in  existence  and whether or not such  reproduction  was made by a
party in the regular course of business, and that any enlargement,  facsimile or
further  reproduction  of such  reproduction  shall  likewise be  admissible  in
evidence.


21.   Notices.
      -------
      Any notice, instruction or other instrument required to be given hereunder
may be  delivered  in person to the offices of the  parties as set forth  herein
during normal business hours or delivered  prepaid  registered mail or by telex,
cable or  telecopy  to the  parties  at the  following  addresses  or such other
addresses as may be notified by any party from time to time.


<PAGE>


      To the Fund:      Legg Mason Investment Trust, Inc.
                        100 Light Street, 29th Floor
                        Baltimore, Maryland  21202
                        Attention:  Marc R. Duffy
                        Telephone:  410-454-5313
                        Telecopy:  410-454-4408


      To the Custodian: State Street Bank and Trust Company
                        1776 Heritage Drive, JAB/4SW
                        North Quincy, Massachusetts  02171
                        Attention:  Edward M. Buccigross
                        Telephone:  617-985-6834
                        Telecopy:  617-985-5450

      Such notice,  instruction or other instrument shall be deemed to have been
served in the case of a registered  letter at the  expiration  of five  business
days after posting,  in the case of cable  twenty-four hours after dispatch and,
in the case of telex,  immediately  on dispatch and if delivered  outside normal
business  hours it shall be deemed to have been  received at the next time after
delivery when normal business hours commence and in the case of cable,  telex or
telecopy on the business day after the receipt thereof. Evidence that the notice
was  properly  addressed,  stamped  and put into the  post  shall be  conclusive
evidence of posting.


22.   Data Access Service Addendum
      ----------------------------

      The Fund  and the  Custodian  agree  to be bound by the  terms of the Data
Access Services Addendum attached hereto.


23.   Shareholder Communications
      --------------------------

      Securities  and Exchange  Commission  Rule 14b-2 requires banks which hold
securities  for the  account of  customers  to respond to requests by issuers of
securities  for the  names,  addresses  and  holdings  of  beneficial  owners of
securities  of that  issuer  held by the bank  unless the  beneficial  owner has
expressly  objected to disclosure of this  information.  In order to comply with
the rule, the Custodian  needs the Fund to indicate  whether the Fund authorizes
the  Custodian  to provide  the Fund's  name,  address,  and share  position  to
requesting  companies whose stock the Fund owns. If the Fund tells the Custodian
"no", the Custodian will not provide this  information to requesting  companies.
If the Fund  tells  the  Custodian  "yes" or do not check  either  "yes" or "no"
below,  the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any funds
or  accounts  established  by the  Fund.  For the  Fund's  protection,  the Rule
prohibits the requesting  company from using the Fund's name and address for any
purpose other than corporate  communications.  Please indicate below whether the
Fund consents or objects by checking one of the alternatives below.


<PAGE>


     YES [ ] The Custodian is  authorized to release the Fund's name,  address,
             and share positions.

     NO  [ ] The  Custodian  is not  authorized  to  release  the  Fund's  name,
             address, and share positions.


24.   Miscellaneous
      -------------

24.1  Expenses of the Fund
      --------------------

      In  addition  to any  liability  to the Fund for  which the  Custodian  is
      determined to be liable under this Contract, the Custodian shall be liable
      to the Fund for all reasonable costs and expenses  incurred by the Fund in
      connection  with a claim by the Fund  against the  Custodian,  an Agent or
      sub-custodian  for which the  Custodian  is liable  under  this  Contract,
      including,  reasonable  attorneys' fees and expenses and other  reasonable
      fees incurred in any investigation, lawsuit or other proceeding related to
      such claim.  Nothing in this  paragraph  shall  preclude  the parties from
      agreeing to payment of such expenses by the Custodian in connection with a
      claim settled by arbitration, mediation or negotiation.

24.2  Assignment
      ----------

      This  Contract  may not be  assigned by either  party  without the written
      consent of the other.

24.3  Insurance
      ---------

      The Custodian agrees to maintain  insurance  adequate to the protection of
      all assets of the Fund that may come into the Custodian's  care under this
      Contract.

24.4  Confidentiality
      ---------------

      The  Custodian  agrees  that  all  books,  records,  information  and data
      pertaining  to the  business of the Fund which are  exchanged  or received
      pursuant to the  negotiation or carrying out of this Contract shall remain
      confidential,  shall not be  voluntarily  disclosed  to any other  person,
      except as may be required by law,  and shall not be used by the  Custodian
      for any purpose not directly  related to the business of the Fund,  except
      with the Fund's written consent.

24.5  Separate Portfolios
      -------------------

      Notwithstanding  any other  provision of this Contract,  the parties agree
      that the assets and  liabilities  of each series of the Fund are  separate


<PAGE>


      and distinct from the assets and liabilities of each other series and that
      no series shall be liable or shall be charged for any debt,  obligation or
      liability of any other  series,  whether  arising  under this  Contract or
      otherwise.


      IN WITNESS  WHEREOF,  each of the parties has caused this instrument to be
executed in its name and behalf by its duly  authorized  representative  and its
seal to be hereunder affixed as of the 30th day of December, 1999.


LEGG MASON INVESTMENT TRUST, INC.         FUND SIGNATURE ATTESTED TO BY:


By:    /s/ Marie K. Karpinski              By:     /s/ Patricia A. Maxey
       ----------------------------                -----------------------

Name:  Marie K. Karpinski                  Name:   Patricia A. Maxey
       ----------------------------                -----------------------

Title: Vice President and Treasurer        Title:  Secretary
       ----------------------------                -----------------------



STATE STREET BANK AND TRUST COMPANY       SIGNATURE ATTESTED TO BY:


By:    /s/ Ronald E. Logue                 By:     /s/ Marc L. Parsons
       ----------------------------                -----------------------

Name:  Ronald E. Logue                     Name:   Marc L. Parsons
       ----------------------------                -----------------------

Title: Vice Chairman                       Title:  Assistant Vice President
       ----------------------------                 and Associate Counsel
                                                   ------------------------