Fitch Upgrades & Withdraws Investors Financial Services; Affirms State Street

Business Wire, July 2, 2007

CHICAGO -- Fitch Ratings has upgraded and removed from Rating Watch Positive the ratings of Investors Financial Services Corporation (IFIN) and its main operating subsidiary Investors Bank & Trust Company (IBT) following their acquisition by State Street Corporation (State Street). These actions align the ratings of IFIN and IBT with those of State Street. Since IFIN and IBT have ceased to exist as separate entities after the merger, Fitch is also withdrawing all issuer ratings of these entities.

In addition, Fitch has affirmed all ratings of State Street Corporation (State Street) and its affiliates. State Street's Rating Outlook remains Stable. A complete list of ratings follows at the end of this release.

Fitch believes the strategic rationale for the deal is strong, but notes several challenges. On the positive side, the merger has increased State Street's scale and reach in the asset servicing business. State Street is now the second largest asset servicer in the world, behind only Bank of New York Mellon. State Street has also become the largest global servicer of hedge funds, a rapidly growing sector of the servicing business. Management projects that the transaction will be neutral to GAAP earnings in 2008 and accretive thereafter.

Challenges include achieving projected cost save and client retention goals. Cost save goals are relatively high, at approximately 50% of IFIN's expense base. The difficulty of achieving this goal is reduced by the degree of overlap between State Street's and IFIN's operations. State Street's client retention goal is to retain 90% of IFIN's existing revenue base. Fitch believes that State Street may face both contract renegotiations as well as client losses, particularly since some of IFIN's clients are rivals of State Street's investment management subsidiary SSgA. Still, since State Street has few direct competitors in servicing complex pooled funds, Fitch believes management should be able to avoid excessive outright client losses.

Fitch notes that management will likely repurchase shares post closing to prevent dilution to earnings per share. That said, Fitch expects management to maintain capital at levels appropriate for State Street's risk profile and ratings category.

Fitch has affirmed the following ratings with a Stable Outlook:

State Street Corporation

--Long-term Issuer default rating (IDR) at 'AA-';

--Long-term senior at 'AA-';

--Long-term subordinated at 'A ';

--Short-term IDR at 'F1 ';

--Short-term debt at 'F1 ';

--Individual at 'A/B';

--Support at '5';

--Support Rating Floor at 'NF'.

State Street Bank and Trust Company

--Long-term Issuer default rating (IDR) at 'AA-';

--Long-term deposits at 'AA';

--Long-term subordinated at 'A ';

--Short-term IDR at 'F1 ';

--Short-term deposits at 'F1 ';

--Individual at 'A/B';

--Support at '2';

--Support Rating Floor at 'BBB '.

State Street Capital I

State Street Capital IV

State Street Institutional Capital Trust A-B

--Trust Preferred Securities at `A .'

Fitch has upgraded, removed from Rating Watch Positive, and withdrawn the following ratings:

Investors Financial Services Corporation

--Long-term Issuer Default Rating (IDR) to `AA-' from 'A';

--Short-term IDR to 'F1 ' from `F1';

--Individual to `A/B' from 'B';

Investors Bank and Trust Company

--Long-term Issuer Default Rating (IDR) to `AA-' from 'A';

--Short-term IDR to 'F1 ' from `F1';

--Long-term deposits to 'AA' from `A ';

--Short-term deposits to 'F1 ' from `F1';

--Individual to `A/B' from 'B';

--Support to '2' from '5';

--Support Rating Floor to 'BBB ' from 'NF.'

Fitch has upgraded the following ratings:

Investors Capital Trust I

--Trust Preferred Securities to `A ' from `A-.'

Fitch has withdrawn the following ratings:

Investors Financial Services Corporation

--Support '5';

--Support Rating Floor 'NF.'

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.