LONDON -- 02/28/2008

New investment strategies provide ideal solution for defined contribution default funds.

State Street Global Advisors (SSgA), the investment management arm of State Street Corporation (NYSE: STT) and the largest institutional fund manager in the world, today announced plans to launch a range of Diversified Growth strategies. SSgA believes that these strategies could provide an ideal default investment fund option for defined contribution (DC) pension schemes. These primarily passively managed strategies provide exposure to a wide range of asset classes, thereby aiming to reduce volatility, and at a lower cost than many actively managed products. The strategies can be an efficient way to achieve the benefits of asset allocation by investing in one strategy, rather than a series of individual investments in multiple asset classes.

The SSgA Diversified Growth strategies will invest across a combination of asset classes, including equities, property, high-yield bonds, commodities and infrastructure. They will also be SSgA's first multi-asset strategy to include exposure to synthetic hedge funds through allocations to SSgA's pioneering hedge fund replication strategy.

"Diversified Growth strategies seek to reduce the risk of exposure to a single asset class by offering a portfolio of diversified assets, without compromising the long-term return objectives," said Kanesh Lakhani, managing director of SSgA in the UK. "They also provide access to alternative asset classes traditionally only accessible by larger investors."

Research reveals that 83 percent of DC schemes use a default fund and that 90 percent of employees and individual savers for retirement choose the default fund, even when provided with a range of investment options.¹

"Trustees and personal pension providers have a responsibility to design a default option that can meet the needs of the vast majority of their schemes' members," continued Lakhani. "Diversified Growth strategies create the ideal default option as they seek to spread risk and thereby reduce volatility by investing in a wider range of uncorrelated asset classes than traditional balanced funds."

"We believe the most effective way of offering this diversification is by applying our skill as a passive manager while seeking to deliver the returns of both traditional and alternative asset classes by means of modern indexing techniques. This approach aims to capture several of the market risk premia for investors, with a lower cost structure than a portfolio of primarily actively managed assets."

Investors will initially have the choice of two different SSgA Diversified Growth strategies, depending on their investment objectives. Diversified Beta is a 100 percent passively managed strategy that aims to deliver a target return in line with traditional balanced portfolios, with lower volatility. Diversified Beta Plus incorporates a 20 percent active element, and seeks to deliver equity-like returns in the long-term but with lower volatility than an equity-only portfolio. Responding to client demand, SSgA also plans to launch a third strategy in this range, Diversified Alternatives, which will provide exposure only to alternative asset classes.

"SSgA is recognised as a leading index manager in the global investment management business," commented Lakhani. "These Diversified Growth strategies harness our cutting-edge capabilities in index management and our investment expertise across a range of asset classes. Our diversified portfolios of primarily passively managed assets give us the ability to offer multi-asset strategies at a reasonable cost even to smaller investors, which aim to enhance net investment returns over the longer term."

¹ National Association of Pension Funds, 2006 and Mercer, September 2007