STT State Street Corporation

State Street Global Markets, the investment research and trading arm of State Street Corporation (NYSE:STT), released today the results of the State Street Investor Confidence Index(R) for January 2006. According to the January index, investor confidence decreased to 76.0 from December's revised reading of 83.8. Looking regionally, the confidence of North American institutional investors fell to 88.0 in January from a revised reading of 102.1 in December. The European Index increased from 61.0 in December to 76.0 in January, and the Asian Index rose from 75.7 in December to 80.4 this month. Developed through State Street Global Markets' research partnership, State Street Associates (SSA), by Harvard University professor Ken Froot and SSA Director Paul O'Connell, the State Street Investor Confidence Index(R) measures investor confidence on a quantitative basis, analyzing actual buying and selling patterns of institutional investors. The index is based on financial theory that assigns precise meaning to changes in investor risk sentiment, or the willingness of investors to hold proportionally more or less of their portfolio in equities. The more of their portfolio that institutional investors are willing to devote to equities, the greater their risk appetite or confidence. "This month we see strong divergence between the risk appetite of North American institutional investors and their counterparts in Europe and Asia," commented O'Connell. "The confidence of North American investors to bear risk by expanding their holdings of risky assets has hit the lowest level we have recorded to date. This figure has impacted the Global ICI as well, resulting also in the lowest level we have ever seen in that indicator. Asian and European investors have stepped in and compensated somewhat, but the overall impact is still strongly downward." "There is a strong sell-off of portfolio risk to begin the year among U.S. investors," added Froot. "In addition to cyclical concerns, these investors are also striving hard for diversification, often into new asset classes and investments that previously utilized long positions only. While North American risk taking in equities has slowed steadily over the past three years, the pace of this charge toward diversification may well be accelerating. Recall that the movement by institutional investors toward 'alpha' is also a movement away from 'beta.' " Since its launch in September of 2003, the State Street Investor Confidence Index(R) has become a key economic indicator for asset owners, investment managers and central banks. As the only index providing a quantitative measure tracking the common buying patterns of institutional investors around the world, the State Street Investor Confidence Index(R) offers a unique look into the investment behavior and decisions of thousands of professional investors and their investment decisions. About State Street Global Markets: State Street Global Markets provides specialized investment research and trading in foreign exchange, equities, fixed income and derivatives. Its goal is to enhance and preserve portfolio values for asset managers and asset owners. From its unique position at the crossroads of the global markets, it creates and unlocks value for its clients with original flow-based research, innovative portfolio strategies, trade process optimization, and global connectivity across multiple asset classes and markets. State Street Global Markets' research team of leading academic and industry experts are committed to continually advancing the science, including theory and application of its proprietary investor behavior research and innovative portfolio & risk management technologies to helps its clients challenge conventional thinking, shape ideas, make more informed investment decisions and deliver measurable results. About the State Street Investor Confidence Index(R): The index is released globally at 10 a.m. Eastern time in Boston on the second to last Tuesday of each month. More information on the State Street Investor Confidence Index, including frequently asked questions and a calendar of release dates, is available at http://www.statestreet.com/investorconfidenceindex. The previous month's calculations for the index are revised to account for trading activity through the end of the reporting period. About State Street: State Street Corporation (NYSE: STT) is the world's leading specialist in providing institutional investors with investment servicing, investment management and investment research and trading services. With $10.1 trillion in assets under custody and $1.4 trillion in assets under management at December 31, 2005, State Street operates in 26 countries and more than 100 geographic markets worldwide. For more information, visit State Street's web site at www.statestreet.com. This news announcement contains forward-looking statements as defined by United States securities laws, including statements about the financial outlook and business environment. Those statements are based on current expectations and involve a number of risks and uncertainties, including those related to the pace at which State Street adds new clients or at which existing clients use additional services, the value of global and regional financial markets, the pace of cross-border investment activity, changes in interest rates, the pace of worldwide economic growth and rates of inflation, the extent of volatility in currency markets, consolidations among clients and competitors, State Street's business mix, the dynamics of markets State Street serves, and State Street's success at integrating and converting acquisitions into its business. Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in State Street's 2004 annual report and subsequent SEC filings. State Street encourages investors to read the corporation's annual report, particularly the section on factors that may affect financial results, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, January 24, 2005, and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.