Advantus Capital Management

As of December 31, 2007

Discovering value and strong client service helped Advantus achieve a record-breaking year in 2007.

Advantus Capital Management, Securian’s asset management subsidiary, attained record sales driven by sales to institutions and insurance companies that value a fundamental investment process and strong client service. As a result, Advantus continued to grow its business through channels outside of Securian.

Advantus sales reached $1.2 billion and set a record for the fourth consecutive year. The Insurance Advisory unit enjoyed a particularly strong year, registering sales of $780 million, a 73 percent increase. Much of that was attributable to new business from existing clients. Sales to other institutions, primarily pension plans, reached $304 million, a 59 percent increase. Sales of $156 million for Ivy Funds®, which Advantus subadvises for Waddell & Reed, were also strong. Overall, unaffiliated assets increased 15 percent and now account for 31 percent of the assets Advantus manages.

Disruption in fixed income markets and illiquidity in mortgage related securities put Advantus’ value style out of favor in 2007. As a result, investment performance results varied more widely than usual for the portfolios Advantus manages.

Performance in portfolios managed for insurance companies remained strong over short- and long-term periods. The Advantus Real Estate Securities composite outperformed its benchmark¹ on a gross basis in a down market in 2007. Short-term performance for the one- and three-year periods ending December 31, 2007, on the Full Duration and Mortgage Securities composites suffered, but both beat their benchmarks^2,3 on a gross basis for the five- and 10-year periods ending December 31, 2007. Meanwhile, the Short Duration composite outperformed its benchmark⁴ on a gross basis for the three-, five- and 10-year periods ending December 31, 2007, and the Intermediate Duration composite continued to beat its benchmark⁵ on a gross basis for the 10-year period ending December 31, 2007.

In 2007, Advantus began managing its new enhanced equity index product and made a significant investment in technology, enhancing investment performance reporting and improving efficiency.

1. The Dow Jones Wilshire Real Estate Securities Index is a market capitalization-weighted index of equity securities whose primary business is equity ownership of commercial real estate (REITs). The index contains equity and hybrid REITs and real estate operating companies.

2. The Lehman Brothers Aggregate Bond Index is a market-weighted index that covers the U.S. investment-grade fixed rate bond market. The index includes government and corporate securities, agency mortgage pass-through securities and asset-backed securities.

3. The Lehman Brothers Mortgage-backed Securities Index includes all fixed rate securities backed by mortgage pools of the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association.

4. The Lehman Brothers Short Treasury 9-12 Month Index includes U.S. Treasury securities with maturities of nine to 12 months.

5. The Lehman Brothers Intermediate U.S. Government/Credit Index is an unmanaged list of investment grade fixed income securities from two major sectors: U.S. government bonds and corporate bonds.