Investors Financial Services Corp. Achieves 20% Core Services Revenue Growth in the First Quarter of 2007; Integration Planning With State Street Underway

Market Wire, April, 2007

Investors Financial Services Corp. (NASDAQ: IFIN) reported diluted earnings per share of $0.60 for the first quarter of 2007, compared to $0.56 in the first quarter of 2006. Net income for the first quarter of 2007 was $40.5 million, compared to $37.4 million in the first quarter of 2006. In addition, during the first quarter Investors Financial signed a definitive agreement to be acquired by State Street Corporation (NYSE: STT) in a stock transaction valued at approximately $4.5 billion at the time of signing. In the transaction, Investors Financial Services Corporation shareholders will receive 0.906 shares of State Street common stock for each share of Investors Financial Services Corporation common stock.

Kevin J. Sheehan, Chairman and Chief Executive Officer, commented, "The transaction with State Street, which is subject to customary closing conditions including regulatory and stockholder approvals, is expected to be completed in the third quarter of 2007. We believe that merging our servicing capabilities with State Street's resources and global reach will provide our clients with an investment servicing partner that is unmatched in the industry."

Net operating revenue for the first quarter of 2007 grew 14% to $220.3 million from $192.8 million for the same period in 2006. Revenue from core services such as global custody, multicurrency accounting, fund administration and middle office outsourcing rose to $129.0 million for the first quarter of 2007, up 20% from $107.8 million for the same period in the prior year. Revenue from value-added services including foreign exchange, cash management, securities lending and investment advisory services was $40.6 million for the quarter, compared to $40.5 million in the first quarter of 2006. Net interest income of $49.2 million for the first quarter of 2007 represented a 14% increase from $43.3 million for the same period in 2006. Operating expenses were $159.4 million for the first quarter of 2007, up 17% from $135.7 million for the same period in 2006.

Assets processed for clients totaled approximately $2.28 trillion at March 31, 2007, an increase of 3% compared to $2.21 trillion at December 31, 2006 and an increase of 18% compared to $1.93 trillion at March 31, 2006.

Today, the Company also announced that its Board of Directors declared a quarterly cash dividend on its common stock of $0.025 per share. The dividend is payable May 15, 2007 to stockholders of record as of April 30, 2007.

Investors Financial Services Corp. provides services for a variety of financial asset managers including fund complexes, investment advisors, hedge funds, banks and insurance companies. The Company's wholly-owned subsidiary, Investors Bank & Trust Company, provides core services including global custody, multicurrency accounting, fund administration and middle office outsourcing, as well as value-added services including foreign exchange, cash management, securities lending and investment advisory services. Offices are located in the United States, Canada, Cayman Islands, Ireland, the United Kingdom and Luxembourg. Visit Investors Financial Services Corp. on the web at www.ibtco.com .

Forward-Looking Statements

This news release contains forward-looking statements (statements that are not historical facts) made under the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. These statements, including the Company's statements regarding the closing of the transaction with State Street, are subject to risks and uncertainties and are based upon certain assumptions and estimates that might not be realized. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include failure to receive regulatory approval or stockholder approval for the transaction with State Street. Additional factors that could also affect actual results are set forth under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2006.