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Ivy VIP High Income

  • $3.63 NAV as of 10/18/2017
  • ($0.00) / 0.09% Daily NAV Change
  • YTD (NAV)

Summary

Seeking to increase income potential through credit selection

Flexibility
The Portfolio has the ability to invest in the full spectrum of credit instruments including both bonds and loans.
Management discipline
A high priority on individual credit selection instead of sector bets on future market direction.
Income
The potential to generate higher levels of income than an investment-grade portfolio, although at greater risk

Asset Allocation

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Morningstar Style Box

Growth
Large
LTD
Low
Source: Morningstar

Portfolio Management

Chad Gunther

  • Ivy Investment Management Company
  • 3 Years with Fund
  • 19 Years in Industry
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Chad Gunther is portfolio manager of Ivy, Ivy VIP and Waddell & Reed Advisors High Income Funds, and of Ivy High Income Opportunities Fund. He has been portfolio manager of the High Income funds and High Income Opportunities fund since 2014. Since the Ivy Apollo Funds inception in 2015, he has been portfolio manager of the High Income Strategy sleeve of Ivy Apollo Strategic Income Fund and Ivy Apollo Multi-Asset Income Fund. Mr. Gunther joined Waddell & Reed in 2003 as a high yield fixed income investment analyst. He was appointed assistant vice president in 2008. He was named assistant portfolio manager of Ivy, Ivy VIP and Waddell & Reed Advisors High Income Funds in 2008. He was appointed vice president in 2013 and senior vice president in 2014. Prior to joining Waddell & Reed, Mr. Gunther was affiliated with Dialpad Communications as director of business operations. His responsibilities included the customer care, risk management and billing departments. Before joining Dialpad, Mr. Gunther was an associate analyst in equity research for George K. Baum & Company. He spent five years with Piper Jaffray before earning his master's degree. Mr. Gunther graduated from the University of Kansas in 1993 with a BS in Business Administration with an emphasis in Economics. He earned an MBA with an emphasis in Finance from Washington University/St. Louis Olin Graduate School of Business in 2000.

Perspectives

Quarterly Fund Commentary

Daily Prices as of 10/18/2017

Net Asset Value (NAV) $3.63
Daily NAV Change ($) ($0.00) 0.09%
Weekly NAV Change ($) $0.00 0.12%
Public Offering Price (POP) $3.63

Fund Facts

CUSIP 46600H620
Fund Code 925
Fund Type Fixed Income Funds
Fund Inception 7/13/1987
Class Inception 4/28/2017
Fiscal Year End December
Dividends Paid May
Fund Assets (as of 9/30/2017) $1.0 bil
Total Equity Holdings (as of 9/30/2017) 3
Total Holdings (as of 9/30/2017) 318
Portfolio Turnover Rate (as of 6/30/2017) 27%
Lipper Category High Current Yield Funds
Morningstar Category High Yield Bond
Benchmark BofAML US HY Master II TR USD

Performance

Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.

Monthly Rates of Return

Average Annual Total Returns as of 9/30/2017
(Returns for periods of less than 1-yr are not annualized)
 
Fund at NAV 2.73%
Lipper High Current Yield Funds 5.92% 7.43% 4.65% 5.22% 6.33% 7.64%
BofAML US HY Master II TR USD 7.05% 9.06% 5.87% 6.38% 7.72% 3.21%

Quarterly Rates of Return

Average Annual Total Returns as of 9/30/2017
(Returns for periods of less than 1-yr are not annualized)
 
Fund at NAV 2.73%
Lipper High Current Yield Funds 5.92% 7.43% 4.65% 5.22% 6.33% 7.64%
BofAML US HY Master II TR USD 7.05% 9.06% 5.87% 6.38% 7.72% 3.21%

Calendar Year Return

  2012
BofAML US HY Master II TR USD 15.59 7.42 2.50 -4.64 17.49

Morningstar Ratings as of 9/30/2017 Morningstar Logo

Category: High Yield Bond
Ratings are based on risk-adjusted returns
Overall out of 601
3 Year out of 601
5 Year out of 485
10 Year out of 319

Expense Ratios as of 4/28/2017

Net 0.67%
Gross 0.67%

3-Year Standard Deviation as of

BofAML US HY Master II TR USD 5.25

Distributions

Historical Prices Inception 4/28/2017

10/2/2017 $3.62 NO NO
10/3/2017 $3.62 NO NO
10/4/2017 $3.62 NO NO
10/5/2017 $3.62 NO NO
10/6/2017 $3.62 NO NO
10/9/2017 $3.63 NO NO
10/10/2017 $3.62 NO NO
10/11/2017 $3.62 NO NO
10/12/2017 $3.62 NO NO
10/13/2017 $3.62 NO NO
10/16/2017 $3.63 NO NO
10/17/2017 $3.62 NO NO

Historical Distributions Inception 4/28/2017

5/17/2017 $0.2058 Long: $0.000 Short: $0.000 $3.54 5/17/2017

*Special Dividend
The table includes the daily prices at NAV (net asset value) for the history of this fund's selected share class. NAV is the amount per share you would receive if you sold shares that day.

Annualized 30-Day SEC Yield as of 9/30/2017

Subsidized - NAV 5.89%
Unsubsidized - NAV 5.89%

Portfolio

Top 10 Holdings as a % of net assets 9/30/2017

New Cotai LLC and New Cotai Capital Corp., 10.6%, 5/1/2019 2.03%
Laureate Education, Inc., 8.3%, 5/1/2025 1.79%
Altice S.A., 7.8%, 5/15/2022 1.54%
Jo-Ann Stores Holdings, Inc., 9.8%, 10/15/2019 1.36%
Kronos Acquisition Holdings, Inc., 9.0%, 8/15/2023 1.32%
Laureate Education, Inc., 5.7%, 4/26/2024 1.32%
Italics Merger Sub, Inc., 7.1%, 7/15/2023 1.27%
B-Corp Merger Sub, Inc., 8.3%, 6/1/2019 1.20%
J.M. Smucker Co. (The), 1.4%, 10/2/2017 1.20%
Numericable - SFR S.A., 7.4%, 5/1/2026 1.17%

Total Portfolio Holdings

Updated quarterly, upon availability.

Maturity
as a % of fixed income assets as of 9/30/2017

<1 Year 17.3%
1-5 Years 36.8%
5-10 Years 45.1%
10-20 Years 0.9%
>20 Years 0.0%
Average Maturity 2.74 years
Effective Duration 2.35 years

Fixed Income Country Allocation
as a % of bond holdings as of 9/30/2017

United States 80.3%
Canada 7.0%
Luxembourg 4.0%
Netherlands 3.3%
France 1.4%
Macau 1.3%
United Kingdom 1.2%
Cayman Islands 0.8%
Hong Kong 0.6%
Austria 0.1%
Australia 0.0%

Quality
as a % of fixed income assets as of 9/30/2017

Quality: Ratings obtained from Standard & Poor's. For securities not rated by Standard & Poor's, ratings are obtained from Moody's. We do not evaluate these ratings, but simply assign them to the appropriate credit quality category as determined by the rating agency.
NonRated 4.90%
BBB 0.90%
BB 14.10%
B 52.50%
CCC 27.10%
Below CCC 0.50%

Portfolio Composition
as a % of net assets as of 9/30/2017

Corporate Bonds 67.29%
Senior Loans 15.80%
Cash and Cash Equivalents 15.64%
Domestic Common Stock 1.08%
Foreign Common Stock 0.15%
Preferred Stock 0.04%

Total Portfolio Holdings

Updated quarterly, upon availability.

Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.

Risk Factors: The value of the Portfolio's shares will change, and you could lose money on your investment. An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Fixed income securities are subject to interest rate risk and, as such, the net asset value of the Portfolio may fall as interest rates rise. Investing in high-income securities may carry a greater risk of nonpayment of interest or principal than higher-rated bonds. In addition to the risks typically associated with fixed-income securities, loan participations in which the Portfolio may invest carry other risks, including the risk of insolvency of the lending bank or other intermediary. Loan participations may be unsecured or not fully collateralized, may be subject to restrictions on resale and sometimes trade infrequently on the secondary market. These and other risks are more fully described in the Portfolio's prospectus. Not all portfolios may be offered at all broker/ dealers. The IVY VARIABLE INSURANCE PORTFOLIOSSM, are only available as investment options in variable life insurance policies and variable annuity contracts issued by participating insurance companies. They are not offered or made available directly to the general public.

Index Description: The BofAML U.S. HY Master II TR USD tracks the performance of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market. It is not possible to invest directly in an index

Annuities are long-term financial products designed for retirement purposes. Annuity and life insurance guarantees are based on the financial strength and claims-paying ability of the issuing insurance company. The guarantees have no bearing on the performance of a variable investment option. Variable investment options are subject to market risk, including loss of principal. There are charges and expenses associated with annuities and variable life insurance products, including mortality and expense risk charges, management fees, administrative fees, expenses for optional riders and deferred sales charges for early withdrawals. Withdrawals before age 59 1/2 may be subject to a 10% IRS tax penalty and surrender charges may apply.

The Portfolio began offering Class I shares on April 28, 2017. Class I shares may be purchased only through fund of funds, advisory or trust accounts, wrap accounts or other asset allocation or fee-based investment arrangements

Fee Waiver and/or Expense Reimbursement: Through April 30, 2018, Waddell & Reed Services Company (doing business as WI Services Company (WISC)), the Portfolio's transfer agent, has contractually agreed to reimburse sufficient shareholder servicing fees to ensure that the total annual ordinary portfolio operating expenses (which would exclude interest, taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, if any) of the Class I shares are at all times equal to the total annual ordinary portfolio operating expenses of the Class II shares less 0.25%, as calculated at the end of each month. Prior to that date, the expense limitation may not be terminated without the consent of the Board of Trustees.

Pricing: All prices and year-to-date returns are based on closing quotes unless noted, as supplied to the NASDAQ by 6:00 p.m. Eastern time. YTD Prices can be updated 3 to 4 hours after the Daily Pricing information which can result in mismatching data.

Style Analysis: The Morningstar Style Box reveals a fund's investment style. For equity funds the vertical axis shows the market capitalization of the stocks owned and the horizontal axis shows investment style (value, blend, or growth). For fixed-income funds, the vertical axis shows the credit quality of the bonds owned and the horizontal axis shows interest rate sensitivity as measured by a bond's effective duration. Morningstar seeks credit rating information from fund companies on a periodic basis (e.g., quarterly). In compiling credit rating information, Morningstar instructs fund companies to only use ratings that have been assigned by the following Nationally Recognized Statistical Rating Organizations (NRSROs): Moody's, Standard & Poor's, Fitch, and Egan-Jones. If two NRSROs have rated a security, fund companies are to report the lowest rating; if three or more NRSROs have rated the same security differently, fund companies are to report the rating that is in the middle. For example, if NRSRO X rates a security AA-, NRSRO Y rates the same security an A and NRSRO Z rates it a BBB+, the fund company should use the credit rating of 'A' in its reporting to Morningstar. PLEASE NOTE: Morningstar, Inc. is not itself an NRSRO nor does it issue a credit rating on the fund. An NRSRO rating on a fixed-income security can change from time-to-time. For credit quality, Morningstar combines the credit rating information provided by the fund companies with an average default rate calculation to come up with a weighted-average credit quality. The weighted-average credit quality is currently a letter that roughly corresponds to the scale used by a leading NRSRO. Bond funds are assigned a style box placement of "low", "medium", or "high" based on their average credit quality. Funds with a low credit quality are those whose weighted-average credit quality is determined to be less than "BBB-"; medium are those less than "AA-", but greater or equal to "BBB-"; and high are those with a weighted-average credit quality of "AA-" or higher. When classifying a bond portfolio, Morningstar first maps the NRSRO credit ratings of the underlying holdings to their respective default rates (as determined by Morningstar's analysis of actual historical default rates). Morningstar then averages these default rates to determine the average default rate for the entire bond fund. Finally, Morningstar maps this average default rate to its corresponding credit rating along a convex curve. For interest-rate sensitivity, Morningstar obtains from fund companies the average effective duration. Generally, Morningstar classifies a fixed-income fund's interest-rate sensitivity based on the effective duration of the Morningstar Core Bond Index (MCBI), which is currently three years. The classification of Limited will be assigned to those funds whose average effective duration is between 25% to 75% of MCBI's average effective duration; funds whose average effective duration is between 75% to 125% of the MCBI will be classified as Moderate; and those that are at 125% or greater of the average effective duration of the MCBI will be classified as Extensive. For municipal bond funds, Morningstar also obtains from fund companies the average effective duration. In these cases static breakpoints are utilized. These breakpoints are as follows: (i) Limited: 4.5 years or less; (ii) Moderate: more than 4.5 years but less than 7 years; and (iii) Extensive: more than 7 years. In addition, for non-US taxable and non-US domiciled fixed income funds static duration breakpoints are used: (i) Limited: less than or equal to 3.5 years; (ii) Moderate: greater than 3.5 and less than equal to 6 years; (iii) Extensive: greater than 6 years.

Unsubsidized yields reflect what the yield would have been without the effect of reimbursements and waivers. The adviser and its affiliates have or may voluntarily waive a portion of their fees (including, but not limited to, distribution and service (12b-1) fees) and reimburse certain expenses. There is no guarantee that the fund will avoid a negative yield. Such undertaking may be amended or withdrawn at any time.

30-Day SEC Yield: is calculated based on a formula mandated by the Securities and Exchange Commission (SEC) that calculates a fund's hypothetical annualized income, as a percentage of its assets. A security's income, for the purposes of this calculation, is based on the current market yield to maturity (in the case of bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30 day period. This hypothetical income will differ (at times, significantly) from the fund's actual experience; as a result, income distributions from the fund may be higher or lower than implied by the SEC yield.

When a fund's share class has less than a year of performance to report, the returns shown are cumulative.

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance, and does not include the effects of sales charges. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

© 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Quality: Ratings obtained from Standard & Poor's. For securities not rated by Standard & Poor's, ratings are obtained from Moody's. We do not evaluate these ratings, but simply assign them to the appropriate credit quality category as determined by the rating agency.

Information is subject to change and is not intended to represent any past or future investment recommendations.

Chad A. Gunther of Ivy Investment Management Company was named portfolio manager of the Fund on July 9, 2014. Prior to that, the Fund was managed by William M. Nelson.

YTD Prices can be updated 3 to 4 hours after the Daily Pricing information which can result in mismatching data.

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