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Ivy VIP Small Cap Core

  • $16.76 NAV as of 6/23/2017
  • ($0.13) / 0.77% Daily NAV Change
  • 4.05% YTD (NAV)


Seeking small companies with the potential for big opportunities

Portfolio holds a limited number of stocks, allowing portfolio manager to interact with company management and for the best ideas to drive performance.
Focus on performance catalysts
Manager focuses on identifying inflection points in company fundamentals. He believes that with inexpensive stocks it is important to wait and see if a company's fundamentals stabilize/inflect before fully entering a position.
Diversification & balance
Portfolio strives to participate in up markets while attempting to keep downdraft effects to a minimum. With a concentrated portfolio, this can be accomplished by focusing on diversification and making sure there is a balance between stable value names and higher risk/reward names. Diversification does not ensure a profit or protect against loss in a declining market.

Morningstar Style Box

Source: Morningstar

Portfolio Management

Kenneth G. Gau

  • Ivy Investment Management Company
  • 2 Years with Fund
  • 23 Years in Industry
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Kenneth G. Gau is a vice president of Ivy Investment Management Company and Waddell & Reed Investment Management Company. Mr. Gau joined the firm in June 2000 as an investment analyst. He was appointed assistant vice president in February 2006 and joined the small-cap growth team as assistant portfolio manager in March 2006. Mr. Gau was appointed vice president in January 2009. He was named assistant portfolio manager of small-cap growth institutional accounts in February 2011. In August 2014, Mr. Gau was appointed portfolio manager of the Ivy Small Cap Value Fund and Ivy VIP Small Cap Value. (The Fund was renamed Ivy Small Cap Core Fund effective March 3, 2017 and Ivy VIP Small Cap Core effective April 28, 2017.) He graduated from The Pennsylvania State University Smeal College of Business Administration in May 1994 with a BS in finance. He earned an MBA from Cornell University Johnson Graduate School of Management in May 2000. While in business school, Mr. Gau participated in Chase Manhattan Bank's summer associate program. Prior to returning for a graduate degree, he worked at Bankers Trust for approximately three and a half years.

Growth of a $10,000 Investment
through 5/31/2017

Assumes an investment over 10 years or life of the share class, reinvestment of dividends and capital gains, and does not include the effect of sales charges or taxes.



Quarterly Fund Commentary

Daily Prices as of 6/23/2017

Net Asset Value (NAV) $16.76
Daily NAV Change ($) ($0.13) 0.77%
Weekly NAV Change ($) $-0.07 -0.44%
Public Offering Price (POP) $16.76

Fund Facts

CUSIP 46600H778
Fund Code 864
Fund Type Domestic Equity
Fund Inception 10/1/1997
Class Inception 10/1/1997
Fiscal Year End December
Dividends Paid May
Fund Assets (as of 5/31/2017) $334.6 mil
Total Equity Holdings (as of 5/31/2017) 52
Total Holdings (as of 5/31/2017) 54
Portfolio Turnover Rate (as of 12/31/2016) 182%
Lipper Category VA Small-Cap Core Funds
Morningstar Category Small Blend
Benchmark Russell 2000 Value TR USD


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. Performance data quoted does not reflect any expenses or charges associated with owning a variable life insurance policy or variable annuity contract that invests in the Portfolio's shares. When such charges are deducted, actual investment performance in a variable annuity will be lower.

Monthly Rates of Return

Average Annual Total Returns as of 5/31/2017
(Returns for periods of less than 1-yr are not annualized)
Russell 2000 Value TR USD -2.86% 21.00% 7.34% 13.67% 5.31% 8.28%
Lipper VA Small-Cap Core Funds 0.81% 18.65% 7.32% 13.85% 6.15% 6.97%
Fund at NAV 2.74% 21.33% 9.68% 15.61% 7.17% 8.41%

Quarterly Rates of Return

Average Annual Total Returns as of 3/31/2017
(Returns for periods of less than 1-yr are not annualized)
Russell 2000 Value TR USD -0.13% 29.37% 7.62% 12.54% 6.09% 8.51%
Lipper VA Small-Cap Core Funds 2.00% 24.08% 6.91% 12.09% 6.93% 7.11%
Russell 2000 TR USD 2.47% 26.22% 7.22% 12.35% 7.12%
Fund at NAV 3.21% 29.12% 9.27% 13.79% 7.71% 8.51%

Calendar Year Return

Russell 2000 Value TR USD 18.05 34.52 4.22 -7.47 31.74
Class II 18.63 33.53 7.05 -5.58 28.88

Morningstar Ratings as of 5/31/2017 Morningstar Logo

Category: Small Blend
Ratings are based on risk-adjusted returns
Overall out of 645
3 Year out of 645
5 Year out of 545
10 Year out of 389

Lipper Ranking through 5/31/2017 Lipper Logo

Category: VA Small-Cap Core Funds
Rankings are based on average annual total returns, but do not consider sales charges.
1 Year 18/148 13
3 Year 10/142 7
5 Year 6/134 5
10 Year 22/106 21

Expense Ratios as of 4/28/2017

Net 1.16%
Gross 1.16%

3-Year Standard Deviation as of 5/31/2017

Russell 2000 Value TR USD 13.95

3-Year MPT* Statistics as of 5/31/2017

*Modern Portfolio Theory
Alpha 3.02
Beta 0.79
R-Squared 90.33
Sharpe Ratio 0.74
Capture Ratio Upside: 86.23%
Downside: 72.05%


Historical Prices Inception 10/1/1997

6/1/2017 $16.89 NO NO
6/2/2017 $16.91 NO NO
6/5/2017 $16.89 NO NO
6/6/2017 $16.89 NO NO
6/7/2017 $16.89 NO NO
6/8/2017 $17.08 NO NO
6/9/2017 $17.08 NO NO
6/12/2017 $16.98 NO NO
6/13/2017 $17.16 NO NO
6/14/2017 $17.06 NO NO
6/15/2017 $16.88 NO NO
6/16/2017 $16.83 NO NO
6/19/2017 $16.93 NO NO
6/20/2017 $16.72 NO NO
6/21/2017 $16.60 NO NO
6/22/2017 $16.63 NO NO
6/23/2017 $16.76 NO NO

Historical Distributions Inception 10/1/1997

5/17/2017 $0 Long: $0.272 Short: $1.961 $16.07 5/17/2017
5/18/2016 $0.0672 Long: $1.432 Short: $0.000 $15.01 5/18/2016
5/20/2015 $0.0153 Long: $1.266 Short: $0.132 $16.76 5/20/2015
5/21/2014 $0.0179 Long: $2.050 Short: $1.026 $16.74 5/21/2014
5/22/2013 $0.1579 Long: $0.655 Short: $0.513 $17.35 5/22/2013

*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.


Top 10 Holdings as a % of net assets 5/31/2017

Tivity Health, Inc. 5.31%
Webster Financial Corp. Webster Financial Corp. operates as the bank and financial holding company for Webster Bank, National Association that provides financial services to individuals, families, and businesses in the U.S. 4.87%
Take-Two Interactive Software, Inc. Take-Two Interactive Software, Inc. is an American multinational publisher, developer, and distributor of video games and video game peripherals. 4.61%
Pinnacle Foods, Inc. Pinnacle Foods Inc., through its subsidiaries, manufactures, markets, and distributes branded convenience food products in North America. 4.33%
Sensient Technologies Corp. Sensient Technologies Corporation supplies and manufactures a variety of ink-jet inks, cosmetic and pharmaceutical additives, and food and beverage flavors. 4.28%
Laredo Petroleum Holdings, Inc. Laredo Petroleum, Inc. operates as an independent energy company in the U.S. It focuses on the acquisition, exploration, and development of oil and natural gas properties, as well as the transportation of oil and natural gas primarily in the Permian Basin in West Texas. 4.15%
Visteon Corp. Visteon Corporation (Visteon) is a global supplier of climate, electronics, interiors and lighting systems, modules and components to global automotive original equipment manufacturers (OEMs). The Company operates in five segments: Climate, Electronics, Interiors, Lighting and Services. 3.84%
Uniti Group, Inc. 3.61%
Bob Evans Farms, Inc. 3.54%
AMC Entertainment Holdings, Inc., Class A AMC Entertainment Holdings, Inc., through its subsidiaries, operates as a theatrical exhibition company in the United States and internationally. 3.16%

Total Portfolio Holdings

Updated quarterly, upon availability.

Market Capitalization
as a % of equity assets as of 5/31/2017

Large 0.0%
Medium 59.7%
Small 40.4%
Median Market Cap (as of 5/31/2017) $2.3 bil

Top 10 Industry Allocation
as a % of Equity Holdings as of 5/31/2017

Regional Banks 11.8%
Specialty Chemicals 7.4%
Packaged Foods & Meats 5.9%
Health Care Services 5.5%
Home Entertainment Software 4.7%
Industrial Machinery 4.6%
Oil & Gas Exploration & Production 4.3%
Auto Parts & Equipment 4.0%
Trucking 3.8%
Specialized REITs 3.7%

Sector Allocation
as a % of equity assets as of 5/31/2017

Information Technology 18.00%
Industrials 15.10%
Financials 14.06%
Consumer Discretionary 13.07%
Health Care 10.19%
Materials 8.08%
Consumer Staples 7.06%
Real Estate 5.68%
Energy 4.26%
Telecommunication Services 2.47%
Utilities 2.03%

Portfolio Composition
as a % of net assets as of 5/31/2017

Domestic Common Stock 97.28%
Cash and Cash Equivalents 2.72%

Equity Country Allocation
as a % of equity assets as of 5/31/2017

United States 100.0%

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 insured or guaranteed by the FDIC or any other government agency. Investing in small-cap growth and value stocks may carry more risk than investing in stocks of larger, more well-established companies. Growth stocks may be more volatile or not perform as well as value stocks or the stock market in general. Value stocks are stocks of companies that may have experienced adverse developments or may be subject to special risks that have caused the stocks to be out of favor and, in the opinion of the Portfolio's manager, undervalued. Such security may never reach what the manager believes to be its full value, or such security's value may decrease. The Portfolio typically holds a limited number of stocks (generally 40 to 60). As a result, the appreciation or depreciation of any one security held by the Portfolio may have a greater impact on the Portfolio's net asset value than it would if the Portfolio invested in a larger number of securities. These and other risks are more fully described in the Portfolio's prospectus. Not all funds or fund classes may be offered at all broker/dealers.

Index Description: Russell 2000 Value is an unmanaged index comprised of securities that represent the small cap sector of the stock market. It is not possible to invest directly in an index.

Consider All 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 insured or guaranteed by the FDIC or any other government agency. Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification. These and other risks are more fully described in the portfolios's prospectus.

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.

Prior to April 28, 2017, Ivy VIP Small Cap Core was known as Ivy VIP Small Cap Value and its benchmark was the Russell 2000 Value Index. The Portfolio's benchmark is now the Russell 2000 Index. These changes were made to more closely align with the Portfolio's investment objectives. Portfolio performance after April 28, 2017, may significantly differ from prior performance due to changes made to the Portfolio's investment strategies.

Original shares of the Portfolio were renamed Class II shares on April 28, 2017.

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.

12-Month Trailing Distribution Yield: at NAV refers to the 12-month historical cash flow paid over the past 12 months in dividends, divided by the past months ending NAV.

MPT Statistics: Alpha is a measure of a portfolio’s actual returns and expected performance, given its level of risk (as measured by beta). Beta reflects the sensitivity of the portfolio’s return to fluctuations in the market index. R-squared indicates how much of a portfolio’s fluctuations are attributable to movements in the portfolio’s benchmark. Standard deviation is a measure of how volatile a portfolio’s returns are. Sharpe ratio is a measure of a portfolio’s risk-adjusted performance.

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.

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

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

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