Boston - March 16, 2005 - State Street Corporation (NYSE: STT), the world's leading provider of services to institutional investors, released today the results of its institutional investor hedge fund survey. State Street conducted the survey late last year in conjunction with the 2004 Global Absolute Return Congress (ARC). Survey respondents included global corporate, public and government pension plans, and endowments and foundations with combined investable assets totaling more than $1.2 trillion.

The results of the survey show that a majority of institutional investors intend to add to hedge fund holdings in their portfolios over the next three years as they strive for better risk-adjusted returns and broader diversification. However, investors also differ greatly on the preferred way to invest in this asset class.

"Given the uncertainty of the world's financial markets, it's no surprise that institutional investors are looking to hedge fund strategies to maximize their portfolios' risk-adjusted performance," said Gary Enos, executive vice president and head of alternative investment services for State Street. "The findings of our survey also support the trend that we have seen in which new entrants to the asset class choose the fund of funds approach, while those with more experience in this asset class continue to favor direct investing."

State Street provides a complete set of servicing and management solutions for alternative investments including recordkeeping, fund accounting, valuation, risk management and regulatory reporting. In 2002, State Street acquired International Fund Services, a leading provider of fund accounting and administration as well as trade support and middle office services for alternative investment portfolios, and today services more than $100 billion in alternative investment assets. State Street Global Advisors, State Street's investment management arm, also provides institutional investors with an array of hedge fund and fund-of-funds strategies.

According to the State Street survey, one-third of institutional investors responding to the survey have at least 10 percent of their portfolios invested in hedge funds today, while half intend to have 10 percent or more invested in alternative strategies by 2007. At the time, 16 percent said they were not invested in hedge funds, but all plan to have some allocation to the asset class by 2007. The largest increase will come from public and government pension plans, the survey found.

"Hedge fund investing is obviously here to stay," continued Enos. "As institutional investors become increasingly more familiar with hedge funds, it is important that we, as service providers, have the right solutions in place to meet this demand."

More than half of the survey respondents said they prefer investing directly in hedge funds, rather than funds of hedge funds or investable hedge fund indices. Investors who began investing in the asset class over the last year (7 percent of survey participants), said they preferred only funds of hedge funds. Those who have been investing in hedge funds for a year or more said they prefer direct investing with single managers, with a combination of single manager and funds of funds as the second most popular approach, the survey found. For the key survey findings, please contact publicrelations@statestreet.com.

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. With $9.5 trillion in assets under custody and $1.4 trillion in assets under management as of December 31, 2004, State Street operates in 25 countries and more than 100 markets worldwide. For more information, visit State Street's web site at www.statestreet.com.

This news release may contain forward-looking statements, as defined by federal securities laws, including statements about the financial outlook and business environment. Any such statements are based on current expectations and involve a number of risks and uncertainties. Important factors, including those mentioned in this news release, that could cause actual results to differ materially are set forth in the company's 2004 annual report and subsequent SEC filings. They include risks and uncertainties relating 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, and the dynamics of the markets State Street serves. State Street encourages investors to review its annual report and SEC filings in conjunction with this announcement and prior to making any investment decision. The forward-looking statements contained in this news release speak only as of the date of release, March 16, 2005, and the company does not undertake to revise those forward-looking statements to reflect events after the date of this release.