JW: Do you anticipate renewing the fee waiver on the sector Spiders?

GF: Yes, we do.

JW: What is State Street looking to do in the way of new products? Any fixed income or international regional funds?

GF: Well, on Friday we're launching 10 new funds. Four of them will be Dow products. There will be a Dow Jones large value, Dow Jones small value, Dow Jones large growth, and Dow Jones small growth. We know that these are actually better style indexes than what's out there. The ones that are out there right now are Russell indexes, the S&P indexes, and the Barra indexes. Dow Jones recently launched indexes that we created about 15 years ago, and we sold the rights to Dow Jones so that they could market them more aggressively. When we constructed those indexes, what we tried to come up with was a better way of defining the style. If you talk to professional investors, I think you'll find that one of the biggest concerns investors have with the indexes that are out there right now is that they have significant turnover. Most of this turnover is caused by the fact that they have one or two criteria to define value and growth, so what you have is a lot of companies switching back and forth. I think the Russell indexes are renowned for this.

JW: So the Dows don't split them right down the middle?

GF: No. What we do is we create a buffer zone, so the securities in the middle don't go into either. So what that does is prevent the companies that don't know what they want to be when they grow up from switching back and forth. As a result, you end up having companies that truly reflect style biases in the indexes. Instead of looking at one or two criteria, we look at 4 or 5 criteria, and what that does is provide more stability in the style biases we're looking for. So they're much better biases in capturing style and much better indexes for managing money, because they're going to have much lower turnover.

One of the other funds we'll be launching on Friday will be the Dow Jones Global Titans. That will be the first time that you'll see a global fund trading in the U.S. We also have the Morgan Stanley Technology and Morgan Stanley Internet coming out Friday and probably the following week you'll see two Fortune funds come out: the Fortune 500 and the E-50.

JW: Are you working on active funds? There are significant problems with trying to get the NAV out without revealing the portfolio.

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