Ivy Variable Insurance Portfolios NCSR Certified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORMN-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number811-5017

Ivy Variable Insurance Portfolios

(Exact name of registrant as specified in charter)

6300 Lamar Avenue, Overland Park, Kansas 66202

(Address of principal executive offices) (Zip code)

Jennifer K. Dulski

6300 Lamar Avenue

Overland Park, Kansas 66202

(Name and address of agent for service)

Registrant’s telephone number, including area code: (913)236-2000

Date of fiscal year end: December 31

Date of reporting period: December 31, 2019

ITEM 1. REPORTS TO STOCKHOLDERS.

LOGO

VARIABLE INSURANCE PORTFOLIOS

Annual Report

DECEMBER 31, 2019


Ivy Variable Insurance Portfolios

Asset Strategy	Class I	Class II

Balanced		Class II

Energy	Class I	Class II

Growth		Class II

High Income	Class I	Class II

International Core Equity		Class II

Mid Cap Growth	Class I	Class II

Natural Resources		Class II

Science and Technology	Class I	Class II

Small Cap Core		Class II

Small Cap Growth	Class I	Class II

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission (SEC), you may not be receiving paper copies of the Fund’s annual or semi-annual shareholder reports by mail, unless you specifically request paper copies of the reports from the insurance company that offers your variable annuity or variable life insurance contract or from your financial intermediary. Instead of delivering paper copies of the report, the insurance company may choose to make the reports available on a website, and will notify you by mail each time a shareholder report is posted and provide you with a website link to access the report. Instructions for requesting paper copies will be provided by your insurance company.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the insurance company or your financial intermediary electronically by following the instructions provided by the insurance company or by contacting your financial intermediary.

You may elect to receive all future Fund shareholder reports in paper free of charge from the insurance company. You can inform the insurance company or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions provided by the insurance company or by contacting your financial intermediary. Your election to receive reports in paper will apply to all portfolio companies available under your contract with the insurance company.


CONTENTS		IVY VIP


President’s Letter			3
Illustration of Portfolio Expenses			4
Management Discussion, Portfolio Highlights and Schedule of Investments:
Asset Strategy			6
Balanced			16
Energy			25
Growth			31
High Income			38
International Core Equity			49
Mid Cap Growth			58
Natural Resources			65
Science and Technology			71
Small Cap Core			79
Small Cap Growth			85
Statements of Assets and Liabilities			94
Statements of Operations			96
Statements of Changes in Net Assets			98
Financial Highlights			100
Notes to Financial Statements			104
Report of Independent Registered Public Accounting Firm			122
Income Tax Information			123
Board of Trustees and Officers			124
Renewal of Investment Management Agreement			128
Annual Privacy Notice			131
Proxy Voting Information			132
Quarterly Portfolio Schedule Information			133


2		ANNUAL REPORT		2019


PRESIDENT’S LETTER		IVY VIP


		DECEMBER 31, 2019 (UNAUDITED)
Philip J. Sanders, CFA

Dear Shareholder,

Following a sharp correction to end 2018, equity markets roared back during the fiscal year. The S&P 500 Index advanced more than 30% in 2019, and every sector posted gains. The rally had apro-cyclical component, as information technology and communication services delivered the strongest sector returns, while energy and health care were the laggards.

The U.S. economy slowed in 2019, but remains in the longest economic expansion in U.S. history despite signs of global weakening. Waning benefits from U.S. fiscal stimulus, elevated inventory levels, Brexit chaos, a stronger U.S. dollar and the lagged effects of tighter monetary policy in places like the U.S. and China coalesced to weaken the pace of global growth. We believe some of those headwinds are reversing and could provide some lift to global growth in 2020.

Uncertainty around trade and the weakening of the global economy pressured the U.S. Federal Reserve (Fed) to reverse its policy during 2019. After projecting two rate hikes at the start of the fiscal year, the Fed cut interest rates three times in 2019, bringing the federal funds rate target range to 1.50–1.75%. Overall, we expect the Fed to leave rates unchanged throughout 2020.

Markets cheered the significant progress made toward a “phase one” U.S.-China trade deal in December, though we believe U.S. trade policy remains a wildcard and poses a threat to the current expansion. The uncertainty about the future of global trade created a significant slowing in the eurozone. In addition, uncertainty about the U.K.’s potential exit from the European Union triggered a further reduction in business confidence. The European Central Bank (ECB) announced additional easing in September, pushing interest rates further into negative territory and introducing another round of quantitative easing via bond purchases. While we believe average GDP growth in 2020 will be similar to the estimated 1.2% average in 2019, we expect the pace of eurozone growth to improve throughout 2020 on the back of a better global economy and reduced risks around trade and Brexit.

Emerging markets felt the effects of weak global trade in 2019, which led to disappointing economic growth overall. Despite near-term concerns and likely volatility across the global equity market, we believe the long-term fundamentals in emerging markets will continue to offer opportunities.

Looking ahead, we believe equities face intensifying headwinds as the pace of global growth slows and trade turmoil lingers. As we examine the investment landscape, we continue to put greater emphasis on the fundamentals and quality of asset classes and sectors. We believe it is important to stay focused on the merits of individual market sectors, industries and companies when making investment decisions. Those fundamentals historically have tended to outweigh external factors such as government policies and regulations. While those can affect every business and every investor, we think the innovation and management skill within individual companies are the ultimate drivers of long-term stock prices.

Economic Snapshot



	12/31/2019			12/31/2018
S&P 500 Index		3,230.78			2,506.85
MSCI EAFE Index		2,036.94			1,719.88
10-Year Treasury Yield		1.92	%		2.69	%
U.S. unemployment rate		3.5	%		3.9	%
30-year fixed mortgage rate		3.74	%		4.55	%
Oil price per barrel		$61.14			$45.41

Sources: Bloomberg, U.S. Department of Labor, MBA, CME

All government statistics shown are subject to periodic revision. The S&P 500 Index is an unmanaged index that tracks the stocks of 500 primarilylarge-cap U.S. companies. MSCI EAFE Index is an unmanaged index comprised of securities that represent the securities markets in Europe, Australasia and the Far East. It is not possible to invest directly in any of these indexes. Mortgage rates are from BankRate and reflect the overnight national average rate on a conventional30-year fixed loan. Oil prices reflect the market price of West Texas intermediate grade crude.

Respectfully,

LOGO

Philip J. Sanders, CFA

President

The opinions expressed in this letter are those of the President of the Ivy Variable Insurance Portfolios and are current only through the end of the period of the report, as stated on the cover. The President’s views are subject to change at any time, based on market and other conditions, and no forecasts can be guaranteed.

2019

ANNUAL REPORT


ILLUSTRATION OF PORTFOLIO EXPENSES		IVY VIP

(UNAUDITED)

Expense Example

Actual Expenses

The first section in the following table provides information about actual investment values and actual expenses for each share class. You may use the information in this section, together with your initial investment in Portfolio shares, to estimate the expenses that you paid over the period. Simply divide the value of that investment by $1,000 (for example, a $7,500 initial investment divided by $1,000 = 7.5), then multiply the result by the number in the first section under the heading entitled “Expenses Paid during Period” to estimate the expenses you paid on your investment during this period. In addition, there are fees and expenses imposed under the variable annuity or variable life insurance contract through which shares of the Portfolio are held. Additional fees have the effect of reducing investment returns.

Hypothetical Example for Comparison Purposes

The second section in the following table provides information about hypothetical investment values and hypothetical expenses for each share class based on the Portfolio’s actual expense ratio and an assumed rate of return of five percent per year before expenses, which is not the Portfolio’s actual return. The hypothetical investment values and expenses may not be used to estimate the actual investment value at the end of the period or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other funds. To do so, compare this five percent hypothetical example with the five percent hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs as a shareholder of the Portfolio and do not reflect any fees and expenses imposed under the variable annuity or variable life insurance contract through which shares of the Portfolio are held.

Expenses paid may be impacted by expense reduction arrangements. If those arrangements had not been in place, expenses paid would have been higher. See Note 6 in Notes to Financial Statements for further information.


4		ANNUAL REPORT		2019


ILLUSTRATION OF PORTFOLIO EXPENSES		IVY VIP

(UNAUDITED)



	Actual⁽¹⁾						Hypothetical⁽²⁾

Portfolio	Beginning Account Value 6-30-19		Ending Account Value 12-31-19		Expenses Paid During Period*		Beginning Account Value 6-30-19		Ending Account Value 12-31-19		Expenses Paid During Period*		Annualized Expense Ratio Based on the Six-Month Period
Asset Strategy
Class I	$	1,000	$	1,062.00	$	4.02	$	1,000	$	1,021.34	$	3.94		0.77%
Class II	$	1,000	$	1,060.60	$	5.25	$	1,000	$	1,020.08	$	5.15		1.02%
Balanced
Class II	$	1,000	$	1,083.70	$	5.31	$	1,000	$	1,020.14	$	5.15		1.01%
Energy
Class I	$	1,000	$	947.80	$	4.87	$	1,000	$	1,020.16	$	5.05		1.00%
Class II	$	1,000	$	946.60	$	6.13	$	1,000	$	1,018.94	$	6.36		1.25%
Growth
Class II	$	1,000	$	1,102.20	$	5.26	$	1,000	$	1,020.18	$	5.05		1.00%
High Income
Class I	$	1,000	$	1,027.50	$	3.45	$	1,000	$	1,021.85	$	3.44		0.67%
Class II	$	1,000	$	1,025.90	$	4.66	$	1,000	$	1,020.57	$	4.65		0.92%
International Core Equity
Class II	$	1,000	$	1,060.10	$	5.97	$	1,000	$	1,019.38	$	5.86		1.16%
Mid Cap Growth
Class I	$	1,000	$	1,087.70	$	4.49	$	1,000	$	1,020.92	$	4.34		0.85%
Class II	$	1,000	$	1,086.30	$	5.74	$	1,000	$	1,019.66	$	5.55		1.10%
Natural Resources
Class II	$	1,000	$	997.10	$	6.19	$	1,000	$	1,019.05	$	6.26		1.22%
Science and Technology
Class I	$	1,000	$	1,127.50	$	4.79	$	1,000	$	1,020.69	$	4.55		0.90%
Class II	$	1,000	$	1,126.10	$	6.17	$	1,000	$	1,019.41	$	5.86		1.15%
Small Cap Core
Class II	$	1,000	$	1,037.60	$	6.01	$	1,000	$	1,019.30	$	5.96		1.17%
Small Cap Growth
Class I	$	1,000	$	1,003.60	$	4.51	$	1,000	$	1,020.71	$	4.55		0.89%
Class II	$	1,000	$	1,002.30	$	5.81	$	1,000	$	1,019.45	$	5.86		1.14%

*	Portfolio expenses are equal to the Portfolio’s annualized expense ratio (provided in the table), multiplied by the average account value over the period, multiplied by 184 days in thesix-month period ended December 31, 2019, and divided by 365.

(1)

This section uses the Portfolio’s actual total return and actual Portfolio expenses. It is a guide to the actual expenses paid by the Portfolio in the period. The “Ending Account Value” shown is computed using the Portfolio’s actual return and the “Expenses Paid During Period” column shows the dollar amount that would have been paid by an investor who started with $1,000 in the Portfolio. A shareholder may use the information here, together with the dollar amount invested, to estimate the expenses that were paid over the period. For every thousand dollars a shareholder has invested, the expenses are listed in the last column of this section.

(2)

This section uses a hypothetical five percent annual return and actual Portfolio expenses. It helps to compare the Portfolio’s ongoing costs with other mutual funds. A shareholder can compare the Portfolio’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other Portfolios.

The above illustrations are based on ongoing costs only.

2019

ANNUAL REPORT


MANAGEMENT DISCUSSION		ASSET STRATEGY

(UNAUDITED)

LOGO

Chace Brundige

LOGO

W. Jeffery Surles

Below, F. Chace Brundige, CFA, and W. Jeffery Surles, CFA, portfolio managers of Ivy VIP Asset Strategy, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Brundige has managed the Portfolio since 2014 and has 26 years of industry experience. Mr. Surles has managed the Portfolio since 2018 and has 18 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Asset Strategy(Class II shares at net asset value)			21.78%
Benchmark and Morningstar Category
MSCI All Country World Index (ACWI)			26.60%
(generally reflects the performance of stocks in 46 developed and emerging markets)
Morningstar World Allocation Category Average			16.10%
(generally reflects the performance of the universe of funds with similar investment objectives)

Please note that the Portfolio returns include applicable investment fees and expense, whereas the index returns do not include any such fees. Also, the Portfolio’s performance data does not take into account any product expenses or charges associated with owning a variable life or annuity policy, which is invested in Ivy Variable Insurance Portfolios.

An interesting year

According to Morgan Stanley, 2019 is the first year since 2010 in which every major asset class performed better than inflation. The starting point is important, of course, since 2018 was unique in that every major asset class underperformed inflation. The MSCI ACWI, the Portfolio’s benchmark, returned 26.6% for the year. It did not recover to its September 2018 high until July, then consolidated until it pierced that level for good in October as the trade picture began to clear with positive indications of an initial trade agreement between the U.S. and China.

Yield curves began the year at their respective peaks, with all major curves flattening or shifting down through the first three quarters. The Federal Reserve (Fed), which raised interest rates nine times between late 2015 and December 2018, finally took its cue from markets and cut rates at each of its July, September, and October 2019 meetings. With central bank support firmly in place and the trade picture clearing, equity markets rallied and yield curves steepened during the fourth quarter. High yield credit spreads performed roughly in line with equities — rallying from recent peaks during the first quarter, volatile during the middle of the year and rallying to new low spread levels for the year in December, though still above the lows of both 2018 and 2017.

In addition to the improving trade picture with China during the year, the modification to the North American Free Trade Agreement known as the U.S.-Mexico-Canada Agreement was passed by the U.S. House of Representatives and we think it is likely to become law upon Senate approval. While it’s difficult to measure the full negative impact of the trade dispute, it’s fairly clear that global trade has slowed and corporate capital expenditures have come under pressure because of the uncertainty. Despite the uptick with “Phase 1” of a trade agreement that is expected to be signed in early 2020, any potential rebound in those two key metrics also will be difficult to gauge. That said, global manufacturing data appears to have bottomed for now, with positive signals stemming from inventory and new order data. Central banks remain accommodative and many national governments appear to be following the U.S., which in late 2019 posted a budget deficit eclipsing $1 trillion.

There were many macro and political events that affected the markets during the year: Brexit uncertainties, trade wars, Hong Kong unrest, Middle East tensions, spats with North Korea and impeachment proceedings, to name a few examples. All largely were brushed off by the markets. The focus — rightly so in our opinion — continues to be more on monetary policy, which remains easy, and economic growth, which we believe remains at acceptable levels.

Solid performance, but we could not keep pace with global equity markets

The Portfolio had a positive return for the fiscal year but did not keep pace with its benchmark. However, the Portfolio outperformed its Morningstar category average return.

The equity sleeve of the Portfolio performed well, with relative strength in information technology and industrials offsetting weakness in consumer discretionary and health care. Strong returns from Taiwan Semiconductor Manufacturing Co. Ltd., Qualcomm, Inc., ASML Holding N.V., Microsoft Corp. and Fiserv, Inc. eclipsed the fact that the Portfolio did not


6		ANNUAL REPORT		2019

hold Apple, Inc. — a major component of the benchmark and key contributor to its performance — for most of the year. The Portfolio’s industrial sector holdings performance was led by aerospace and defense, with Airbus SE — the largest position in the sector — rallying 55% for the year. Other industrial contributors include Ferguson Plc in the U.K., Vinci in France, and railroads Union Pacific Corp. and Kansas City Southern.

Weakness in the consumer discretionary sector performance was led by two positions within Japanese autos — Suzuki Motor Corp. and Subaru Corp. The former has been driven by a downturn in demand from India via its majority owned Maruti Suzuki subsidiary. We were a bit late to purchase Subaru, and the stock consolidated after a period of outperformance. In both cases, we feel the market has mispriced the respective opportunities in India and North America, and we continue to add on weakness. Dollar Tree, Inc., has also performed poorly since our purchase, though we maintain conviction in the longer term potential opportunity.

Health care performance was hindered by a large weight in Pfizer, which fell during the year after strong performance in 2018, and a poorly timed exit from UnitedHealth Group. We sold Pfizer during the year and built a position in Anthem within managed care, which trades at a steep discount to UnitedHealth Group.

Performance of the fixed income component of the Portfolio had a double-digit return on a standalone basis during the year. While a solid performance in isolation, it still was a detractor to overall performance against the Portfolio’sall-equity benchmark. A longstanding position in subordinated European bank debt continued to perform well. Near the end of the fiscal year, we slightly reduced the position as a number of bonds hit price targets. Another longstanding position that contributed to performance was Altice Luxembourg S.A., in which we own bonds at several different points in the capital structure. Management demonstrated its ability tode-leverage the company through a series of asset sales which caused the bonds to rally substantially. Again, we reduced the position near the end of the year as bonds started to hit price targets and grew less attractive on a relative value basis. We had one substantial credit event during the year related to Argentina, where the Portfolio owns both sovereign and provincial credit. We were caught when the election cycle returned a Peronist government to power, causing bond prices to drop precipitously. We still have the exposure in the Portfolio as we believe the bonds are now trading significantly below recovery value in the event of any restructuring.

Gold consolidated early in the year but picked up steam as global rates came under pressure until Fed easing took hold. The metal continues to hold a place in our portfolio as one of the least-correlated to equities over time, though position size may vary with circumstances.

Investments in derivatives had a small positive impact on performance for the fiscal year.

Outlook for 2020

We enter 2020 with an equity weight of around 66%, with more than 25% in fixed income, almost 6% in gold and expected portfolio volatility of 74% of the benchmarks. Over the last few months, we continued to trim positions as they approached our targets, redeploying that capital in what we believe are attractive areas of global equity and fixed income.

For the first time in a long time, the Portfolio’s equity exposure is primarily outside the U.S., where strong relative performance has, in many cases, led to less appealing relative value. We have found opportunities in autos in Japan, oil exploration & production in Canada, and semiconductors and financials in Asia, among others. In fixed income, we have decreased the previously outsized exposure to European bank subordinated debt and are primarily looking to

redeploy capital into bifurcated parts of the high yield markets, where the relative spreads betweenBB-rated credit and lower-rated segments of the market are at historically wide levels.

We remain comfortable with the gold position because of its strong performance in 2019. Many countries and their respective central banks are beginning to question the ability of monetary policy alone to drive economic growth, given slower population growth, rising dependency ratios, high and rising corporate debt, and a decline in China’s appetite for basic materials.

The call for fiscal stimulus is strong and growing globally, buttressed by the growing acceptance of “Modern Monetary Theory,” which generally rejects conventional beliefs about government spending, money, taxes and budget deficits. We think it may just work…until it doesn’t. To the extent that deficits do matter, we think the gold market will sniff that out even as real interest rates begin to rise to send the warning — and what would central banks do then?

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

The Portfolio may allocate its assets among different asset classes of varying correlation around the globe.

2019

ANNUAL REPORT

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.

The Portfolio may seek to hedge market risk via the use of derivative instruments. Such investments involve additional risks.

Investing in commodities is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.

The use of derivatives presents several risks, including the risk that these instruments may change in value in a manner that adversely affects the Portfolio’s value and the risk that fluctuations in the value of the derivatives may not correlate with the corresponding securities or fixed income markets or the underlying asset upon which the derivative’s value is based.

These and other risks are more fully described in the Portfolio’s prospectus.

The opinions expressed in this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.

The index noted is unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Asset Strategy.


8		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		ASSET STRATEGY

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			66.2%
Information Technology			17.3%
Industrials			11.9%
Financials			9.3%
Consumer Discretionary			7.1%
Health Care			7.1%
Consumer Staples			6.6%
Energy			3.8%
Communication Services			1.1%
Utilities			1.0%
Materials			0.7%
Real Estate			0.3%
Bullion (Gold)			5.7%
Bonds			25.1%
Corporate Debt Securities			13.7%
Loans			5.1%
United States Government and Government Agency Obligations			4.3%
Mortgage-Backed Securities			1.0%
Other Government Securities			1.0%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			3.0%

Country Weightings


North America			46.6%
United States			44.8%
Other North America			1.8%
Europe			28.4%
France			7.9%
United Kingdom			7.1%
Switzerland			4.5%
Other Europe			8.9%
Pacific Basin			15.0%
Japan			5.5%
Other Pacific Basin			9.5%
South America			1.3%
Bullion (Gold)			5.7%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			3.0%

Top 10 Equity Holdings



Company	Country	Sector	Industry
Microsoft Corp.	United States	Information Technology	Systems Software
Taiwan Semiconductor Manufacturing Co. Ltd.	Taiwan	Information Technology	Semiconductors
Fiserv, Inc.	United States	Information Technology	Data Processing & Outsourced Services
Wal-Mart Stores, Inc.	United States	Consumer Staples	Hypermarkets & Super Centers
Airbus SE	France	Industrials	Aerospace & Defense
Visa, Inc., Class A	United States	Information Technology	Data Processing & Outsourced Services
ORIX Corp.	Japan	Financials	Consumer Finance
Nestle S.A., Registered Shares	Switzerland	Consumer Staples	Packaged Foods & Meats
Adobe, Inc.	United States	Information Technology	Application Software
Ping An Insurance (Group) Co. of China Ltd., H Shares	China	Financials	Life & Health Insurance

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.

+Cash equivalents are defined as highly liquid securities with maturities of less than three months. Cash equivalents may include U.S. Government Treasury bills, bank certificates of deposit, bankers’ acceptances, corporate commercial paper and other money market instruments.

2019

ANNUAL REPORT


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		ASSET STRATEGY

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class I		Class II
1-year period ended12-31-19		22.08%		21.78%
5-year period ended12-31-19		—		3.99%
10-year period ended12-31-19		—		5.65%
Since Inception of Class through12-31-19⁽³⁾		9.87%		—

(2)

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. Please visit www.ivyinvestments.com for the Portfolio’s most recentmonth-end performance. 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 policy or contract will be lower.

(3)

4-28-17 (the date on which shares were first acquired by shareholders).

Past performance is not necessarily indicative of future performance. Indexes are unmanaged. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or on the redemption of Portfolio shares. Performance results may include the effect of expense reduction arrangements for some or all of the periods shown. If those arrangements had not been in place, the performance results for those periods would have been lower.


10		ANNUAL REPORT		2019


CONSOLIDATED SCHEDULE OF INVESTMENTS		ASSET STRATEGY (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares			Value
Communication Services

Interactive Media & Services – 1.1%
Facebook, Inc., Class A (A)		41		$	8,505


Total Communication Services – 1.1%					8,505
Consumer Discretionary

Auto Parts & Equipment – 1.1%
Aptiv plc		85			8,076


Automobile Manufacturers – 2.1%
Subaru Corp. (B)		274			6,767
Suzuki Motor Corp. (B)		222			9,244

					16,011


General Merchandise Stores – 0.8%
Dollar Tree, Inc. (A)		69			6,524


Home Improvement Retail – 1.0%
Home Depot, Inc. (The)		36			7,915


Internet & Direct Marketing Retail – 1.0%
Amazon.com, Inc. (A)		4			7,861


Leisure Facilities – 0.0%
COTA Racing & Entertainment LLC, Class B (A)		—	*		—


Leisure Products – 0.1%
Media Group Holdings LLC, Series H (A)(C)(D)(E)		32			—	*
Media Group Holdings LLC, Series T (A)(C)(D)(E)		4			395

					395


Restaurants – 1.0%
Compass Group plc (B)		309			7,748


Total Consumer Discretionary – 7.1%					54,530
Consumer Staples

Household Products – 1.0%
Procter & Gamble Co. (The)		63			7,865


Hypermarkets & Super Centers – 2.1%
Wal-Mart Stores, Inc.		135			16,043


Packaged Foods & Meats – 2.5%
Danone S.A. (B)		95			7,893
Nestle S.A., Registered Shares (B)		107			11,572

					19,465


Personal Products – 1.0%
Beiersdorf Aktiengesellschaft (B)		66			7,850


Total Consumer Staples – 6.6%					51,223


COMMON STOCKS(Continued)	Shares		Value
Energy

Integrated Oil & Gas – 1.0%
Total S.A. (B)		146	$	8,031


Oil & Gas Exploration & Production – 0.9%
Canadian Natural Resources Ltd.		212		6,852


Oil & Gas Refining & Marketing – 1.1%
Reliance Industries Ltd. (B)		404		8,568


Oil & Gas Storage & Transportation – 0.8%
Enterprise Products Partners L.P.		210		5,912


Total Energy – 3.8%				29,363
Financials

Consumer Finance – 1.7%
ORIX Corp. (B)		795		13,141


Diversified Banks – 3.8%
BNP Paribas S.A. (B)		146		8,657
ICICI Bank Ltd. (B)		1,020		7,704
Kabushiki Kaisha Mitsubishi Tokyo Financial Group (B)		1,314		7,103
UniCredit S.p.A. (B)		414		6,042

				29,506


Life & Health Insurance – 2.6%
AIA Group Ltd. (B)		874		9,173
Ping An Insurance (Group) Co. of China Ltd., H Shares (B)		902		10,666

				19,839


Other Diversified Financial Services – 1.2%
Citigroup, Inc.		120		9,558


Total Financials – 9.3%				72,044
Health Care

Biotechnology – 0.7%
Sarepta Therapeutics, Inc. (A)(F)		39		5,057


Health Care Equipment – 1.3%
Zimmer Holdings, Inc.		64		9,581


Life Sciences Tools & Services – 0.3%
Qiagen N.V. (A)		71		2,400


Managed Health Care – 0.8%
Anthem, Inc.		21		6,427


Pharmaceuticals – 4.0%
AstraZeneca plc (B)		76		7,708
Elanco Animal Health, Inc. (A)		299		8,808
GlaxoSmithKline plc (B)		338		7,976
Merck KGaA (B)		60		7,068

				31,560


Total Health Care – 7.1%				55,025


COMMON STOCKS(Continued)	Shares		Value
Industrials

Aerospace & Defense – 3.0%
Airbus SE (B)		91	$	13,386
Northrop Grumman Corp.		29		9,922

				23,308


Construction & Engineering – 1.8%
Larsen & Toubro Ltd. (B)		348		6,326
Vinci (B)		70		7,811

				14,137


Construction Machinery & Heavy Trucks – 1.1%
Caterpillar, Inc.		59		8,703


Electrical Components & Equipment – 1.3%
Schneider Electric S.A. (B)		94		9,691


Industrial Conglomerates – 0.9%
Koninklijke Philips Electronics N.V., Ordinary Shares (B)		140		6,820


Industrial Machinery – 0.9%
Gardner Denver Holdings, Inc. (A)		181		6,637


Railroads – 2.0%
Kansas City Southern		40		6,166
Union Pacific Corp.		52		9,405

				15,571


Trading Companies & Distributors – 0.9%
Ferguson plc (B)		81		7,368


Total Industrials – 11.9%				92,235
Information Technology

Application Software – 2.6%
Adobe, Inc. (A)		34		11,234
Intuit, Inc.		35		9,266

				20,500


Data Processing & Outsourced Services – 4.2%
Fiserv, Inc. (A)		164		18,950
Visa, Inc., Class A		71		13,278

				32,228


Electronic Equipment & Instruments – 0.8%
Keyence Corp. (B)		19		6,473


Internet Services & Infrastructure – 0.3%
VeriSign, Inc. (A)		11		2,030


IT Consulting & Other Services – 0.2%
Garter, Inc., Class A (A)		12		1,874


Semiconductor Equipment – 1.1%
ASML Holding N.V., Ordinary Shares (B)		30		8,737

2019

ANNUAL REPORT


CONSOLIDATED SCHEDULE OF INVESTMENTS		ASSET STRATEGY (in thousands)

DECEMBER 31, 2019


COMMON STOCKS(Continued)	Shares		Value
Semiconductors – 4.1%
QUALCOMM, Inc.		97	$	8,548
Taiwan Semiconductor Manufacturing Co. Ltd. (B)		2,086		23,033

				31,581


Systems Software – 3.0%
Microsoft Corp.		146		23,083


Technology Hardware, Storage & Peripherals – 1.0%
Samsung Electronics Co. Ltd. (B)		160		7,656


Total Information Technology – 17.3%				134,162
Materials

Diversified Metals & Mining – 0.7%
Glencore International plc (B)		1,773		5,527


Total Materials – 0.7%				5,527
Real Estate

Specialized REITs – 0.3%
Equinix, Inc.		4		2,130


Total Real Estate – 0.3%				2,130
Utilities

Electric Utilities – 1.0%
E.ON AG (B)		744		7,918


Total Utilities – 1.0%				7,918

TOTAL COMMON STOCKS – 66.2%			$	512,662
(Cost: $445,158)

CORPORATE DEBT SECURITIES	Principal
Communication Services

Cable & Satellite – 0.7%
Altice Luxembourg S.A.,
10.500%,5-15-27 (G)	$	2,383		2,717
Altice S.A.,
7.625%,2-15-25 (G)		2,603		2,707

				5,424


Integrated Telecommunication Services – 1.1%
Frontier Communications Corp.:
7.625%,4-15-24		2,119		1,022
6.875%,1-15-25		6,323		3,066
11.000%,9-15-25		5,680		2,755
9.000%,8-15-31		2,119		1,028
West Corp.,
8.500%,10-15-25 (F)(G)		1,500		1,200

				9,071


Total Communication Services – 1.8%				14,495


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Consumer Discretionary

Leisure Facilities – 0.3%
Circuit of the Americas LLC, Series D,
0.000%,10-2-23 (H)	$	3,642	$	2,261


Total Consumer Discretionary – 0.3%				2,261
Consumer Staples

Packaged Foods & Meats – 0.3%
JBS Investments II GmbH (GTD by JBS S.A.),
7.000%,1-15-26 (G)		2,088		2,271


Tobacco – 0.3%
Altria Group, Inc. (GTD by Philip Morris USA, Inc.),
5.950%,2-14-49		2,000		2,418


Total Consumer Staples – 0.6%				4,689
Energy

Integrated Oil & Gas – 0.9%
Petroleos Mexicanos:
6.490%,1-23-27 (G)		4,223		4,491
6.840%,1-23-30 (G)		2,057		2,193

				6,684


Total Energy – 0.9%				6,684
Financials

Diversified Banks – 4.9%
Barclays plc:
7.875%,12-29-49		7,618		8,208
8.000%,9-15-68		2,013		2,252
ING Groep N.V.,
6.875%,12-29-49		2,681		2,866
Royal Bank of Scotland Group plc (The),
8.625%,12-29-49		8,153		8,816
Societe Generale Group,
7.375%,12-29-49 (G)		5,723		6,066
Standard Chartered plc,
7.500%,12-29-49 (G)		3,731		4,016
UniCredit S.p.A.:
5.861%,6-19-32 (G)		3,700		3,861
7.296%,4-2-34 (G)		1,612		1,852

				37,937


Diversified Capital Markets – 1.3%
Credit Suisse Group AG:
6.375%,2-21-68 (G)		1,232		1,328
7.500%,6-11-68 (G)		2,852		3,205
7.125%,7-29-68		4,855		5,225

				9,758


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Investment Banking & Brokerage – 0.4%
Goldman Sachs Group, Inc. (The)(3-Month U.S. LIBOR plus 117 bps),
3.080%,5-15-26 (I)	$	3,241	$	3,275


Total Financials – 6.6%				50,970
Health Care

Pharmaceuticals – 0.3%
Teva Pharmaceutical Finance Netherlands III B.V. (GTD by Teva Pharmaceutical Industries Ltd.),
2.800%,7-21-23		2,034		1,887


Total Health Care – 0.3%				1,887
Industrials

Aerospace & Defense – 0.9%
Wolverine Escrow LLC:
8.500%,11-15-24 (G)		2,080		2,153
9.000%,11-15-26 (G)		2,081		2,180
13.125%,11-15-27 (G)		2,081		2,138

				6,471


Industrial Conglomerates – 0.3%
Cosan Ltd.,
5.500%,9-20-29 (G)		2,330		2,429


Railroads – 0.2%
Rumo Luxembourg S.a.r.l.,
7.375%,2-9-24 (G)		1,362		1,467


Security & Alarm Services – 0.7%
Prime Security Services Borrower LLC and Prime Finance, Inc.,
9.250%,5-15-23 (G)		5,084		5,332


Total Industrials – 2.1%				15,699
Information Technology

IT Consulting & Other Services – 0.4%
Atento Luxco 1 S.A.,
6.125%,8-10-22 (G)		3,201		3,153


Total Information Technology – 0.4%				3,153
Materials

Diversified Metals & Mining – 0.7%
Glencore Funding LLC:
4.125%,3-12-24 (G)		2,415		2,527
4.875%,3-12-29 (G)		2,732		2,965

				5,492


Total Materials – 0.7%				5,492

TOTAL CORPORATE DEBT SECURITIES – 13.7%			$	105,330
(Cost: $103,727)


12		ANNUAL REPORT		2019


CONSOLIDATED SCHEDULE OF INVESTMENTS		ASSET STRATEGY (in thousands)

DECEMBER 31, 2019


MORTGAGE-BACKED SECURITIES	Principal		Value
Non-Agency REMIC/CMO – 1.0%
Ellington Financial Mortgage Trust, Series2018-1, Class B1 (Mortgage spread to10-year U.S. Treasury index),
5.574%,10-25-58 (G)(I)	$	1,500	$	1,504
Homeward Opportunities Fund I Trust, Series2019-1, Class B1 (Mortgage spread to10-year U.S. Treasury index),
4.800%,1-25-59 (G)(I)		1,061		1,073
Merrill Lynch Mortgage Investors Trust, Series1998-C1, Class F,
6.250%,11-15-26		1,228		1,240
Verus Securitization Trust,Series 2019-1, Class B1 (Mortgage spread to10-year U.S. Treasury index),
5.311%,2-25-59 (G)(I)		3,432		3,491

				7,308


TOTAL MORTGAGE-BACKED SECURITIES – 1.0%			$	7,308
(Cost: $7,388)

OTHER GOVERNMENT SECURITIES (J)
Argentina – 1.0%
Province of Mendoza, 8.375%,5-19-24		4,362		3,250
Republic of Argentina:
4.625%,1-11-23		6,531		3,223
5.875%,1-11-28 (F)		2,100		987

				7,460


TOTAL OTHER GOVERNMENT SECURITIES – 1.0%			$	7,460
(Cost: $12,541)

LOANS (I)
Communication Services

Integrated Telecommunication Services – 0.7%
West Corp.(3-Month ICE LIBOR plus 400 bps),
5.927%,10-10-24		6,093		5,150


Total Communication Services – 0.7%				5,150
Energy

Oil & Gas Storage & Transportation – 0.3%
EPIC Crude Services L.P. (ICE LIBOR plus 500 bps),
7.040%,3-1-26		2,818		2,698


Total Energy – 0.3%				2,698


LOANS (I)(Continued)	Principal		Value
Financials

Financial Exchanges & Data – 0.4%
Refinitiv U.S. Holdings, Inc. (ICE LIBOR plus 375 bps),
5.049%,10-1-25	$	3,243	$	3,271


Property & Casualty Insurance – 1.7%
Amynta Agency Borrower, Inc. (ICE LIBOR plus 400 bps),
6.299%,2-28-25 (E)		5,310		4,938
Hub International Ltd. (ICE LIBOR plus 300 bps),
4.690%,4-25-25		522		521
USI, Inc. (ICE LIBOR plus 300 bps)
4.945%,5-16-24		7,285		7,278

				12,737


Total Financials – 2.1%				16,008
Health Care

Health Care Facilities – 0.6%
RegionalCare Hospital Partners Holdings, Inc. (ICE LIBOR plus 450 bps),
6.202%,11-16-25		1,998		2,013
Surgery Center Holdings, Inc. (ICE LIBOR plus 325 bps),
5.050%,8-31-24		2,820		2,803

				4,816


Health Care Services – 0.3%
Heartland Dental LLC,
0.000%,4-30-25 (K)		58		57
Heartland Dental LLC (ICE LIBOR plus 375 bps),
5.549%,4-30-25		2,561		2,545

				2,602


Total Health Care – 0.9%				7,418
Information Technology

Application Software – 0.4%
Avaya, Inc. (ICE LIBOR plus 425 bps),
5.990%,12-15-24		2,853		2,794


Total Information Technology – 0.4%				2,794
Materials

Construction Materials – 0.7%
Hillman Group, Inc. (The) (ICE LIBOR plus 350 bps),
5.799%,5-31-25		5,304		5,208


Total Materials – 0.7%				5,208

TOTAL LOANS – 5.1%			$	39,276
(Cost: $40,711)


UNITED STATES GOVERNMENT AGENCY OBLIGATIONS	Principal		Value
Mortgage-Backed Obligations – 0.7%
Federal National Mortgage Association Agency REMIC/CMO(1-Month U.S. LIBOR plus 562 bps),
3.828%,6-25-45 (I)(L)	$	4,267	$	798
Federal National Mortgage Association Agency REMIC/CMO(1-Month U.S. LIBOR plus 625 bps):
4.328%,4-25-45 (I)(L)		2,152		438
4.308%,4-25-46 (I)(L)		5,067		803
4.308%,8-25-46 (I)(L)		5,211		859
4.458%,6-25-48 (I)(L)		11,748		2,248

				5,146


TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS – 0.7%			$	5,146
(Cost: $5,129)

UNITED STATES GOVERNMENT OBLIGATIONS

Treasury Inflation Protected Obligations – 2.1%
U.S. Treasury Notes:
0.125%,4-15-21		4,646		4,637
0.625%,1-15-26		5,830		6,008
0.125%,7-15-26		5,797		5,815

				16,460


Treasury Obligations – 1.5%
U.S. Treasury Bonds:
2.750%,8-15-47		8,828		9,456
3.000%,2-15-49		2,024		2,280

				11,736


TOTAL UNITED STATES GOVERNMENT OBLIGATIONS – 3.6%			$	28,196
(Cost: $27,042)

BULLION – 5.7%	Troy Ounces
Gold		29		44,344

(Cost: $36,084)

SHORT-TERM SECURITIES		Shares
Money Market Funds (N) – 2.7%
Dreyfus Institutional Preferred Government Money Market Fund – Institutional Shares,
1.550%, (M)		616		616
State Street Institutional U.S. Government Money Market Fund – Premier Class,
1.550%		19,994		19,994

				20,610


TOTAL SHORT-TERM SECURITIES – 2.7%			$	20,610
(Cost: $20,610)

2019

ANNUAL REPORT


CONSOLIDATED SCHEDULE OF INVESTMENTS		ASSET STRATEGY (in thousands)

DECEMBER 31, 2019


	Value

TOTAL INVESTMENT SECURITIES – 99.7%	$	770,332
(Cost: $698,390)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.3%		2,276

NET ASSETS – 100.0%	$	772,608

Notes to Consolidated Schedule of Investments

*	Not shown due to rounding.

(A)	No dividends were paid during the preceding 12 months.

(B)	Listed on an exchange outside the United States.

(C)	Restricted securities. At December 31, 2019, the Portfolio owned the following restricted securities:


Security	Acquisition Date(s)		Shares		Cost		Value
Media Group Holdings LLC, Series H		8-29-13 to 10-31-13		32	$	22,349	$	—	*
Media Group Holdings LLC, Series T		7-2-13 to1-23-15		4		8,413		395

					$	30,762	$	395

The total value of these securities represented 0.1% of net assets at December 31, 2019.

(D)	Investment is owned by an entity that is treated as a corporation for U.S. tax purposes and is owned by the Portfolio and consolidated as described in Note 5 of the Notes to Financial Statements.

(E)	Securities whose value was determined using significant unobservable inputs.

(F)	All or a portion of securities with an aggregate value of $5,144 are on loan.

(G)

Securities were purchased pursuant to an exemption from registration available under Rule 144A under the Securities Act of 1933 and may only be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2019 the total value of these securities amounted to $66,319 or 8.6% of net assets.

(H)	Zero coupon bond.

(I)	Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2019. Description of the reference rate and spread, if applicable, are included in the security description.

(J)	Other Government Securities may include emerging markets sovereign, quasi-sovereign, corporate and supranational agency and organization debt securities.

(K)	All or a portion of this position has not settled. Full contract rates do not take effect until settlement date.

(L)	Interest-only security. Amount shown as principal represents notional amount for computation of interest.

(M)	Investment made with cash collateral received from securities on loan.

(N)	Rate shown is the annualized7-day yield at December 31, 2019.

The following table is a summary of the valuation of the Portfolio’s investments by the fair value hierarchy levels as of December 31, 2019. See Note 3 to the Financial Statements for further information regarding fair value measurement.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks
Communication Services	$	8,505	$	—	$	—
Consumer Discretionary		38,124		16,011		395
Consumer Staples		31,801		19,422		—
Energy		29,363		—		—
Financials		45,758		26,286		—
Health Care		47,957		7,068		—
Industrials		92,235		—		—
Information Technology		120,033		14,129		—
Materials		5,527		—		—
Real Estate		2,130		—		—
Utilities		—		7,918		—
Total Common Stocks	$	421,433	$	90,834	$	395


14		ANNUAL REPORT		2019


CONSOLIDATED SCHEDULE OF INVESTMENTS		ASSET STRATEGY (in thousands)

DECEMBER 31, 2019


	Level 1		Level 2		Level 3
Corporate Debt Securities	$	—	$	105,330	$	—
Mortgage-Backed Securities		—		7,308		—
Other Government Securities		—		7,460		—
Loans		—		34,338		4,938
United States Government Agency Obligations		—		5,146		—
United States Government Obligations		—		28,196		—
Bullion		44,344		—		—
Short-Term Securities		20,610		—		—
Total	$	486,387	$	278,612	$	5,333

During the year ended December 31, 2019, securities totaling $3,417 were transferred from Level 2 to Level 3 due to the lack of observable market data due to decreased market activity or information for these securities.

The following acronyms are used throughout this schedule:

CMO = Collateralized Mortgage Obligation

GTD = Guaranteed

ICE = Intercontinental Exchange

LIBOR = London Interbank Offered Rate

REIT = Real Estate Investment Trust

REMIC = Real Estate Mortgage Investment Conduit

Country Diversification


(as a % of net assets)
United States			44.8%
France			7.9%
United Kingdom			7.1%
Japan			5.5%
Switzerland			4.5%
Taiwan			3.0%
Germany			2.9%
Netherlands			2.9%

Country Diversification(Continued)


India	2.9	%
Italy	1.5	%
China	1.4	%
Luxembourg	1.3	%
Hong Kong	1.2	%
South Korea	1.0	%
Argentina	1.0	%
Other Countries	2.4	%
Other+	8.7	%

+Includes gold bullion, cash and other assets (net of liabilities), and cash equivalents

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


MANAGEMENT DISCUSSION		BALANCED

(UNAUDITED)

LOGO

Matthew A. Hekman

LOGO

Mark G. Beischel

LOGO

Susan Regan

Below, Matthew A. Hekman, Mark G. Beischel, CFA, and Susan K. Regan, theco-portfolio managers of Ivy VIP Balanced, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Hekman has managed the Portfolio since 2014, and has 21 years of industry experience. Mr. Beischel and Ms. Regan joined Mr. Hekman asco-portfolio managers of the Fund in April 2018. Mr. Beischel has 26 years of industry experience. Ms. Regan has 32 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Balanced(Class II shares at net asset value)			22.09%
Benchmark and Morningstar Category
S&P 500 Index			31.49%
(Generally reflects the performance of large- andmedium-sized U.S. stocks)
Bloomberg Barclays U.S. Government/Credit Index			9.71%
(Generally reflects the performance of securities in the bond market)
Morningstar Allocation 50% to 70% Equity Category Average			19.23%
(Generally reflects the performance of the universe of portfolios with similar investment objectives)

Please note that Portfolio returns include applicable fees and expenses while index returns do not include any such fees. Also, the Portfolio’s performance data does not take into account any product expenses or charges associated with owning a variable life or annuity policy, which is invested in Ivy Variable Insurance Portfolios.

Key Drivers

The fiscal year that ended December 31, 2019 was rewarding for investors. Equity markets posted positive returns with the S&P 500 Index, the Portfolio’s equity benchmark, advancing 31.5% for the year. It is important to note the context of the benchmark’s performance in 2019. This followed a weak fourth quarter 2018 that was punctuated by a dramatic 9% decline in December, which had the ignoble distinction of being the worst performance for the final month of a calendar year since 1931.

However, even against that backdrop, the vigorous advance of domestic equity markets was encouraging. Within the S&P 500 Index, the information technology, communication services and financials sectors outperformed the benchmark average while the energy, materials and traditionally defensive sectors of health care, utilities and consumer staples sectors underperformed. As this year marks the end of a decade, it seems appropriate to highlight the index’s 11.2% annualized price return over the10-year period ending December 31, 2019. This performance makes the most recent decade the fourth-most rewarding10-year period on an annualized price returns basis since 1930; bested only by the 1950s (13.6% annualized price return), the 1980s (12.6%) and the 1990s (15.3%).

As many investors have experienced, the most recent decade has not been without drama and volatility. These periodic bouts of volatility can be unnerving, but the trailing fiscal year and10-year performance of the Portfolio is a profitable reminder of the value of patient, disciplined investing with a long-term perspective.

Fixed income markets also posted positive returns for the fiscal year with the Bloomberg Barclays U.S. Government / Credit Index, the Portfolio’s fixed income benchmark, up 9.71% for the year. Within the fixed income market, the U.S. Treasury yield curve flattened, benefiting longer duration positioning. Short-term Treasury yields declined as the U.S. Federal Reserve (Fed) cut the federal funds rate by a total of 75 basis points during the year, while longer-dated Treasury yields declined due to moderating growth expectations, modest inflation rates and global demand for the relatively attractive yield of U.S. Treasuries.

Investment grade credit reversed its abysmal 2018 performance and generated an excess return of 6.2% versus Treasuries across the maturity spectrum of the fixed income benchmark. During the fiscal year, we continued adjusting the allocation


16		ANNUAL REPORT		2019

of the fixed income portfolio to reduce exposure to credit risk. We reduced our credit allocation of the fixed income portion of the Portfolio from 44% at the start of the year to 31% at year’s end. Over the same period, we increased our allocation to U.S. Treasuries from 48% to 63%. The Portfolio’s duration at year end was 106% of the benchmark.

Contributors and detractors

The Portfolio advanced just over 22% for the fiscal year, outperforming its peers in the Morningstar moderate allocation category. Performance was driven by a modest overweight of equities relative to the blended benchmark and strong security selection in both the equity and fixed income sleeves. The Portfolio’s equity exposure averaged about 63% for the year; with 36% on average invested in fixed income securities and the balance in cash.

The equity component of the Portfolio rose 32.2% for the year, outperforming the S&P 500 Index. Strong stock selection in the financials, materials, consumer staples and information technology sectors were the notable highlights. The fixed income component of the Portfolio was up 9.9% for the year, modestly outperforming its corresponding benchmark. Our long-duration position relative to the benchmark and strong security selection in the industrial, energy and information technology sectors positively impacted relative performance.

Top contributors toover-all product performance included Apple, Inc., Blackstone Group, Inc., Qualcomm, Inc., Microsoft Corporation and Autodesk, Inc. Apple, Inc. had a remarkable year as investorsre-valued its equity in recognition of the strength of the brand and in growing anticipation of an iPhone refresh cycle in 2020. Blackstone Group, Inc. also experienced are-rating of its equity as it converted to aC-Corporation legal structure, which broadened its shareholder base and brought attention to its exceptional growth.

Qualcomm, Inc. posted strong returns as it settled legal disputes with its largest customers and benefited from its technology lead in next-generation 5G Wireless chipsets. Microsoft Corporation continues to expand its capability and market share in the cloud with its Azure product. Its deep focus and expertise in serving corporate information technology departments has strengthened a competitive moat we believe will prove durable. In addition, Autodesk, Inc. continues to execute a successful transition in revenue recognition from sale of product to recurring subscription fees coupled with strong demand for the companies’ products which we believe could accelerate in the coming year.

Detractors to performance in the fiscal year were Tapestry, Inc., Cimarex Energy Co., Core Laboratories N.V., Biogen, Inc. and Arista Networks, Inc. Tapestry, Inc. was a disappointing investment for the Portfolio that performed poorly as investor concern over the health of the Coach and Kate Spade brands has proven to be accurate. We elected to exit our position in Tapestry, Inc. and Cimarex Energy Co., which were each negatively affected by an oversupplied energy market, which depressed prices of energy commodities and slowed exploration and production activity. We sold our position in Cimarex Energy Co. and reduced our exposure to Core Laboratories N.V. as we look to emphasize business models that can profitably survive a protracted cyclical downturn in the energy space.

Biogen, Inc. had a perplexing year as its late-stage research program on a drug to treat Alzheimer’s disease was terminated due to futility. As a result, we exited the position as the risk/reward was unfavorable in our view at that point. In addition, Arista Networks, Inc. was a recent addition to the equity portion of the Portfolio, which declined in value as a key customer dramatically reduced its demand for Arista’s products. Due to substantial negative earnings revisions, turnover in the management team and uncertainty around the motivations of the key customer, we elected to exit our position to invest in more attractive opportunities.

Outlook

As we look ahead, we think that global economic growth is likely to improve over the next several quarters as central banks have reduced rates in response to slowing growth and trade frictions have eased between the U.S. and China. However, the uncertainties around political and trade policies are likely to linger.

While we believe domestic economic growth will continue, the lagged effects of tariffs and ongoing uncertainty over future trade policy coupled with a volatile presidential election cycle represent a headwind to confidence and the growth outlook. As a result, we are closely watching inflation rates and inflation expectations which have been modest, and must remain so, in order to allow our central bank to respond to slower growth.

We have been encouraged by the Fed’s recent accommodative monetary policy and the ongoing strength exhibited by the U.S. consumer. While we continue to monitor macroeconomic forces and trends, we maintain an emphasis on finding high quality, growing companies whose securities are trading at a reasonable valuation with visible catalysts to drive relative outperformance over the next twelve months. This approach has served investors well over time, and our confidence in it has not waned.

2019

ANNUAL REPORT

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

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. The lower-rated securities in which the Portfolio may invest may carry greater risk of nonpayment of interest or principal then 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. The Portfolio’s emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperformnon-dividend paying stocks and the market as a whole over any period of time. In addition, there is no guarantee that the companies in which the Portfolio invests will declare dividends in the future or that dividends, if declared, will remain at current levels or increase over time. The amount of any dividend the company may pay may fluctuate significantly. In addition, the value of dividend-paying common stocks can decline when interest rates rise as fixed-income investments become more attractive to investors. This risk may be greater due to the current period of historically low interest rates.

The Portfolio typically holds a limited number of stocks (generally 45 to 55). As a result, the appreciation or depreciation of any one security held by the Portfolio will have a greater impact on the Portfolio’s net asset value than it would if the Portfolio invested in a large number of securities.

The value of a security believed by the Portfolio’s managers to be undervalued may never reach what the managers believe to be its full value, or such security’s value may decrease. These and other risks are more fully described in the Portfolio’s prospectus.

The opinions expressed in this report are those of the Portfolio managers and are current only through the end of the period of the report as stated on the cover. The managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.

The indexes noted are unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Balanced.


18		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		BALANCED

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)


Asset Allocation

Stocks			67.1%
Information Technology			16.6%
Financials			9.2%
Industrials			8.8%
Communication Services			7.3%
Health Care			7.2%
Consumer Discretionary			6.3%
Energy			4.5%
Consumer Staples			4.1%
Materials			3.1%
Bonds			32.5%
United States Government and Government Agency Obligations			21.5%
Corporate Debt Securities			10.7%
Loans			0.3%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			0.4%


Top 10 Equity Holdings

Company	Sector	Industry
Apple, Inc.	Information Technology	Technology Hardware, Storage & Peripherals
Microsoft Corp.	Information Technology	Systems Software
Autodesk, Inc.	Information Technology	Application Software
Las Vegas Sands, Inc.	Consumer Discretionary	Casinos & Gaming
Union Pacific Corp.	Industrials	Railroads
QUALCOMM, Inc.	Information Technology	Semiconductors
Zimmer Holdings, Inc.	Health Care	Health Care Equipment
Philip Morris International, Inc.	Consumer Staples	Tobacco
Lowe’s Co., Inc.	Consumer Discretionary	Home Improvement Retail
JPMorgan Chase & Co.	Financials	Other Diversified Financial Services

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.

2019

ANNUAL REPORT


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		BALANCED

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		22.09%
5-year period ended12-31-19		6.00%
10-year period ended12-31-19		9.18%

(2)


20		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		BALANCED (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Communication Services

Integrated Telecommunication Services – 1.1%
Verizon Communications, Inc.		59	$	3,635


Interactive Home Entertainment – 1.7%
Electronic Arts, Inc. (A)		53		5,723


Interactive Media & Services – 3.8%
Alphabet, Inc., Class A (A)		4		5,897
Alphabet, Inc., Class C (A)		1		1,678
Facebook, Inc., Class A (A)		26		5,359

				12,934


Movies & Entertainment – 0.7%
Walt Disney Co. (The)		17		2,465


Total Communication Services – 7.3%				24,757
Consumer Discretionary

Apparel, Accessories & Luxury Goods – 1.2%
V.F. Corp.		40		3,989


Casinos & Gaming – 2.0%
Las Vegas Sands, Inc.		98		6,772


Home Improvement Retail – 1.7%
Lowe’s Co., Inc.		50		6,025


Restaurants – 1.4%
Domino’s Pizza, Inc.		16		4,722


Total Consumer Discretionary – 6.3%				21,508
Consumer Staples

Distillers & Vintners – 1.5%					��
Constellation Brands, Inc.		27		5,122


Packaged Foods & Meats – 0.8%
General Mills, Inc.		49		2,616


Tobacco – 1.8%
Philip Morris International, Inc.		72		6,118


Total Consumer Staples – 4.1%				13,856
Energy

Integrated Oil & Gas – 2.0%
Chevron Corp.		28		3,430
Hess Corp.		52		3,465

				6,895


Oil & Gas Equipment & Services – 0.2%
Core Laboratories N.V.		18		687


Oil & Gas Exploration & Production – 1.2%
Canadian Natural Resources Ltd.		128		4,153


COMMON STOCKS(Continued)	Shares		Value
Oil & Gas Storage & Transportation – 1.1%
Enterprise Products Partners L.P.		138	$	3,878


Total Energy – 4.5%				15,613
Financials

Asset Management & Custody Banks – 0.4%
Blackstone Group, Inc. (The), Class A		26		1,439


Diversified Banks – 2.5%
Northern Trust Corp.		43		4,572
U.S. Bancorp		63		3,737

				8,309


Investment Banking & Brokerage – 1.5%
Goldman Sachs Group, Inc. (The)		23		5,182


Multi-Sector Holdings – 1.4%
Berkshire Hathaway, Inc., Class B (A)		21		4,762


Other Diversified Financial Services – 1.7%
JPMorgan Chase & Co.		43		6,014


Regional Banks – 1.7%
PNC Financial Services Group, Inc. (The)		36		5,789


Total Financials – 9.2%				31,495
Health Care

Health Care Equipment – 1.9%
Zimmer Holdings, Inc.		44		6,583


Health Care Technology – 1.4%
Cerner Corp.		64		4,694


Managed Health Care – 1.3%
Anthem, Inc.		15		4,513


Pharmaceuticals – 2.6%
GlaxoSmithKline plc ADR		100		4,687
Jazz Pharmaceuticals plc (A)		15		2,258
Pfizer, Inc.		45		1,754

				8,699


Total Health Care – 7.2%				24,489
Industrials

Aerospace & Defense – 1.4%
Boeing Co. (The)		15		4,892


Agricultural & Farm Machinery – 1.3%
Deere & Co.		25		4,318


Airlines – 1.0%
Delta Air Lines, Inc.		61		3,566


COMMON STOCKS(Continued)	Shares		Value
Electrical Components & Equipment – 0.8%
Emerson Electric Co.		34	$	2,617


Industrial Machinery – 1.0%
Snap-on, Inc.		20		3,443


Railroads – 2.0%
Union Pacific Corp.		37		6,746


Trucking – 1.3%
Knight Transportation, Inc.		123		4,394


Total Industrials – 8.8%				29,976
Information Technology

Application Software – 2.0%
Autodesk, Inc. (A)		37		6,873


Communications Equipment – 1.9%
Arista Networks, Inc. (A)		3		709
Cisco Systems, Inc.		121		5,825

				6,534


Data Processing & Outsourced Services – 1.7%
Fiserv, Inc. (A)		51		5,872


Electronic Manufacturing Services – 1.1%
IPG Photonics Corp. (A)		26		3,744


Semiconductors – 5.7%
Infineon Technologies AG ADR		176		3,932
Intel Corp.		50		2,988
Micron Technology, Inc. (A)		109		5,846
QUALCOMM, Inc.		76		6,692

				19,458


Systems Software – 2.1%
Microsoft Corp.		44		6,994


Technology Hardware, Storage & Peripherals – 2.1%
Apple, Inc.		24		7,157


Total Information Technology – 16.6%				56,632
Materials

Commodity Chemicals – 1.4%
LyondellBasell Industries N.V., Class A		49		4,655


Specialty Chemicals – 1.7%
PPG Industries, Inc.		43		5,727


Total Materials – 3.1%				10,382

TOTAL COMMON STOCKS – 67.1%			$	228,708
(Cost: $187,997)

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		BALANCED (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES	Principal		Value
Communication Services

Cable & Satellite – 0.3%
Comcast Corp. (GTD by Comcast Cable Communications and NBCUniversal):
4.250%,10-15-30	$	450	$	514
4.700%,10-15-48		450		554

				1,068


Total Communication Services – 0.3%				1,068
Consumer Discretionary

Casinos & Gaming – 0.1%
Las Vegas Sands Corp.,
3.500%,8-18-26		350		360


Internet & Direct Marketing Retail – 0.3%
Amazon.com, Inc.,
2.800%,8-22-24		1,000		1,035


Total Consumer Discretionary – 0.4%				1,395
Consumer Staples

Hypermarkets & Super Centers – 0.8%
Walmart, Inc.,
4.050%,6-29-48		2,500		2,953


Total Consumer Staples – 0.8%				2,953
Energy

Oil & Gas Drilling – 0.8%
Nabors Industries Ltd., Convertible,
0.750%,1-15-24		3,600		2,683


Oil & Gas Storage & Transportation – 0.6%
Colorado Interstate Gas Co.,
4.150%,8-15-26 (B)		800		839
Williams Partners L.P.,
3.600%,3-15-22		1,000		1,028

				1,867


Total Energy – 1.4%				4,550
Financials

Consumer Finance – 0.3%
General Motors Financial Co., Inc. (GTD by AmeriCredit Financial Services, Inc.):
3.450%,4-10-22		250		256
3.700%,5-9-23		150		154
Hyundai Capital America,
2.550%,4-3-20 (B)		500		500

				910


Diversified Banks – 0.4%
HSBC Holdings plc,
3.400%,3-8-21		625		635
Truist Financial Corp.(3-Month ICE LIBOR plus 386 bps),
5.754%,12-15-68 (C)		400		401


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Diversified Banks(Continued)
U.S. Bancorp,
3.100%,4-27-26	$	400	$	416

				1,452


Investment Banking & Brokerage – 0.8%
Credit Suisse Group Funding (Guernsey) Ltd.,
2.750%,3-26-20		500		501
Goldman Sachs Group, Inc. (The),
2.905%,7-24-23		2,000		2,035
Goldman Sachs Group, Inc. (The)(3-Month U.S. LIBOR plus 388.4 bps),
5.785%,12-29-49 (C)		66		66

				2,602


Life & Health Insurance – 0.6%
Northwestern Mutual Life Insurance Co. (The),
3.850%,9-30-47 (B)		1,000		1,051
Sumitomo Life Insurance Co.,
4.000%,9-14-77 (B)		1,000		1,056

				2,107


Multi-Line Insurance – 0.1%
Aon plc (GTD by Aon Corp.),
2.800%,3-15-21		500		505


Other Diversified Financial Services – 0.7%
Citigroup, Inc.:
5.950%,12-29-49		150		154
6.250%,12-29-49		750		852
JPMorgan Chase & Co.,
5.300%,11-1-68		250		252
JPMorgan Chase & Co.(3-Month U.S. LIBOR plus 332 bps),
5.419%,1-1-68 (C)		750		755
JPMorgan Chase & Co.(3-Month U.S. LIBOR plus 347 bps),
5.406%,4-29-49 (C)		194		196

				2,209


Property & Casualty Insurance – 0.1%
Berkshire Hathaway Finance Corp. (GTD by Berkshire Hathaway, Inc.),
2.200%,3-15-21		200		201


Regional Banks – 0.2%
PNC Bank N.A.,
3.250%,6-1-25		600		629


Total Financials – 3.2%				10,615
Health Care

Biotechnology – 0.3%
Amgen, Inc.,
2.125%,5-1-20		1,000		1,001


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Health Care Equipment – 0.1%
Zimmer Holdings, Inc.,
2.700%,4-1-20	$	350	$	350


Health Care Supplies – 0.3%
Shire Acquisitions Investments Ireland Designated Activity Co.,
2.875%,9-23-23		1,000		1,018


Pharmaceuticals – 0.8%
Bristol-Myers Squibb Co.,
3.450%,11-15-27 (B)		500		535
Forest Laboratories, Inc.,
5.000%,12-15-21 (B)		1,258		1,315
Johnson & Johnson,
3.400%,1-15-38		1,000		1,070

				2,920


Total Health Care – 1.5%				5,289
Industrials

Aerospace & Defense – 0.8%
L3Harris Technologies, Inc.,
4.400%,6-15-28		1,000		1,113
Northrop Grumman Corp.,
3.250%,1-15-28		1,500		1,564

				2,677


Airlines – 0.1%
Southwest Airlines Co.,
2.650%,11-5-20		375		377


Environmental & Facilities Services – 0.3%
Waste Management, Inc. (GTD by Waste Management Holdings, Inc.),
3.150%,11-15-27		1,000		1,042


Total Industrials – 1.2%				4,096
Information Technology

Electronic Equipment & Instruments – 0.2%
Keysight Technologies, Inc.,
4.600%,4-6-27		500		554


Technology Hardware, Storage & Peripherals – 0.3%
Apple, Inc.,
3.200%,5-11-27		1,000		1,054


Total Information Technology – 0.5%				1,608
Materials

Diversified Metals & Mining – 0.1%
Anglo American plc,
4.125%,4-15-21 (B)		500		510

Specialty Chemicals – 0.3%
Ecolab, Inc.,
3.250%, 12-1-27		1,000		1,057


Total Materials – 0.4%				1,567


22		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		BALANCED (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Real Estate

Specialized REITs – 0.6%
American Tower Corp.,
2.250%,1-15-22	$	1,200	$	1,203
Crown Castle International Corp.:
5.250%,1-15-23		200		217
3.100%,11-15-29		600		607

				2,027


Total Real Estate – 0.6%				2,027
Utilities

Electric Utilities – 0.4%
Duke Energy Corp.,
3.150%,8-15-27		500		515
Entergy Texas, Inc.,
2.550%,6-1-21		300		300
Exelon Corp.,
2.450%,4-15-21		400		402

				1,217


Total Utilities – 0.4%				1,217

TOTAL CORPORATE DEBT SECURITIES – 10.7%			$	36,385
(Cost: $35,760)

LOANS (C)
Industrials

Industrial Machinery – 0.3%
Dynacast International LLC (ICE LIBOR plus 850 bps),
10.445%,1-30-23		1,100		1,037


Total Industrials – 0.3%				1,037

TOTAL LOANS – 0.3%			$	1,037
(Cost: $1,089)

UNITED STATES GOVERNMENT AGENCY OBLIGATIONS
Mortgage-Backed Obligations – 0.9%
Federal Home Loan Mortgage Corp. Agency REMIC/CMO,
3.000%,6-15-45		730		750
Federal National Mortgage Association Agency REMIC/CMO:
3.500%,6-25-29		461		482
3.000%,10-25-46		756		780
Federal National Mortgage Association Fixed Rate Pass-Through Certificates:
6.500%,10-1-28		57		62
6.500%,2-1-29		27		30
7.500%,4-1-31		27		30
7.000%,7-1-31		34		40
7.000%,9-1-31		62		71
6.500%,2-1-32		138		159


UNITED STATES GOVERNMENT AGENCY OBLIGATIONS (Continued)	Principal		Value
Mortgage-Backed Obligations(Continued)
7.000%,2-1-32	$	99	$	113
7.000%,3-1-32		34		40
7.000%,7-1-32		68		78
5.500%,5-1-33		30		33
5.500%,6-1-33		32		36
4.500%,11-1-43		458		507
U.S. Department of Veterans Affairs, Guaranteed REMIC Pass-Through Certificates, Vendee Mortgage Trust, Series1997-1, Class 3A,
8.293%,12-15-26		24		27

				3,238


TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS – 0.9%			$	3,238
(Cost: $3,185)

UNITED STATES GOVERNMENT OBLIGATIONS
Treasury Inflation Protected Obligations – 3.6%
U.S. Treasury Notes:
0.125%,7-15-26		4,294		4,307
2.125%,2-15-40		3,810		4,979
1.000%,2-15-46		2,607		2,866

				12,152


Treasury Obligations – 17.0%
U.S. Treasury Bonds:
2.250%,11-15-25		3,240		3,325
3.500%,2-15-39		4,000		4,788
3.875%,8-15-40		225		283
3.750%,8-15-41		650		806
3.000%,2-15-48		250		281
3.000%,8-15-48		3,060		3,442
3.000%,2-15-49		1,750		1,972
U.S. Treasury Notes:
2.250%,2-15-21		3,907		3,933
2.875%,10-15-21		8,195		8,377
2.875%,11-15-21		750		768
1.875%,4-30-22		200		201
2.000%,7-31-22		1,045		1,055
1.875%,10-31-22		1,000		1,007
2.000%,10-31-22		480		485
2.125%,12-31-22		6,300		6,392
2.875%,9-30-23		2,000		2,087
2.875%,10-31-23		600		627
2.750%,11-15-23		500		520
1.750%,6-30-24		600		601
2.125%,9-30-24		1,000		1,019
2.250%,10-31-24		3,635		3,727
1.500%,11-30-24 (D)		1,700		1,685
2.500%,1-31-25		1,250		1,298
2.875%,4-30-25		1,000		1,058
2.875%,5-31-25		900		952
3.000%,9-30-25		900		960
2.625%,12-31-25		800		838
2.375%,5-15-27		340		352
2.750%,2-15-28		250		266
2.875%,5-15-28		575		619
2.875%,8-15-28		1,987		2,140


UNITED STATES GOVERNMENT OBLIGATIONS(Continued)	Principal		Value
Treasury Obligations(Continued)
3.125%,11-15-28	$	700	$	769
1.625%,8-15-29		1,250		1,217

				57,850


TOTAL UNITED STATES GOVERNMENT OBLIGATIONS – 20.6%			$	70,002
(Cost: $66,626)

SHORT-TERM SECURITIES	Shares
Money Market Funds (E) – 0.2%
State Street Institutional U.S. Government Money Market Fund – Premier Class,
1.550%		845		845


TOTAL SHORT-TERM SECURITIES – 0.2%			$	845
(Cost: $845)

TOTAL INVESTMENT SECURITIES – 99.8%			$	340,215
(Cost: $295,502)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.2%				624

NET ASSETS – 100.0%			$	340,839

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		BALANCED (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

(A)	No dividends were paid during the preceding 12 months.

(B)

(C)	Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2019. Description of the reference rate and spread, if applicable, are included in the security description.

(D)	All or a portion of securities with an aggregate value of $602 are on loan.

(E)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks	$	228,708	$	—	$	—
Corporate Debt Securities		—		36,385		—
Loans		—		1,037		—
United States Government Agency Obligations		—		3,238		—
United States Government Obligations		—		70,002		—
Short-Term Securities		845		—		—
Total	$	229,553	$	110,662	$	—

During the year ended December 31, 2019, securities totaling $1,023 were transferred from Level 3 to Level 2 due to increased availability of observable market data due to increased market activity or information for these securities.

The following acronyms are used throughout this schedule:

ADR = American Depositary Receipts

CMO = Collateralized Mortgage Obligation

GTD = Guaranteed

ICE = Intercontinental Exchange

LIBOR = London Interbank Offered Rate

REMIC = Real Estate Mortgage Investment Conduit

REIT = Real Estate Investment Trust

See Accompanying Notes to Financial Statements.


24		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		ENERGY

(UNAUDITED)

LOGO

David P. Ginther

LOGO

Michael T. Wolverton

Below, David P. Ginther, CPA, and Michael T. Wolverton, CFA, portfolio managers of Ivy VIP Energy, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Ginther has managed the Portfolio since its inception in 2006 and has 24 years of industry experience. Mr. Wolverton has managed the Portfolio since 2016 and has 15 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Energy(Class II shares at net asset value)			3.48%
Benchmark and Morningstar Category
S&P 1500 Energy Sector Index			10.05%
(generally reflects the performance of stocks that represent the energy market)
Morningstar Equity Energy Category Average			7.25%
(generally reflects the performance of the universe of funds with similar investment objectives)

Geopolitics in the spotlight

Crude oil prices rebounded significantly higher for the fiscal year. West Texas Intermediate, the U.S. benchmark, was up over 30% after falling 45% in the fourth quarter of 2018. Energy equities continued to disconnect from the oil commodity price because of escalating tension in the U.S.-China trade war, fear of a worldwide recession that surfaced during the year and the fact that demand for oil appeared to be peaking as many around the world continue to demand a reduction in the overall carbon footprint.

Geopolitical risks around the world increased throughout the year and affected the energy market. Tensions between U.S. and Iran flared atmid-year after Iran shot down a U.S. drone and there were charges that Iran was behind attacks on oil tankers in the Straits of Hormuz. Roughly 20% of the world oil supply travels through that waterway every day, making it a key issue for global oil supply.

Saudi Arabia oil facilities then were damaged by a missile strike in September that briefly reduced production capacity. Unrest then erupted in Iran late in the year with protests and an attack on the U.S. embassy in Baghdad. It spilled over into Iraq, where demonstrators began protests against the government and Iranian influence in their country. Iran’s economy continued to struggle from the effects of government policy that has led to higher inflation and unemployment.

In addition to the growing tensions in the Middle East, the oil market absorbed news that affected oil output in other producing countries, including Iran, Libya and Venezuela.

In July, member countries of the Organization of Petroleum Exporting Countries plus Russia — widely referred to as OPEC+ — agreed to extend production cuts through the first quarter of 2020 as a means of supporting the oil price. But in early December, OPEC+ announced a larger-than-expected cut in production. The additional cuts were set to come from greater compliance with quotas and Saudi Arabia’s promise to reduce production if other OPEC members complied with their quotas. OPEC said it will review the cuts and could extend them through the end of 2020, depending on global economic growth and U.S. production growth.

U.S. production growth started to slow as many energy companies began to show discipline in operating within their cash flow levels, generate free cash flow and return capital to shareholders. The U.S. rig count was reduced roughly 20% in the fiscal year, evidence that many companies were trying to spend within cash flow. We believe that will lead to slower U.S. oil production growth. These changes are further evidence to us that the energy industry has a growing awareness of the demand to pursue stronger environmental, social and corporate governance (ESG) standards and to help lower the globe’s carbon footprint.

Positive year but challenges remain

The Portfolio had a positive return for the fiscal year but underperformed both the benchmark and its Morningstar category average.

2019

ANNUAL REPORT

The Portfolio’s five greatest contributors to performance in the fiscal year relative to the benchmark were WEX, Inc., Dril-Quip Inc., WPX Energy Inc., Cactus, Inc. and Parsley Energy, Inc.

The Portfolio’s five greatest detractors from relative performance were Whiting Petroleum Corp., Continental Resources, Inc., Centennial Resource Development, Concho Resources, Inc. and Oasis Petroleum, Inc. At the end of the fiscal year, Whiting Petroleum Corp. and Centennial Resource Development were no longer holdings in the Portfolio.

At the end of the fiscal year, about 36% of the Portfolio was allocated to holdings in the Oil & Gas Exploration & Production industry segment, followed by about 26% to Oil & Gas Equipment & Services. The weighting in those industry segments detracted from relative performance versus the benchmark, which had heavier weighting to integrated oil companies.

The focus of the energy strategy remains on investing in companies that can create value over the full course of the energy cycle. We identify those as companies that arelow-cost operators, have strong balance sheets, have the ability to grow profitably and have strong return on capital.

Outlook focuses on supply/demand

We believe the additional production cuts by OPEC+ and higher compliance will balance the oil market in the first half 2020 and move into a deficit in 2021. Natural gas will remain over supplied in 2020 despite natural gas rig count near record lows.

We anticipate that U.S. oil production growth will slow as exploration & production companies change from a growth-oriented strategy to focus on more capital discipline and generating free cash flow. Companies are focused on shareholder returns and repairing balance sheets. Spending within cash flow means lower capital expenditures (capex). With the rig count already down more than 20% from its peak, we think a reduction in capex is likely to lead to lower U.S. oil production growth.

Demand expectations have improved based on improvements in the U.S.-China trade war, accommodative fiscal policy and forecasts for improving economic growth worldwide. We believe the majority of oil demand growth will continue to come from emerging markets.

Geopolitical tensions in the Middle East are likely to continue in 2020 with unrest in Iraq and Iran. We remain concerned about the reliability of oil infrastructure in the region after the attacks in September on Saudi Arabia’s oil fields. The security and cost for transportation of crude oil through the Strait of Hormuz also remains a key concern.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater sector diversification. Investing in the energy sector can be riskier than other types of investment activities because of a range of factors, including price fluctuation caused by real and perceived inflationary trends and political developments, and the cost assumed by energy companies in complying with environmental safety regulations. These and other risks are more fully described in the Portfolio’s prospectus.

The index noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Energy.


26		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		ENERGY

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)


Asset Allocation
Stocks			96.7%
Energy			90.3%
Information Technology			3.8%
Industrials			2.6%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			3.3%


Country Weightings
North America			91.7%
United States			87.7%
Canada			4.0%
Europe			5.0%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			3.3%

Top 10 Equity Holdings



Company	Country	Sector	Industry
Concho Resources, Inc.	United States	Energy	Oil & Gas Exploration & Production
Phillips 66	United States	Energy	Oil & Gas Refining & Marketing
Valero Energy Corp.	United States	Energy	Oil & Gas Refining & Marketing
Pioneer Natural Resources Co.	United States	Energy	Oil & Gas Exploration & Production
Marathon Petroleum Corp.	United States	Energy	Oil & Gas Refining & Marketing
WPX Energy, Inc.	United States	Energy	Oil & Gas Exploration & Production
Cactus, Inc., Class A	United States	Energy	Oil & Gas Equipment & Services
Parsley Energy, Inc., Class A	United States	Energy	Oil & Gas Exploration & Production
Diamondback Energy, Inc.	United States	Energy	Oil & Gas Exploration & Production
Continental Resources, Inc.	United States	Energy	Oil & Gas Exploration & Production

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.

2019

ANNUAL REPORT


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		ENERGY

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class I		Class II
1-year period ended12-31-19		3.74%		3.48%
5-year period ended12-31-19		—		-9.01%
10-year period ended12-31-19		—		-2.19%
Since Inception of Class through12-31-19⁽³⁾		-12.68%		—

(2)

(3)

4-28-17 (the date on which shares were first acquired by shareholders).


28		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		ENERGY (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Energy

Integrated Oil & Gas – 5.6%
Chevron Corp.		7	$	875
Hess Corp.		6		380
Suncor Energy, Inc.		32		1,064

				2,319


Oil & Gas Drilling – 3.9%
Patterson-UTI Energy, Inc.		67		704
Transocean, Inc. (A)		136		937

				1,641


Oil & Gas Equipment & Services – 24.9%
Baker Hughes, Inc.		50		1,292
Cactus, Inc., Class A		44		1,512
Core Laboratories N.V.		8		312
Dril-Quip, Inc. (A)		24		1,124
Frank’s International N.V. (A)		83		429
Halliburton Co.		44		1,086
Helix Energy Solutions Group, Inc. (A)		87		837
Liberty Oilfield Services, Inc., Class A		33		371
National Oilwell Varco, Inc.		12		297
NexTier Oilfield Solutions, Inc. (A)		65		438
ProPetro Holding Corp. (A)		51		579
Schlumberger Ltd.		32		1,267
TechnipFMC plc (A)		38		811

				10,355


Oil & Gas Exploration & Production – 34.5%
Canadian Natural Resources Ltd.		18		566
Concho Resources, Inc.		23		2,043
ConocoPhillips		10		664
Continental Resources, Inc.		43		1,465
Diamondback Energy, Inc.		16		1,476
EOG Resources, Inc.		13		1,092
Marathon Oil Corp.		69		941
Oasis Petroleum LLC (A)		126		410
Parsley Energy, Inc., Class A		79		1,485
Pioneer Natural Resources Co.		13		1,900
Viper Energy Partners L.P.		30		729
WPX Energy, Inc. (A)		117		1,604

				14,375


Oil & Gas Refining & Marketing – 16.5%
Marathon Petroleum Corp.		28		1,708
PBF Energy, Inc., Class A		39		1,218
Phillips 66		18		2,023
Valero Energy Corp.		20		1,917

				6,866


Oil & Gas Storage & Transportation – 4.9%
Energy Transfer L.P.		23		297
Enterprise Products Partners L.P.		32		890
MPLX L.P.		8		210
Rattler Midstream L.P.		36		642

				2,039


Total Energy – 90.3%				37,595


COMMON STOCKS(Continued)	Shares		Value
Industrials

Industrial Machinery – 2.6%
Apergy Corp. (A)		32	$	1,080


Total Industrials – 2.6%				1,080
Information Technology

Application Software – 0.4%
Aspen Technology, Inc. (A)		1		176


Data Processing & Outsourced Services – 3.4%
Wright Express Corp. (A)		7		1,403


Total Information Technology – 3.8%				1,579

TOTAL COMMON STOCKS – 96.7%			$	40,254
(Cost: $53,129)

SHORT-TERM SECURITIES

Money Market Funds(B) – 2.5%
State Street Institutional U.S. Government Money Market Fund – Premier Class, 1.550%		1,055		1,055


TOTAL SHORT-TERM SECURITIES – 2.5%			$	1,055
(Cost: $1,055)

TOTAL INVESTMENT SECURITIES – 99.2%			$	41,309
(Cost: $54,184)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.8%				348

NET ASSETS – 100.0%			$	41,657

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		ENERGY (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

(A)	No dividends were paid during the preceding 12 months.

(B)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks	$	40,254	$	—	$	—
Short-Term Securities		1,055		—		—
Total	$	41,309	$	—	$	—

Country Diversification


(as a % of net assets)
United States			87.7%
Canada			4.0%
Switzerland			2.2%
United Kingdom			2.0%
Other Countries			0.8%
Other+			3.3%

+Includes cash and other assets (net of liabilities), and cash equivalents

See Accompanying Notes to Financial Statements.


30		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		GROWTH

(UNAUDITED)

LOGO

Bradley M. Klapmeyer

Below, Bradley M. Klapmeyer, CFA, portfolio manager of Ivy VIP Growth, discusses positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Klapmeyer has managed the Portfolio since August 2016 and he has 20 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Growth(Class II shares at net asset value)			36.59%
Benchmark and Morningstar Category
Russell 1000 Growth Index			36.39%
(generally reflects the performance of securities that represent thelarge-cap growth market)
Morningstar Large Growth Category Average			31.90%
(generally reflects the performance of the universe of funds with similar investment objectives)

Market conditions

The Russell 1000 Growth Index, the Fund’s benchmark, gained a remarkable 36.39% during the measurement period, which followed rather unimpressive equity market returns in 2018. Market gains started early in the calendar year as there was a recovery from a downdraft that occurred during the fourth quarter of 2018. There were fundamental factors driving the strong market returns as well, the most notable being accommodative Federal Reserve (Fed) interest rate policy and thede-escalation of the trade war with China. Over the past decade, the Russell 1000 Growth Index is up over 300%, marking an exceptionally strong decade of appreciation for growth-style investments.

The calendar year began with a quick reversal of the negative sentiment accumulated during the fourth quarter of 2018 and this reversal was mainly driven by commentary from the Fed. Post what was perceived to be policy error during fourth quarter of 2018, the Fed moved quickly to ease tightening financial conditions. The actions taken included: stepping back from quantitative tightening (balance sheet reduction) and communicating interest rate hikes will be on hold for the foreseeable future. This commentary on interest rate hikes proved to be conservative as the Fed moved to become very accommodative with policy throughout 2019.

Yields across the yield curve in the U.S. ended substantially lower than where they started in January 2019, with much of the move coming during the first half of the measurement period. Investors were clearly anticipating Fed action as worry began to increase regarding slowing global growth, continued trade war rhetoric, and weakening manufacturing data in the U.S. The pieces were assembling for an elevated risk of a more material downturn or a recession. The Fed responded to these desires, and data points, with federal funds target rate cuts of 0.25% in August, another 0.25% in September and a final 0.25% cut in October. This placed both Fed commentary and interest rates in a more accommodative position at the end of 2019 versus its position at the end of 2018.

Another pressure upon the market was the continued trade war with China, as well as with several additional trade partners, such as Europe and Mexico. As could have been anticipated given the roller coaster ride of trade tariff sentiment during the prior year, 2019 matched with a similar level of intensity and sentiment shifts. During second quarter of 2019 there was a temporary tariff spat with Mexico that resolved quickly. However, the bigger news atmid-year was the building expectation for an easing in trade tensions between U.S. and China that ultimately ended with a temporary “trade truce” between the two countries during the June G20 Summit. This truce continued to build expectations for furtherde-escalation in the trade war during the third and fourth quarters of 2019. Those expectations were met, concluding in December’s “phase 1” deal that reduced tariffs implemented in September, withdrew the threat of escalation and promised further progress on a more comprehensive deal.

Economic data points throughout the calendar year were generally mixed with housing and labor (employment) performing well. However, the manufacturing economy moved into contraction territory as orders and production both weakened materially. We saw similar manufacturing trends globally as well.

The market clearly had a cloud of negative sentiment hanging over valuations at the start of 2019 that slowly cleared to allow beams of more optimistic sentiment drive returns toward the back half the calendar year. One of the more notable events during the year was the aggressive low quality, deep value rotation that occurred in early September. This rotation marked a clear change in narrative from concern on an economic slowdown to one of optimism, looking forward to better

2019

ANNUAL REPORT

growth prospects on the horizon. This sentiment shift appeared to be trigged by a confluence of factors, including many that were aforementioned — global central bank policy (easing), trade rhetoric(de-escalation) and global economic data points (slightly better). This rotation came at the expense of momentum, as the market sold the high-performing stocks.

Looking at the return by the index, factor performance showed that risk (beta) and quality (Return on Assets, Return on Capital and Return on Equity) factors were key factors driving performance during the calendar year. Value (low enterprise value to earnings before interest, taxes, depreciation and amortization [EBITDA], low price to cash flow) and growth (five-year projected earnings per share growth and earnings per share estimate revisions) were the key lagging factors during the measurement period.

Strategies employed, contributors and detractors

In the12-month period ended Dec. 31, 2019, the Portfolio posted strong absolute gains and outperformed relative to its benchmark and peer category average. Stock selection drove positive attribution in industrials, consumer discretionary, consumer staples, information technology and real estate. Despite the strong absolute and relative performance there were a few notable detractors as well, including financials, communications services and health care. Even though the Portfolio held a minimal amount, cash was a detractor given the strong absolute gains during the measurement period.

From a high level, the Portfolio outperformed for much of the measurement period but did struggle during the latter months of the year. As noted in the market conditions commentary, for a large portion of 2019, investors were concerned about slowing growth and potential looming recessionary conditions. This sentiment backdrop meant that investors favored stable, less volatile growth stocks with long-term visibility into growth prospects. The Portfolio’s key philosophy is to look for enduring, structurally advantaged business models that have strong long-term growth prospects, which were stocks that the market favored much of the year. These stocks were rewarded for these characteristics with higher valuations on average than the market. Stocks in the Portfolio that had exceptional returns partly due to this market dynamic, but also due to strong company-specific fundamentals, included such names as CoStar Group, Verisk Analytics, Verisign, Adobe, and MasterCard.

During the closing months of 2019, many of these same securities, despite continued strong underlying results, saw their valuations compress as investors shifted to a more positive narrative around accelerating growth thus favoring cheaper and more economically sensitive securities. At times, these rotations included strong returns forlow-quality names that had been set aside as investors worried if those businesses could weather ano-growth economy. This rotation reduced the extent of full-year outperformance as many of the names that worked well for much of the year saw notable relative underperformance in those ending months. The stocks that perform well only in a period of favorable macroeconomic sentiment did well during the same time frame. These periods are difficult for the Portfolio as it remains positioned toward high quality, competitively advantaged business models that we believe perform well through-cycle and are unlikely to have significant exposure to securities that perform well during such intense rotations.

Turning back to positive contributors during the measurement period, within industrials it was an overweight position to two services stocks (CoStar Group, Inc. and Verisk Analytics, Inc.) that led the way for strong sector attribution. These stocks continued to show strong quarterly growth performance throughout the measurement period. Within consumer discretionary two notable contributors were V.F. Corp., which saw continued strong sales of Vans shoes and an improvement in trends at The North Face brand, and Ulta Beauty, which posted improving same store sales comparables for most of the year. We exited our position in Ulta Beauty during the third quarter as we saw the stock as fully valued and expectations elevated.

Within consumer staples, Estee Lauder Co., Inc. was a strong contributor as the company maintained strong momentum in emerging markets, including China, despite market fears of a consumer slowdown. We reduced our position in Estee Lauder in the back half of 2019 as we saw expectations fully embrace strong three-year growth prospects. We intend to stay exposed to the favorable long-term trends within the cosmetic/skin-care market. Within information technology, we saw strong performance from NVIDIA Corp., a leader in graphic processing units and a new position during 2019, as fundamentals in data center and gaming end markets saw improvements.

The Fund was overweight Pfizer, Inc. for the measurement period, which was a notable detractor as the stock underperformed due to the announced exit of its Upjohn business. This led investors to debate the outlook for the remaining company. We sold Pfizer during the fourth quarter. An underweight position to Apple, Inc., which posted a significant return on the back of mainly valuation expansion, was a large detractor during the period. Worth noting as detractor was our overweight position to CME Group, Inc., which performed poorly due to an environment in which uncertainty and volatility was in decline leading to lower utilization of derivative products.


32		ANNUAL REPORT		2019

Outlook and positioning

We believe there is still room for the “accelerating global growth” narrative to push cyclical, cheaper stocks higher. A change in sentiment can be a strong tailwind for a group of stocks that was set aside during a period of economic fears. This move will likely be supported by improvements in global manufacturing data around the world, as many of those indices have bottomed or are near a bottom entering 2020. We think global accommodate monetary policy will likely stimulate some level of incremental economic growth during 2020.

This reversion to mean may support that positive narrative temporarily, but sustained improvements in earnings growth would be required for sustained outperformance of value-style securities. We are somewhat skeptical that the fourth mini-cycle of this decade long bull market will create enough economic momentum to sustain a durable rally in value. We think more likely is continued mediocre growth that is unable to resuscitate structurally challenged businesses without an overall stronger environment in which to operate. We think a modest growth environment is positive for our style of investing and good for active management as there will be more dispersion and separation between contributors and detractors.

Excesses, such as consumer debt, manufacturing inventories, corporate debt coverage, and business investment, are just not apparent this cycle. While this suggests limited excesses to worry about on the downside, this could also remove the catalysts for upside momentum as there are less economic input troughing and bouncing off a bottom. Sometimes a sharp correction sows the seeds for a strong growth recovery. The ability to create a strong growth cycle from monetary policy or fiscal stimulus may be waning in an environment of decent housing, low unemployment, rational business investment and appropriate inventories.

We exited the year with the Portfolio positioned for moderately improving economic growth. We did add some high-quality cyclical exposure, specifically where we see an overly discounted downside economic scenario already embedded, such as in Caterpillar, Inc. within industrials. Another name providing high-quality cyclical exposure is Stanley Black & Decker, Inc., where we see a potential benefit from easing headwinds (tariffs, inputs prices) combined with strong company-specific growth drivers. As always, our goal is to select stocks based on three- to five-year growth prospects rather than near-term revisions arising from macro factors. As valuation spreads between cyclicals andnon-cyclicals compress, our goal is to sift through those adjustments and add exposure to long-term stories where current valuation understates our view of the company’s long-term prospects.

As of calendar year end 2019, the Portfolio’s largest positions are Microsoft Corp., Apple, Inc., Alphabet, Inc., Visa, Inc., Amazon.com, Inc., Facebook, Inc., Coca-Cola Co. (The), Booking Holdings, Inc., Cerner Corp. and Motorola Solutions, Inc. Thank you for your continued interest and support.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment. Prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may not perform as well as value stocks or the stock market in general. These and other risks are more fully described in the Portfolio’s prospectus.

The opinions expressed in this report are those of the portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.

The index noted is unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Growth.

2019

ANNUAL REPORT


PORTFOLIO HIGHLIGHTS		GROWTH

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			99.4%
Information Technology			37.2%
Consumer Discretionary			15.7%
Health Care			12.6%
Communication Services			12.2%
Industrials			11.9%
Consumer Staples			4.2%
Financials			3.5%
Real Estate			2.1%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			0.6%

Top 10 Equity Holdings



Company	Sector	Industry
Microsoft Corp.	Information Technology	Systems Software
Apple, Inc.	Information Technology	Technology Hardware, Storage & Peripherals
Alphabet, Inc., Class A	Communication Services	Interactive Media & Services
Visa, Inc., Class A	Information Technology	Data Processing & Outsourced Services
Amazon.com, Inc.	Consumer Discretionary	Internet & Direct Marketing Retail
Cerner Corp.	Health Care	Health Care Technology
Facebook, Inc., Class A	Communication Services	Interactive Media & Services
Coca-Cola Co. (The)	Consumer Staples	Soft Drinks
Booking Holdings, Inc.	Consumer Discretionary	Internet & Direct Marketing Retail
Motorola, Inc.	Information Technology	Communications Equipment

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.


34		ANNUAL REPORT		2019


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		GROWTH

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		36.59%
5-year period ended12-31-19		14.41%
10-year period ended12-31-19		14.51%

(2)

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		GROWTH (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Communication Services

Interactive Home Entertainment – 1.9%
Electronic Arts, Inc. (A)		139	$	14,958


Interactive Media & Services – 9.0%
Alphabet, Inc., Class A (A)		29		38,456
Alphabet, Inc., Class C (A)		6		8,437
Facebook, Inc., Class A (A)		118		24,141

				71,034


Movies & Entertainment – 1.3%
Walt Disney Co. (The)		75		10,848


Total Communication Services – 12.2%				96,840
Consumer Discretionary

Apparel, Accessories & Luxury Goods – 1.9%
V.F. Corp.		148		14,761


Automobile Manufacturers – 1.9%
Ferrari N.V.		90		14,856


Footwear – 2.4%
NIKE, Inc., Class B		192		19,480


Home Improvement Retail – 2.2%
Home Depot, Inc. (The)		79		17,294


Internet & Direct Marketing Retail – 7.3%
Amazon.com, Inc. (A)		19		35,346
Booking Holdings, Inc. (A)		11		22,441

				57,787


Total Consumer Discretionary – 15.7%				124,178
Consumer Staples

Personal Products – 1.2%
Estee Lauder Co., Inc. (The), Class A		44		9,176


Soft Drinks – 3.0%
Coca-Cola Co. (The)		430		23,799


Total Consumer Staples – 4.2%				32,975
Financials

Financial Exchanges & Data – 3.5%
CME Group, Inc.		75		15,149
S&P Global, Inc.		46		12,535

				27,684


Total Financials—3.5%				27,684
Health Care

Biotechnology – 1.5%
Vertex Pharmaceuticals, Inc. (A)		53		11,678


Health Care Equipment – 3.5%
Danaher Corp.		103		15,815


COMMON STOCKS(Continued)	Shares		Value
Health Care Equipment(Continued)
Intuitive Surgical, Inc. (A)		20	$	11,868

				27,683


Health Care Technology – 3.0%
Cerner Corp.		329		24,160


Life Sciences Tools & Services – 1.2%
Illumina, Inc. (A)		28		9,441


Managed Health Care – 1.9%
UnitedHealth Group, Inc.		50		14,841


Pharmaceuticals – 1.5%
Zoetis, Inc.		89		11,829


Total Health Care – 12.6%				99,632
Industrials

Aerospace & Defense – 2.6%
Boeing Co. (The)		28		9,207
Northrop Grumman Corp.		34		11,559

				20,766


Construction Machinery & Heavy Trucks – 1.8%
Caterpillar, Inc.		94		13,905


Industrial Machinery – 2.4%
Stanley Black & Decker, Inc.		114		18,860


Railroads – 1.2%
Union Pacific Corp.		53		9,560


Research & Consulting Services – 2.6%
CoStar Group, Inc. (A)		15		9,221
Verisk Analytics, Inc., Class A		76		11,308

				20,529


Trucking – 1.3%
J.B. Hunt Transport Services, Inc.		86		10,065


Total Industrials – 11.9%				93,685
Information Technology

Application Software – 6.9%
Adobe, Inc. (A)		65		21,312
Intuit, Inc.		60		15,635
NVIDIA Corp.		74		17,473

				54,420


Communications Equipment – 2.7%
Motorola, Inc.		136		21,859


Data Processing & Outsourced Services – 10.6%
Broadridge Financial Solutions, Inc.		86		10,631
FleetCor Technologies, Inc. (A)		35		10,178
MasterCard, Inc., Class A		35		10,563
PayPal, Inc. (A)		136		14,697
Visa, Inc., Class A		200		37,496

				83,565


COMMON STOCKS(Continued)	Shares		Value
Internet Services & Infrastructure – 1.1%
VeriSign, Inc. (A)		45	$	8,725


IT Consulting & Other Services – 0.6%
Garter, Inc., Class A (A)		31		4,806


Systems Software – 9.1%
Microsoft Corp.		458		72,177


Technology Hardware, Storage & Peripherals – 6.2%
Apple, Inc.		166		48,779


Total Information Technology – 37.2%				294,331
Real Estate

Specialized REITs – 2.1%
American Tower Corp., Class A		28		6,338
Equinix, Inc.		18		10,599

				16,937


Total Real Estate – 2.1%				16,937

TOTAL COMMON STOCKS – 99.4%			$	786,262
(Cost: $540,040)

SHORT-TERM SECURITIES

Money Market Funds (B) – 0.6%
State Street Institutional U.S. Government Money Market Fund – Premier Class, 1.550%		4,460		4,460


TOTAL SHORT-TERM SECURITIES – 0.6%			$	4,460
(Cost: $4,460)

TOTAL INVESTMENT SECURITIES – 100.0%			$	790,722
(Cost: $544,500)

LIABILITIES, NET OF CASH AND OTHER ASSETS – 0.0%				(22	)

NET ASSETS – 100.0%			$	790,700


36		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		GROWTH (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

(A)	No dividends were paid during the preceding 12 months.

(B)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks	$	786,262	$	—	$	—
Short-Term Securities		4,460		—		—
Total	$	790,722	$	—	$	—

The following acronym is used throughout this schedule:

REIT = Real Estate Investment Trust

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


MANAGEMENT DISCUSSION		HIGH INCOME

(UNAUDITED)

LOGO

Chad A. Gunther

Below, Chad Gunther, portfolio manager of Ivy VIP High Income, discusses positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Gunther has managed the Portfolio since July 2014, and has 22 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP High Income(Class II shares at net asset value)			11.19%
Benchmark and Morningstar Category
ICE Bank of America Merrill Lynch US High Yield Index			14.41%
(generally reflects the performance of securities representing the high-yield sector of the bond market)
Morningstar High Yield Bond Category Average			12.62%
(generally reflects the performance of the universe of funds with similar investment objectives)

Please note that the Portfolio returns include applicable investment fees and expenses, whereas the index returns do not include any such fees. Also, the Portfolio’s performance data does not take into account any product expenses or charges associated with owning a variable life or annuity policy, which is invested in Ivy Variable Insurance Portfolios.

Performance

The Portfolio ended the fiscal year with a double-digit return, but underperformed its benchmark and Morningstar peer group category average. Compared to the Portfolio’sall-bond benchmark, as well as our peer group, we are underweight high-yield bonds. This detracted from our performance as bank loans underperformed high yield in 2019. The allocation to loans was the largest detractor from performance. Additionally, credit selection inside our loan portfolio in the mining, oil & gas and retail sectors detracted from relative performance. Conversely, the selection effect of our bond portfolio outperformed the index and peer group in 2019.

Market Sector Update

The high-yield sector posted a full-year return of 14.08%, as measured by JPMorgan. Meanwhile, leveraged loans returned 8.64% for the full year. Overall in fiscal year 2019,B-rated returned 15.69% and outperformedBB-rated andCCC-rated bonds, which returned 15.61% and 11.25%, respectively. Default activity in bonds and loans decreased to $1.2 billion in December, the lowest level since January 2019. This is compared to an average monthly default rate of $4.9 billion, $3.6 billion and $3.1 billion in 2019, 2018 and 2017, respectively. Sectors contributing to this year’s default activity were energy (44%), healthcare (9%) and retail (9%). The full-year U.S. default rate was 2.86%.

Bond yields declined sharply in December as completion ofphase-one of the U.S.-China trade deal came into focus. Yields and spreads decreased 44 basis points (bps) and 46 bps in December to 5.91% and 424 bps, respectively. Yields on the high-yield index ended the fiscal year below 6% for the first time since January 2018.

In the final month of the calendar year, after underperforming for seven consecutive months, lower rated CCC bonds returned 5.08% and meaningfully outperformed B and BB bonds, which returned 2.36% and 1.37%, respectively. Energy was the largest outperformer in December at 5.79%, but lagged the broader index for the year.

The high-yield universe had strong new issuance in the final quarter of the fiscal year with $78 billion of new bonds. Refinancing continues to lead among the use of proceeds for the 35th straight month. In terms of full-year new issuance by ratings, split BBB or BB accounted for the highest volume at 47% of total volume; CCC ornon-rated was the lowest volume at 10%.

Leveraged loans ended the fiscal year with December posting the strongest gains since January. For the fiscal year, leveraged loans returned 8.64%, but underperformed the high-yield and investment-grade sectors which returned 14.08% and 14.10%, respectively. Loan funds reported their 15th consecutive outflow in December, albeit it was one of the lowest outflows of the fiscal year at approximately $1 billion. The last four quarters rank among the eight largest quarterly outflows on record.

New issue activity picked up considerably for leveraged loans during the final quarter of the fiscal year with $141.3 billion priced versus $93 billion, $91 billion and $67 billion in the third, second and first quarters, respectively. Similar to bonds, refinancing was the main use of proceeds.


38		ANNUAL REPORT		2019

Portfolio Positioning

The Portfolio’s allocation across asset classes remained steady, ending the year with 64.5% bonds, 22.1% loans, 5.4% other and 7.8% cash. The Portfolio’s weighting by rating category is 12.9% BB, 47.1% B, and 23.8% CCC, as measured by Standard & Poor’s. The breakdown of our loan portfolio is 17% first lien and 4% second lien.

Leveraged loans continue to offer attractive yields relative to their seniority in the capital structure. First-lien loans are the largest loan category and one of the most senior parts of the capital structure. In times of stress and volatility, loans offer the potential for more stability and outperformance as compared to high-yield debt and equity.

As we assess the market uncertainty around tariffs and trade, we have become more cautious about the risks we are taking. The outperformance ofBB-rated bonds in 2019 has mostly been rate driven as the10-year U.S. Treasury yield moved from 2.68% at the beginning of the year to 1.92% at the end of the year. We continue to view our loan portfolio as a replacement for our exposure in the BB category. The yieldpick-up in loans relative to expensiveBB-rated paper reinforces our allocation to leveraged loans.

Looking towards 2020

The Federal Reserve’s (Fed) early-year dovish approach to interest rate policy had an effect on high-yield bonds as the bonds became the preferred way to lock in cheaper borrowing rates. As economic indicators stabilized toward the end of calendar year 2019 andphase-one of a U.S.-China trade pact became clear, there was a late-year increase in issuance and abetter-bid in the secondary market.

As the market becomes more comfortable that the Fed is done cutting rates, we believe outflows from the loan asset class should cease which would reverse the large technical (supply/demand changes) that the loan market experienced in 2019. However, still looming over the market in 2020 are the presidential impeachment proceedings, the 2020 U.S. presidential election, unrest in the Middle East and questions around the trajectory of global growth. On the flip side, the strong labor market continues to help consumer confidence, the Fed and global central banks are easing and providing stimulus, which in turn has continued to help sectors such as housing and building materials.

We believe replicating the returns experienced this past fiscal year may be extremely difficult as spreads sit close to 400 bps versus 570 bps when the fiscal year started. Market predictions for high yield performance in 2020 indicates expectations for single-digit returns, while S&P Global Ratings expect the corporate default rate to rise to 3.9% by the end of 3Q 2020, driven by more energy sector defaults. As always, our focus when evaluating investments is a company’s business model and competitive advantages in order to weather a recession and perform throughout the cycle.

Past performance is not a guarantee of future results. As with any investment, the value of the Portfolio’s shares will change, and you could lose money on your investment.

Fixed-income securities are subject to interest rate risk and, as such, the Fund’s net asset value may fall as interest rates rise. Investing in high-income securities may carry a greater risk ofnon-payment of interest or principal than higher-rated bonds. In addition to the risks typically associated with fixed-income securities, loan participations in which the fund 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.

The index noted is unmanaged, includes reinvested dividends, and does not include fees. One cannot invest directly in an index, nor is an index representative of the Ivy VIP High Income.

2019

ANNUAL REPORT


PORTFOLIO HIGHLIGHTS		HIGH INCOME

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			5.5%
Financials			2.9%
Consumer Discretionary			1.7%
Energy			0.9%
Health Care			0.0%
Consumer Staples			0.0%
Industrials			0.0%
Warrants			0.0%
Bonds			85.4%
Corporate Debt Securities			63.3%
Loans			22.1%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			9.1%

Quality Weightings


Non-Investment Grade			85.4%
BB			7.7%
B			48.4%
CCC			25.5%
Below CCC			1.5%
Non-rated			2.3%
Cash and Other Assets (Net of Liabilities), Cash Equivalents+ and Equities			14.6%

Our preference is to always use ratings obtained from Standard & Poor’s, Moody’s, and Fitch. It is each Portfolio’s general policy to classify such security at the lower rating level if only two ratings are available. If more than two ratings are available and a median exists, the median is used. If more than two ratings exist without a median, the lower of the two middle ratings is used. We do not evaluate these ratings, but simply assign them to the appropriate credit quality category as determined by the rating agency.


40		ANNUAL REPORT		2019


COMPARISON OF CHANGE IN VALUE IN $10,000 INVESTMENT		HIGH INCOME

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class I		Class II
1-year period ended12-31-19		11.49%		11.19%
5-year period ended12-31-19		—		4.75%
10-year period ended12-31-19		—		7.37%
Since Inception of Class through12-31-19⁽³⁾		4.73%		—

(2)

(3)

4-28-17 (the date on which shares were first acquired by shareholders).

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		HIGH INCOME (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares			Value
Consumer Discretionary

Apparel Retail – 0.0%
True Religion Apparel, Inc. (A)(B)		13		$	—	*

Casinos & Gaming – 0.0%
New Cotai Participation Corp., Class B (A)(B)(C)		—	*		—


Education Services – 0.9%
Laureate Education, Inc., Class A (A)		443			7,795


Hotels, Resorts & Cruise Lines – 0.8%
Studio City International Holdings Ltd. ADR (A)		343			6,862


Total Consumer Discretionary – 1.7%					14,657
Consumer Staples

Agricultural Products – 0.0%
ASG Warrant Corp. (A)(B)		1			—


Total Consumer Staples – 0.0%					—
Energy

Coal & Consumable Fuels – 0.0%
Westmoreland Coal Co. (A)		29			344


Oil & Gas Equipment & Services – 0.0%
Larchmont Resources LLC (A)(B)(C)(D)(E)		1			252
McDermott International, Inc. (A)		21			14

					266


Oil & Gas Exploration & Production – 0.0%
Bellatrix Exploration Ltd. (A)(B)(D)		436			—	*
Sabine Oil & Gas Corp. (A)(B)(C)		—	*		19

					19


Total Energy – 0.0%					629
Health Care

Pharmaceuticals – 0.0%
Advanz Pharma Corp. (A)(D)		35			96


Total Health Care – 0.0%					96
Industrials

Air Freight & Logistics – 0.0%
BIS Industries Ltd. (A)(B)(C)		1,605			79


Total Industrials – 0.0%					79

TOTAL COMMON STOCKS – 1.7%				$	15,461
(Cost: $13,362)


INVESTMENT FUNDS	Shares		Value
Registered Investment Companies – 2.9%
iShares iBoxx $ High Yield Corporate Bond ETF		290	$	25,503


TOTAL INVESTMENT FUNDS – 2.9%			$	25,503
(Cost: $25,202)

PREFERRED STOCKS
Consumer Staples

Agricultural Products – 0.0%
Pinnacle Agriculture Enterprises LLC (A)(B)(C)		4,583		—	*


Total Consumer Staples – 0.0%				—	*
Energy

Oil & Gas Exploration & Production – 0.9%
Targa Resources Corp., 9.500% (A)(C)		8		8,211


Total Energy – 0.9%				8,211

TOTAL PREFERRED STOCKS – 0.9%			$	8,211
(Cost: $10,499)

WARRANTS
Oil & Gas Exploration & Production – 0.0%
Ultra Resources, Inc., expires7-14-25 (F)		20		1


TOTAL WARRANTS – 0.0%			$	1
(Cost: $5)

CORPORATE DEBT SECURITIES	Principal
Communication Services

Alternative Carriers – 0.1%
Consolidated Communications Finance II Co.,
6.500%,10-1-22 (G)	$	926		838

Broadcasting – 1.1%
Clear Channel Outdoor Holdings, Inc.,
5.125%,8-15-27 (H)		5,508		5,735
Clear Channel Worldwide Holdings, Inc.,
9.250%,2-15-24 (H)		3,979		4,407

				10,142


Cable & Satellite – 8.0%
Altice Financing S.A.:
6.625%,2-15-23 (H)		950		966
7.500%,5-15-26 (H)		4,462		4,797
Altice France S.A.:
7.375%,5-1-26 (H)		7,396		7,941
8.125%,2-1-27 (H)		6,013		6,772
Altice Luxembourg S.A.,
10.500%,5-15-27 (H)		11,289		12,870


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Cable & Satellite(Continued)
Altice S.A.,
7.625%,2-15-25 (H)	$	5,952	$	6,190
Altice U.S. Finance I Corp.,
5.500%,5-15-26 (H)		2,745		2,906
CCO Holdings LLC and CCO Holdings Capital Corp.:
5.500%,5-1-26 (H)		1,187		1,251
5.000%,2-1-28 (H)		4,233		4,442
CSC Holdings LLC:
5.375%,2-1-28 (H)		4,930		5,257
5.750%,1-15-30 (H)		1,372		1,464
DISH DBS Corp.:
5.875%,7-15-22		2,310		2,449
5.875%,11-15-24		1,724		1,762
7.750%,7-1-26		2,821		2,988
Neptune Finco Corp.,
6.625%,10-15-25 (H)		788		836
VTR Finance B.V.,
6.875%,1-15-24 (H)		8,223		8,408

				71,299


Integrated Telecommunication Services – 3.5%
Frontier Communications Corp.:
6.875%,1-15-25		6,315		3,063
11.000%,9-15-25		8,236		3,994
8.500%,4-1-26 (H)		11,690		11,836
West Corp.,
8.500%,10-15-25 (H)		15,487		12,390

				31,283


Publishing – 0.4%
MDC Partners, Inc.,
6.500%,5-1-24 (H)		3,426		3,101


Wireless Telecommunication Service – 1.5%
Digicel Group Ltd.:
6.000%,4-15-21 (H)		1,965		1,533
8.250%,9-30-22 (H)		760		182
8.250%,12-30-22 (H)		3,033		1,691
Digicel Group Ltd. (7.125% Cash and 2.000% PIK),
9.125%,4-1-24 (H)(I)		3,263		498
Digicel International Finance Ltd.,
8.750%,5-25-24 (H)		8,401		8,191
Digicel Ltd.,
6.750%,3-1-23 (H)		2,507		1,454

				13,549


Total Communication Services – 14.6%				130,212
Consumer Discretionary

Automotive Retail – 0.4%
Allison Transmission, Inc.,
5.000%,10-1-24 (H)		781		800
Lithia Motors, Inc.,
4.625%,12-15-27 (H)		1,119		1,150
Sonic Automotive, Inc.,
6.125%,3-15-27		1,198		1,249

				3,199


Casinos & Gaming – 2.1%
Boyd Gaming Corp.,
4.750%,12-1-27 (H)		2,089		2,170


42		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		HIGH INCOME (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Casinos & Gaming(Continued)
Everi Payments, Inc.,
7.500%,12-15-25 (H)	$	4,320	$	4,633
Gateway Casinos & Entertainment Ltd.,
8.250%,3-1-24 (H)		2,450		2,505
Golden Nugget, Inc.,
6.750%,10-15-24 (H)		5,273		5,458
Scientific Games International, Inc. (GTD by Scientific Games Corp.):
7.000%,5-15-28 (H)		282		302
7.250%,11-15-29 (H)		282		306
Wynn Macau Ltd.:
4.875%,10-1-24 (H)		855		874
5.500%,10-1-27 (H)		2,301		2,393
5.125%,12-15-29 (H)		421		430

				19,071


Education Services – 2.3%
Laureate Education, Inc.,
8.250%,5-1-25 (H)		19,228		20,694


Hotels, Resorts & Cruise Lines – 0.3%
Boyne USA, Inc.,
7.250%,5-1-25 (H)		2,468		2,684


Leisure Facilities – 0.3%
Cedar Fair L.P., Magnum Management Corp., Canada’s Wonderland Co. and Millennium Operations LLC,
5.375%,4-15-27		2,137		2,300


Specialized Consumer Services – 0.4%
Nielsen Co. (Luxembourg) S.a.r.l. (The),
5.500%,10-1-21 (H)		2,371		2,380
Nielsen Finance LLC and Nielsen Finance Co.,
5.000%,4-15-22 (H)		896		899

				3,279


Specialty Stores – 2.9%
Party City Holdings, Inc.,
6.625%,8-1-26 (G)(H)		1,785		1,259
Staples, Inc.:
7.500%,4-15-26 (H)		16,924		17,559
10.750%,4-15-27 (H)		7,355		7,465

				26,283


Total Consumer Discretionary – 8.7%				77,510
Consumer Staples

Food Distributors – 0.4%
Performance Food Group, Inc.:
5.500%,6-1-24 (H)		2,754		2,823
5.500%,10-15-27 (H)		485		518

				3,341


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Packaged Foods & Meats – 4.6%
JBS USA LLC and JBS USA Finance, Inc.:
5.875%,7-15-24 (H)	$	5,708	$	5,873
5.750%,6-15-25 (H)		4,650		4,813
JBS USA Lux S.A. and JBS USA Finance, Inc.,
6.750%,2-15-28 (H)		3,115		3,442
JBS USA, JBS USA Food Co. and JBS USA Finance, Inc. (GTD by JBS S.A.):
6.500%,4-15-29 (H)		545		606
5.500%,1-15-30 (H)		2,078		2,232
Pilgrim’s Pride Corp.:
5.750%,3-15-25 (H)		881		911
5.875%,9-30-27 (H)		3,082		3,332
Post Holdings, Inc.:
5.500%,3-1-25 (H)		781		818
5.000%,8-15-26 (H)		1,267		1,338
5.750%,3-1-27 (H)		5,618		6,026
Simmons Foods, Inc.:
7.750%,1-15-24 (H)		1,656		1,784
5.750%,11-1-24 (H)		9,752		9,801

				40,976


Total Consumer Staples – 5.0%				44,317
Energy

Oil & Gas Drilling – 0.9%
KCA Deutag UK Finance plc,
7.250%,5-15-21 (H)		5,209		3,542
Offshore Drilling Holding S.A.,
8.375%,9-20-20 (H)(J)		8,682		2,518
Valaris plc,
7.750%,2-1-26		2,484		1,403

				7,463


Oil & Gas Equipment & Services – 0.3%
Nine Energy Service, Inc.,
8.750%,11-1-23 (H)		1,917		1,553
SESI LLC,
7.125%,12-15-21 (G)		906		772

				2,325


Oil & Gas Exploration & Production – 3.3%
Bellatrix Exploration Ltd.,
8.500%,9-11-23 (K)		1,022		1,048
Bellatrix Exploration Ltd. (3.000% Cash and 9.500% PIK),
9.500%,12-15-23 (I)(K)		1,113		1,137
Chesapeake Energy Corp.,
11.500%,1-1-25		3,037		2,870
Crownrock L.P.,
5.625%,10-15-25 (H)		7,521		7,671
Endeavor Energy Resources L.P.:
5.500%,1-30-26 (H)		2,453		2,533
5.750%,1-30-28 (H)		1,789		1,880
Extraction Oil & Gas, Inc.,
5.625%,2-1-26 (H)		3,647		2,188
Laredo Petroleum, Inc.,
6.250%,3-15-23 (G)		821		770


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Oil & Gas Exploration & Production(Continued)
Sanchez Energy Corp.,
7.250%,2-15-23 (G)(H)(K)	$	622	$	404
Seven Generations Energy Ltd.:
6.750%,5-1-23 (H)		5,646		5,787
5.375%,9-30-25 (H)		2,523		2,536
Ultra Resources, Inc. (9.000% Cash and 2.000% PIK),
11.000%, 7-12-24 (I)		1,016		163

				28,987


Oil & Gas Refining & Marketing – 1.6%
Callon Petroleum Co. (GTD by Callon Petroleum Operating Co.):
6.125%,10-1-24		1,081		1,101
6.375%,7-1-26		386		392
Comstock Escrow Corp.,
9.750%,8-15-26		10,817		9,817
EP Energy LLC and Everest Acquisition Finance, Inc.:
9.375%,5-1-24 (H)(K)		1,320		26
8.000%,2-15-25 (H)(K)		1,386		28
7.750%,5-15-26 (H)(K)		1,933		1,382
QEP Resources, Inc.,
5.625%,3-1-26 (G)		1,599		1,559

				14,305


Total Energy – 6.1%				53,080
Financials

Consumer Finance – 0.3%
CURO Group Holdings Corp.,
8.250%,9-1-25 (H)		2,815		2,477


Financial Exchanges & Data – 0.7%
Refinitiv U.S. Holdings, Inc.,
8.250%,11-15-26 (H)		5,889		6,632


Insurance Brokers – 1.7%
NFP Corp.:
6.875%,7-15-25 (H)		12,033		12,063
8.000%,7-15-25 (H)		2,791		2,847

				14,910


Other Diversified Financial Services – 1.3%
New Cotai LLC and New Cotai Capital Corp. (10.625% Cash or 10.625% PIK),
10.625%, 5-1-19 (H)(I)(K)		26,095		11,482


Property & Casualty Insurance – 1.3%
Amwins Group, Inc.,
7.750%,7-1-26 (H)		5,966		6,593
Hub International Ltd.,
7.000%,5-1-26 (H)		4,731		5,003

				11,596


Specialized Finance – 1.5%
BCPE Cycle Merger Sub II, Inc.,
10.625%,7-15-27 (H)		5,496		5,633

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		HIGH INCOME (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Specialized Finance(Continued)
Compass Group Diversified Holdings LLC,
8.000%,5-1-26 (H)	$	2,534	$	2,743
Tervita Escrow Corp.,
7.625%,12-1-21 (H)		1,289		1,297
TMX Finance LLC and TitleMax Finance Corp.,
11.125%,4-1-23 (H)		3,348		3,030

				12,703


Thrifts & Mortgage Finance – 0.3%
Provident Funding Associates L.P. and PFG Finance Corp.,
6.375%,6-15-25 (H)		2,943		2,884


Total Financials – 7.1%				62,684
Health Care

Health Care Facilities – 1.9%
RegionalCare Hospital Partners Holdings, Inc. and Legend Merger Sub, Inc.,
9.750%,12-1-26 (H)		8,355		9,441
Surgery Center Holdings, Inc.,
10.000%,4-15-27 (H)		6,050		6,640

				16,081


Health Care Services – 0.6%
Heartland Dental LLC,
8.500%,5-1-26 (H)		4,714		4,826


Health Care Technology – 1.2%
Verscend Holding Corp.,
9.750%,8-15-26 (H)		9,366		10,244


Life Sciences Tools & Services – 0.9%
Avantor, Inc.,
9.000%,10-1-25 (H)		6,976		7,796


Pharmaceuticals – 2.2%
Advanz Pharma Corp.,
8.000%,9-6-24		430		405
Bausch Health Cos., Inc.:
6.125%,4-15-25 (H)		1,727		1,784
9.000%,12-15-25 (H)		855		972
9.250%,4-1-26 (H)		2,515		2,889
8.500%,1-31-27 (H)		3,270		3,724
Eagle Holding Co. II LLC (7.500% Cash or 8.500% PIK),
7.750%,5-15-22 (H)(I)		6,101		6,195
Par Pharmaceutical, Inc.,
7.500%,4-1-27 (H)		3,609		3,591

				19,560


Total Health Care – 6.8%				58,507
Industrials

Aerospace & Defense – 5.5%
TransDigm UK Holdings plc,
6.875%,5-15-26		2,171		2,312


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Aerospace & Defense(Continued)
TransDigm, Inc. (GTD by TransDigm Group, Inc.):
6.500%,7-15-24	$	6,077	$	6,268
6.500%,5-15-25		1,162		1,208
6.250%,3-15-26 (H)		3,744		4,053
6.375%,6-15-26		2,490		2,641
7.500%,3-15-27		2,673		2,924
5.500%,11-15-27 (H)		6,936		7,014
Wolverine Escrow LLC:
8.500%,11-15-24 (H)		7,697		7,967
9.000%,11-15-26 (H)		11,228		11,761
13.125%,11-15-27 (H)		2,259		2,321

				48,469


Diversified Support Services – 0.4%
Ahern Rentals, Inc.,
7.375%,5-15-23 (H)		3,901		3,092
United Rentals (North America), Inc. (GTD by United Rentals, Inc.),
5.875%,9-15-26		472		506

				3,598


Electrical Components & Equipment – 0.1%
Vertiv Group Corp.,
9.250%,10-15-24 (H)		844		907
Vertiv Intermediate Holding Corp. (12.000% Cash or 13.000% PIK),
12.000%,2-15-22 (H)(I)		393		408

				1,315


Environmental & Facilities Services – 1.0%
GFL Environmental, Inc.:
5.375%,3-1-23 (H)		2,809		2,893
7.000%,6-1-26 (H)		3,835		4,052
8.500%,5-1-27 (H)		952		1,047
Waste Pro USA, Inc.,
5.500%,2-15-26 (H)		482		502

				8,494


Research & Consulting Services – 0.3%
Alliance Data Systems Corp.,
4.750%,12-15-24 (H)		2,991		2,983


Security & Alarm Services – 0.8%
Prime Security Services Borrower LLC and Prime Finance, Inc.,
9.250%,5-15-23 (H)		6,620		6,943


Total Industrials – 8.1%				71,802
Information Technology

Application Software – 1.5%
Kronos Acquisition Holdings, Inc.,
9.000%,8-15-23 (H)		13,902		13,276


Data Processing & Outsourced Services – 1.5%
Italics Merger Sub, Inc.,
7.125%,7-15-23 (H)		12,260		12,444


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Data Processing & Outsourced Services(Continued)
j2 Cloud Services LLC and j2 Global, Inc.,
6.000%,7-15-25 (H)	$	1,192	$	1,264

				13,708


Electronic Equipment & Instruments – 0.2%
NCR Corp.:
5.750%,9-1-27 (H)		966		1,029
6.125%,9-1-29 (H)		966		1,048

				2,077


IT Consulting & Other Services – 1.0%
Cardtronics, Inc. and Cardtronics USA, Inc.,
5.500%,5-1-25 (H)		687		713
NCR Escrow Corp.,
6.375%,12-15-23		4,266		4,373
Pioneer Holding Corp.,
9.000%,11-1-22 (H)		3,739		3,907

				8,993


Total Information Technology – 4.2%				38,054
Materials

Aluminum – 1.0%
Constellium N.V.:
5.750%,5-15-24 (H)		3,551		3,649
5.875%,2-15-26 (H)		2,322		2,455
Novelis Corp. (GTD by Novelis, Inc.):
6.250%,8-15-24 (H)		1,471		1,543
5.875%,9-30-26 (H)		985		1,048

				8,695


Commodity Chemicals – 0.5%
NOVA Chemicals Corp.:
4.875%,6-1-24 (H)		2,943		3,039
5.250%,6-1-27 (H)		1,177		1,209

				4,248


Construction Materials – 0.6%
Hillman Group, Inc. (The),
6.375%,7-15-22 (H)		5,883		5,471


Fertilizers & Agricultural Chemicals – 0.3%
Pinnacle Operating Corp.,
9.000%,5-15-23 (B)(H)		6,601		2,640


Metal & Glass Containers – 0.3%
ARD Finance S.A. (6.500% Cash or 7.250% PIK),
6.500%,6-30-27 (H)(I)		2,110		2,182


44		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		HIGH INCOME (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Metal & Glass Containers(Continued)
HudBay Minerals, Inc.:
7.250%,1-15-23 (H)	$	408	$	423
7.625%,1-15-25 (H)		611		645

				3,250


Total Materials – 2.7%				24,304

TOTAL CORPORATE DEBT SECURITIES – 63.3%			$	560,470
(Cost: $581,094)

LOANS (L)
Communication Services

Advertising – 0.4%
Advantage Sales & Marketing, Inc. (ICE LIBOR plus 325 bps),
5.049%,7-25-21		790		762
Advantage Sales & Marketing, Inc. (ICE LIBOR plus 650 bps),
8.299%,7-25-22		2,951		2,606

				3,368


Broadcasting – 0.8%
Clear Channel Outdoor Holdings, Inc. (ICE LIBOR plus 350 bps),
5.299%,8-1-26		6,597		6,628


Integrated Telecommunication Services – 1.1%
West Corp.(3-Month ICE LIBOR plus 400 bps),
5.927%,10-10-24		10,951		9,255


Publishing – 0.1%
Recorded Books, Inc. (ICE LIBOR plus 450 bps),
6.299%,8-31-25 (B)		1,130		1,132


Wireless Telecommunication Service – 0.1%
Digicel International Finance Ltd. (ICE LIBOR plus 325 bps),
5.340%,5-27-24		1,394		1,240


Total Communication Services – 2.5%				21,623
Consumer Discretionary

Apparel Retail – 0.6%
Talbots, Inc. (The) (ICE LIBOR plus 700 bps),
8.799%,11-28-22 (B)		4,483		4,371
TRLG Intermediate Holdings LLC,
10.000%,10-27-22		1,521		1,435

				5,806


Department Stores – 0.2%
Belk, Inc. (ICE LIBOR plus 675 bps),
8.803%,7-31-25		2,200		1,522


LOANS (L)(Continued)	Principal		Value
Housewares & Specialties – 0.3%
KIK Custom Products, Inc. (ICE LIBOR plus 400 bps),
5.792%,5-15-23	$	2,573	$	2,521


Restaurants – 0.4%
CEC Entertainment, Inc. (ICE LIBOR plus 650 bps),
8.299%,8-30-26		3,444		3,299
NPC International, Inc. (ICE LIBOR plus 750 bps),
9.427%,4-18-25		3,326		339

				3,638


Specialized Consumer Services – 0.2%
Asurion LLC (ICE LIBOR plus 600 bps),
8.299%,8-4-25		1,861		1,883


Specialty Stores – 1.1%
Jo-Ann Stores, Inc. (ICE LIBOR plus 500 bps),
6.934%,10-16-23		3,273		2,268
Jo-Ann Stores, Inc. (ICE LIBOR plus 925 bps),
11.042%,5-21-24		3,971		1,363
Staples, Inc. (ICE LIBOR plus 500 bps),
6.691%,4-12-26		6,061		5,949

				9,580


Textiles – 0.5%
SIWF Holdings, Inc. (ICE LIBOR plus 425 bps),
6.049%,6-15-25		4,219		4,198


Total Consumer Discretionary – 3.3%				29,148
Consumer Staples

Packaged Foods & Meats – 0.3%
Bellring Brands LLC (ICE LIBOR plus 500 bps),
6.799%,10-21-24		2,762		2,788


Total Consumer Staples – 0.3%				2,788
Energy

Coal & Consumable Fuels – 0.6%
Foresight Energy LLC (ICE LIBOR plus 725 bps),
7.659%,3-28-22		6,950		2,964
Westmoreland Coal Co. (ICE LIBOR plus 650 bps),
10.150%,3-15-22 (B)		595		592
Westmoreland Mining Holdings LLC (15.000% Cash or 15.000% PIK),
15.000%,3-15-29 (I)		1,870		1,440

				4,996


LOANS (L)(Continued)	Principal		Value
Oil & Gas Equipment & Services – 0.1%
Larchmont Resources LLC (8.890% Cash or 8.890% PIK),
8.890%,8-7-20 (B)(E)(I)	$	757	$	697


Oil & Gas Exploration & Production – 0.4%
California Resources Corp. (ICE LIBOR plus 1,037.50 bps),
12.180%,12-31-21		2,885		2,140
California Resources Corp. (ICE LIBOR plus 475 bps),
6.555%,12-31-22		1,928		1,718

				3,858


Oil & Gas Storage & Transportation – 1.2%
Bowie Resources Holdings LLC (ICE LIBOR plus 1,075 bps),
12.659%,2-16-21		1,911		1,791
Bowie Resources Holdings LLC (ICE LIBOR plus 575 bps),
7.659%,8-12-20		2,748		2,673
EPIC Crude Services L.P. (ICE LIBOR plus 500 bps),
7.040%,3-1-26		6,000		5,745
Lower Cadence Holdings LLC (ICE LIBOR plus 400 bps),
5.799%,5-22-26		681		672

				10,881


Total Energy – 2.3%				20,432
Financials

Asset Management & Custody Banks – 0.4%
Edelman Financial Holdings II, Inc. (ICE LIBOR plus 675 bps),
8.535%,7-20-26		4,048		4,028


Financial Exchanges & Data – 0.4%
Hudson River Trading LLC(3-Month U.S. LIBOR plus 350 bps),
5.299%,4-3-25 (B)		3,350		3,367


Insurance Brokers – 0.3%
NFP Corp. (ICE LIBOR plus 300 bps),
4.799%,1-8-24		2,499		2,486


Investment Banking & Brokerage – 0.6%
Jane Street Group LLC (ICE LIBOR plus 300 bps),
4.799%,8-25-22		5,020		5,008


Other Diversified Financial Services – 0.0%
New Cotai LLC,
0.000%,7-20-20 (M)		44		44
New Cotai LLC(1-Month U.S. LIBOR plus 25 bps):
2.965%,7-20-20		71		72
5.000%,7-20-20		71		71

				187

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		HIGH INCOME (in thousands)

DECEMBER 31, 2019


LOANS (L)(Continued)	Principal		Value
Property & Casualty Insurance – 1.2%
Amynta Agency Borrower, Inc. (ICE LIBOR plus 400 bps),
6.299%, 2-28-25(B)	$	8,373	$	7,787
Amynta Agency Borrower, Inc. (ICE LIBOR plus 850 bps),
10.299%, 2-28-26		2,807		2,821

				10,608


Specialized Finance – 0.5%
Gulf Finance LLC (ICE LIBOR plus 525 bps):
6.950%,8-25-23		3,806		2,969
7.200%,8-25-23		2,272		1,772

				4,741


Total Financials—3.4%				30,425
Health Care

Health Care Equipment – 0.1%
LifeScan Global Corp.(3-Month ICE LIBOR plus 950 bps),
11.556%,10-1-25		632		543


Health Care Facilities – 1.5%
Gentiva Health Services, Inc.(3-Month ICE LIBOR plus 375 bps),
5.563%,7-2-25		7,322		7,355
RegionalCare Hospital Partners Holdings, Inc. (ICE LIBOR plus 450 bps),
6.202%,11-16-25		6,406		6,452

				13,807


Health Care Services – 1.6%
Heartland Dental LLC,
0.000%,4-30-25 (M)		90		89
Heartland Dental LLC (ICE LIBOR plus 375 bps),
5.549%,4-30-25		3,986		3,961
U.S. Renal Care, Inc.(3-Month ICE LIBOR plus 500 bps),
6.813%,6-26-26		10,964		10,854

				14,904


Health Care Technology – 1.0%
Verscend Holding Corp. (ICE LIBOR plus 450 bps),
6.299%,8-27-25		8,917		8,969


Pharmaceuticals – 0.1%
Concordia International Corp. (ICE LIBOR plus 550 bps),
7.447%,9-6-24		1,158		1,080


Total Health Care – 4.3%				39,303


LOANS (L)(Continued)	Principal		Value
Industrials

Building Products – 0.1%
Hampton Rubber Co. & SEI Holding Corp. (ICE LIBOR plus 800 bps),
9.799%,3-27-22	$	1,074	$	1,052


Construction & Engineering – 0.8%
McDermott Technology (Americas), Inc. (ICE LIBOR plus 500 bps),
6.945%,5-10-25		5,530		3,220
McDermott Technology Americas, Inc.,
0.000%,10-21-21 (M)		1,483		1,511
McDermott Technology Americas, Inc. (ICE LIBOR plus 1,000 bps):
11.900%,10-21-21		407		415
12.002%,10-21-21		896		912
Tensar International Corp. (ICE LIBOR plus 850 bps),
10.445%,7-10-22 (B)		1,119		896

				6,954


Diversified Support Services – 0.1%
Creative Artists Agency LLC (ICE LIBOR plus 375 bps),
5.549%,11-26-26		1,034		1,042


Industrial Conglomerates – 0.7%
PAE Holding Corp. (ICE LIBOR plus 550 bps),
7.349%,10-20-22		4,968		4,968
PAE Holding Corp. (ICE LIBOR plus 950 bps),
11.349%,10-20-23		798		783

				5,751


Industrial Machinery – 1.6%
Dynacast International LLC (ICE LIBOR plus 850 bps),
10.445%,1-30-23		13,354		12,586
Form Technologies LLC (ICE LIBOR plus 325 bps),
5.195%,1-28-22 (B)		1,680		1,630

				14,216


Total Industrials – 3.3%				29,015
Information Technology

Application Software – 0.3%
Applied Systems, Inc. (ICE LIBOR plus 700 bps),
8.945%,9-19-25		1,954		1,987
Kronos Acquisition Holdings, Inc. (ICE LIBOR plus 700 bps),
8.799%,5-15-23 (B)		531		523

				2,510


Communications Equipment – 0.9%
MLN U.S. Holdco LLC (ICE LIBOR plus 450 bps),
6.191%,11-30-25		5,814		5,479


LOANS (L)(Continued)	Principal		Value
Communications Equipment (Continued)
MLN U.S. Holdco LLC (ICE LIBOR plus 875 bps),
10.441%,11-30-26	$	2,920	$	2,161

				7,640


Data Processing & Outsourced Services – 1.0%
CommerceHub, Inc. (ICE LIBOR plus 375 bps),
5.299%,5-21-25		3,145		3,074
Cyxtera DC Holdings, Inc.,
0.000%,5-1-25 (M)		702		423
Cyxtera DC Holdings, Inc. (ICE LIBOR plus 300 bps),
8.990%,5-1-25		2,727		1,642
Cyxtera DC Holdings, Inc. (ICE LIBOR plus 325 bps),
4.740%,5-1-24		3,359		2,954

				8,093


Total Information Technology – 2.2%				18,243
Materials

Construction Materials – 0.5%
Hillman Group, Inc. (The) (ICE LIBOR plus 350 bps),
5.799%,5-31-25		4,298		4,221


Total Materials – 0.5%				4,221

TOTAL LOANS – 22.1%			$	195,198
(Cost: $215,920)

SHORT-TERM SECURITIES	Shares
Money Market Funds (O) – 8.1%
Dreyfus Institutional Preferred Government Money Market Fund – Institutional Shares,
1.550%, (N)		2,193		2,193
State Street Institutional U.S. Government Money Market Fund – Premier Class,
1.550%		69,394		69,394

				71,587


TOTAL SHORT-TERM SECURITIES – 8.1%			$	71,587
(Cost: $71,587)

TOTAL INVESTMENT SECURITIES – 99.0%			$	876,431
(Cost: $917,669)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 1.0%				9,442

NET ASSETS – 100.0%			$	885,873


46		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		HIGH INCOME (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

*	Not shown due to rounding.

(A)	No dividends were paid during the preceding 12 months.

(B)	Securities whose value was determined using significant unobservable inputs.

(C)	Restricted securities. At December 31, 2019, the Portfolio owned the following restricted securities:


Security	Acquisition Date(s)		Shares			Cost		Value
BIS Industries Ltd.		12-22-17		1,605		$	151	$	79
Larchmont Resources LLC		12-8-16		1			340		252
New Cotai Participation Corp., Class B		4-12-13		—	*		62		—
Sabine Oil & Gas Corp.		12-7-16		—	*		11		19
Pinnacle Agriculture Enterprises LLC		3-10-17		4,583			2,083		—	*
Targa Resources Corp., 9.500%		10-24-17		8			8,416		8,211

						$	11,063	$	8,561

The	total value of these securities represented 1.0% of net assets at December 31, 2019.

(D)	Listed on an exchange outside the United States.

(E)	Deemed to be an affiliate due to the Portfolio owning at least 5% of the voting securities.

(F)	Warrants entitle the Portfolio to purchase a predetermined number of shares of common stock and arenon-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any.

(G)	All or a portion of securities with an aggregate value of $1,918 are on loan.

(H)

(I)	Payment-in-kind bond which may pay interest in additional par and/or in cash. Rates shown are the current rate and possible payment rates.

(J)	Step bond that pays an initial coupon rate for the first period and then a higher or lower coupon rate for the following periods. Interest rate disclosed is that which is in effect at December 31, 2019.

(K)	Non-income producing as the issuer has either missed its most recent interest payment or declared bankruptcy.

(L)	Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2019. Description of the reference rate and spread, if applicable, are included in the security description.

(M)	All or a portion of this position has not settled. Full contract rates do not take effect until settlement date.

(N)	Investment made with cash collateral received from securities on loan.

(O)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks
Consumer Discretionary	$	14,657	$	—	$	—	*
Energy		14		344		271
Health Care		96		—		—
Industrials		—		—		79
Total Common Stocks	$	14,767	$	344	$	350
Investment Funds		25,503		—		—
Preferred Stocks		—		8,211		—	*
Warrants		—		1		—
Corporate Debt Securities		—		557,830		2,640
Loans		—		174,203		20,995
Short-Term Securities		71,587		—		—
Total	$	111,857	$	740,589	$	23,985

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		HIGH INCOME (in thousands)

DECEMBER 31, 2019

The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:


	Common Stocks			Preferred Stocks			Corporate Debt Securities			Loans
Beginning Balance1-1-19	$	4,144		$	410		$	—		$	50,874
Net realized gain (loss)		434			—			—			29
Net change in unrealized appreciation (depreciation)		(1,260	)		(410	)		(1,650	)		(492	)
Purchases		664			—			—			2,820
Sales		(3,644	)		—			—			(6,725	)
Amortization/Accretion of premium/discount		—			—			—			53
Transfers into Level 3 during the period		12			—			4,290			10,137
Transfers out of Level 3 during the period		—			—			—			(35,701	)
Ending Balance12-31-19	$	350		$	—	*	$	2,640		$	20,995
Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of12-31-19	$	(826	)	$	(410	)	$	(1,650	)	$	(492	)

Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information.

Information about Level 3 fair value investments:

Fair Value at

12-31-19

Valuation Technique(s)

Unobservable Input(s)

Input value(s)

Assets

Common Stocks

Market approach

Adjusted EBITDA multiple

6.20x

271

Third-party valuation service

Broker quotes

N/A

—

Net asset approach

Adjusted book value

1.00x

Preferred Stocks

—

Transaction

Price

Corporate Debt Securities

2,640

Transaction

Price

$40

Loans

20,995

Third-party valuation service

Broker quotes

N/A

Significant increases (decreases) in the adjusted EBITDA multiple inputs as of the reporting date would result in a higher (lower) fair value measurement.

The following acronyms are used throughout this schedule:

ETF = Exchange Traded Fund

GTD = Guaranteed

ICE = Intercontinental Exchange

PIK = Payment In Kind

LIBOR = London Interbank Offered Rate

See Accompanying Notes to Financial Statements.


48		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		INTERNATIONAL CORE EQUITY

(UNAUDITED)

LOGO

John C. Maxwell

LOGO

Catherine L. Murray

Below, John Maxwell, CFA, and Catherine Murray, portfolio managers of Ivy VIP International Core Equity, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Maxwell has managed the Portfolio since May 2009 and has 28 years of industry experience. Ms. Murray was namedco-portfolio manager in January 2017 and was previously an assistant portfolio manager on the Portfolio since 2014. She has 29 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP International Core Equity(Class II shares at net asset value)			18.69%
Benchmark and Morningstar Category
MSCI EAFE Index			22.01%
(generally reflects the performance of securities in Europe, Australasia and the Far East)
Morningstar Foreign Large Blend Category Average			21.59%
(generally reflects the performance of the universe of funds with similar investment objectives)

Please note that the Portfolio returns include applicable fees and expenses, whereas the index returns do not include any such fees. Also, the Portfolio’s performance data does not take into account any product expenses or charges associated with owning a variable life or annuity policy, which is invested in Ivy Variable Insurance Portfolios.

International markets stage a recovery

The MSCI EAFE Index, the Portfolio’s benchmark, was up 22% in 2019 as the anticipation of relief from geopolitical overhangs was enough to boost sentiment in developed international equities. We believe market gains did not fully reflect the volatility of events that took place during the fiscal year. The U.S.-China trade war was met with many hurdles, delays and unexpected turns which resulted in damage to corporate confidence across the globe. Companies paused investment and slowed inventory procurement, all impacting manufacturing in key international economies. The year had several economic setbacks and murky visibility. But relatively cheap equity valuations to start the year, expansionary monetary policy and signs of economic bottoming coincided with enough progress toward a phase 1 trade deal between the U.S. and China that confidence overcame fear.

The U.S. Federal Reserve (Fed) had an about face with its 2019 approach toward interest rate policy. After taking a hawkish tone through 2018, the Fed cut 75 basis points during the year in an effort to provide “insurance” to the market. With the Fed accommodating, central banks around the world followed easy policy. In China, a combination of monetary and fiscal measures, including a significant income tax break, helped boost a faltering consumer base. This boost helped the country maintain a reasonably high growth rate.

The U.S. dollar appreciated against the euro and British pound for the first half of 2019 before reversing to erase all gains to close the year. The opposite trend took place for the yen, where global fear in the first half of the year drew money to the safe-haven currency before it rushed out as fear subsided. Oil was volatile throughout the year as oversupply in the beginning of 2019 was met with several geopolitical events and supply cuts from OPEC. In September, oil fields in Saudi Arabia were bombed and escalation in the Middle East to end the year were major events that demonstrated how fragile one of the world’s major sources of oil can be.

Portfolio review

For the fiscal year ended Dec. 31, 2019, the Portfolio underperformed its benchmark and Morningstar peer group. In 2019, markets were dominated by growth companies, an environment not favorable for the strategy, which uses a relative value approach. Throughout the year, the Portfolio was positioned with a slightly defensive posture. An above historical average cash balance, selective currency contracts and hedges as well as undervalued companies that, we believed, were positioned to go down less than the market all offset market risk. Although, we did not anticipate the market would shrug off risks in the manner it did. The Portfolio did perform well within periods of market stress; however, those periods were short-lived. Overall, the rally was primarily led by, what we believe are, overvalued growth companies.

During the year, poor stock selection in the financials, information technology and communication services sectors were top relative detractors to performance. Additionally, the Portfolio’s overweight allocation to the poor performing energy sector as well as a relatively large cash allocation in a strong market contributed to the underperformance. Specifically, positions in Swedbank AB, a Swedish bank; Isuzu Motors Ltd., a Japanese truck company; and BT Group plc, a British telecommunications company were the worst relative performing stocks for the fiscal year. Contributing to performance

2019

ANNUAL REPORT

was strong stock selection in industrials and consumer staples. In particular, positions in Wuliangye Yibin Co. Ltd., A Shares, a Chinese spirits business; Airbus SE, a French aerospace company; and CRH plc, a U.K.-based building materials company, all helped performance. The Portfolio no longer holds BT Group plc or Wuliangye Yibin Co. Ltd.

From a country standpoint, stock selection in China was the largest relative contributor, while stock selection in France and Sweden dragged on performance. An overweight allocation to Canada was also a detractor.

Actions in the Portfolio during the year

To start the fiscal year, the Portfolio transitioned to a more defensive posture through increasing cash and selling several positions highly levered to global trade. The threat of an escalating trade war and clear stress on global trade led the team to believe certain companies would be at risk. As the year progressed, new threats began to rise. The U.S. discussed limiting U.S. pension access to Chinese equities and stopping Chinese companies from listing on U.S. exchanges. This opened up the potential for a new set of rules that led the Portfolio to slightly lower direct China holdings and instead gain exposure through global companies with significant exposure to the Chinese consumer.

Throughout most of the year, the strategy maintained an above average cash position, a long Japanese yen position and had China exposure fully hedged to currency risk. Toward the end of the year as several of the risk factors began to abate, the cash level was lowered and the currency hedge to the Chinese yuan was exited.

Current Portfolio themes are:

•

Disproportionate growth of emerging-market consumers, particularly in the Asia-Pacific region

•

Strong growth in infrastructure

•

Solid and believable dividend yields

•

Forces of market disruption

What we seek

As we move forward, we continue to seek companies we believe are underpriced relative to their prospects and peers in both the growth and value parts of the market. We are seeking less economically sensitive and less leveraged stocks in both the cyclical and defensive parts of the market. With disruptive forces that seem more concentrated in the defensive part of the market, the Portfolio’s defensive/cyclical weighting is balanced. We are also increasingly focused on companies with sustainable competitive advantages or improving industry dynamics that are not appreciated by the market — a strategy we believe to be effective at the end of an economic cycle.

Outlook

The outset of 2020 has several conflicting circumstances to consider. Global growth is still fragile. Manufacturing and industrial production has been weak and the lasting impacts of trade disputes on capital investment and business confidence is still unknown. The consumer has rescued and supported economic growth across much of the world, a source of growth that may not be sustainable. Tensions in the Middle East are boiling, which could continue to drive oil prices to levels that hurt consumers and major oil importing nations around the world. It may also carry with it a risk premium that discounts current market valuations.

On the positive side, there are signs of cyclical bottoming across Europe and Asia. If these economies can sustain improvements in key economic growth drivers, this would be positive for the global economy. We believe a U.S.-China trade deal expected to be signed in January should bring confidence to industries that had previously experienced significant trade-related slowdowns. Lastly, Brexit is several steps closer toward an orderly conclusion. There are still variables that could derail this soft exit, but the situation has improved which should support improvements in the U.K. and Europe.

Looking forward, we believe 2020 should prove to be an eventful year. Geopolitics will likely continue to be an unrelenting driver of asset values across the globe. An election year in the U.S. will bring a new slate of risks to consider. And tensions in the Middle East could bring market shocks. At the same time, the positive factors mentioned above could bring another year of positive returns, particularly in international markets.

We continue to believe there is opportunity in developed international markets. We believe valuations remain attractive, particularly in the companies we own, and growth prospects are brightening. The relative value approach the Portfolio employs led us to be underexposed to many of the large gainers in the international universe in 2019; however, we are confident the value discrepancies in the stocks we own are temporary.


50		ANNUAL REPORT		2019

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

International investing involves additional risks, including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. Investments in countries with emerging economies or securities markets may carry greater risk than investments in more developed countries. Political and economic structures in many such countries may be undergoing significant evolution and rapid development, and such countries may lack the social, political and economic stability characteristics of more developed countries. Investments in securities issued in these countries may be more volatile and less liquid than securities issued in more developed countries. The use of derivatives presents several risks, including the risk that these instruments may change in value in a manner that adversely affects the Portfolio’s value and the risk that fluctuations in the value of the derivatives may not correlate with the corresponding securities or fixed income markets or the underlying asset upon which the derivative’s value is based. These and other risks are more fully described in the Portfolio’s prospectus.

The index noted is unmanaged, and includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of Ivy VIP International Core Equity.

2019

ANNUAL REPORT


PORTFOLIO HIGHLIGHTS		INTERNATIONAL CORE EQUITY

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			95.7%
Financials			13.8%
Industrials			13.4%
Health Care			13.2%
Consumer Discretionary			13.1%
Consumer Staples			11.6%
Energy			9.9%
Materials			7.4%
Information Technology			6.7%
Communication Services			3.0%
Utilities			2.2%
Real Estate			1.4%
Bonds			0.3%
Other Government Securities			0.3%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			4.0%

Country Weightings


Europe			63.2%
France			13.6%
United Kingdom			12.5%
Germany			12.3%
Switzerland			8.9%
Netherlands			4.1%
Other Europe			11.8%
Pacific Basin			26.9%
Japan			12.8%
China			5.3%
Other Pacific Basin			8.8%
North America			5.9%
Canada			4.5%
Other North America			1.4%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			4.0%

Top 10 Equity Holdings



Company	Country	Sector	Industry
Total S.A.	France	Energy	Integrated Oil & Gas
Nestle S.A., Registered Shares	Switzerland	Consumer Staples	Packaged Foods & Meats
Airbus SE	France	Industrials	Aerospace & Defense
SAP AG	Germany	Information Technology	Application Software
Roche Holdings AG, Genusscheine	Switzerland	Health Care	Pharmaceuticals
Subaru Corp.	Japan	Consumer Discretionary	Automobile Manufacturers
UniCredit S.p.A.	Italy	Financials	Diversified Banks
Bayer AG	Germany	Health Care	Pharmaceuticals
Seven & i Holdings Co. Ltd.	Japan	Consumer Staples	Food Retail
Merck KGaA	Germany	Health Care	Pharmaceuticals

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.


52		ANNUAL REPORT		2019

COMPARISON OF CHANGE IN VALUE

OF $10,000 INVESTMENT

INTERNATIONAL CORE EQUITY

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		18.69%
5-year period ended12-31-19		3.77%
10-year period ended12-31-19		5.43%

(2)

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		INTERNATIONAL CORE EQUITY (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Australia

Materials – 3.2%
BHP Group plc		347	$	8,172
BHP Group plc ADR		113		5,315
Newcrest Mining Ltd.		406		8,619

				22,106


Total Australia – 3.2%			$	22,106
Canada

Consumer Discretionary – 1.1%
Dollarama, Inc.		220		7,578


Energy – 3.4%
Canadian Natural Resources Ltd.		281		9,075
Seven Generations Energy Ltd., Class A (A)		1,027		6,698
Suncor Energy, Inc.		234		7,675

				23,448


Total Canada – 4.5%			$	31,026
China

Consumer Discretionary – 2.0%
Alibaba Group Holding Ltd. ADR (A)(B)		40		8,452
Gree Electric Appliances, Inc. of Zhuhai, A Shares		591		5,571

				14,023


Consumer Staples – 1.0%
Wens Foodstuffs Group Co. Ltd., Class A		1,464		7,064


Financials – 1.2%
China Construction Bank Corp.		9,645		8,330


Health Care – 1.1%
Yunnan Baiyao Group Co. Ltd., A Shares		567		7,287


Total China – 5.3%			$	36,704
Denmark

Industrials – 1.3%
A.P. Moller – Maersk A/S		5		6,686
A.P. Moller – Maersk A/S, Class A		2		2,135

				8,821


Total Denmark – 1.3%			$	8,821
Finland

Information Technology – 0.8%
Nokia Corp., Series A ADR		722		2,680
Nokia OYJ		720		2,668

				5,348


Total Finland – 0.8%			$	5,348


COMMON STOCKS(Continued)	Shares		Value
France

Communication Services – 2.2%
Orange S.A.		741	$	10,912
Ubisoft Entertainment S.A. (A)		57		3,919

				14,831


Consumer Staples – 1.3%
Pernod Ricard S.A.		51		9,149


Energy – 2.8%
Total S.A.		360		19,872


Financials – 1.5%
BNP Paribas S.A.		170		10,054


Industrials – 3.9%
Airbus SE		114		16,738
Schneider Electric S.A.		100		10,306

				27,044


Information Technology – 0.8%
Cap Gemini S.A.		48		5,854


Utilities – 1.1%
ENGIE		472		7,631


Total France – 13.6%			$	94,435
Germany

Consumer Discretionary – 1.2%
Continental AG		66		8,437


Consumer Staples – 1.1%
Beiersdorf Aktiengesellschaft		65		7,757


Financials – 0.6%
Commerzbank AG		676		4,128


Health Care – 4.7%
Bayer AG		150		12,138
Fresenius Medical Care AG & Co. KGaA		134		9,832
Merck KGaA		97		11,458

				33,428


Information Technology – 2.2%
SAP AG		118		15,760


Real Estate – 1.4%
Deutsche Wohnen AG		242		9,874


Utilities – 1.1%
E.ON AG		709		7,542


Total Germany – 12.3%			$	86,926
Hong Kong

Financials – 1.5%
Hong Kong Exchanges and Clearing Ltd.		331		10,763


Total Hong Kong – 1.5%			$	10,763


COMMON STOCKS(Continued)	Shares		Value
India

Financials – 2.1%
Axis Bank Ltd.		744	$	7,860
Housing Development Finance Corp. Ltd.		206		6,971

				14,831


Total India – 2.1%			$	14,831
Ireland

Materials – 1.3%
CRH plc		222		8,931


Total Ireland – 1.3%			$	8,931
Italy

Financials – 1.8%
UniCredit S.p.A.		862		12,572


Total Italy – 1.8%			$	12,572
Japan

Consumer Discretionary – 5.4%
Isuzu Motors Ltd.		782		9,226
Subaru Corp.		549		13,576
Suzuki Motor Corp.		177		7,375
Zozo, Inc.		396		7,558

				37,735


Consumer Staples – 1.7%
Seven & i Holdings Co. Ltd.		320		11,729


Energy – 1.2%
Inpex Corp.		836		8,605


Financials – 2.4%
ORIX Corp.		459		7,583
Tokio Marine Holdings, Inc.		163		9,132

				16,715


Industrials – 2.1%
SMC Corp.		23		10,670
Taisei Corp.		94		3,872

				14,542


Total Japan – 12.8%			$	89,326
Luxembourg

Energy – 1.1%
Tenaris S.A.		335		3,802
Tenaris S.A. ADR (C)		166		3,749

				7,551


Total Luxembourg – 1.1%			$	7,551
Netherlands

Consumer Discretionary – 1.2%
Prosus N.V. (A)		116		8,654


54		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		INTERNATIONAL CORE EQUITY (in thousands)

DECEMBER 31, 2019


COMMON STOCKS(Continued)	Shares		Value

Health Care – 0.5%
Qiagen N.V. (A)		108	$	3,680


Industrials – 2.4%
Koninklijke Philips Electronics N.V., Ordinary Shares		164		8,005
Randstad Holding N.V.		154		9,425

				17,430


Total Netherlands – 4.1%			$	29,764
Norway

Communication Services – 0.3%
Telenor ASA		113		2,026


Consumer Staples – 1.1%
Mowi ASA		289		7,513


Financials – 1.2%
DNB ASA		456		8,534


Total Norway – 2.6%			$	18,073
Singapore

Communication Services – 0.5%
Singapore Telecommunications Ltd.		1,534		3,849


Total Singapore – 0.5%			$	3,849
South Korea

Information Technology – 1.5%
Samsung Electronics Co. Ltd.		220		10,541


Total South Korea – 1.5%			$	10,541
Spain

Consumer Discretionary – 1.1%
Industria de Diseno Textil S.A.		214		7,537


Total Spain – 1.1%			$	7,537
Sweden

Financials – 1.5%
Swedbank AB		713		10,583


Total Sweden – 1.5%			$	10,583
Switzerland

Consumer Staples – 2.7%
Nestle S.A., Registered Shares		173		18,674


Health Care – 3.1%
Alcon, Inc. (A)		136		7,671
Roche Holdings AG, Genusscheine		42		13,789

				21,460


Industrials – 1.6%
Ferguson plc		121		11,022


COMMON STOCKS(Continued)	Shares		Value

Materials – 1.5%
Glencore International plc		3,414	$	10,644


Total Switzerland – 8.9%			$	61,800
United Kingdom

Consumer Discretionary – 1.1%
Whitbread plc		117		7,500


Consumer Staples – 2.7%
British American Tobacco plc		260		11,119
Imperial Tobacco Group plc		325		8,040

				19,159


Energy – 1.4%
BP plc		1,046		6,536
BP plc ADR		83		3,151

				9,687


Health Care – 3.8%
AstraZeneca plc		38		3,816
AstraZeneca plc ADR		100		4,973
GlaxoSmithKline plc		471		11,108
GlaxoSmithKline plc ADR		139		6,541

				26,438


Industrials – 2.1%
Babcock International Group plc		877		7,312
BAE Systems plc		1,017		7,609

				14,921


Information Technology – 1.4%
Amdocs Ltd.		130		9,380


Total United Kingdom – 12.5%			$	87,085

TOTAL COMMON STOCKS – 94.3%			$	658,572
(Cost: $665,437)

INVESTMENT FUNDS

United States – 1.4%
SPDR Gold Trust (A)		70		10,023


TOTAL INVESTMENT FUNDS – 1.4%			$	10,023
(Cost: $8,720)

OTHER GOVERNMENT SECURITIES (D)	Principal

Norway – 0.3%
Norway Government Bond 3.750%,5-25-21 (E)(F)		NOK21,060		2,479


TOTAL OTHER GOVERNMENT SECURITIES – 0.3%			$	2,479
(Cost: $2,429)


SHORT-TERM SECURITIES	Shares		Value

Money Market Funds (G) – 3.7%
State Street Institutional U.S. Government Money Market Fund – Premier Class 1.550%		25,862	$	25,862
Dreyfus Institutional Preferred Government Money Market Fund – Institutional Shares 1.550% (H)		76		76

				25,938


TOTAL SHORT-TERM SECURITIES – 3.7%			$	25,938
(Cost: $25,938)

TOTAL INVESTMENT SECURITIES – 99.7%			$	697,012
(Cost: $702,524)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.3%				2,065

NET ASSETS – 100.0%			$	699,077

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		INTERNATIONAL CORE EQUITY (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

(A)	No dividends were paid during the preceding 12 months.

(B)	All or a portion of securities with an aggregate value of $1,315 are held in collateralized accounts for OTC foreign forward currency contracts collateral.

(C)	All or a portion of securities with an aggregate value of $72 are on loan.

(D)	Other Government Securities may include emerging markets sovereign, quasi-sovereign, corporate and supranational agency and organization debt securities.

(E)	Principal amounts are denominated in the indicated foreign currency, where applicable (NOK – Norwegian Krone).

(F)

(G)	Rate shown is the annualized7-day yield at December 31, 2019.

(H)	Investment made with cash collateral received from securities on loan.

The following forward foreign currency contracts were outstanding at December 31, 2019:


	Currency to be Delivered			Currency to be Received		Settlement Date		Counterparty	Unrealized Appreciation		Unrealized Depreciation
U.S. Dollar		58,936	Japanese Yen		6,310,648		1-10-20	Deutsche Bank AG	$	—	$	833


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks
Communication Services	$	14,831	$	5,875	$	—
Consumer Discretionary		45,292		46,172		—
Consumer Staples		35,372		45,673		—
Energy		56,756		12,407		—
Financials		43,978		52,532		—
Health Care		37,777		54,516		—
Industrials		70,417		23,363		—
Information Technology		17,914		28,969		—
Materials		41,681		—		—
Real Estate		—		9,874		—
Utilities		7,631		7,542		—
Total Common Stocks	$	371,649	$	286,923	$	—
Investment Funds		10,023		—		—
Other Government Securities		—		2,479		—
Short-Term Securities		25,938		—		—
Total	$	407,610	$	289,402	$	—
Liabilities
Forward Foreign Currency Contracts	$	—	$	833	$	—


56		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		INTERNATIONAL CORE EQUITY (in thousands)

DECEMBER 31, 2019

The following acronyms are used throughout this schedule:

ADR = American Depositary Receipts

OTC = Over The Counter

Market Sector Diversification


(as a % of net assets)
Financials			13.8%
Industrials			13.4%
Health Care			13.2%
Consumer Discretionary			13.1%
Consumer Staples			11.6%
Energy			9.9%
Materials			7.4%
Information Technology			6.7%
Communication Services			3.0%
Utilities			2.2%
Real Estate			1.4%
Other Government Securities			0.3%
Other+			4.0%

+Includes cash and other assets (net of liabilities), and cash equivalents

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


MANAGEMENT DISCUSSION		MID CAP GROWTH

(UNAUDITED)

LOGO

Kimberly A. Scott

LOGO

Nathan A. Brown

Below, Kimberly A. Scott, CFA, and Nathan A. Brown, CFA,co-portfolio managers of Ivy VIP Mid Cap Growth, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Ms. Scott has managed the Portfolio since its inception in 2005 and has 32 years of industry experience. Mr. Brown becameco-portfolio manager in October 2016 and has 20 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Mid Cap Growth(Class II shares at net asset value)			37.94%
Benchmark and Morningstar Category
Russell Midcap Growth Index			35.47%
(generally reflects the performance of securities that represent themid-cap sector of the stock market)
MorningstarMid-Cap Growth Category Average			32.52%
(generally reflects the performance of the universe of Portfolios with similar investment objectives)

Contributors and detractors

Mid-cap growth stocks, as represented by the Portfolio’s benchmark, the Russell Midcap Growth Index, gained 35.47% in the12-month period ended December 31, 2019. Ivy VIP Mid Cap Growth posted a 37.94% return for the measurement period, soundly outperforming its benchmark and peer category average.

During the measurement period, the Portfolio experienced positive results in all sectors except for real estate and consumer staples. The strongest sector exposure was in consumer discretionary, followed by information technology, health care, materials, communication services, industrials and financials. All sectors benefited from strong stock selection. Energy provided a positive contribution due to our decision to have no exposure to companies within that sector. Negative contributions to relative performance came from real estate, where we had no exposure, and consumer staples, where the benefit of our underweight position was overcome by poor stock selection within that sector. Equity options were additive to returns in the form of a portfolio hedge implemented in July, when the trade agreement was in doubt and there was no substantial talk by the Federal Reserve (Fed) regarding interest rate policy changes. While we maintained cash at the low end of our comfortable range, it was a significant drag on the Portfolio throughout the year.

Holdings within the consumer discretionary sector made the greatest positive contribution to the Portfolio’s return for the measurement period. We were overweight this sector, with our names outperforming the names held in the index by 5.99%. While the consumer discretionary sector is composed of 85 names in the benchmark, we chose to focus on 12 names in the sector, a couple of which are not in the index. The vast performance for the sector came from Chipotle Mexican Grill, Inc., MercadoLibre, Inc., Lululemon Athletica, Inc. and Tiffany & Co. Chipotle and Lululemon are both long-held names in the Portfolio that experienced tremendous growth throughout 2019 due to strong management execution on product sets that are innovative and differentiated in the marketplace. Both companies also began to see the fruits of theire-commerce strategies that ultimately drove better bottom-line results. As the year progressed and the stocks appreciated, we became more active in managing the position sizes within the Portfolio. We have taken some gains from each name while maintaining exposure to what we deem to be superior business models. MercadoLibre is a Latin American focusede-commerce company that demonstrated strong growth after emerging from a significant corporate investment period. Tiffany & Co. benefitted in the fourth quarter of 2019 from an unsolicited acquisition bid by the parent company of Louis Vuitton, and we chose to exit the position. Duluth Holdings, Inc. and GrubHub, Inc. were two standout detractors from performance for the year. Duluth is a specialty retailer that had disappointing sales performance as new store openings did not meet expectations in generating overall growth in the business. We have exited our position in Duluth. GrubHub is a scale provider in restauranttake-out and delivery that underperformed in 2019 due to intense competition in the industry. We think GrubHub will weather the competitive threat because of scale and should ultimately be able to expand into adjacent business lines by cross-selling as it more deeply integrates with restaurants. Despite the macro environment in the U.S. struggling with the trade war, the domestic consumer maintained resiliency throughout 2019, rewarding cyclically charged consumer companies.

Information technology names within the Portfolio were a strong positive performance group in aggregate. With 124 names comprising the benchmark’s information technology sector, our portfolio of 23 names, while underweight the benchmark


58		ANNUAL REPORT		2019

allocation, outperformed the index by 5.89%. Stock selection within this sector more than offset the underperformance caused by our strategy being underweight this strong performing sector.Top-performing names in the Portfolio included Teradyne, Inc. and Keysight Technologies, Inc., both of which provide, among other things, systems and network testing for the oncoming 5G market. Universal Display Corp., the dominant provider of phosphorous OLED products used for displays like televisions and foldable cell phones, was another strong contributor to the Portfolio return for the year. An overweight position to negative performing Arista Networks, Inc. hurt performance relative to the benchmark. Arista had a pullback on the year due in part to lackluster spending outlooks from the cloud titans who utilize Arista’s cloud network solutions. We are maintaining exposure to Arista as we feel it is still a solid long-term provider in the cloud solutions infrastructure.

Health care was an overweight sector in the Portfolio relative to the benchmark where both allocation effect and stock selection were positive. Top names for the year were DexCom, Inc., Seattle Genetics, Inc., and Zoetis, Inc. DexCom engages in the design and development of continuous glucose monitoring systems for diabetics. It is benefitting from a best in class product suite as well as a shift from point in time blood glucose monitoring to continuous glucose monitoring. Seattle Genetics, a biotech company that engages in development of antibody-based therapies for the treatment of cancer, experienced strong growth from an existing lymphoma treatment while capturing positive early and later stage results for oncology therapies currently in its product pipeline. Zoetis, the global leader in animal health therapies for both livestock and companion animals, continues to grow sales and profits faster than industry peers with plenty of new products in the pipeline. Abiomed, Inc. was the standout detractor from Portfolio performance in the health care sector on the year. The heart pump maker had a slower than expected adoption rate in smaller hospitals and an early year U.S. Food and Drug Administration (FDA) letter that caused concern for the company’s Impella heart pump. We have maintained a position in the name with the belief that the company’s products are strong and that continual results from FDA studies will validate our thesis.

Industrials, like health care, contributed positively to the Portfolio on both an allocation and security selection basis. CoStar Group, Inc., the top holding in the Portfolio at the end of 2019, led this sector in performance for the year. CoStar Group is the leading provider of real estate data, analytics and marketplace listing platforms, including Apartments.com. It has a defensible franchise of mainly subscription-based revenue that continues to grow with solid management execution. Annual online traffic trends for Apartments.com and ForRent.com indicate robust growth over the past 12 months, far outpacing that of competitors.

Our materials exposure was a source of alpha generation, primarily related to a strong year from Scotts Miracle-Gro Companies. The Scotts Miracle-Gro consumer division continued steady growth throughout 2019 while it’s Hawthorne division, the largest hydroponic distributor in the U.S., experienced some doubt early in the year before regaining solid footing in the fourth quarter with strong guidance going into 2020.

Consumer staples was the only sector where the Portfolio had negative stock selection for the measurement period. Sprouts Farmers Markets, Inc. experienced weaker than expected same store sales growth and had significant executive level management turnover. We sold our position in the third quarter but continue to monitor the name, given its market position in the healthy grocery store segment with few independent competitors.

Market conditions and outlook

The market’s temperament was positive at the beginning of 2019, based on the Fed talk of halting interest rate hikes and much rhetoric around a resolution, albeit on the horizon, to the China/U.S. trade wars. Near-term confidence in the economy and corporate profits became in vogue again in the first quarter, with strong risk trade presenting itself in the markets. The market cooled substantially from the first quarter to the second, based largely on trade war concerns and the ultimate affect the impasse would have on global and domestic gross domestic product (GDP) growth. Though the ramifications of the impasse seemed largely contained, many of the rest of the world’s economies were challenged to find solid growth footing. The Fed began to discuss interest rate cuts for the back half of 2019 and there was continual rhetoric around a resolution to the China/U.S. trade wars. Near-term confidence in the economy and corporate profits became more uncertain in the second quarter, with decelerating earnings growth once again the talk of the markets. The broad U.S. equity market continued its quarterly moderating return profile in the third quarter, based largely on trade war concerns and the ultimate effect the impasse would have on global and domestic GDP. The ramifications of the trade impasse coupled with political and geopolitical uncertainties appeared to be bleeding through to company management decisions relating to capital expenditures and productivity. The Fed implemented an interest rate cut late in the third quarter as an ‘insurance measure’ against the potential economic slowdown due to tariffs, but near-term confidence in the economy and corporate profits continued to be uncertain in quarter. The broad U.S. equity market reaccelerated in the fourthquarter, based largely on an agreement for phase 1 in the trade war, an acceptable level for the Fed Funds Rate, and indications that the trade impasse had not meaningfully constricted global growth. What is interesting is that the uncertainty around the U.S. political environment continues to hang over the markets, including a president who has been impeached by the House of

2019

ANNUAL REPORT

Representatives, is seemingly of little consequence to the markets. Although many of the rest of the world’s economies are challenged, it appears that the bottoming process is beginning to take place, with confidence growing around the trade agreement and motion in the finalization of the Brexit agreement. As expected, the Fed cut interest rates one final time in October, then signaled that it was entirely comfortable with the level as it stands now.

Domestic equities from large to mid to small had excellent returns in calendar year 2019, even though the U.S. economy was slowing (the Institute for Supply Management is in a contractionary state) and corporate earnings were decelerating. Looking into 2020, there are many positives forming as a market foundation, including a “Goldilocks” economy in the U.S., an apparent bottoming in many developed and emerging international economies, strong underlying corporate fundamentals, and continually strong consumer confidence level. On the flip side, the trade agreement has yet to be signed, there is significant uncertainty around the coming U.S. Presidential election, and there are plenty of geopolitical hotspots that could intensify.

We think the measurable positives outweigh any potential negatives for 2020, and our Portfolio continues to express a more economically constructive and optimistic view, with a more assertivepro-growth, less defensive stance. We are not expecting the same level of returns in the market that we saw in 2019 and we are cautiously mindful of elevated stock valuations in an environment of rising interest rates and potential inflationary pressure. We remain overweight the consumer discretionary, health care, financials and materials sectors and, while we are underweight, we still have a healthy exposure to the information technology sector. We remain steadfast in our approach in which stock selection drives performance, but we will prudently apply a macro overlay if need be, by utilizing more defensive sector exposure, cash and/or portfolio hedging.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

Investing inmid-cap stocks may carry more risk than investing in stocks of larger, more-established companies. Prices of growth stocks may be more sensitive to changes in current or expected earnings than the prices of other stocks. Growth stocks may not perform as well as value stocks or the stock market in general. The use of derivatives presents several risks, including the risk that these instruments may change in value in a manner that adversely affects the Portfolio’s value and the risk that fluctuations in the value of the derivatives may not correlate with securities markets or the underlying asset upon which the derivative’s value is based. These and other risks are more fully described in the Portfolio’s prospectus.

The index noted is unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Mid Cap Growth.


60		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		MID CAP GROWTH

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			95.1%
Information Technology			26.8%
Health Care			17.6%
Consumer Discretionary			17.2%
Industrials			17.1%
Financials			6.4%
Materials			4.5%
Communication Services			4.0%
Consumer Staples			1.5%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			4.9%

Top 10 Equity Holdings



Company	Sector	Industry
CoStar Group, Inc.	Industrials	Research & Consulting Services
Electronic Arts, Inc.	Communication Services	Interactive Home Entertainment
Chipotle Mexican Grill, Inc., Class A	Consumer Discretionary	Restaurants
MarketAxess Holdings, Inc.	Financials	Financial Exchanges & Data
TransUnion	Industrials	Research & Consulting Services
Teradyne, Inc.	Information Technology	Semiconductor Equipment
Tractor Supply Co.	Consumer Discretionary	Specialty Stores
Fastenal Co.	Industrials	Trading Companies & Distributors
Keysight Technologies, Inc.	Information Technology	Electronic Equipment & Instruments
DexCom, Inc.	Health Care	Health Care Equipment

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.

2019

ANNUAL REPORT

COMPARISON OF CHANGE IN VALUE

OF $10,000 INVESTMENT

MID CAP GROWTH

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class I		Class II
1-year period ended12-31-19		38.28%		37.94%
5-year period ended12-31-19		—		11.83%
10-year period ended12-31-19		—		13.80%
Since Inception of Class through12-31-19⁽³⁾		19.57%		—

(2)

(3)

4-28-17 (the date on which shares were first acquired by shareholders).


62		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		MID CAP GROWTH (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Communication Services

Interactive Home Entertainment – 3.0%
Electronic Arts, Inc. (A)		153	$	16,434


Interactive Media & Services – 1.0%
Twitter, Inc. (A)		168		5,374


Total Communication Services – 4.0%				21,808
Consumer Discretionary

Apparel, Accessories & Luxury Goods – 2.6%
Burberry Group plc (B)		224		6,534
lululemon athletica, Inc. (A)		34		7,912

				14,446


Auto Parts & Equipment – 1.7%
BorgWarner, Inc.		214		9,285


Automotive Retail – 1.3%
O’Reilly Automotive, Inc. (A)		16		7,180


Department Stores – 0.7%
Nordstrom, Inc.		92		3,750


Internet & Direct Marketing Retail – 2.6%
Grubhub, Inc. (A)		107		5,221
MercadoLibre, Inc. (A)		15		8,829

				14,050


Restaurants – 4.3%
Chipotle Mexican Grill, Inc., Class A (A)		18		15,300
Dunkin Brands Group, Inc.		114		8,601

				23,901


Specialty Stores – 4.0%
Tractor Supply Co.		138		12,903
Ulta Beauty, Inc. (A)		35		8,919

				21,822


Total Consumer Discretionary – 17.2%				94,434
Consumer Staples

Packaged Foods & Meats – 1.5%
Hershey Foods Corp.		55		8,051


Total Consumer Staples – 1.5%				8,051
Financials

Financial Exchanges & Data – 3.2%
Chicago Board Options Exchange, Inc.		29		3,501
MarketAxess Holdings, Inc.		37		13,843

				17,344


Regional Banks – 3.2%
First Republic Bank		86		10,130
SVB Financial Group (A)		30		7,480

				17,610


Total Financials – 6.4%				34,954


COMMON STOCKS(Continued)	Shares		Value
Health Care

Biotechnology – 1.6%
Seattle Genetics, Inc. (A)		78	$	8,859


Health Care Equipment – 7.7%
Abiomed, Inc. (A)		35		5,970
DexCom, Inc. (A)		52		11,365
Edwards Lifesciences Corp. (A)		47		10,920
Glaukos Corp. (A)		86		4,702
Intuitive Surgical, Inc. (A)		16		9,470

				42,427


Health Care Services – 2.0%
Laboratory Corp. of America Holdings (A)		43		7,209
Teladoc Health, Inc. (A)(C)		43		3,608

				10,817


Health Care Supplies – 0.9%
National Vision Holdings, Inc. (A)		157		5,091


Health Care Technology – 2.0%
Cerner Corp.		148		10,837


Life Sciences Tools & Services – 2.0%
10x Genomics, Inc., Class A (A)		9		714
Agilent Technologies, Inc.		80		6,796
TECHNE Corp.		15		3,200

				10,710


Pharmaceuticals – 1.4%
Zoetis, Inc.		58		7,648


Total Health Care – 17.6%				96,389
Industrials

Aerospace & Defense – 1.5%
L3Harris Technologies, Inc.		43		8,440


Building Products – 2.9%
A. O. Smith Corp.		180		8,571
Trex Co., Inc. (A)		83		7,415

				15,986


Industrial Machinery – 4.5%
Gardner Denver Holdings, Inc. (A)		165		6,035
IDEX Corp.		54		9,371
Middleby Corp. (A)		82		9,035

				24,441


Research & Consulting Services – 5.9%
CoStar Group, Inc. (A)		32		18,851
TransUnion		158		13,542

				32,393


Trading Companies & Distributors – 2.3%
Fastenal Co.		335		12,360


Total Industrials – 17.1%				93,620


COMMON STOCKS(Continued)	Shares		Value
Information Technology

Application Software – 4.7%
DocuSign, Inc. (A)		92	$	6,831
Guidewire Software, Inc. (A)		99		10,898
Tyler Technologies, Inc. (A)		27		8,076

				25,805


Communications Equipment – 1.3%
Arista Networks, Inc. (A)		35		7,214


Data Processing & Outsourced Services – 1.8%
Square, Inc., Class A (A)		154		9,653


Electronic Components – 1.9%
II-VI, Inc. (A)		22		754
Maxim Integrated Products, Inc.		159		9,785

				10,539


Electronic Equipment & Instruments – 3.7%
Coherent, Inc. (A)		33		5,502
Keysight Technologies, Inc. (A)		116		11,906
Novanta, Inc. (A)		32		2,787

				20,195


Internet Services & Infrastructure – 1.4%
Twilio, Inc., Class A (A)		59		5,762
VeriSign, Inc. (A)		9		1,742

				7,504


Semiconductor Equipment – 2.4%
Teradyne, Inc.		193		13,134


Semiconductors – 7.0%
Advanced Micro Devices, Inc. (A)		213		9,790
Microchip Technology, Inc.		101		10,616
Monolithic Power Systems, Inc.		59		10,447
Universal Display Corp.		37		7,536

				38,389


Systems Software – 2.6%
Palo Alto Networks, Inc. (A)		35		8,209
ServiceNow, Inc. (A)		22		6,258

				14,467


Total Information Technology – 26.8%				146,900
Materials

Fertilizers & Agricultural Chemicals – 1.3%
ScottsMiracle-Gro Co. (The)		65		6,862


Specialty Chemicals – 3.2%
Axalta Coating Systems Ltd. (A)		295		8,968
RPM International, Inc.		112		8,618

				17,586


Total Materials – 4.5%				24,448

TOTAL COMMON STOCKS – 95.1%			$	520,604
(Cost: $376,071)

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		MID CAP GROWTH (in thousands)

DECEMBER 31, 2019


SHORT-TERM SECURITIES	Shares		Value

Money Market Funds (D) – 4.9%
State Street Institutional U.S. Government Money Market Fund – Premier Class,
1.550%		26,803	$	26,803


TOTAL SHORT-TERM SECURITIES – 4.9%			$	26,803
(Cost: $26,803)

TOTAL INVESTMENT SECURITIES – 100.0%			$	547,407
(Cost: $402,874)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.0%				159

NET ASSETS – 100.0%			$	547,566

Notes to Schedule of Investments

(A)	No dividends were paid during the preceding 12 months.

(B)	Listed on an exchange outside the United States.

(C)	All or a portion of securities with an aggregate value of $3,229 are on loan.

(D)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks	$	520,604	$	—	$	—
Short-Term Securities		26,803		—		—
Total	$	547,407	$	—	$	—

See Accompanying Notes to Financial Statements.


64		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		NATURAL RESOURCES

(UNAUDITED)

LOGO

David P. Ginther

LOGO

Michael T. Wolverton

Below, David P. Ginther, CPA, and Michael T. Wolverton, CFA, portfolio managers of Ivy VIP Natural Resources, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Ginther has managed the Portfolio since 2013 and has 24 years of industry experience. Mr. Wolverton has managed the Portfolio since 2016 and has 15 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Natural Resources(Class II shares at net asset value)			9.46%
Benchmark and Morningstar Category
S&P North American Natural Resources Sector Index			17.63%
(generally reflects the performance of the energy and materials stocks in North America)
Morningstar Natural Resources Category Average			14.95%
(generally reflects the performance of the universe of funds with similar investment objectives)

Transition year for energy

The energy market struggled against the broader equity market and underperformed for a third straight year despite the crude oil price rising by over 30%. This move higher in oil came after moving sharply lower in the fourth quarter of the previous year, however. Despite the higher oil price, energy equities struggled to overcome concerns about a U.S.-China trade deal having a negative effect on demand along with the price volatility. Additionally, excess capacity for oil supply, poor financial performance by the sector and a shift away from energy by investors because of environmental concerns helped cause a sharp decline in the multiples for the equities.

All of these issues have created strategic questions for companies in the sector and are causing their management teams tore-evaluate strategies and modify business models. Many U.S. energy companies are shifting away from prioritizing production growth and moving to prioritizing free cash flow and return on capital employed. This is a welcome change in our view, but only time will tell if energy companies are able to execute the strategy and stick with it in the years ahead. At the very least, we believe these changes will slow oil supply growth for the industry, especially in the U.S.

The other significant player in the oil market beside the U.S. is OPEC. After cutting its production quota in November 2018, the organization again announced plans to further reduce supply in December 2019. OPEC, for the time being, has showed a strong willingness to balance the oil market in an attempt to support the price. The combination of deceleration in U.S. oil supply growth and decreased OPEC supply allowed the oil price to end the year at around $61 per barrel for West Texas Intermediate, the U.S. benchmark.

Portfolio positioning

The Portfolio had a positive return for the fiscal year but trailed the return of its benchmark index and category average. The Portfolio in general was underweight the energy sector and overweight the materials sector compared to its benchmark. The Portfolio averaged about 62% energy exposure for the year, with the remainder in materials.

Globally, the energy sector significantly underperformed the materials sector during the fiscal year, but both sectors underperformed the overall market. Generally, more defensive names outperformed in energy, as did companies with high-quality balance sheets. The Portfolio was underweight the industry segments of Integrated Oil, Pipelines, and Precious Metals, which detracted from performance. Overweight positions in Refining, Railroads, Chemicals, and Other Metals contributed to positive relative performance.

The Portfolio’s five greatest contributors to performance relative to the benchmark in the year were underweight positions in Exxon Mobil Corp., Occidental Petroleum Corp., ConocoPhillips, and overweight positions in Rio Tinto plc and Canadian Pacific Railway Ltd. At the end of the fiscal year, Exxon Mobil Corp. and Occidental Petroleum Corp. were no longer holdings in the Portfolio.

The five greatest detractors from relative performance were Centennial Resource Development, Inc., Halliburton Co., Concho Resources Inc., Core Laboratories N.V., and Anadarko Petroleum Corp. At the end of the fiscal year, Centennial Resource Development, Inc., and Anadarko Petroleum Corp. were no longer holdings in the Portfolio.

2019

ANNUAL REPORT

Capital discipline is critical to stock performance

Even though the oil market enters the year 2020 relatively balanced, oil supply capacity remains abundant with excess capability from OPEC and the U.S. With OPEC signaling that it is willing to cede market share to keep the market in balance, responsibility for capital discipline falls on the U.S. producers. If these companies follow through on promises to limit capital expenditures, restrain production growth and produce free cash flow, we believe the energy sector will likely see positive stock performance. If excess cash flows are redirected into more drilling, however, we think investors are likely to be disappointed.

U.S. oil production is forecast to decelerate in 2020. After growing over 1 million barrels per day in 2019, production could grow at half that rate in 2020 based on current drilling activity. We believe this would be a positive step toward a recovery in the energy markets.

On the demand side, risks remain both in the short and long term. Both the energy and materials sectors are quite sensitive to the level of demand for commodities in emerging markets, especially China. Demand for commodities is also dependent on currency movements, particularly in the U.S. dollar. If recent declines in the value of the dollar continue, we think it will likely be supportive for emerging market and commodity demand.

The Portfolio is focusing on equities across the natural resources landscape that we believe can deliver above-market returns on capital, with disciplined capital allocation and a strong balance sheet.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

Investing in companies involved in one specified sector may be more risky and volatile than an investment with greater diversification. Investing in natural resources can be riskier than other types of investment activities because of a range of factors, including price fluctuation caused by real and perceived inflationary trends and political developments; and the cost assumed by natural resource companies in complying with environmental and safety regulations.

Commodity trading, including trading in precious metals, is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.

These and other risks are more fully described in the Portfolio’s prospectus.

The index noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Natural Resources.


66		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		NATURAL RESOURCES

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			96.6%
Energy			60.5%
Materials			30.0%
Industrials			5.6%
Information Technology			0.5%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			3.4%

Country Weightings


North America			75.4%
United States			64.8%
Canada			10.6%
Europe			14.8%
United Kingdom			7.0%
Other Europe			7.8%
Pacific Basin			4.6%
Australia			3.6%
Other Pacific Basin			1.0%
Other			1.8%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			3.4%

Top 10 Equity Holdings



Company	Country	Sector	Industry
Phillips 66	United States	Energy	Oil & Gas Refining & Marketing
Chevron Corp.	United States	Energy	Integrated Oil & Gas
Marathon Petroleum Corp.	United States	Energy	Oil & Gas Refining & Marketing
Valero Energy Corp.	United States	Energy	Oil & Gas Refining & Marketing
ConocoPhillips	United States	Energy	Oil & Gas Exploration & Production
BHP Group plc	Australia	Materials	Diversified Metals & Mining
Rio Tinto plc	United Kingdom	Materials	Diversified Metals & Mining
Barrick Gold Corp.	Canada	Materials	Gold
EOG Resources, Inc.	United States	Energy	Oil & Gas Exploration & Production
Concho Resources, Inc.	United States	Energy	Oil & Gas Exploration & Production

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.

2019

ANNUAL REPORT


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		NATURAL RESOURCES

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		9.46%
5-year period ended12-31-19		-3.63%
10-year period ended12-31-19		-3.10%

(2)


68		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		NATURAL RESOURCES (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Australia

Materials – 3.6%
BHP Group plc		133	$	3,135


Total Australia – 3.6%			$	3,135
Canada

Energy – 1.5%
Suncor Energy, Inc.		41		1,336


Industrials – 2.8%
Canadian Pacific Railway Ltd.		10		2,427


Materials – 6.3%
Barrick Gold Corp.		158		2,930
Nutrien Ltd. (A)		35		1,658
West Fraser Timber Co. Ltd. (A)		21		931

				5,519


Total Canada – 10.6%			$	9,282
France

Energy – 3.0%
Total S.A. ADR		48		2,630


Total France – 3.0%			$	2,630
Hong Kong

Materials – 0.0%
China Metal Recycling (Holdings) Ltd. (B)(C)		1,900		—	*


Total Hong Kong – 0.0%			$	—	*
India

Energy – 1.0%
Reliance Industries Ltd.		43		902


Total India – 1.0%			$	902
Netherlands

Energy – 2.6%
Core Laboratories N.V.		14		533
Royal Dutch Shell plc, Class A		59		1,737

				2,270


Total Netherlands – 2.6%			$	2,270
Portugal

Energy – 2.2%
Galp Energia SGPS S.A., Class B		115		1,928


Total Portugal – 2.2%			$	1,928
South Africa

Materials – 1.8%
Mondi plc		68		1,602


Total South Africa – 1.8%			$	1,602


COMMON STOCKS(Continued)	Shares		Value
United Kingdom

Energy – 2.5%
BP plc		350	$	2,187


Materials – 4.5%
Croda International plc		14		948
Rio Tinto plc		51		3,022

				3,970


Total United Kingdom – 7.0%			$	6,157
United States

Energy – 47.7%
Cabot Oil & Gas Corp.		68		1,181
Chevron Corp.		35		4,172
Cimarex Energy Co.		19		1,001
Concho Resources, Inc.		31		2,717
ConocoPhillips		49		3,206
Diamondback Energy, Inc.		24		2,260
Enterprise Products Partners L.P.		88		2,486
EOG Resources, Inc.		34		2,852
Halliburton Co.		77		1,894
HollyFrontier Corp.		7		377
Magellan Midstream Partners L.P.		35		2,179
Marathon Petroleum Corp.		59		3,537
Noble Energy, Inc.		64		1,588
ONEOK, Inc.		24		1,784
Parsley Energy, Inc., Class A		70		1,327
Phillips 66		38		4,241
Valero Energy Corp.		37		3,443
WPX Energy, Inc. (B)		111		1,520

				41,765


Industrials – 2.8%
Union Pacific Corp.		14		2,465


Information Technology – 0.5%
Enphase Energy, Inc. (A)(B)		18		460


Materials – 13.8%
Air Products and Chemicals, Inc.		6		1,388
Albemarle Corp.		6		465
Avery Dennison Corp.		6		812
FMC Corp.		9		880
Graphic Packaging Holding Co.		34		558
Huntsman Corp.		37		894
LyondellBasell Industries N.V., Class A		9		876
Packaging Corp. of America		13		1,480
PPG Industries, Inc.		13		1,774
Sherwin-Williams Co. (The)		2		1,329
Southern Copper Corp.		37		1,578

				12,034


Total United States – 64.8%			$	56,724

TOTAL COMMON STOCKS – 96.6%			$	84,630
(Cost: $94,201)


SHORT-TERM SECURITIES	Shares		Value
Money Market Funds (D) – 7.1%
State Street Institutional U.S. Government Money Market Fund – Premier Class 1.550%		3,446	$	3,446
Dreyfus Institutional Preferred Government Money Market Fund – Institutional Shares 1.550% (E)		2,806		2,806

				6,252


TOTAL SHORT-TERM SECURITIES – 7.1%			$	6,252
(Cost: $6,252)

TOTAL INVESTMENT SECURITIES – 103.7%			$	90,882
(Cost: $100,453)

LIABILITIES, NET OF CASH AND OTHER ASSETS (F) – (3.7)%				(3,274	)

NET ASSETS – 100.0%			$	87,608

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		NATURAL RESOURCES (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

*	Not shown due to rounding.

(A)	All or a portion of securities with an aggregate value of $2,719 are on loan.

(B)	No dividends were paid during the preceding 12 months.

(C)	Securities whose value was determined using significant unobservable inputs.

(D)	Rate shown is the annualized7-day yield at December 31, 2019.

(E)	Investment made with cash collateral received from securities on loan.

(F)	Cash of $610 has been pledged as collateral on OTC forward foreign currency contracts.

The following forward foreign currency contracts were outstanding at December 31, 2019:


	Currency to be Delivered			Currency to be Received		Settlement Date		Counterparty	Unrealized Appreciation		Unrealized Depreciation
Euro		5,615	U.S. Dollar		6,189		1-10-20	Morgan Stanley International	$	—	$	112
British Pound		8,156	U.S. Dollar		10,032		1-10-20	UBS AG		—		773
Canadian Dollar		1,169	U.S. Dollar		884		1-10-20	UBS AG		—		16

									$	—	$	901


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks	$	84,630	$	—	$	—	*
Short-Term Securities		6,252		—		—
Total	$	90,882	$	—	$	—	*
Liabilities
Forward Foreign Currency Contracts	$	—	$	901	$	—

During the year ended December 31, 2019, there were no transfers in or out of level 3.

The following acronym is used throughout this schedule:

ADR = American Depositary Receipts

OTC = Over the Counter

Market Sector Diversification


(as a % of net assets)
Energy			60.5%
Materials			30.0%
Industrials			5.6%
Information Technology			0.5%
Other+			3.4%

+Includes liabilities (net of cash and other assets), and cash equivalents

See Accompanying Notes to Financial Statements.


70		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		SCIENCE AND TECHNOLOGY

(UNAUDITED)

LOGO

Zachary H. Shafran

LOGO

Bradley J. Warden

Below, Zachary Shafran and Bradley Warden, portfolio managers of Ivy VIP Science and Technology, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Shafran has managed the Portfolio since 2001 and has 31 years of industry experience. Mr. Warden has managed the Portfolio since 2016 and was previously an assistant portfolio manager on the Portfolio from 2014 to 2016. He has 22 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Science and Technology(Class II)			49.48%
Benchmark and Morningstar Category
S&P North American Technology Sector Index			42.68%
(generally reflects the performance of U.S. science and technology stocks)
Morningstar Technology Category Average			37.49%
(generally reflects the performance of the universe of funds with similar investment objectives)

Strong markets despite continued macroeconomic and political concerns

Equity and fixed-income markets were strong in the fiscal year ended December 31, 2019. U.S. growth continued through the fiscal year, driven by a strong job market and supportive economy, while some key global economies, like China, struggled under the negative sentiment of increasing tariffs. Over the course of the fiscal year, markets rebounded from the latter months of 2018 when domestic markets began to fear the long-term impacts of trade policy and a potential policy mistake by the Federal Reserve (Fed).

Along with the Fed’s pivot away from monetary policy tightening in early 2019, other areas of the world echoed a similar easing of monetary policy. The markets’ primary concerns around the final rate increase in December 2018 related to softening in the domestic housing market and continued trade-related slowdowns. Following the December 2018 rate increase, the Fed expressed a more dovish outlook on monetary policy in 2019 and stuck with it during calendar year 2019. Inflation remained in check through the fiscal year, even with stronger wage growth being offset by energy and housing price relief.

The Fed’s actions were in focus, but the U.S.-China trade war created the greatest uncertainty in the markets over the past fiscal year. China’s economy and markets saw significant weakening over the course of the fiscal year. We believe a negotiated solution is in the best interest of each country, and the emergence of “phase one” of a trade settlement helped to sustain the market’s upward trajectory.

Beyond the global challenges, the U.S. House of Representatives pushed forward articles of impeachment against President Trump, which further complicates policymaking preceding the upcoming U.S. presidential election. The markets shrugged off any real concern on the issue, believing the Republican-controlled Senate will not garner the votes needed to impeach the president.

During the fiscal year, information technology stocks performed well with the Portfolio’s benchmark advancing 42.7%. Within information technology, the technology hardware subsector performed well on the back of Apple’s stellar performance, while the semiconductor subsector also outperformed the other subsectors. We continue to believe semiconductors are key to future innovation within information technology and that consolidation, operating leverage, balance sheet strength, increases in dividend payments and strong management should provide stability and growth for this subsector. The software subsector performed in line with the benchmark, following a few years of outperformance.

On the health care front, a few health care technology and biotech stocks had strong performance, but the aggregate health care portion of the portfolio relatively underperformed, largely due to the outsized performance of the information technology sector. We believe health care policy and drug pricing likely get additional focus, though major health care policy changes seem unlikely given the current government composition.

2019

ANNUAL REPORT

Semiconductor exposure drove outperformance

The Portfolio outperformed its benchmark and its Morningstar peer group average during the fiscal year. Outperformance in the Portfolio’s technology exposure was primarily driven by the positions in Universal Display Corp., Cypress Semiconductor Corp., WNS Holdings, and Micron Technology Inc. Underweight positions in Amazon.com, Inc. and Cisco Systems, Inc. contributed positively to relative returns as well. The Portfolio no longer holds Cypress Semiconductor Corp. or Cisco Systems, Inc., as of Dec. 31, 2019.

Health care is not represented in the benchmark, so the Portfolio’s allocation to the sector is an important distinction when comparing performance metrics. In the fiscal year, the Portfolio’s health care allocation detracted from relative performance, with outperformance in health care technology offset by underperformance in biotechnology. Within biotechnology, Vertex Pharmaceuticals, Inc. was the greatest positive contributor.

The Portfolio used derivatives over the reporting period, but the usage had no material impact on Portfolio performance.

Portfolio positioning

While we recognize the challenges of the world economic backdrop, we are excited about the innovation and growth that is taking place within certain companies. We believe many stocks in the information technology space remain relatively well-positioned going forward. We saw a meaningful rebound in fiscal 2019 after the latesell-off in 2018. The Portfolio had approximately 62% of its equity exposure in the information technology sector, as of Dec. 31, 2019. The exposure in information technology is lower year over year due to the creation of the communication services sector, which includes many companies previously in the information technology sector. The Portfolio had approximately 15% of its equity assets in the communication services sector, as of Dec. 31, 2019.

As of the fiscal year end, roughly 14% of the Portfolio’s equity assets were in the health care sector. In developing markets, as the standard of living increases, we believe the demand for quality health care should increase. In our view, biotechnology, health care information technology systems and pharmaceuticals are among the greatest innovators and early adopters of new science and technology, so we are paying particularly close attention to companies in those areas. Even with rhetoric around drug pricing, we believe biotechnology and pharmaceutical companies that bring economic value to the market (e.g. fewer hospitalizations and better patient productivity) should see significant returns and appreciating stock prices. We believe the next few years should continue to be constructive for biotechnology company stocks and we have added several names in this area, as we expect significant innovation and economic returns.

The Portfolio’s “applied science and technology” holdings span several industries and sectors and make up the remainder of the Portfolio’s equity composition. At the end of the fiscal year, the Portfolio’s cash position was 2.6% of net assets. We almost always have some cash on hand in an effort to take advantage of opportunities that may present themselves, or to use as a defensive measure to protect the Portfolio in adverse market conditions.

Seeking opportunities in a volatile market

Going forward, with global trade tensions easing and more dovish monetary policy, we are cautiously optimistic on the broader macroeconomy. Core to this optimism is an expectation of continued progress in the trade war through the balance of 2020. This action is in the long-term best interests of both the U.S. and China and we believe that progress towards negotiations should be supportive of financial markets. Company management teams express varying levels of optimism about economic growth. We also recognize that global economic growth is likely to continue to be questioned as aggressive global monetary easing slows and global trade policy questions linger. With this backdrop, we expect any potential volatility to provide opportunities for positioning in keyinnovation-led names that fit our process and long-term holding strategy.

For the upcoming fiscal year, we believe growth may be lower than fiscal 2019, though asset prices largely reflect this expectation. That said, we intend to continue to be prudent in balancing growth with valuations, as we believe there are many potential investment opportunities — especially in biotechnology, data and semiconductors — around the world. As we look at the securities of such companies, we are focused on what we believe are good growth prospects and sound capital structures. We believe there will be improvement in capital spending trends, and we are looking for a continuation of an activemergers-and-acquisition environment. As always, we continue to carefully monitor the macroeconomic environment, but our focus remains primarily on security-specific fundamental research. Going forward, we believe this attention tobottom-up research, coupled with the innovation and transformation under way across the globe should continue to provide investment opportunities for the Portfolio.


72		ANNUAL REPORT		2019

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

Because the Portfolio invests more than 25% of its total assets in the science and technology industry, the Portfolio’s performance may be more susceptible to a single economic, regulatory or technological occurrence than a fund that does not concentrate its investments in this industry. Securities of companies within specific industries or sectors of the economy may periodically perform differently than the overall market. In addition, the Portfolio’s performance may be more volatile than an investment in a portfolio of broad market securities and may underperform the market as a whole, due to the relatively limited number of issuers of science and technology related securities. Investment risks associated with investing in science and technology securities, in addition to other risks, include: operating in rapidly changing fields, abrupt or erratic market movements, limited product lines, markets or financial resources, management that is dependent on a limited number of people, short product cycles, aggressive pricing of products and services, new market entrants and obsolescence of existing technology.

Dividend-paying stocks may fall out of favor with investors and underperformnon-dividend paying stocks and the market as a whole. In addition, dividend-paying companies may not pay dividends in the future; such dividends, if declared, may not remain at current levels or increase over time. The amount of any dividend the company may pay may fluctuate significantly. Dividend-paying stocks can decline in value when interest rates rise; this risk may be greater during the current period of historically low interest rates. These and other risks are more fully described in the Portfolio’s prospectus.

The index noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Science and Technology.

2019

ANNUAL REPORT


PORTFOLIO HIGHLIGHTS		SCIENCE AND TECHNOLOGY

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			97.5%
Information Technology			60.4%
Communication Services			14.5%
Health Care			13.3%
Consumer Discretionary			7.2%
Real Estate			1.5%
Industrials			0.4%
Materials			0.2%
Warrants			0.0%
Bonds			0.1%
Corporate Debt Securities			0.1%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			2.4%

Country Weightings


North America			80.1%
United States			80.1%
Pacific Basin			11.3%
China			4.6%
India			4.3%
Other Pacific Basin			2.4%
Europe			6.2%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			2.4%

Top 10 Equity Holdings



Company	Country	Sector	Industry
Microsoft Corp.	United States	Information Technology	Systems Software
Apple, Inc.	United States	Information Technology	Technology Hardware, Storage & Peripherals
Facebook, Inc., Class A	United States	Communication Services	Interactive Media & Services
Micron Technology, Inc.	United States	Information Technology	Semiconductors
Alibaba Group Holding Ltd. ADR	China	Consumer Discretionary	Internet & Direct Marketing Retail
Vertex Pharmaceuticals, Inc.	United States	Health Care	Biotechnology
Aspen Technology, Inc.	United States	Information Technology	Application Software
ACI Worldwide, Inc.	United States	Information Technology	Application Software
Euronet Worldwide, Inc.	United States	Information Technology	Data Processing & Outsourced Services
WNS (Holdings) Ltd. ADR	India	Information Technology	Data Processing & Outsourced Services

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.


74		ANNUAL REPORT		2019

COMPARISON OF CHANGE IN VALUE

OF $10,000 INVESTMENT

SCIENCE AND TECHNOLOGY

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class I		Class II
1-year period ended12-31-19		49.86%		49.48%
5-year period ended12-31-19		—		13.04%
10-year period ended12-31-19		—		14.97%
Since Inception of Class through12-31-19⁽³⁾		21.09%		—

(2)

(3)

4-28-17 (the date on which shares were first acquired by shareholders).

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		SCIENCE AND TECHNOLOGY (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Communication Services

Interactive Home Entertainment – 2.2%
Electronic Arts, Inc. (A)		57	$	6,171
Take-Two Interactive Software, Inc. (A)		56		6,832

				13,003


Interactive Media & Services – 11.3%
Alphabet, Inc., Class A (A)		11		15,135
Alphabet, Inc., Class C (A)		14		18,441
Facebook, Inc., Class A (A)		156		32,027

				65,603


Movies & Entertainment – 1.0%
Walt Disney Co. (The)		38		5,518


Total Communication Services – 14.5%				84,124
Consumer Discretionary

Internet & Direct Marketing Retail – 7.2%
Alibaba Group Holding Ltd. ADR (A)		128		27,085
Amazon.com, Inc. (A)		6		10,348
Booking Holdings, Inc. (A)		2		4,582

				42,015


Total Consumer Discretionary – 7.2%				42,015
Health Care

Biotechnology – 9.0%
CRISPR Therapeutics AG (A)		66		4,050
Evogene Ltd. (A)		137		205
Ionis Pharmaceuticals, Inc. (A)(B)		144		8,697
Moderna, Inc. (A)		116		2,270
Sage Therapeutics, Inc. (A)		31		2,216
Sarepta Therapeutics, Inc. (A)		62		8,001
Vertex Pharmaceuticals, Inc. (A)		123		26,955

				52,394


Health Care Services – 0.6%
Teladoc Health, Inc. (A)(B)		44		3,709


Health Care Technology – 3.7%
Cerner Corp.		290		21,262


Total Health Care – 13.3%				77,365
Industrials

Trucking – 0.4%
Lyft, Inc., Class A (A)		56		2,423


Total Industrials – 0.4%				2,423
Information Technology

Application Software – 11.1%
ACI Worldwide, Inc. (A)		681		25,818
Aspen Technology, Inc. (A)		221		26,737
NVIDIA Corp.		27		6,260
salesforce.com, Inc. (A)		34		5,558

				64,373


COMMON STOCKS(Continued)	Shares		Value
Data Processing & Outsourced Services – 10.4%
Euronet Worldwide, Inc. (A)		160	$	25,213
Fiserv, Inc. (A)		85		9,858
WNS (Holdings) Ltd. ADR (A)		379		25,081

				60,152


Semiconductor Equipment – 3.0%
ASML Holding N.V., NY Registry Shares		59		17,431


Semiconductors – 17.3%
Infineon Technologies AG (C)		649		14,513
Microchip Technology, Inc. (B)		83		8,702
Micron Technology, Inc. (A)		532		28,621
QUALCOMM, Inc.		135		11,937
Semtech Corp. (A)		139		7,351
Taiwan Semiconductor Manufacturing Co. Ltd. ADR		120		6,952
Universal Display Corp.		109		22,457

				100,533


Systems Software – 11.2%
Microsoft Corp.		373		58,824
ServiceNow, Inc. (A)		22		6,106

				64,930


Technology Hardware, Storage & Peripherals – 7.4%
Apple, Inc.		123		36,002
Samsung Electronics Co. Ltd. (C)		142		6,811

				42,813


Total Information Technology – 60.4%				350,232
Materials

Fertilizers & Agricultural Chemicals – 0.2%
Marrone Bio Innovations, Inc. (A)		1,116		1,127


Total Materials – 0.2%				1,127
Real Estate

Specialized REITs – 1.5%
QTS Realty Trust, Inc., Class A		160		8,700


Total Real Estate – 1.5%				8,700

TOTAL COMMON STOCKS – 97.5%			$	565,986
(Cost: $300,862)

WARRANTS
Fertilizers & Agricultural Chemicals – 0.0%
Marrone Bio Innovations, Inc., expires12-31-20 (D)(E)		230		—	*
Marrone Bio Innovations, Inc., expires8-20-23 (D)(E)		230		—	*

				—	*


TOTAL WARRANTS – 0.0%			$	—	*
(Cost: $—)


CORPORATE DEBT SECURITIES	Principal		Value
Materials

Fertilizers & Agricultural Chemicals – 0.1%
Marrone Bio Innovations, Inc.,
8.000%,8-20-20 (D)	$	288	$	293


Total Materials – 0.1%				293

TOTAL CORPORATE DEBT SECURITIES – 0.1%			$	293
(Cost: $288)

SHORT-TERM SECURITIES	Shares
Money Market Funds (F) – 2.4%
State Street Institutional U.S. Government Money Market Fund – Premier Class,
1.550%		14,152		14,152


TOTAL SHORT-TERM SECURITIES – 2.4%			$	14,152
(Cost: $14,152)

TOTAL INVESTMENT SECURITIES – 100.0%			$	580,431
(Cost: $315,302)

LIABILITIES, NET OF CASH AND OTHER ASSETS – 0.0%				(8	)

NET ASSETS – 100.0%			$	580,423


76		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		SCIENCE AND TECHNOLOGY (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

*	Not shown due to rounding.

(A)	No dividends were paid during the preceding 12 months.

(B)	All or a portion of securities with an aggregate value of $5,497 are on loan.

(C)	Listed on an exchange outside the United States.

(D)	Restricted securities. At December 31, 2019, the Portfolio owned the following restricted securities:


Security	Acquisition Date(s)		Principal		Cost		Value
Marrone Bio Innovations, Inc., 8.000%,08-20-20		8-20-15	$	288	$	288	$	293

			Shares
Marrone Bio Innovations, Inc., expires12-31-20		2-6-18		230		—		—	*
Marrone Bio Innovations, Inc., expires8-20-23		8-20-15		230		—		—	*

					$	288	$	293

The total value of these securities represented 0.1% of net assets at December 31, 2019.

(E)	Warrants entitle the Portfolio to purchase a predetermined number of shares of common stock and arenon-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date, if any.

(F)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1			Level 2			Level 3
Assets
Investments in Securities
Common Stocks
Communication Services	$	84,124		$	—		$	—
Consumer Discretionary		42,015			—			—
Health Care		77,365			—			—
Industrials		2,423			—			—
Information Technology		328,908			21,324			—
Materials		1,127			—			—
Real Estate		8,700	��		—			—
Total Common Stocks	$	544,662		$	21,324		$	—
Warrants		—			—	*		—
Corporate Debt Securities		—			293			—
Short-Term Securities		14,152			—			—
Total	$	558,814		$	21,617		$	—

The following acronyms are used throughout this schedule:

ADR = American Depositary Receipts

REIT = Real Estate Investment Trust

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		SCIENCE AND TECHNOLOGY (in thousands)

DECEMBER 31, 2019

Country Diversification


(as a % of net assets)
United States			80.1%
China			4.6%
India			4.3%
Netherlands			3.0%
Germany			2.5%
Taiwan			1.2%
South Korea			1.2%
Other Countries			0.7%
Other+			2.4%

+Includes liabilities (net of cash and other assets), and cash equivalents

See Accompanying Notes to Financial Statements.


78		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		SMALL CAP CORE

(UNAUDITED)

LOGO

Kenneth G. Gau

Below, Kenneth G. Gau, portfolio manager of Ivy VIP Small Cap Core, discusses positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Gau has managed the Portfolio since 2014, and has 26 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Small Cap Core(Class II shares at net asset value)			24.33%
Benchmark and Morningstar Category
Russell 2000 Index			25.53%
(Generally reflects the performance of small-company stocks)
Morningstar Small Blend Category Average			23.75%
(Generally reflects the performance of the universe of portfolios with similar investment objectives)

Key factors

In a vacuum, it was a good year for small cap stocks with the Russell 2000 Index, the Portfolio’s benchmark, up 25.5% for the year ended December 31, 2019. Shifts in sentiment related to U.S.-China trade negotiations marked inflection points in the market throughout the year, which ultimately ended on a relative high note as the first phase of a deal was agreed to in principle in December. However, it is also important to keep in context that absent a severe drawdown in the fourth quarter of 2018 that returns would not look so rosy in 2019 as we have yet to recapture the highs the market saw in August of 2018, and more than 100% of the rebound in the index can be attributed to expanding valuations rather than earnings growth.

Also, from peak to trough in 2019, the yield on the10-year U.S. Treasury note declined by more than 130 basis points, which inverted the yield curve in the process. A yield curve inversion historically has signaled an increased likelihood of an impending recession. While the curve has since recovered to a positive slope, it has been led by a combination of expectations of a bottoming in economic fundamentals (that have yet to clearly be manifested) and a dramatic reversal by the U.S. Federal Reserve (Fed), which cut rates three times and shifted from quantitative tightening to quantitative easing towards the end of 2019.

This move by the Fed was not unique only to the U.S. as many central bankers around the world have pumped liquidity into their markets hoping to arrest decelerating growth trends. How this will all work out going forward remains to be seen, as it is clearly out of the ordinary to see such stimulus when we are at full employment in the U.S. One thing for sure is that low or negative rates globally made equities a relatively attractive asset class, and drove them higher over the course of the year, accelerating into year end.

Contributors and detractors

Despite delivering a positive return, the Portfolio slightly lagged the benchmark for the period ended December 31, 2019. In many ways, the year could be broken down into what occurred before and after September.

Through the beginning of August, the yield on the U.S.10-year Treasury drifted down, culminating with a marked acceleration downward exiting the month. The Portfolio was positioned well for this type of environment, with stable, defensive business models, which were favored across industries. Our stock selection in information technology, consumer discretionary and communication services helped drive significant outperformance through the end of August, led by PROS Holdings, Inc. and Vonage Holdings Corporation.

September brought about a rapid reversal in the10-year Treasury, which triggered a sharp rotation in the types of stocks that led the benchmark. The low volatility,low-beta stocks that led the market in the first part of the year gave way to smaller, more cyclical, and in many cases, lower-quality stocks for the remainder of the year, with the stretched valuation gap between the two cohorts correcting to some extent.

This rotation took a toll on the relative performance of the Portfolio, as the significant lead developed versus the benchmark through late summer dwindled to a slight loss by year end, though we still ended up in the top half of the peer group as just 35% of portfolios outpaced the benchmark.

2019

ANNUAL REPORT

Stock selection became a drag post-August, as both factor-driven underperformance and stock specific issues arose, with the biggest drag coming from Vonage Holdings Corporation (execution, competition) and Grand Canyon Education, Inc. (political concerns.) For the full year, positive relative attribution was generated out of information technology (+2.4%), energy (+1.5%) and consumer discretionary (+1.0%). Conversely, negative relative attribution was based on performance from the financials(-2.9%), materials(-0.7%) and industrials(-0.4%) sectors.

Outlook

Looking forward to 2020, we hold to our view that the business cycle is still in its later stages. When it ends is hard to exactly predict, but we believe managing risk at this point is of great importance. While it might be true that this is a mini cycle that we just experienced (within a broader cycle) and this cycle could be longer than what has been experienced historically because of its lower slope and the size of the last recession, we do not believe that we will see a substantial reacceleration in global growth.

Not only do we believe that China — one of the biggest growth engines over the past decade — will experience moderated growth, we also believe global demographics are a headwind. In addition, interest rates are already very low across the world, leverage is high and considerable stimulus has already been exhausted in the form of major cut in taxes and significant amounts of deregulation.

How this all translates to equity returns remains to be seen, but it would seem logical if growth slows then returns followed suit. Independent of what the market holds, we believe our process of identifying quality, underappreciated companies coupled with thoughtful Portfolio construction will set us up to outperform our peers and benchmark over time.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

Investing insmall-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. These and other risks are more fully described in the Portfolio’s prospectus.

The opinions expressed in this report are those of the Portfolio manager and are current only through the end of the period of the report as stated on the cover. The manager’s views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.

The index noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Small Cap Core.


80		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		SMALL CAP CORE

ALL DATA AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			98.6%
Financials			17.4%
Information Technology			14.5%
Health Care			13.3%
Industrials			12.6%
Consumer Discretionary			11.3%
Consumer Staples			6.5%
Materials			6.3%
Real Estate			6.0%
Energy			4.4%
Utilities			3.2%
Communication Services			3.1%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			1.4%

Top 10 Equity Holdings



Company	Sector	Industry
Nomad Foods Ltd.	Consumer Staples	Packaged Foods & Meats
Chemed Corp.	Health Care	Health Care Services
Cardtronics plc, Class A	Information Technology	Data Processing & Outsourced Services
Visteon Corp.	Consumer Discretionary	Auto Parts & Equipment
Encompass Health Corp.	Health Care	Health Care Facilities
Webster Financial Corp.	Financials	Regional Banks
MGIC Investment Corp.	Financials	Thrifts & Mortgage Finance
Cogent Communications Group, Inc.	Communication Services	Alternative Carriers
Switch, Inc., Class A	Information Technology	IT Consulting & Other Services
Magnolia Oil & Gas Corp.	Energy	Oil & Gas Exploration & Production

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.

+ Cash equivalents are defined as highly liquid securities with maturities of less than three months. Cash equivalents may include U.S. Government Treasury bills, bank certificates of deposit, bankers’ acceptances, corporate commercial paper and other money market instruments.

2019

ANNUAL REPORT


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		SMALL CAP CORE

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		24.33%
5-year period ended12-31-19		9.02%
10-year period ended12-31-19		11.15%

(2)


82		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		SMALL CAP CORE (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Communication Services

Alternative Carriers – 3.1%
Cogent Communications Group, Inc.		73	$	4,823
Vonage Holdings Corp. (A)		145		1,071

				5,894


Total Communication Services – 3.1%				5,894
Consumer Discretionary

Auto Parts & Equipment – 3.5%
Visteon Corp. (A)		76		6,579


Casinos & Gaming – 0.6%
Red Rock Resorts, Inc., Class A		49		1,173


Education Services – 1.4%
Grand Canyon Education, Inc. (A)		27		2,600


Footwear – 1.4%
Skechers USA, Inc. (A)		61		2,620


Homebuilding – 0.8%
TopBuild Corp. (A)		14		1,443


Leisure Products – 3.1%
Polaris, Inc.		34		3,436
YETI Holdings, Inc. (A)(B)		69		2,392

				5,828


Specialized Consumer Services – 0.5%
OneSpaWorld Holdings Ltd. (B)		58		985


Total Consumer Discretionary – 11.3%				21,228
Consumer Staples

Packaged Foods & Meats – 6.5%
Nomad Foods Ltd. (A)		373		8,346
Sanderson Farms, Inc.		10		1,767
TreeHouse Foods, Inc. (A)		44		2,116

				12,229


Total Consumer Staples – 6.5%				12,229
Energy

Oil & Gas Exploration & Production – 2.4%
Magnolia Oil & Gas Corp. (A)		354		4,448


Oil & Gas Refining & Marketing – 0.9%
PBF Energy, Inc., Class A		54		1,684


Oil & Gas Storage & Transportation – 1.1%
Scorpio Tankers, Inc.		53		2,103


Total Energy – 4.4%				8,235
Financials

Consumer Finance – 1.7%
Encore Capital Group, Inc. (A)		93		3,280


COMMON STOCKS(Continued)	Shares		Value
Financial Exchanges & Data – 1.8%
Morningstar, Inc.		23	$	3,486


Multi-Line Insurance – 2.5%
Assurant, Inc.		14		1,870
Kemper Corp.		36		2,757

				4,627


Property & Casualty Insurance – 2.1%
Argo Group International Holdings Ltd.		46		3,013
Old Republic International Corp.		41		922

				3,935


Regional Banks – 6.2%
First Horizon National Corp.		159		2,631
TCF Financial Corp.		65		3,053
Webster Financial Corp.		112		5,982

				11,666


Thrifts & Mortgage Finance – 3.1%
MGIC Investment Corp.		406		5,754


Total Financials – 17.4%				32,748
Health Care

Health Care Equipment – 5.1%
Envista Holdings Corp. (A)		100		2,965
Integer Holdings Corp. (A)		19		1,515
NuVasive, Inc. (A)		32		2,446
Tandem Diabetes Care, Inc. (A)		46		2,757

				9,683


Health Care Facilities – 3.3%
Encompass Health Corp.		89		6,176


Health Care Services – 4.1%
Chemed Corp.		18		7,704


Pharmaceuticals – 0.8%
Intersect ENT, Inc. (A)		59		1,457


Total Health Care – 13.3%				25,020
Industrials

Building Products – 1.0%
Trex Co., Inc. (A)		21		1,843


Electrical Components & Equipment – 1.0%
EnerSys		26		1,939


Environmental & Facilities Services – 1.1%
Clean Harbors, Inc. (A)		23		1,972


Industrial Machinery – 5.0%
Crane Co.		43		3,705
Gardner Denver Holdings, Inc. (A)		85		3,104
RBC Bearings, Inc. (A)		17		2,655

				9,464


COMMON STOCKS(Continued)	Shares		Value
Research & Consulting Services – 2.1%
ICF International, Inc.		44	$	3,999


Security & Alarm Services – 1.3%
Brink’s Co. (The)		28		2,516


Trucking – 1.1%
Knight Transportation, Inc.		55		1,980


Total Industrials – 12.6%				23,713
Information Technology

Application Software – 1.8%
Q2 Holdings, Inc. (A)		43		3,459


Data Processing & Outsourced Services – 5.1%
Cardtronics plc, Class A (A)		166		7,405
EVERTEC, Inc.		64		2,190

				9,595


Electronic Equipment & Instruments – 1.2%
Coherent, Inc. (A)		13		2,239


IT Consulting & Other Services – 2.5%
Switch, Inc., Class A		313		4,644


Semiconductor Equipment – 2.4%
Brooks Automation, Inc.		55		2,319
Enphase Energy, Inc. (A)(B)		80		2,083

				4,402


Systems Software – 1.5%
Varonis Systems, Inc. (A)		37		2,860


Total Information Technology – 14.5%				27,199
Materials

Aluminum – 1.3%
Constellium N.V., Class A (A)		181		2,428


Diversified Chemicals – 1.8%
Huntsman Corp.		143		3,464


Diversified Metals & Mining – 1.5%
Compass Minerals International, Inc.		46		2,792


Fertilizers & Agricultural Chemicals – 1.7%
ScottsMiracle-Gro Co. (The)		29		3,116


Total Materials – 6.3%				11,800
Real Estate

Diversified REITs – 0.6%
Essential Properties Realty Trust, Inc.		48		1,203


Hotel & Resort REITs – 1.5%
Ryman Hospitality Properties, Inc.		33		2,854

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		SMALL CAP CORE (in thousands)

DECEMBER 31, 2019


COMMON STOCKS(Continued)	Shares		Value
Industrial REITs – 2.1%
STAG Industrial, Inc.		127	$	4,012


Retail REITs – 1.8%
Agree Realty Corp.		47		3,317


Total Real Estate – 6.0%				11,386
Utilities

Electric Utilities – 1.2%
ALLETE, Inc.		29		2,366


Gas Utilities – 2.0%
ONE Gas, Inc.		39		3,685


Total Utilities – 3.2%				6,051

TOTAL COMMON STOCKS – 98.6%			$	185,503
(Cost: $168,256)


SHORT-TERM SECURITIES	Shares		Value
Money Market Funds (D) – 3.9%
Dreyfus Institutional Preferred Government Money Market Fund – Institutional Shares, 1.550% (C)		4,768	$	4,768
State Street Institutional U.S. Government Money Market Fund – Premier Class, 1.550%		2,480		2,480

				7,248


TOTAL SHORT-TERM SECURITIES – 3.9%			$	7,248
(Cost: $7,248)

TOTAL INVESTMENT SECURITIES – 102.5%			$	192,751
(Cost: $175,504)

LIABILITIES, NET OF CASH AND OTHER ASSETS – (2.5)%				(4,735	)

NET ASSETS – 100.0%			$	188,016

Notes to Schedule of Investments

(A)	No dividends were paid during the preceding 12 months.

(B)	All or a portion of securities with an aggregate value of $4,705 are on loan.

(C)	Investment made with cash collateral received from securities on loan.

(D)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks	$	185,503	$	—	$	—
Short-Term Securities		7,248		—		—
Total	$	192,751	$	—	$	—

The following acronym is used throughout this schedule:

REIT = Real Estate Investment Trust

See Accompanying Notes to Financial Statements.


84		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		SMALL CAP GROWTH

(UNAUDITED)

LOGO

Kenneth G. McQuade

LOGO

Timothy J. Miller

LOGO

Bradley P. Halverson

Below, Bradley P. Halverson, CFA, Kenneth G. McQuade and Timothy J. Miller, CFA,co-portfolio managers of Ivy VIP Small Cap Growth, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. McQuade has managed the Portfolio since 2006 and has 21 years of investment experience. Mr. Halverson and Mr. Miller assumed co-manager responsibility in 2016 and they have 18 years and 40 years of industry experience, respectively.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Small Cap Growth(Class II shares at net asset value)			23.37%
Benchmark and Morningstar Category
Russell 2000 Growth Index			28.48%
(Generally reflects the performance of small-company stocks)
Morningstar Small Growth Category Average			27.68%
(Generally reflects the performance of the universe of portfolios with similar investment objectives)

Key factors

A strong domestic stock market year across the board for the year ended Dec. 31, 2019 was led bymid- and large-capitalization stocks, butsmall-cap stocks also delivered healthy returns for the period. For the year,small-cap growth stocks outperformedsmall-cap value stocks. The profile of performance for the year was divided into three segments driven by macro factors influencing the market.

The first segment was a strong move upward from the beginning of the year until early May. Economic activity remained strong while the U.S. Federal Reserve (Fed) turned dovish allowing interest rates to decline and risk assets to perform well. This momentum was halted in May as the U.S. raised tariffs on $250 billion of Chinese imports, as well as threatening tariffs on Mexico, triggering renewed fear of harmful trade disputes. Issues related to the United Kingdom’s pending exit from the European Union also raised concerns about the global economic direction. The result was an initial sharp correction followed by a flattish pattern through the summer.

The final period was another sharp rally from early October through the end of the year. The Fed cut interest rates for the first time in years in reaction to an inverted yield curve, which sparked recession fears. The markets responded favorably as the whole term structure of rates continued to fall and as signs of trade progress were evident.

The second half of the fiscal year was particularly challenging for thesmall-cap growth segment of the market. Biotechnology stocks were the best performers by a wide margin. The industry accounted for 13% of the Russell 2000 Growth Index, the Portfolio’s benchmark, when the index was rebalanced. This group advanced a whopping 32% in the fourth quarter, accounting forone-third of the benchmark’s return for that period.

Another headwind for growth stocks was a sharp rotation to lower quality and value stocks during the period. This latter move was in response to the combination of the Fed lowering short-term rates and a China trade agreement, igniting a rally in many depressed cyclical stocks such as machinery, materials and automobiles.

2019

ANNUAL REPORT

Contributors and detractors

Despite delivering a positive return for the year, the Portfolio lagged the benchmark for the year, with most of the shortfall occurring in the second half of the year. The Portfolio had significant outperformance through June during the market’s initial rally. The outperformance during this first half was attributable to the information technology, consumer discretionary, and industrial sectors. Within those sectors, the software stocks were leaders in information technology; housing, internet retail and specialty retail stocks led consumer discretionary; and machinery, aerospace and truckers led the industrial sector. Notable winners included Paycom Software, Inc., Booz Allen Hamilton Holding Corporation, Carvana Group, LLC and JBT Corporation.

The second half of the year proved challenging for the Portfolio, accounting for the underperformance for the year. Two general factors accounted for the shortfall. First, the environment for growth managers during the second half of the year was quite unfavorable, with the index performance being driven by more speculative biotechnology stocks and a rally inlow-quality cyclical stocks. These groups do not generally fit our investment process, and are therefore underexposed in the Portfolio. Fortunately, history shows these periods of outperformance from these groups are short-lived, and in the case of the cyclical stocks, tend to do best coming out of a recession, which is not the environment that exists. The second factor was a slate of stock-specific issues that led to outsized negative reactions from the market given the prevailing sentiment against growth stocks. Among these were shortfalls from CareDx, Inc., Merit Medical Systems, Inc., Pluralsight, Inc. and Grand Canyon Education, Inc.

Information technology was a notable contributor to performance during 2019. The Portfolio was overweight the sector, which outperformed the benchmark, and stock selection exceeded the sector performance. Software was a key contributor, with cloud adoption and automation driving companies globally to enable workforces to become increasingly mobile while making their operations more efficient. Paycom Software, Inc., Proofpoint, Inc., Globant SA and Five9, Inc. positively contributed during the year, delivering consistent results. Conversely, detractors Pluralsight, Inc. and New Relic, Inc. had sales force execution challenges, which modestly offset the overall positive contribution.

Also within the sector, the IT services segment was an area of strength as both Booz Allen Hamilton Holding Corporation and Interxion Holding N.V. both delivered strong performance. Despite healthy contributions from semiconductors stock Monolithic Power Systems, Inc., the Portfolio lagged the industry due to an underweight position in the space. We remain overweight in the information technology sector and continue to focus on identifying companies attached to strong secular trends that can deliver multi-year outperformance.

Within the health care sector, the Portfolio underperformed the benchmark for the year due primarily to the previously noted performance within the biotechnology segment. This industry produced a 44% annual return, which was the best performing segment within the health care sector, and one of the best segments anywhere. We consistently underweight biotechnology given the more binary risk profile usually centered around clinical data or drug approval for typically single-product companies. In addition, their usual unprofitability and lack of operational history also does not fit our investment process.

We attempt to find similar growth in other health care industries, such as medical equipment and health care technology. These segments did not perform anywhere close to biotechnology for the year, which created a weighting issue. Certain holdings within the medical equipment and health care technology segments exhibited poor execution, including Inogen, Inc., Merit Medical Systems, Inc. and Evolent Health, Inc., further setting the Portfolio back from the biotechnology returns.

“Medicare-for-all” spurred concerns periodically throughout the year and will likely do the same in 2020 as the presidential election nears. However, the pressures on drug pricing will probably maintain greater fundamental risks for health care stocks. We believe we are less exposed to drug pricing risk due to our investment process, but all health care can be subject to the rhetoric of regulation changes. Meanwhile, most Americans still have access to health care insurance so we think that the percentage of insured patients should remain stable while any significant regulation enactment should be nonexistent until after the November election.

We think that this stable environment should result in slow but steady health care growth, possibly in the lower single-digits, slightly higher than gross domestic product (GDP) growth. Health care’s minimal exposure to cyclical slowdown and trade war risks make the sector more appealing if macro concerns escalate. Insurers are also accelerating the shift to more cost-effective settings and procedures, such as ambulatory,in-office and home-based treatments. We continue to gravitate to novel products and services that facilitate the trend away from costly hospitals.

We finished the year in line with industrials. The Portfolio benefitted from the continued economic growth, housing related strengths and a strong aerospace cycle. Factors detracting from performance include the pressures of trade wars and the tight labor market. With an economy still buoyed by low interest rates, low taxes and strong business sentiment,


86		ANNUAL REPORT		2019

manufacturing is expected to continue to grow, especially if trade relationships improve. We remain invested in multiple specialty industrial segments anticipated to have greater growth than GDP with overweight exposure to aerospace and defense, building supplies and transportation.

Outlook

The macro headwinds faced in the second half of the year should ease as we move through 2020. Small cap stocks in general should benefit from better earnings growth. Interest rate declines are likely behind us at this point, but they are not expected to rise significantly in 2020, a scenario that is beneficial for growth stocks.

The 2020 elections undoubtedly will generate some volatility for the market and certain sectors, but ultimately it is the companies that deliver or exceed expectations that will prevail. Our focus remains on identifying the companies best positioned to capitalize on large market opportunities for sustained multi-year growth.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

Investing insmall-cap stocks may carry more risk than investing in stocks of larger more well-established companies. Prices of growth stocks may be more sensitive to changes in current and expected earnings than the prices of other stocks. Growth stocks may not perform as well as value stocks or the stock market in general. The Portfolio may invest in Initial Public Offerings (IPOs), which can have a significant positive impact on the Portfolio’s performance that may not be replicated in the future. These and other risks are more fully described in the Portfolio’s prospectus.

The index noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Small Cap Growth.

2019

ANNUAL REPORT


PORTFOLIO HIGHLIGHTS		SMALL CAP GROWTH

ALL DATA AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			95.3%
Information Technology			25.7%
Health Care			22.6%
Industrials			19.2%
Consumer Discretionary			13.9%
Financials			6.4%
Communication Services			2.7%
Consumer Staples			2.7%
Energy			1.7%
Real Estate			0.4%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			4.7%

Top 10 Equity Holdings



Company	Sector	Industry
Teladoc Health, Inc.	Health Care	Health Care Services
Nexstar Broadcasting Group, Inc.	Communication Services	Broadcasting
Five9, Inc.	Information Technology	Application Software
Mercury Computer Systems, Inc.	Industrials	Aerospace & Defense
Insulet Corp.	Health Care	Health Care Equipment
InterXion Holding N.V.	Information Technology	IT Consulting & Other Services
Clean Harbors, Inc.	Industrials	Environmental & Facilities Services
Grand Canyon Education, Inc.	Consumer Discretionary	Education Services
Tactile Systems Technology, Inc.	Health Care	Health Care Equipment
Woodward, Inc.	Industrials	Industrial Machinery

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.

+ Cash equivalents are defined as highly liquid securities with maturities of less than three months. Cash equivalents may include U.S. Government Treasury bills, bank certificates of deposit, bankers’ acceptances, corporate commercial paper and other money market instruments.


88		ANNUAL REPORT		2019


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		SMALL CAP GROWTH

(UNAUDITED)

LOGO

(1)The

value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class I		Class II
1-year period ended12-31-19		23.68%		23.37%
5-year period ended12-31-19		—		8.84%
10-year period ended12-31-19		—		10.42%
Since Inception of Class through12-31-19⁽³⁾		7.31%		—

(2)

(3)

11-5-18 (the date on which shares were first acquired by shareholders).

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		SMALL CAP GROWTH (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Communication Services

Broadcasting – 2.7%
Gray Television, Inc. (A)		52	$	1,109
Nexstar Broadcasting Group, Inc.		81		9,505

				10,614


Total Communication Services – 2.7%				10,614
Consumer Discretionary

Apparel Retail – 0.6%
Boot Barn Holdings, Inc. (A)		50		2,239


Auto Parts & Equipment – 0.9%
Fox Factory Holding Corp. (A)		52		3,622


Casinos & Gaming – 1.6%
Churchill Downs, Inc.		32		4,403
PlayAGS, Inc. (A)		150		1,822

				6,225


Distributors – 1.0%
Pool Corp.		19		3,957


Education Services – 1.8%
Grand Canyon Education, Inc. (A)		74		7,073


General Merchandise Stores – 0.5%
Ollie’s Bargain Outlet Holdings, Inc. (A)		32		2,079


Homebuilding – 2.4%
Installed Building Products, Inc. (A)		94		6,495
TopBuild Corp. (A)		28		2,887

				9,382


Hotels, Resorts & Cruise Lines – 1.2%
Hilton Grand Vacations, Inc. (A)		130		4,461


Leisure Facilities – 1.5%
SeaWorld Entertainment, Inc. (A)		182		5,784


Leisure Products – 0.7%
Malibu Boats, Inc., Class A (A)		70		2,880


Restaurants – 1.7%
Wingstop, Inc.		76		6,570


Total Consumer Discretionary – 13.9%				54,272
Consumer Staples

Packaged Foods & Meats – 2.7%
J&J Snack Foods Corp.		28		5,098
Nomad Foods Ltd. (A)		239		5,336

				10,434


Total Consumer Staples – 2.7%				10,434


COMMON STOCKS(Continued)	Shares		Value
Energy

Oil & Gas Equipment & Services – 0.9%
Cactus, Inc., Class A		56	$	1,909
Dril-Quip, Inc. (A)		36		1,679

				3,588


Oil & Gas Exploration & Production – 0.8%
Matador Resources Co. (A)		166		2,985


Total Energy – 1.7%				6,573
Financials

Asset Management & Custody Banks – 0.7%
Hamilton Lane, Inc., Class A		47		2,796


Insurance Brokers – 1.2%
eHealth, Inc. (A)		49		4,700


Investment Banking & Brokerage – 2.2%
Houlihan Lokey, Inc.		36		1,759
LPL Investment Holdings, Inc.		74		6,861

				8,620


Regional Banks – 1.2%
Seacoast Banking Corp. of Florida (A)		146		4,457


Thrifts & Mortgage Finance – 1.1%
Essent Group Ltd.		80		4,165


Total Financials – 6.4%				24,738
Health Care

Biotechnology – 1.3%
Vericel Corp. (A)		300		5,220


Health Care Distributors – 1.3%
PetIQ, Inc. (A)		203		5,075


Health Care Equipment – 6.9%
Insulet Corp. (A)		46		7,915
iRhythm Technologies, Inc. (A)		30		2,047
NovoCure Ltd. (A)		33		2,764
Penumbra, Inc. (A)		30		4,856
Tactile Systems Technology, Inc. (A)		104		7,042
Veracyte, Inc. (A)		76		2,123

				26,747


Health Care Services – 6.3%
AMN Healthcare Services, Inc. (A)		91		5,686
LHC Group, Inc. (A)		43		5,867
Teladoc Health, Inc. (A)(B)		156		13,102

				24,655


Health Care Supplies – 1.2%
STAAR Surgical Co. (A)		133		4,688


COMMON STOCKS(Continued)	Shares			Value
Health Care Technology – 4.3%
CareDx, Inc. (A)		312		$	6,721
HMS Holdings Corp. (A)		165			4,890
Omnicell, Inc. (A)		61			4,954

					16,565


Managed Health Care – 1.3%
HealthEquity, Inc. (A)		66			4,886
			��

Total Health Care – 22.6%					87,836
Industrials

Aerospace & Defense – 2.1%
Mercury Computer Systems, Inc. (A)		122			8,413


Air Freight & Logistics – 1.4%
Air Transport Services Group, Inc. (A)		230			5,386


Building Products – 1.3%
PGT Innovations, Inc. (A)		198			2,951
Trex Co., Inc. (A)		23			2,071

					5,022


Electrical Components & Equipment – 1.3%
EnerSys		67			4,993


Environmental & Facilities Services – 1.9%
Clean Harbors, Inc. (A)		85			7,303


Industrial Machinery – 7.6%
Crane Co.		55			4,792
John Bean Technologies Corp.		62			6,979
RBC Bearings, Inc. (A)		29			4,570
Timken Co. (The)		110			6,177
Woodward, Inc.		59			7,005

					29,523


Security & Alarm Services – 1.8%
Brink’s Co. (The)		77			6,956


Trading Companies & Distributors – 0.5%
GMS, Inc. (A)		77			2,094


Trucking – 1.3%
Knight Transportation, Inc.		143			5,140


Total Industrials – 19.2%					74,830
Information Technology

Application Software – 12.2%
Envestnet, Inc. (A)		73			5,054
Five9, Inc. (A)		130			8,551
Globant S.A. (A)		54			5,688
HubSpot, Inc. (A)		25			4,024
Mimecast Ltd. (A)		159			6,919
Paycom Software, Inc. (A)		13			3,450
Pluralsight, Inc., Class A (A)		197			3,383


90		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		SMALL CAP GROWTH (in thousands)

DECEMBER 31, 2019


COMMON STOCKS(Continued)	Shares		Value
Application Software(Continued)
Q2 Holdings, Inc. (A)		83	$	6,706
Smartsheet, Inc., Class A (A)		82		3,695

				47,470


Communications Equipment – 1.1%
Viavi Solutions, Inc. (A)		273		4,097


Data Processing & Outsourced Services – 1.0%
EVO Payments, Inc., Class A (A)		155		4,091


Electronic Equipment & Instruments – 1.2%
Coherent, Inc. (A)		28		4,687


Internet Services & Infrastructure – 1.2%
8x8, Inc. (A)		245		4,486


IT Consulting & Other Services – 3.1%
Booz Allen Hamilton Holding Corp.		65		4,605
InterXion Holding N.V. (A)		90		7,580

				12,185


Semiconductor Equipment – 0.8%
Enphase Energy, Inc. (A)(B)		122		3,185


Semiconductors – 1.7%
Monolithic Power Systems, Inc.		37		6,658


Systems Software – 3.4%
Proofpoint, Inc. (A)		61		6,978
Varonis Systems, Inc. (A)		80		6,195

				13,173


Total Information Technology – 25.7%				100,032
Real Estate

Health Care REITs – 0.4%
Community Healthcare Trust, Inc.		34		1,449


Total Real Estate – 0.4%				1,449

TOTAL COMMON STOCKS – 95.3%			$	370,778
(Cost: $282,748)


SHORT-TERM SECURITIES	Shares		Value
Money Market Funds (D) – 4.9%
Dreyfus Institutional Preferred Government Money Market Fund – Institutional Shares, 1.550% (C)		1,607	$	1,607
State Street Institutional U.S. Government Money Market Fund – Premier Class, 1.550%		17,391		17,391

				18,998


TOTAL SHORT-TERM SECURITIES – 4.9%			$18,998
(Cost: $18,998)

TOTAL INVESTMENT SECURITIES – 100.2%			$	389,776
(Cost: $301,746)

LIABILITIES, NET OF CASH AND OTHER ASSETS – (0.2)%				(833	)

NET ASSETS – 100.0%			$	388,943

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		SMALL CAP GROWTH (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

*	Not shown due to rounding.

(A)	No dividends were paid during the preceding 12 months.

(B)	All or a portion of securities with an aggregate value of $13,293 are on loan.

(C)	Investment made with cash collateral received from securities on loan.

(D)	Rate shown is the annualized7-day yield at December 31, 2019.

The following total return swap agreements were outstanding at December 31, 2019:

Underlying Security

Long/Short

Counterparty

Maturity
Date

Notional
Amount

Financing

Fee⁽¹⁾⁽²⁾

Value

Upfront
Payments/
(Receipts)

Unrealized
Appreciation

Biotech Custom Index

Long

Goldman Sachs International

07/02/2020

11,066

1-Month LIBOR plus 2.5 bps

609

—

609

(1)	The Portfolio pays the financing fee multiplied by the notional amount if long on the swap agreement. If the Portfolio is short on the swap agreement, the Portfolio receives the financing fee multiplied by the notional amount.

(2)

At the termination date, a net cash flow is exchanged where the market-linked total return is equivalent to the return of the underlying security less a financing rate, if any. If the Portfolio is long on the swap agreement, the Portfolio would receive payments on any net positive total return, and would owe payments in the event of a negative total return. If the Portfolio is short on the swap agreement, the Portfolio would owe payments on any net positive total return, and would receive payments in the event of a negative total return.

The following table represents security positions within the total return basket swap as of December 31, 2019:


Reference Entity	Shares			Notional Amount		Value		% of Value
Global Blood Therapeutics, Inc.		—	*	$	662	$	36		6.0	%
Arrowhead Pharmaceuticals, Inc.		—	*		472		26		4.2
ACADIA Pharmaceuticals, Inc.		—	*		364		20		3.3
Repligen Corp.		—	*		355		20		3.2
Blueprint Medicines Corp.		—	*		316		17		2.9
Immunomedics, Inc.		1			273		15		2.5
Mirati Therapeutics, Inc.		—	*		262		14		2.4
MyoKardia, Inc.		—	*		258		14		2.3
Iovance Biotherapeutics, Inc.		1			257		14		2.3
Intercept Pharmaceuticals, Inc.		—	*		245		14		2.2
FibroGen, Inc.		—	*		242		13		2.2
PTC Therapeutics, Inc.		—	*		222		12		2.0
Audentes Therapeutics, Inc.		—	*		209		12		1.9
Halozyme Therapeutics, Inc.		1			205		11		1.9
Emergent BioSolutions, Inc.		—	*		201		11		1.8
Axsome Therapeutics, Inc.		—	*		197		11		1.8
Ultragenyx Pharmaceutical, Inc.		—	*		188		10		1.7
Amicus Therapeutics, Inc.		1			181		10		1.6
Zogenix, Inc.		—	*		180		10		1.6
Ironwood Pharmaceuticals, Inc.		1			163		9		1.5
Medicines Co. (The)		—	*		160		9		1.4
Acceleron Pharma, Inc.		—	*		157		9		1.4


Reference Entity	Shares			Notional Amount		Value		% of Value
Momenta Pharmaceuticals, Inc.		—	*	$	157	$	9		1.4	%
Natera, Inc.		—	*		151		8		1.4
Insmed, Inc.		—	*		150		8		1.4
Biohaven Pharmaceutical Holding Co. Ltd.		—	*		148		8		1.3
Pacira BioSciences, Inc.		—	*		148		8		1.3
ArQule, Inc.		—	*		147		8		1.3
Arena Pharmaceuticals, Inc.		—	*		147		8		1.3
Heron Therapeutics, Inc.		—	*		139		8		1.3
Reata Pharmaceuticals, Inc.		—	*		139		8		1.3
Allakos, Inc.		—	*		132		7		1.2
Portola Pharmaceuticals, Inc.		—	*		128		7		1.2
Xencor, Inc.		—	*		126		7		1.1
Esperion Therapeutics, Inc.		—	*		120		7		1.1
Editas Medicine, Inc.		—	*		120		7		1.1
Apellis Pharmaceuticals, Inc.		—	*		119		7		1.1
Aimmune Therapeutics, Inc.		—	*		119		7		1.1
Ra Pharmaceuticals, Inc.		—	*		117		6		1.1
Epizyme, Inc.		—	*		114		6		1.0
Invitae Corp.		—	*		113		6		1.0
REGENXBIO, Inc.		—	*		110		6		1.0
Veracyte, Inc.		—	*		107		6		1.0
Corcept Therapeutics, Inc.		—	*		96		5		0.9
Supernus Pharmaceuticals, Inc.		—	*		94		5		0.9
Theravance Biopharma, Inc.		—	*		92		5		0.8


Reference Entity	Shares			Notional Amount		Value		% of Value
Dicerna Pharmaceuticals, Inc.		—	*	$	92	$	5		0.8	%
Exact Sciences Corp.		—	*		91		5		0.8
Enanta Pharmaceuticals, Inc.		—	*		86		5		0.8
Aerie Pharmaceuticals, Inc.		—	*		83		5		0.8
Fate Therapeutics, Inc.		—	*		82		5		0.7
Allogene Therapeutics, Inc.		—	*		82		4		0.7
Athenex, Inc.		—	*		74		4		0.7
Innoviva, Inc.		—	*		73		4		0.7
Radius Health, Inc.		—	*		73		4		0.7
Vanda Pharmaceuticals, Inc.		—	*		69		4		0.6
NanoString Technologies, Inc.		—	*		69		4		0.6
Codexis, Inc.		—	*		67		4		0.6
Denali Therapeutics, Inc.		—	*		67		4		0.6
Tricida, Inc.		—	*		66		4		0.6
TG Therapeutics, Inc.		—	*		63		3		0.6
Vericel Corp.		—	*		62		3		0.6
ZIOPHARM Oncology, Inc.		1			61		3		0.6
Atara Biotherapeutics, Inc.		—	*		59		3		0.5
Madrigal Pharmaceuticals, Inc.		—	*		57		3		0.5
Amphastar Pharmaceuticals, Inc.		—	*		56		3		0.5
Sangamo Therapeutics, Inc.		—	*		54		3		0.5
Heska Corp.		—	*		54		3		0.5
Pacific Biosciences of California, Inc.		1			54		3		0.5


92		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		SMALL CAP GROWTH (in thousands)

DECEMBER 31, 2019


Reference Entity	Shares			Notional Amount		Value		% of Value
Omeros Corp.		—	*	$	53	$	3		0.5	%
UroGen Pharma Ltd.		—	*		51		3		0.5
Adverum Biotechnologies, Inc.		—	*		49		3		0.4
Retrophin, Inc.		—	*		46		3		0.4
ANI Pharmaceuticals, Inc.		—	*		46		3		0.4
G1 Therapeutics, Inc.		—	*		43		2		0.4
Clovis Oncology, Inc.		—	*		40		2		0.4


Reference Entity	Shares			Notional Amount		Value		% of Value
Phibro Animal Health Corp.		—	*	$	39	$	2		0.3	%
Cara Therapeutics, Inc.		—	*		39		2		0.3
PetIQ, Inc.		—	*		38		2		0.3
Accelerate Diagnostics, Inc.		—	*		37		2		0.3
Amneal Pharmaceuticals, Inc.		—	*		36		2		0.3
Twist Bioscience Corp.		—	*		35		2		0.3


Reference Entity	Shares			Notional Amount		Value		% of Value
Stemline Therapeutics, Inc.		—	*	$	34	$	2		0.3	%
Spectrum Pharmaceuticals, Inc.		—	*		30		2		0.3
AnaptysBio, Inc.		—	*		27		1		0.2
Voyager Therapeutics, Inc.		—	*		27		1		0.2

						$	609


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks	$	370,778	$	—	$	—
Short-Term Securities		18,998		—		—
Total	$	389,776	$	—	$	—
Total Return Swaps	$	—	$	609	$	—

The following acronym is used throughout this schedule:

REIT = Real Estate Investment Trust

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


STATEMENTS OF ASSETS AND LIABILITIES		IVY VIP

AS OF DECEMBER 31, 2019


(In thousands, except per share amounts)	Asset Strategy⁽¹⁾			Balanced			Energy				Growth			High Income				International Core Equity			Mid Cap Growth
ASSETS
Investments in unaffiliated securities at value+^		$	725,988		$	340,215		$	41,309			$	790,722		$	875,482			$	697,012		$	547,407
Investments in affiliated securities at value+			—			—			—				—			949				—			—
Bullion at value+			44,344			—			—				—			—				—			—
Investments at Value			770,332			340,215			41,309				790,722			876,431				697,012			547,407
Cash			291			—			—				—			1,776				—			—
Cash denominated in foreign currencies at value+			—			—			—				—			—				2,024			—
Investment securities sold receivable			23			—			—				—			93				442			691
Dividends and interest receivable			3,026			982			28				525			11,883				2,240			119
Capital shares sold receivable			262			4			360				89			340				22			506
Receivable from affiliates			—			—			—				—			—				—			116
Receivable from securities lending income — net			1			1			—	*			14			7				5			1
Prepaid and other assets			9			4			—	*			6			11				5			3
Total Assets			773,944			341,206			41,697				791,356			890,541				701,750			548,843

LIABILITIES
Cash collateral on securities loaned at value			616			—			—				—			2,193				76			—
Investment securities purchased payable			58			—			—				—			2,055				1,256			961
Capital shares redeemed payable			452			256			27				328			293				368			250
Independent Trustees and Chief Compliance Officer fees payable			163			92			9				287			85				83			37
Distribution and service fees payable			5			2			—	*			6			6				5			2
Shareholder servicing payable			1			1			—	*			1			1				1			1
Investment management fee payable			15			7			1				15			15				16			13
Accounting services fee payable			17			8			2				17			18				14			12
Unrealized depreciation on forward foreign currency contracts			—			—			—				—			—				833			—
Other liabilities			9			1			1				2			2				21			1
Total Liabilities			1,336			367			40				656			4,668				2,673			1,277
Commitments and Contingencies (See Note 2 and Note 13)
Total Net Assets		$	772,608		$	340,839		$	41,657			$	790,700		$	885,873			$	699,077		$	547,566

NET ASSETS
Capital paid in (shares authorized — unlimited)		$	702,160		$	274,562		$	92,530			$	432,335		$	942,590			$	691,083		$	363,983
Accumulated earnings gain (loss)			70,448			66,277			(50,873	)			358,365			(56,717	)			7,994			183,583
Total Net Assets		$	772,608		$	340,839		$	41,657			$	790,700		$	885,873			$	699,077		$	547,566

CAPITAL SHARES OUTSTANDING:
Class I			35			N/A			47				N/A			7,827				N/A			18,254
Class II			81,292			41,463			10,368				69,810			247,531				44,662			24,794

NET ASSET VALUE PER SHARE:
Class I		$	9.50			N/A		$	4.02				N/A		$	3.48				N/A		$	12.77
Class II		$	9.50		$	8.22		$	4.00			$	11.33		$	3.47			$	15.65		$	12.69

+COST
Investments in unaffiliated securities at cost		$	662,306		$	295,502		$	54,184			$	544,500		$	916,579			$	702,524		$	402,874
Investments in affiliated securities at cost			—			—			—				—			1,090				—			—
Bullion at cost			36,084			—			—				—			—				—			—
Cash denominated in foreign currencies at cost			—			—			—				—			—				2,021			—

^Securities loaned at value			5,144			602			—				—			1,918				72			3,229

*	Not shown due to rounding.

(1)

Consolidated Statement of Assets and Liabilities (See Note 5 in Notes to Financial Statements).

See Accompanying Notes to Financial Statements.


94		ANNUAL REPORT		2019


STATEMENTS OF ASSETS AND LIABILITIES		IVY VIP

AS OF DECEMBER 31, 2019


(In thousands, except per share amounts)	Natural Resources				Science and Technology			Small Cap Core				Small Cap Growth
ASSETS
Investments in unaffiliated securities at value+^		$	90,882			$	580,431		$	192,751			$	389,776
Investments at Value			90,882				580,431			192,751				389,776
Cash denominated in foreign currencies at value+			—	*			—			—				—
Restricted cash			610				—			—				—
Investment securities sold receivable			504				144			193				686
Dividends and interest receivable			60				290			138				78
Capital shares sold receivable			38				228			141				61
Receivable from affiliates			—				—			—				38
Swap agreements, at value			—				—			—				609
Receivable from securities lending income — net			—	*			1			14				3
Prepaid and other assets			1				6			2				4
Total Assets			92,095				581,100			193,239				391,255

LIABILITIES
Cash collateral on securities loaned at value			2,806				—			4,768				1,607
Investment securities purchased payable			654				—			378				224
Capital shares redeemed payable			101				548			31				333
Independent Trustees and Chief Compliance Officer fees payable			18				96			33				125
Distribution and service fees payable			1				4			1				2
Shareholder servicing payable			—	*			1			—	*			1
Investment management fee payable			2				14			4				9
Accounting services fee payable			4				13			6				10
Unrealized depreciation on forward foreign currency contracts			901				—			—				—
Other liabilities			—	*			1			2				1
Total Liabilities			4,487				677			5,223				2,312
Commitments and Contingencies (See Note 2 and Note 13)
Total Net Assets		$	87,608			$	580,423		$	188,016			$	388,943

NET ASSETS
Capital paid in (shares authorized — unlimited)		$	148,100			$	293,113		$	162,201			$	301,428
Accumulated earnings gain (loss)			(60,492	)			287,310			25,815				87,515
Total Net Assets		$	87,608			$	580,423		$	188,016			$	388,943

CAPITAL SHARES OUTSTANDING:
Class I			N/A				32			N/A				6,547
Class II			22,797				19,435			13,710				37,757

NET ASSET VALUE PER SHARE:
Class I			N/A			$	29.94			N/A			$	8.80
Class II		$	3.84			$	29.82		$	13.71			$	8.77

+COST
Investments in unaffiliated securities at cost		$	100,453			$	315,302		$	175,504			$	301,746
Cash denominated in foreign currencies at cost			—	*			—			—				—

^Securities loaned at value			2,719				5,497			4,705				13,293

* Not shown due to rounding.

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


STATEMENTS OF OPERATIONS		IVY VIP

FOR THE YEAR ENDED DECEMBER 31, 2019


(In thousands)	Asset Strategy⁽¹⁾				Balanced				Energy				Growth				High Income				International Core Equity				Mid Cap Growth
INVESTMENT INCOME
Dividends from unaffiliated securities		$	10,905			$	4,246			$	690			$	7,010			$	1,945			$	22,670			$	3,019
Foreign dividend withholding tax			(879	)			(10	)			(10	)			(14	)			—				(2,002	)			—
Interest and amortization from unaffiliated securities			12,711				3,627				28				138				64,410				1,025				201
Interest and amortization from affiliated securities			—				—				—				—				77				—				—
Securities lending income — net			104				13				5				21				138				199				20
Total Investment Income			22,841				7,876				713				7,155				66,570				21,892				3,240

EXPENSES
Investment management fee			5,392				2,304				354				5,295				5,461				6,016				4,248
Distribution and service fees:
Class II			1,925				823				104				1,891				2,114				1,769				714
Shareholder servicing:
Class I			—	*			N/A				—	*			N/A				1				N/A				2
Class II			30				11				4				22				26				19				15
Custodian fees			54				8				4				14				17				87				11
Independent Trustees and Chief Compliance Officer fees			51				25				3				60				53				43				27
Accounting services fee			200				96				28				192				214				167				135
Professional fees			75				33				26				35				60				52				30
Commitment and interest expense for borrowing			—				—				—				—				41				—				—
Other			133				21				13				38				66				60				34
Total Expenses			7,860				3,321				536				7,547				8,053				8,213				5,216
Less:
Expenses in excess of limit			—	*			—				—				—				—				—				(260	)
Total Net Expenses			7,860				3,321				536				7,547				8,053				8,213				4,956
Net Investment Income (Loss)			14,981				4,555				177				(392	)			58,517				13,679				(1,716	)

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments in unaffiliated securities			32,220				17,335				(7,223	)			112,843				(1,822	)			326				41,326
Investments in affiliated securities			—				—				—				—				1				—				—
Written options			—				—				—				—				—				—				(88	)
Swap agreements			569				—				—				—				—				201				—
Forward foreign currency contracts			—				—				—				—				55				225				—
Foreign currency exchange transactions			(180	)			—				—				—				—	*			(107	)			(3	)
Net change in unrealized appreciation (depreciation) on:
Investments in unaffiliated securities			104,123				43,391				8,632				118,696				36,468				105,851				114,679
Investments in affiliated securities			—				—				—				—				(47	)			—				—
Swap agreements			—				—				—				—				—				(46	)			—
Forward foreign currency contracts			—				—				—				—				(14	)			(485	)			—
Foreign currency exchange transactions			33				—				—				—				—	*			30				—	*
Net Realized and Unrealized Gain			136,765				60,726				1,409				231,539				34,641				105,995				155,914
Net Increase in Net Assets Resulting from Operations		$	151,746			$	65,281			$	1,586			$	231,147			$	93,158			$	119,674			$	154,198

*	Not shown due to rounding.

(1)

Consolidated Statement of Operations (See Note 5 in Notes to Financial Statements).

See Accompanying Notes to Financial Statements.


96		ANNUAL REPORT		2019


STATEMENTS OF OPERATIONS		IVY VIP

FOR THE YEAR ENDED DECEMBER 31, 2019


(In thousands)	Natural Resources				Science and Technology				Small Cap Core				Small Cap Growth
INVESTMENT INCOME
Dividends from unaffiliated securities		$	2,767			$	2,914			$	1,975			$	711
Foreign dividend withholding tax			(55	)			(73	)			(1	)			—
Interest and amortization from unaffiliated securities			56				362				191				394
Securities lending income — net			8				318				27				60
Total Investment Income			2,776				3,521				2,192				1,165

EXPENSES
Investment management fee			756				4,441				1,649				3,301
Distribution and service fees:
Class II			223				1,305				485				830
Shareholder servicing:
Class I			N/A				—	*			N/A				—	*
Class II			7				18				7				14
Custodian fees			5				8				16				6
Independent Trustees and Chief Compliance Officer fees			7				32				13				29
Accounting services fee			43				141				70				124
Professional fees			33				35				29				31
Other			26				48				12				49
Total Expenses			1,100				6,028				2,281				4,384
Less:
Expenses in excess of limit			—				—				—				(92	)
Total Net Expenses			1,100				6,028				2,281				4,292
Net Investment Income (Loss)			1,676				(2,507	)			(89	)			(3,127	)

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments in unaffiliated securities			(9,898	)			77,233				9,077				22,223
Written options			—				(2,276	)			—				—
Swap agreements			—				—				(1	)			1,265
Forward foreign currency contracts			1,442				—				—				—
Foreign currency exchange transactions			10				(24	)			—				—
Net change in unrealized appreciation (depreciation) on:
Investments in unaffiliated securities			16,492				130,323				32,388				58,289
Swap agreements			—				—				—				1,921
Forward foreign currency contracts			(1,327	)			—				—				—
Foreign currency exchange transactions			—	*			—	*			—				—
Net Realized and Unrealized Gain			6,719				205,256				41,464				83,698
Net Increase in Net Assets Resulting from Operations		$	8,395			$	202,749			$	41,375			$	80,571

* Not shown due to rounding.

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


STATEMENTS OF CHANGES IN NET ASSETS		IVY VIP


	Asset Strategy⁽¹⁾								Balanced								Energy
(In thousands)	Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss)		$	14,981			$	14,508			$	4,555			$	5,385			$	177			$	(601	)
Net realized gain (loss) on investments			32,609				83,992				17,335				26,007				(7,223	)			6,108
Net change in unrealized appreciation (depreciation)			104,156				(139,114	)			43,391				(40,922	)			8,632				(28,418	)
Net Increase (Decrease) in Net Assets Resulting from Operations			151,746				(40,614	)			65,281				(9,530	)			1,586				(22,911	)

Distributions to Shareholders From:
Accumulated earnings:
(combined net investment income and net realized gains)
Class I			(20	)			(18	)			N/A				N/A				—				—
Class II			(45,846	)			(49,202	)			(31,681	)			(10,863	)			—				—
Total Distributions to Shareholders			(45,866	)			(49,220	)			(31,681	)			(10,863	)			—				—
Capital Share Transactions			(86,614	)			(92,730	)			(3,079	)			(31,749	)			873				(106,411	)
Net Increase (Decrease) in Net Assets			19,266				(182,564	)			30,521				(52,142	)			2,459				(129,322	)
Net Assets, Beginning of Period			753,342				935,906				310,318				362,460				39,198				168,520
Net Assets, End of Period		$	772,608			$	753,342			$	340,839			$	310,318			$	41,657			$	39,198

	Growth								High Income								International Core Equity
(In thousands)	Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss)		$	(392	)		$	(200	)		$	58,517			$	57,825			$	13,679			$	13,342
Net realized gain (loss) on investments			112,843				187,073				(1,766	)			(24,107	)			645				58,736
Net change in unrealized appreciation (depreciation)			118,696				(147,341	)			36,407				(51,073	)			105,350				(216,635	)
Net Increase (Decrease) in Net Assets Resulting from Operations			231,147				39,532				93,158				(17,355	)			119,674				(144,557	)

Distributions to Shareholders From:
Accumulated earnings:
(combined net investment income and net realized gains)
Class I			N/A				N/A				(3,156	)			(3,506	)			N/A				N/A
Class II			(186,937	)			(99,828	)			(55,287	)			(56,012	)			(70,370	)			(32,980	)
Total Distributions to Shareholders			(186,937	)			(99,828	)			(58,443	)			(59,518	)			(70,370	)			(32,980	)
Capital Share Transactions			77,299				(153,936	)			4,104				(19,488	)			(26,103	)			18,832
Net Increase (Decrease) in Net Assets			121,509				(214,232	)			38,819				(96,361	)			23,201				(158,705	)
Net Assets, Beginning of Period			669,191				883,423				847,054				943,415				675,876				834,581
Net Assets, End of Period		$	790,700			$	669,191			$	885,873			$	847,054			$	699,077			$	675,876

(1)

Consolidated Statements of Changes in Net Assets (See Note 5 in Notes to Financial Statements).

See Accompanying Notes to Financial Statements.


98		ANNUAL REPORT		2019


STATEMENTS OF CHANGES IN NET ASSETS		IVY VIP


	Mid Cap Growth								Natural Resources								Science and Technology
(In thousands)	Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss)		$	(1,716	)		$	(2,364	)		$	1,676			$	837			$	(2,507	)		$	(2,425	)
Net realized gain (loss) on investments			41,235				158,437				(8,446	)			2,092				74,933				136,933
Net change in unrealized appreciation (depreciation)			114,679				(136,340	)			15,165				(30,405	)			130,323				(144,970	)
Net Increase (Decrease) in Net Assets Resulting from Operations			154,198				19,733				8,395				(27,476	)			202,749				(10,462	)

Distributions to Shareholders From:
Accumulated earnings:
(combined net investment income and net realized gains)
Class I			(35,378	)			(6,483	)			N/A				N/A				(80	)			(85	)
Class II			(46,820	)			(23,180	)			(870	)			(351	)			(49,737	)			(65,600	)
Total Distributions to Shareholders			(82,198	)			(29,663	)			(870	)			(351	)			(49,817	)			(65,685	)
Capital Share Transactions			61,552				(291,936	)			(8,357	)			(15,129	)			(2,175	)			(138,951	)
Net Increase (Decrease) in Net Assets			133,552				(301,866	)			(832	)			(42,956	)			150,757				(215,098	)
Net Assets, Beginning of Period			414,014				715,880				88,440				131,396				429,666				644,764
Net Assets, End of Period		$	547,566			$	414,014			$	87,608			$	88,440			$	580,423			$	429,666

	Small Cap Core								Small Cap Growth
(In thousands)	Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss)		$	(89	)		$	(857	)		$	(3,127	)		$	(1,836	)
Net realized gain on investments			9,076				37,591				23,488				67,357
Net change in unrealized appreciation (depreciation)			32,388				(48,670	)			60,210				(77,892	)
Net Increase (Decrease) in Net Assets Resulting from Operations			41,375				(11,936	)			80,571				(12,371	)

Distributions to Shareholders From:
Accumulated earnings:
(combined net investment income and net realized gains)
Class I			N/A				N/A				(4,305	)			—
Class II			(36,690	)			(56,235	)			(24,945	)			(117,993	)
Total Distributions to Shareholders			(36,690	)			(56,235	)			(29,250	)			(117,993	)
Capital Share Transactions			7,974				(72,013	)			(14,405	)			105,572
Net Increase (Decrease) in Net Assets			12,659				(140,184	)			36,916				(24,792	)
Net Assets, Beginning of Period			175,357				315,541				352,027				376,819
Net Assets, End of Period		$	188,016			$	175,357			$	388,943			$	352,027

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


FINANCIAL HIGHLIGHTS		IVY VIP

FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD



	Net Asset Value, Beginning of Period			Net Investment Income (Loss)⁽¹⁾				Net Realized and Unrealized Gain (Loss) on Investments				Total from Investment Operations				Distributions From Net Investment Income				Distributions From Net Realized Gains				Total Distributions
Asset Strategy
Class I Shares
Year ended12-31-2019		$	8.29		$	0.20			$	1.63			$	1.83			$	(0.23	)		$	(0.39	)		$	(0.62	)
Year ended12-31-2018			9.37			0.18				(0.67	)			(0.49	)			(0.20	)			(0.39	)			(0.59	)
Year ended12-31-2017⁽⁴⁾			8.57			0.08				0.88				0.96				(0.16	)			—				(0.16	)

Class II Shares
Year ended12-31-2019			8.29			0.18				1.62				1.80				(0.20	)			(0.39	)			(0.59	)
Year ended12-31-2018			9.37			0.16				(0.67	)			(0.51	)			(0.18	)			(0.39	)			(0.57	)
Year ended12-31-2017			8.04			0.03				1.44				1.47				(0.14	)			—				(0.14	)
Year ended12-31-2016			8.30			0.06				(0.27	)			(0.21	)			(0.05	)			—				(0.05	)
Year ended12-31-2015			10.87			0.08				(0.77	)			(0.69	)			(0.04	)			(1.84	)			(1.88	)

Balanced
Class II Shares
Year ended12-31-2019			7.46			0.11				1.44				1.55				(0.14	)			(0.65	)			(0.79	)
Year ended12-31-2018			7.95			0.12				(0.36	)			(0.24	)			(0.13	)			(0.12	)			(0.25	)
Year ended12-31-2017			7.47			0.12				0.70				0.82				(0.12	)			(0.22	)			(0.34	)
Year ended12-31-2016			8.76			0.11				0.00	*			0.11				(0.12	)			(1.28	)			(1.40	)
Year ended12-31-2015			10.19			0.12				(0.09	)			0.03				(0.09	)			(1.37	)			(1.46	)

Energy
Class I Shares
Year ended12-31-2019			3.88			0.03				0.11				0.14				—				—				—
Year ended12-31-2018			5.87			0.00	*			(1.99	)			(1.99	)			—				—				—
Year ended12-31-2017⁽⁴⁾			5.84			0.06				0.02				0.08				(0.05	)			—				(0.05	)

Class II Shares
Year ended12-31-2019			3.87			0.02				0.11				0.13				—				—				—
Year ended12-31-2018			5.87			(0.02	)			(1.98	)			(2.00	)			—				—				—
Year ended12-31-2017			6.77			0.04				(0.90	)			(0.86	)			(0.04	)			—				(0.04	)
Year ended12-31-2016			5.04			(0.02	)			1.76				1.74				(0.01	)			—				(0.01	)
Year ended12-31-2015			6.51			0.00	*			(1.44	)			(1.44	)			—	*			(0.03	)			(0.03	)

Growth
Class II Shares
Year ended12-31-2019			11.02			(0.01	)			3.58				3.57				—				(3.26	)			(3.26	)
Year ended12-31-2018			12.09			0.00	^*			0.36				0.36				—	*			(1.43	)			(1.43	)
Year ended12-31-2017			10.30			0.01				2.84				2.85				(0.03	)			(1.03	)			(1.06	)
Year ended12-31-2016			11.42			0.03				0.03				0.06				—	*			(1.18	)			(1.18	)
Year ended12-31-2015			12.08			0.00	*			0.85				0.85				(0.01	)			(1.50	)			(1.51	)

High Income
Class I Shares
Year ended12-31-2019			3.35			0.24				0.13				0.37				(0.24	)			—				(0.24	)
Year ended12-31-2018			3.65			0.23				(0.29	)			(0.06	)			(0.24	)			—				(0.24	)
Year ended12-31-2017⁽⁴⁾			3.73			0.16				(0.03	)			0.13				(0.21	)			—				(0.21	)

Class II Shares
Year ended12-31-2019			3.34			0.23				0.13				0.36				(0.23	)			—				(0.23	)
Year ended12-31-2018			3.64			0.22				(0.29	)			(0.07	)			(0.23	)			—				(0.23	)
Year ended12-31-2017			3.61			0.23				0.01				0.24				(0.21	)			—				(0.21	)
Year ended12-31-2016			3.35			0.24				0.28				0.52				(0.26	)			—				(0.26	)
Year ended12-31-2015			3.85			0.26				(0.48	)			(0.22	)			(0.24	)			(0.04	)			(0.28	)

International Core Equity
Class II Shares
Year ended12-31-2019			14.66			0.29				2.28				2.57				(0.25	)			(1.33	)			(1.58	)
Year ended12-31-2018			18.58			0.30				(3.45	)			(3.15	)			(0.28	)			(0.49	)			(0.77	)
Year ended12-31-2017			15.30			0.23				3.29				3.52				(0.24	)			—				(0.24	)
Year ended12-31-2016			15.53			0.24				(0.11	)			0.13				(0.20	)			(0.16	)			(0.36	)
Year ended12-31-2015			18.00			0.20				(0.06	)			0.14				(0.24	)			(2.37	)			(2.61	)

*	Not shown due to rounding.

(1)

Based on average weekly shares outstanding.

(2)

Based on net asset value. Total returns do not reflect a sales charge or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized.

(3)

Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses.

(4)

For the period from April 28, 2017 (commencement of operations of the class) through December 31, 2017.

(5)

Annualized.

(6)

Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period ended December 31, 2017.


100		ANNUAL REPORT		2019


	Net Asset Value, End of Period			Total Return⁽²⁾			Net Assets, End of Period (in millions)				Ratio of Expenses to Average Net Assets Including Expense Waiver			Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver			Ratio of Expenses to Average Net Assets Excluding Expense Waiver⁽³⁾			Ratio of Net Investment Income (Loss) to Average Net Assets Excluding Expense Waiver⁽³⁾			Portfolio Turnover Rate
Asset Strategy
Class I Shares
Year ended12-31-2019		$	9.50		22.08	%		$	1			0.77	%		2.19	%		0.77	%		2.19	%		46	%
Year ended12-31-2018			8.29		-5.20				—	*		0.78			1.91			0.78			1.91			58
Year ended12-31-2017⁽⁴⁾			9.37		11.16				—	*		0.74	⁽⁵⁾		1.30	⁽⁵⁾		—			—			39	⁽⁶⁾

Class II Shares
Year ended12-31-2019			9.50		21.78				772			1.02			1.94			—			—			46
Year ended12-31-2018			8.29		-5.44				753			1.03			1.65			—			—			58
Year ended12-31-2017			9.37		18.27				936			1.02			0.35			—			—			39
Year ended12-31-2016			8.04		-2.57				954			1.01			0.70			1.02			0.69			68
Year ended12-31-2015			8.30		-8.35				1,268			0.98			0.81			0.99			0.80			70

Balanced
Class II Shares
Year ended12-31-2019			8.22		22.09				341			1.01			1.38			—			—			44
Year ended12-31-2018			7.46		-3.24				310			1.01			1.55			—			—			54
Year ended12-31-2017			7.95		11.37				362			1.01			1.54			—			—			48
Year ended12-31-2016			7.47		2.03				361			1.01			1.53			—			—			54
Year ended12-31-2015			8.76		-0.32				383			1.00			1.28			—			—			44

Energy
Class I Shares
Year ended12-31-2019			4.02		3.74				—	*		1.04			0.64			—			—			21
Year ended12-31-2018			3.88		-33.96				—	*		0.94			-0.09			0.94			-0.09			37
Year ended12-31-2017⁽⁴⁾			5.87		1.55				—	*		0.92	⁽⁵⁾		1.70	⁽⁵⁾		—			—			22	⁽⁶⁾

Class II Shares
Year ended12-31-2019			4.00		3.48				42			1.29			0.42			—			—			21
Year ended12-31-2018			3.87		-34.14				39			1.19			-0.41			—			—			37
Year ended12-31-2017			5.87		-12.64				169			1.19			0.75			—			—			22
Year ended12-31-2016			6.77		34.55				196			1.19			-0.27			—			—			31
Year ended12-31-2015			5.04		-22.14				117			1.20			0.08			—			—			34

Growth
Class II Shares
Year ended12-31-2019			11.33		36.59				791			1.00			-0.05			—			—			30
Year ended12-31-2018			11.02		2.28				669			1.00			-0.02			—			—			37
Year ended12-31-2017			12.09		29.34				883			0.99			0.05			—			—			41
Year ended12-31-2016			10.30		1.22				835			0.98			0.26			1.00			0.24			53
Year ended12-31-2015			11.42		7.17				897			0.96			0.03			0.99			—			30

High Income
Class I Shares
Year ended12-31-2019			3.48		11.49				27			0.67			6.82			—			—			35
Year ended12-31-2018			3.35		-1.86				44			0.66			6.50			0.66			6.50			42
Year ended12-31-2017⁽⁴⁾			3.65		3.42				56			0.66	⁽⁵⁾		6.53	⁽⁵⁾		—			—			52	⁽⁶⁾

Class II Shares
Year ended12-31-2019			3.47		11.19				859			0.92			6.57			—			—			35
Year ended12-31-2018			3.34		-2.11				803			0.91			6.27			—			—			42
Year ended12-31-2017			3.64		6.68				887			0.91			6.22			—			—			52
Year ended12-31-2016			3.61		16.19				845			0.89			6.97			0.92			6.94			36
Year ended12-31-2015			3.35		-6.50				725			0.89			7.01			0.92			6.98			44

International Core Equity
Class II Shares
Year ended12-31-2019			15.65		18.69				699			1.16			1.93			—			—			69
Year ended12-31-2018			14.66		-17.81				676			1.16			1.70			—			—			51
Year ended12-31-2017			18.58		23.16				835			1.16			1.33			—			—			59
Year ended12-31-2016			15.30		1.08				736			1.17			1.60			—			—			77
Year ended12-31-2015			15.53		-0.94				675			1.16			1.18			—			—			87

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT

101


FINANCIAL HIGHLIGHTS		IVY VIP

FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD



	Net Asset Value, Beginning of Period			Net Investment Income (Loss)⁽¹⁾				Net Realized and Unrealized Gain (Loss) on Investments				Total from Investment Operations				Distributions From Net Investment Income				Distributions From Net Realized Gains				Total Distributions
Mid Cap Growth
Class I Shares
Year ended12-31-2019		$	11.10		$	(0.02	)		$	3.95			$	3.93			$	—			$	(2.26	)		$	(2.26	)
Year ended12-31-2018			11.63			(0.02	)			0.09				0.07				—				(0.60	)			(0.60	)
Year ended12-31-2017⁽⁴⁾			10.30			0.00	*			1.64				1.64				—				(0.31	)			(0.31	)

Class II Shares
Year ended12-31-2019			11.07			(0.06	)			3.94				3.88				—				(2.26	)			(2.26	)
Year ended12-31-2018			11.61			(0.05	)			0.09				0.04				—				(0.58	)			(0.58	)
Year ended12-31-2017			9.44			(0.04	)			2.52				2.48				—				(0.31	)			(0.31	)
Year ended12-31-2016			9.42			(0.01	)			0.55				0.54				—				(0.52	)			(0.52	)
Year ended12-31-2015			10.84			(0.01	)			(0.52	)			(0.53	)			—				(0.89	)			(0.89	)

Natural Resources
Class II Shares
Year ended12-31-2019			3.55			0.07				0.26				0.33				(0.04	)			—				(0.04	)
Year ended12-31-2018			4.63			0.03				(1.10	)			(1.07	)			(0.01	)			—				(0.01	)
Year ended12-31-2017			4.50			0.00	*			0.14				0.14				(0.01	)			—				(0.01	)
Year ended12-31-2016			3.66			0.01				0.86				0.87				(0.03	)			—				(0.03	)
Year ended12-31-2015			4.72			0.02				(1.08	)			(1.06	)			—	*			—				—	*

Science and Technology
Class I Shares
Year ended12-31-2019			21.91			(0.06	)			10.95				10.89				—				(2.86	)			(2.86	)
Year ended12-31-2018			27.04			(0.03	)			(1.24	)			(1.27	)			—				(3.86	)			(3.86	)
Year ended12-31-2017⁽⁴⁾			25.22			(0.04	)			4.16				4.12				—				(2.30	)			(2.30	)

Class II Shares
Year ended12-31-2019			21.84			(0.13	)			10.90				10.77				—				(2.79	)			(2.79	)
Year ended12-31-2018			27.04			(0.11	)			(1.23	)			(1.34	)			—				(3.86	)			(3.86	)
Year ended12-31-2017			22.34			(0.13	)			7.08				6.95				—				(2.25	)			(2.25	)
Year ended12-31-2016			22.96			(0.11	)			0.34				0.23				—				(0.85	)			(0.85	)
Year ended12-31-2015			25.02			(0.15	)			(0.41	)			(0.56	)			—				(1.50	)			(1.50	)

Small Cap Core
Class II Shares
Year ended12-31-2019			13.51			0.00	*			3.12				3.12				—				(2.92	)			(2.92	)
Year ended12-31-2018			18.32			(0.06	)			(1.37	)			(1.43	)			(0.02	)			(3.36	)			(3.38	)
Year ended12-31-2017			18.34			0.00	*			2.21				2.21				—				(2.23	)			(2.23	)
Year ended12-31-2016			15.66			0.01				4.17				4.18				(0.07	)			(1.43	)			(1.50	)
Year ended12-31-2015			17.98			0.05				(0.95	)			(0.90	)			(0.02	)			(1.40	)			(1.42	)

Small Cap Growth
Class I Shares
Year ended12-31-2019			7.69			(0.05	)			1.85				1.80				—				(0.69	)			(0.69	)
Year ended12-31-2018⁽⁵⁾			8.76			0.00	*			(1.07	)			(1.07	)			—				—				—

Class II Shares
Year ended12-31-2019			7.68			(0.07	)			1.85				1.78				—				(0.69	)			(0.69	)
Year ended12-31-2018			11.63			(0.06	)			0.03				(0.03	)			(0.05	)			(3.87	)			(3.92	)
Year ended12-31-2017			9.69			(0.07	)			2.27				2.20				—				(0.26	)			(0.26	)
Year ended12-31-2016			10.60			(0.07	)			0.23				0.16				—				(1.07	)			(1.07	)
Year ended12-31-2015			12.15			(0.09	)			0.51				0.42				—				(1.97	)			(1.97	)

*	Not shown due to rounding.

(1)

Based on average weekly shares outstanding.

(2)

Based on net asset value. Total returns do not reflect a sales charge or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized.

(3)

Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses.

(4)

For the period from April 28, 2017 (commencement of operations of the class) through December 31, 2017.

(5)

For the period from November 5, 2018 (commencement of operations of the class) through December 31, 2018.

(6)

Annualized.

(7)

Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period ended December 31, 2017.

(8)

Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period ended December 31, 2018.

(9)

Expense ratio based on the period excluding reorganization expenses was 0.89%.

(10)

Expense ratio based on the period excluding reorganization expenses was 1.14%.


102		ANNUAL REPORT		2019


	Net Asset Value, End of Period			Total Return⁽²⁾			Net Assets, End of Period (in millions)				Ratio of Expenses to Average Net Assets Including Expense Waiver			Ratio of Net Investment Income (Loss) to Average Net Assets Including Expense Waiver			Ratio of Expenses to Average Net Assets Excluding Expense Waiver⁽³⁾			Ratio of Net Investment Income (Loss) to Average Net Assets Excluding Expense Waiver⁽³⁾			Portfolio Turnover Rate
Mid Cap Growth
Class I Shares
Year ended12-31-2019		$	12.77		38.28	%		$	233			0.85	%		-0.20	%		0.90	%		-0.25	%		20	%
Year ended12-31-2018			11.10		0.20				184			0.85			-0.14			0.90			-0.19			53
Year ended12-31-2017⁽⁴⁾			11.63		16.44				131			0.85	⁽⁶⁾		0.05	⁽⁶⁾		0.89	⁽⁶⁾		0.01	⁽⁶⁾		25	⁽⁷⁾

Class II Shares
Year ended12-31-2019			12.69		37.94				315			1.10			-0.45			1.15			-0.50			20
Year ended12-31-2018			11.07		-0.06				230			1.10			-0.42			1.15			-0.47			53
Year ended12-31-2017			11.61		26.89				585			1.11			-0.39			1.15			-0.43			25
Year ended12-31-2016			9.44		6.12				615			1.10			-0.09			1.15			-0.14			33
Year ended12-31-2015			9.42		-5.78				586			1.10			-0.07			1.15			-0.12			42

Natural Resources
Class II Shares
Year ended12-31-2019			3.84		9.46				88			1.24			1.88			—			—			36
Year ended12-31-2018			3.55		-23.23				88			1.21			0.72			—			—			33
Year ended12-31-2017			4.63		2.97				131			1.36			0.11			—			—			44
Year ended12-31-2016			4.50		23.81				144			1.36			0.20			—			—			67
Year ended12-31-2015			3.66		-22.39				114			1.35			0.54			—			—			34

Science and Technology
Class I Shares
Year ended12-31-2019			29.94		49.86				1			0.90			-0.23			—			—			31
Year ended12-31-2018			21.91		-5.00				1			0.91			-0.11			0.91			-0.11			17
Year ended12-31-2017⁽⁴⁾			27.04		17.24				—	*		0.90	⁽⁶⁾		-0.25	⁽⁶⁾		—			—			27	⁽⁷⁾

Class II Shares
Year ended12-31-2019			29.82		49.48				579			1.15			-0.48			—			—			31
Year ended12-31-2018			21.84		-5.23				429			1.16			-0.38			—			—			17
Year ended12-31-2017			27.04		32.12				645			1.15			-0.51			—			—			27
Year ended12-31-2016			22.34		1.54				514			1.15			-0.52			1.17			-0.54			16
Year ended12-31-2015			22.96		-2.88				582			1.13			-0.60			1.15			-0.62			25

Small Cap Core
Class II Shares
Year ended12-31-2019			13.71		24.33				188			1.18			-0.05			—			—			126
Year ended12-31-2018			13.51		-10.49				175			1.17			-0.34			—			—			112
Year ended12-31-2017			18.32		13.73				316			1.15			0.01			—			—			112
Year ended12-31-2016			18.34		28.88				348			1.16			0.08			—			—			182
Year ended12-31-2015			15.66		-5.58				318			1.15			0.26			—			—			142

Small Cap Growth
Class I Shares
Year ended12-31-2019			8.80		23.68				58			0.89			-0.60			0.91			-0.62			41
Year ended12-31-2018⁽⁵⁾			7.69		-12.24				52			1.05	⁽⁶⁾⁽⁹⁾		0.15	⁽⁶⁾		1.07	⁽⁶⁾		0.13	⁽⁶⁾		52	⁽⁸⁾

Class II Shares
Year ended12-31-2019			8.77		23.37				331			1.14			-0.84			1.17			-0.87			41
Year ended12-31-2018			7.68		-4.11				300			1.16	⁽¹⁰⁾		-0.52			1.18			-0.54			52
Year ended12-31-2017			11.63		23.12				377			1.15			-0.69			1.17			-0.71			55
Year ended12-31-2016			9.69		2.92				426			1.14			-0.79			1.16			-0.81			107
Year ended12-31-2015			10.60		1.88				430			1.13			-0.76			1.15			-0.78			102

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT

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NOTES TO FINANCIAL STATEMENTS		IVY VIP

DECEMBER 31, 2019

ORGANIZATION

Ivy Variable Insurance Portfolios, a Delaware statutory trust (the “Trust”), is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. Asset Strategy, Balanced, Energy, Growth, High Income, International Core Equity, Mid Cap Growth, Natural Resources, Science and Technology, Small Cap Core and Small Cap Growth (each, a “Portfolio”) are eleven series of the Trust and are the only series of the Trust included in these financial statements. The assets belonging to each Portfolio are held separately by the custodian. The investment objective, policies and risk factors of each Portfolio are described more fully in the Prospectus and Statement of Additional Information (“SAI”). Each Portfolio’s investment adviser is Ivy Investment Management Company (“IICO”).

Each Portfolio offers Class II shares. Asset Strategy, Energy, High Income, Mid Cap Growth, Science and Technology and Small Cap Growth also offer Class I shares. All classes of shares have identical rights and voting privileges with respect to the Portfolio in general and exclusive voting rights on matters that affect that class alone. Net investment income, net assets and net asset value per share (“NAV”) may differ due to each class having its own expenses, such as transfer agent and shareholder servicing fees, directly attributable to that class. Class II shares have a distribution and service plan. Class I shares are not included in the plan.

SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by each Portfolio.

Security Transactions and Related Investment Income. Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses are calculated on the identified cost basis. Interest income is recorded on the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Portfolio is informed of the ex-dividend date. All or a portion of the distributions received from a real estate investment trust or publicly traded partnership may be designated as a reduction of cost of the related investment or realized gain.

Foreign Currency Translation. Each Portfolio’s accounting records are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars daily, using foreign exchange rates obtained from an independent pricing service approved by the Board of Trustees of the Trust (the “Board”). Purchases and sales of investment securities and accruals of income and expenses are translated at the rate of exchange prevailing on the date of the transaction. For assets and liabilities other than investments in securities, net realized and unrealized gains and losses from foreign currency translation arise from changes in currency exchange rates. Each Portfolio combines fluctuations from currency exchange rates and fluctuations in value when computing net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments. Foreign exchange rates are typically valued as of the close of the New York Stock Exchange (“NYSE”), normally 4:00 P.M. Eastern time, on each day the NYSE is open for trading.

Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than those attributable to a specific class), gains and losses are allocated on a daily basis to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders are recorded by each Portfolio on the business day following record date. Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America (“U.S. GAAP”). If the total dividends and distributions made in any tax year exceeds net investment income and accumulated realized capital gains, a portion of the total distribution may be treated as a tax return of capital.

Income Taxes. It is the policy of each Portfolio to distribute all of its taxable income and capital gains to its shareholders and to otherwise qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. In addition, each Portfolio intends to pay distributions as required to avoid imposition of excise tax. Accordingly, no provision has been made for Federal income taxes. The Portfolios file income tax returns in U.S. federal and applicable state jurisdictions. The Portfolios’ tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax returns. Management of the Trust periodically reviews all tax positions to assess whether it is more likely than not that the position would be sustained upon examination by the relevant tax authority based on the technical merits of each position. As of the date of these financial statements, management believes that no liability for unrecognized tax positions is required.


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and regulations of the U.S. Commodities Futures Trading Commission require that a Portfolio either deliver collateral or segregate assets in connection with certain investments (e.g., dollar rolls, financial futures contracts, foreign currency exchange contracts, options written, securities with extended settlement periods, and swaps), the Portfolio will segregate collateral or designate on its books and records, cash or other liquid securities having a value at least equal to the amount that is required to be physically segregated for the benefit of the counterparty. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit cash or securities as collateral for certain investments. Certain countries require that cash reserves be held while investing in companies incorporated in that country. These cash reserves and cash collateral that has been pledged to cover obligations of the Portfolios under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as “Restricted cash”. Securities collateral pledged for the same purpose, if any, is noted on the Schedule of Investments.

Concentration of Market and Credit Risk. In the normal course of business, the Portfolios invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Portfolios may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Portfolios; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Portfolios may be exposed to counterparty credit risk, or the risk that an entity with which the Portfolios have unsettled or open transactions may fail to or be unable to perform on its commitments. The Portfolios manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Portfolios to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Portfolios’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded on the Portfolios’ Statement of Assets and Liabilities, less any collateral held by the Portfolios.

Certain Portfolios may hold high-yield or non-investment-grade bonds, that may be subject to a greater degree of credit risk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Portfolios may acquire securities in default and are not obligated to dispose of securities whose issuers subsequently default.

Certain Portfolios may enter into financial instrument transactions (such as swaps, futures, options and other derivatives) that may have off-balance sheet market risk. Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected on the Statement of Assets and Liabilities.

If a Portfolio invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in financial derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Portfolio, or, in the case of hedging positions, that the Portfolio’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad.

The London Interbank Offered Rate “LIBOR” is an indicative measure of the average interest rate at which major global banks could borrow from one another. LIBOR is quoted in multiple currencies and multiple time frames using data reported by private-sector banks. LIBOR is used extensively in the United States and globally as a “benchmark” or “reference rate” for various commercial and financial contracts, including corporate and municipal bonds and loans, floating rate mortgages, asset-backed securities, consumer loans, and interest rate swaps and other derivatives.

It is expected that a number of private-sector banks currently reporting information used to set LIBOR will stop doing so after 2021 when their current reporting commitment ends, which could either cause LIBOR to stop publication immediately or cause LIBOR’s regulator to determine that its quality has degraded to the degree that it is no longer representative of its underlying market.

Management believes that, with respect to any significant investments by a Portfolio in instruments linked to LIBOR, the impact on investments and discontinuation of LIBOR may represent a significant risk.

However, management acknowledges that the anticipated transition away from LIBOR will occur after 2021 and certain of the current investments will mature prior to that time. Furthermore, the ways in which LIBOR’s discontinuation potentially could impact the Portfolios’ investments is not fully known. The extent of that impact may vary depending on various factors, which include, but are not limited to: (i) existing fallback or termination provisions in individual contracts and (ii) whether, how, and when industry participants develop and adopt new successor reference rates and/or fallbacks for both legacy and new instruments.

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In addition, the transition to a successor rate could potentially cause (i) increased volatility or illiquidity in markets for instruments that currently rely on LIBOR, (ii) a reduction in the value of certain instruments held by a Portfolio, or (iii) reduced effectiveness of related Portfolio transactions, such as hedging.

As the impacts of the transition become clearer during the next year, Management will be evaluating the impacts of these changes.

Inflation-Indexed Bonds. Certain Portfolios may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond will be included as interest income on the Statement of Operations, even though investors do not receive their principal until maturity.

Interest Only Obligations.These securities entitle the owner to receive only the interest portion from a bond, Treasury note or pool of mortgages. These securities are generally created by a third party separating a bond or pool of mortgages into distinct interest-only and principal-only securities. As the principal (par) amount of a bond or pool of mortgages is paid down, the amount of interest income earned by the owner will decline as well.

Loans. Certain Portfolios may invest in loans, the interest rates of which float or adjust periodically based upon a specified adjustment schedule, benchmark indicator, or prevailing interest rates, the debtor of which may be a domestic or foreign corporation, partnership or other entity (“Borrower”). Loans generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates generally include prime rates of one or more major U.S. banks, the LIBOR or certificates of deposit rates. Loans often require prepayments from excess cash flow or permit the Borrower to repay at its election. The degree to which Borrowers repay cannot be predicted with accuracy. As a result, the actual maturity may be substantially less than the stated maturities. Loans are exempt from registration under the Securities Act of 1933, as amended, may contain certain restrictions on resale, and cannot be sold publicly. A Portfolio’s investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties.

When a Portfolio purchases assignments, it acquires all the rights and obligations under the loan agreement of the assigning lender. Assignments may, however, be arranged through private negotiations between potential assignees and potential assignors, and the rights and obligations acquired by the purchaser of an assignment may differ from, and be more limited than those held by the assigning lender. When a Portfolio purchases a participation of a loan interest, the Portfolio typically enters into a contractual agreement with the lender or other third party selling the participation. A participation interest in loans includes the right to receive payments of principal, interest and any fees to which it is entitled from the lender and only upon receipt by the lender of payments from the Borrower, but not from the Borrower directly. When investing in a participation interest, if a Borrower is unable to meet its obligations under a loan agreement, a Portfolio generally has no direct right to enforce compliance with the terms of the loan agreement. As a result, the Portfolio assumes the credit risk of the Borrower, the selling participant, and any other persons that are interpositioned between the Portfolio and the Borrower. If the lead lender in a typical lending syndicate becomes insolvent, enters Federal Deposit Insurance Corporation (“FDIC”) receivership or, if not FDIC insured, enters into bankruptcy, the Portfolio may incur certain costs and delays in receiving payment or may suffer a loss of principal and interest.

Payment In-Kind Securities. Certain Portfolios may invest in payment in-kind securities (“PIKs”). PIKs give the issuer the option at each interest payment date of making interest payments in cash or in additional debt securities. Those additional debt securities usually have the same terms, including maturity dates and interest rates, and associated risks as the original bonds. The daily market quotations of the original bonds may include the accrued interest (referred to as a dirty price) and require a pro-rata adjustment from the unrealized appreciation or depreciation on investments to interest receivable on the Statement of Assets and Liabilities.

Securities on a When-Issued or Delayed Delivery Basis. Certain Portfolios may purchase securities on a “when-issued” basis, and may purchase or sell securities on a “delayed delivery” basis. “When-issued” or “delayed delivery” refers to securities whose terms and indenture are available and for which a market exists, but which are not available for immediate delivery. Delivery and payment for securities that have been purchased by a Portfolio on a when-issued basis normally take place within six months and possibly as long as two years or more after the trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The purchase of securities on a when-issued basis may increase the volatility of a Portfolio’s NAV to the extent the Portfolio executes such transactions while remaining substantially fully invested. When a Portfolio engages in when-issued or delayed delivery transactions, it relies on the buyer or seller, as the case may be, to complete the transaction. Their failure to do so may cause the Portfolio to lose the opportunity to obtain or dispose of the security at a price and yield IICO, or the Portfolio’s investment subadviser, as applicable, consider advantageous. The Portfolio maintains internally designated assets with a value equal to or greater than the amount of its purchase commitments. The Portfolio may also sell securities that it purchased on a when-issued or delayed delivery basis prior to settlement of the original purchase.


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Custodian Fees. “Custodian fees” on the Statement of Operations may include interest expense incurred by a Portfolio on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. A Portfolio pays interest to its custodian on such cash overdrafts, to the extent they are not offset by positive cash balances maintained by that Portfolio. The “Earnings credit” line item, if shown, represents earnings on cash balances maintained by that Portfolio during the period. Such interest expense and other custodian fees may be paid with these earnings.

Indemnification. The Trust’s organizational documents provide current and former Trustees and Officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Trust. In the normal course of business, the Trust may also enter into contracts that provide general indemnification. The Trust’s maximum exposure under these arrangements is unknown and is dependent on future claims that may be made against the Trust. The risk of material loss from such claims is considered remote.

Basis of Preparation. Each Portfolio is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 (“ASC 946”). The accompanying financial statements were prepared in accordance with U.S. GAAP, including but not limited to ASC 946. U.S. GAAP requires the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity.

Subsequent Events. Management has performed a review for subsequent events through the date this report was issued.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Each Portfolio’s investments are reported at fair value. Fair value is defined as the price that each Portfolio would receive upon selling an asset or would pay upon satisfying a liability in an orderly transaction between market participants at the measurement date. Each Portfolio calculates the NAV of its shares as of the close of the NYSE, normally 4:00 P.M. Eastern time, on each day the NYSE is open for trading.

For purposes of calculating the NAV, the portfolio securities and financial instruments are valued on each business day using pricing and valuation methods as adopted by the Board. Where market quotes are readily available, fair value is generally determined on the basis of the last reported sales price, or if no sales are reported, based on quotes obtained from a quotation reporting system, established market makers, or pricing services.

Prices for fixed-income securities are typically based on quotes that are obtained from an independent pricing service approved by the Board. To determine values of fixed-income securities, the independent pricing service utilizes such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Securities that cannot be valued by the independent pricing service may be valued using quotes obtained from dealers that make markets in the securities.

Short-term securities with maturities of 60 days or less are valued based on quotes that are obtained from an independent pricing service approved by the Board as described in the preceding paragraph above.

Because many foreign markets close before the NYSE, events may occur between the close of the foreign market and the close of the NYSE that could have a material impact on the valuation of foreign securities. Waddell & Reed Services Company (“WRSCO”), pursuant to procedures adopted by the Board, evaluates the impact of these events and may adjust the valuation of foreign securities to reflect the fair value as of the close of the NYSE. In addition, all securities for which values are not readily available or are deemed unreliable are appraised at fair value as determined in good faith under the supervision of the Board.

Where market quotes are not readily available, portfolio securities or financial instruments are valued at fair value, as determined in good faith by the Board or Valuation Committee pursuant to procedures approved by the Board.

Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the NYSE close, that materially affect the values of a Portfolio’s securities or financial instruments. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade do not open for trading for the entire day and no other market prices are available.

The Board has delegated to WRSCO the responsibility for monitoring significant events that may materially affect the values of a Portfolio’s securities or financial instruments and for determining whether the value of the applicable securities or financial instruments should be re-evaluated in light of such significant events. IICO, pursuant to authority delegated by the Board, has established a Valuation Committee to administer and oversee the valuation process, including the use of third party pricing vendors.

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pursuant to procedures established by the Board, with reference to other securities or indices. In the event that the security or financial instrument cannot be valued pursuant to one of the valuation methods established by the Board, the value of the security or financial instrument will be determined in good faith by the Valuation Committee in accordance with the procedures adopted by the Board.

When a Portfolio uses these fair valuation methods applied by WRSCO that use significant unobservable inputs to determine its NAV, securities will be priced by a method that the Board or persons acting at its direction believe accurately reflects fair value and are categorized as Level 3 of the fair value hierarchy. These methods may require subjective determinations about the value of a security. The prices used by a Portfolio may differ from the value that will ultimately be realized at the time the securities are sold.

WRSCO is responsible for monitoring the implementation of the pricing and valuation policies through a series of activities to provide reasonable comfort of the accuracy of prices including: 1) periodic vendor due diligence meetings to review methodologies, new developments, and process at vendors, 2) daily and monthly multi-source pricing comparisons reviewed and submitted to the Valuation Committee, and 3) daily review of unpriced, stale, and variance reports with exceptions reviewed by management and the Valuation Committee.

Accounting standards establish a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the factors that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs which are significant to the overall valuation.

The three-tier hierarchy of inputs is summarized as follows:

•

Level 1 – Observable inputs such as quoted prices, available in active markets, for identical assets or liabilities.

•

Level 2 – Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs.

•

Level 3 – Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, which may include assumptions made by the Board or persons acting at its direction that are used in determining the fair value of investments.

A description of the valuation techniques applied to the Portfolios’ major classes of assets and liabilities measured at fair value on a recurring basis follows:

Asset-Backed Securities and Mortgage-Backed Securities. The fair value of asset-backed securities and mortgage-backed securities are estimated using recently executed transactions and based on models that consider the estimated cash flows of each debt tranche of the issuer, establish a benchmark yield, and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche including, but not limited to, the prepayment speed assumptions and attributes of the collateral. To the extent the inputs are observable and timely, the values would be categorized in Level 2 of the fair value hierarchy, and otherwise they would be categorized as Level 3.

Bullion. The fair value of bullion is at the last settlement price at the end of each day on the board of trade or exchange upon which they are traded and are categorized in Level 1 of the fair value hierarchy.

Corporate Bonds. The fair value of corporate bonds, as obtained from an independent pricing service, is estimated using various techniques, which consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, fundamental data relating to the issuer, and credit default swap spreads adjusted for any basis difference between cash and derivative instruments. While most corporate bonds are categorized in Level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in Level 3 of the fair value hierarchy.


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options are ordinarily valued at the mean of the last bid and ask price provided by an independent pricing service unless the price is unavailable, in which case they are valued at a quotation obtained from a broker-dealer. Over the counter (“OTC”) options are ordinarily valued at the mean of the last bid and ask price for a comparable listed option provided by an independent pricing service unless such a price is unavailable, in which case they are valued at a quotation obtained from a broker-dealer.

Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. OTC derivative contracts include forward foreign currency contracts, swap agreements, and option contracts related to interest rates, foreign currencies, credit standing of reference entities, equity prices, or commodity prices. Depending on the product and the terms of the transaction, the fair value of the OTC derivative products are modeled taking into account the counterparties’ creditworthiness and using a series of techniques, including simulation models. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgments and the pricing inputs are observed from actively quoted markets, as is the case with interest rate swap and option contracts. OTC derivative products valued using pricing models with significant observable inputs are categorized within Level 2 of the fair value hierarchy.

Equity Securities. Equity securities traded on U.S. or foreign securities exchanges or included in a national market system are valued at the official closing price at the close of each business day unless otherwise stated below. OTC equity securities and listed securities for which no price is readily available are valued at the average of the last bid and ask prices.

Mutual funds, including investment funds, typically are valued at the NAV reported as of the valuation date.

Securities that are stated at the last reported sales price or closing price on the day of valuation taken from the primary exchange where the security is principally traded and to the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.

Foreign securities, for which the primary trading market closes at the same time or after the NYSE, are valued based on quotations from the primary market in which they are traded and categorized in Level 1. Because many foreign securities markets and exchanges close prior to the close of the NYSE, closing prices for foreign securities in those markets or on those exchanges do not reflect the events that occur after that close. Certain foreign securities may be fair valued using a pricing service that considers the correlation of the trading patterns of the foreign security to the intra-day trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, exchange-traded funds, and the movement of certain indices of securities based on a statistical analysis of their historical relationship; such valuations generally are categorized in Level 2.

Preferred stock, repurchase agreements, and other equities traded on inactive markets or valued by reference to similar instruments are also generally categorized in Level 2.

Loans. Loans are valued using a price or composite price from one or more brokers or dealers as obtained from an independent pricing service. The fair value of loans is estimated using recently executed transactions, market price quotations, credit/market events, and cross-asset pricing. Inputs are generally observable market inputs obtained from independent sources. Loans are generally categorized in Level 2 of the fair value hierarchy, unless key inputs are unobservable in which case they would be categorized as Level 3.

Municipal Bonds. Municipal bonds are fair valued based on pricing models used by and obtained from an independent pricing service that take into account, among other factors, information received from market makers and broker-dealers, current trades, bid-wants lists, offerings, market movements, the callability of the bond, state of issuance, benchmark yield curves, and bond insurance. To the extent that these inputs are observable and timely, the fair values of municipal bonds would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.

Restricted Securities. Restricted securities that are deemed to be Rule 144A securities and illiquid, as well as restricted securities held in non-public entities, are included in Level 3 of the fair value hierarchy to the extent that significant inputs to valuation are unobservable, because they trade infrequently, if at all and, therefore, the inputs are unobservable. Restricted securities that are valued at a discount to similar publicly traded securities may be categorized as Level 2 of the fair value hierarchy to the extent that the discount is considered to be insignificant to the fair value measurement in its entirety; otherwise they may be categorized as Level 3.

U.S. Government and Agency Securities. U.S. government and agency securities are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, quoted market prices, and reference data. Accordingly, U.S. government and agency securities are normally categorized in Level 2 of the fair value hierarchy depending on the liquidity and transparency of the market.

2019

ANNUAL REPORT

109

For fair valuations using unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in or out of the Level 3 category during the period. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for each respective Portfolio.

Net realized gain (loss) and net unrealized appreciation (depreciation), shown on the reconciliation of Level 3 investments, if applicable, are included on the Statement of Operations in net realized gain (loss) on investments in unaffiliated and/or affiliated securities and in net change in unrealized appreciation (depreciation) on investments in unaffiliated and/or affiliated securities, respectively. Additionally, the net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of December 31, 2019, if applicable, is included on the Statement of Operations in net change in unrealized appreciation (depreciation) on investments in unaffiliated and/or affiliated securities.

DERIVATIVE INSTRUMENTS($ amounts in thousands unless indicated otherwise)

The following disclosures contain information on why and how the Portfolios use derivative instruments, the associated risks of investing in derivative instruments, and how derivative instruments affect the Portfolios’ financial positions and results of operations.

Forward Foreign Currency Contracts. All Portfolios are authorized to enter into forward foreign currency contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date. Forward contracts are reported on a schedule following the Schedule of Investments. Forward contracts are valued daily based upon the closing prices of the forward currency rates provided by an independent pricing service determined at the close of the NYSE. The resulting unrealized appreciation and depreciation is reported on the Statement of Assets and Liabilities as a receivable or payable and on the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) on the Statement of Operations.

Risks to a Portfolio related to the use of such contracts include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. Credit risk arises from the possibility that the counterparty will default. If the counterparty defaults, a Portfolio’s maximum loss will consist of the aggregate unrealized gain on appreciated contracts that is not collateralized.

High Income, International Core Equity and Natural Resources enter into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from foreign currencies (foreign currency exchange rate risk).

Option Contracts. Options purchased by a Portfolio are accounted for in the same manner as portfolio securities. The cost of the underlying instruments acquired through the exercise of call options is increased by the premium paid to purchase the call. The proceeds from instruments sold through the exercise of put options are decreased by the premium paid to purchase the put.

When a Portfolio writes (sells) an option, an amount equal to the premium received by the Portfolio is recorded as a liability. The amount of the liability is subsequently adjusted to reflect the current value of the option written. When an option expires on its stipulated expiration date or a Portfolio enters into a closing purchase transaction, the Portfolio realizes a gain (or loss if the cost of a closing purchase transaction exceeds the premium received when the call option was sold), and the liability related to such option is extinguished. When a written call option is exercised, the premium is added to the proceeds from the sale of the underlying instrument in determining whether a Portfolio has realized a gain or loss. When a written put is exercised, the cost basis of the instruments purchased by a Portfolio is reduced by the amount of the premium received.

Investments in options, whether purchased or written, involve certain risks. Writing put options and purchasing call options may increase a Portfolio’s exposure to the underlying instrument. With written options, there may be times when a Portfolio will be required to purchase or sell instruments to meet its obligation under the option contract where the required action is not beneficial to the Portfolio, due to unfavorable movement of the market price of the underlying instrument.

Option contracts can be traded on a regulated exchange or traded OTC. Unlike the trades on a regulated exchange where the clearinghouse guarantees the performances of both the buyer and the seller, to the extent a Portfolio enters into OTC option transactions with counterparties, the Portfolio will be exposed to the risk that counterparties to these OTC transactions will be unable to meet their obligations under the terms of the transaction.

Asset Strategy, Mid Cap Growth and Science and Technology purchase and write call and put options to increase or decrease hedging exposure to underlying instruments (which include credit risk, equity risk, foreign currency exchange rate risk, event risk and/or interest rate risk), increase exposure to various equity markets or certain sectors, gain exposure to or facilitate trading in certain securities and/or, in the case of options written, to generate returns from options premiums.


110		ANNUAL REPORT		2019

Swap Agreements. All Portfolios are authorized to invest in swap agreements. Swap agreements are bilaterally negotiated agreements between a Portfolio and counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified, future intervals. Swap agreements are privately negotiated in the over-the-counter market (“OTC swaps”). If the OTC swap entered is one of the swaps identified by a relevant regulator as a swap that is required to be cleared, then it will be cleared through a third party, known as a central counterparty or derivatives clearing organization (“centrally cleared swaps”).

Swaps are marked to market daily and changes in value are recorded as unrealized appreciation (depreciation) on the Statement of Operations. Payments received or made by the Portfolio are recorded as realized gain or loss on the Statement of Operations. Any upfront premiums paid are recorded as assets and any upfront fees received are recorded as liabilities and are shown as swap premiums paid and swap premiums received, respectively, if any, on the Statement of Assets and Liabilities and amortized over the term of the swap. An early termination payment received or made at an early termination or a final payment made at the maturity of the swap is recorded as realized gain or loss on the Statement of Operations.

After a centrally cleared swap is accepted for clearing, a Portfolio may be required to deposit initial margin with a Clearing Member in the form of cash or securities. Securities deposited as initial margin, if any, are designated on the Schedule of Investments. Cash deposited as initial margin is identified on the Schedule of Investments and is recorded as restricted cash on the Statement of Assets and Liabilities.

Total return swaps involve a commitment of one party to pay periodic interest payments in exchange for a market-linked return based on a security or a basket of securities including a variety of securities or representing a particular index. To the extent the total return of the security, a basket of securities, or an index exceeds or falls short of the offsetting interest rate obligation, the Portfolio will receive a payment from or make a payment to the counterparty.

Asset Strategy, International Core Equity, Small Cap Core and Small Cap Growth enter into total return swaps to hedge exposure to a security or market.

The creditworthiness of the counterparty with which a Portfolio enters into a swap agreement is monitored by IICO. If a counterparty creditworthiness declines, the value of the agreement would likely decline, potentially resulting in losses. If a default occurs by the counterparty to such a transaction, the Portfolio will have contractual remedies pursuant to the agreement related to the transaction. The maximum loss a Portfolio may incur consists of the aggregate unrealized gain on appreciated contracts that is not collateralized due to facts specific to certain situations (i.e., collateral may not have been posted by the counterparty due to the required collateral amount being less than the pre-agreed thresholds. Additionally, regulatory developments called stay resolutions and the ensuing required contractual amendments to the transactional documentation, including derivatives, permit the relevant regulators to preclude parties to a transaction from terminating trades, among other rights it may have in the trade agreements should a counterparty that it regulates experience financial distress. A relevant regulator also has the authority to reduce the value of certain liabilities owed by the counterparty to a Fund and/or convert cash liabilities of a regulated entity into equity holdings. The power given to the relevant regulators includes the ability to amend transactional agreements unilaterally, modify the maturity of eligible liabilities, reduce the amount of interest payable or change the date on which interest becomes payable, among other powers.

To prevent incurring losses due to the counterparty credit risk, IICO actively monitors the creditworthiness of the counterparties with which it has entered financial transactions. IICO consistently and frequently risk manages the credit risk of the counterparties it faces in transactions.

Collateral and rights of offset. A Portfolio mitigates credit risk with respect to OTC derivative counterparties through credit support annexes (“CSA”) included with an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement which is the standard contract governing all OTC derivative transactions between the Portfolio and each of its counterparties. Although it is not possible to eliminate credit risk entirely, the CSA allows the Portfolio and its counterparty to reduce their exposure to the risk of payment default by the other party by holding an amount in collateral equivalent to the realized and unrealized amount of exposure to the counterparty, which is generally held by the Portfolio’s custodian. An amount of collateral is moved to/from applicable counterparties only if the amount of collateral required to be posted surpasses both the threshold and the minimum transfer amount pre-agreed in the CSA between the Portfolio and the counterparty. See Note 2 “Segregation and Collateralization” for additional information with respect to collateral practices.

2019

ANNUAL REPORT

111

Offsetting of Assets and Liabilities. The following tables present financial instruments that are either (1) offset or (2) subject to an enforceable master netting arrangement or similar agreement as of December 31, 2019:

Assets


									Gross Amounts Not Offset on the Statement of Assets and Liabilities
Portfolio	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Statement of Assets and Liabilities		Net Amounts of Assets Presented on the Statement of Assets and Liabilities			Financial Instruments and Derivatives Available for Offset			Non-Cash Collateral Received		Cash Collateral Received			Net Amount Receivable
International Core Equity
Unrealized appreciation on forward foreign currency contracts⁽¹⁾	$	13		$	—	$	13		$	(13	)	$	—	$	—		$	—
Natural Resources
Unrealized appreciation on forward foreign currency contracts⁽¹⁾	$	—	*	$	—	$	—	*	$	—	*	$	—	$	—		$	—
Small Cap Growth
Swap agreements, at value	$	609		$	—	$	609		$	—		$	—	$	(609	)	$	—

*	Not shown due to rounding.

(1)

Amounts include forward contracts that have an offset to an open and close contract, but have not settled. These amounts are included on the Statement of Assets and Liabilities line item for Investment securities sold receivable.

Liabilities


							Gross Amounts Not Offset on the Statement of Assets and Liabilities
Portfolio	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Statement of Assets and Liabilities		Net Amounts of Liabilities Presented on the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset			Non-Cash Collateral Pledged			Cash Collateral Pledged			Net Amount Payable
International Core Equity
Unrealized depreciation on forward foreign currency contracts⁽¹⁾	$	1,044	$	—	$	1,044	$	(13	)	$	(1,031	)	$	—		$	—
Natural Resources
Unrealized depreciation on forward foreign currency contracts⁽¹⁾	$	904	$	—	$	904	$	—	*	$	—		$	(610	)	$	294

*	Not shown due to rounding.

(1)

Additional

Disclosure Related to Derivative Instruments

Fair values of derivative instruments as of December 31, 2019:

Assets

Liabilities

Portfolio

Type of Risk
Exposure

Statement of Assets & Liabilities
Location

Value

Statement of Assets & Liabilities
Location

Value

International Core Equity

Foreign currency

—

Unrealized depreciation on forward foreign currency contracts

833

Natural Resources

Foreign currency

—

Unrealized depreciation on forward foreign currency contracts

901

Small Cap Growth

Equity

Swap agreements, at value

609

—


112		ANNUAL REPORT		2019

Amount of realized gain (loss) on derivatives recognized on the Statement of Operations for the year ended December 31, 2019:


		Net realized gain (loss) on:
Portfolio	Type of Risk Exposure	Investments in unaffiliated securities*		Swap agreements			Futures contracts		Written options			Forward foreign currency contracts		Total
Asset Strategy	Equity	$	267	$	569		$	—	$	—		$	—	$	836
High Income	Foreign currency		—		—			—		—			55		55
International Core Equity	Equity		—		201			—		—			—		201
	Foreign currency		—		—			—		—			225		225
Mid Cap Growth	Equity		2,401		—			—		(88	)		—		2,313
Natural Resources	Foreign currency		—		—			—		—			1,442		1,442
Science and Technology	Equity		3,720		—			—		(2,276	)		—		1,444
Small Cap Core	Equity		—		(1	)		—		—			—		(1	)
Small Cap Growth	Equity		—		1,265			—		—			—		1,265

* Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule of Investments.

Change in unrealized appreciation (depreciation) on derivatives recognized on the Statement of Operations for the year ended December 31, 2019:


		Net change in unrealized appreciation (depreciation) on:
Portfolio	Type of Risk Exposure	Investments in unaffiliated securities*		Swap agreements			Futures contracts		Written options		Forward foreign currency contracts			Total
High Income	Foreign currency	$	—	$	—		$	—	$	—	$	(14	)	$	(14	)
International Core Equity	Equity		—		(46	)		—		—		—			(46	)
	Foreign currency		—		—			—		—		(485	)		(485	)
Natural Resources	Foreign currency		—		—			—		—		(1,327	)		(1,327	)
Small Cap Growth	Equity		—		1,921			—		—		—			1,921

* Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule of Investments.

During the year ended December 31, 2019, the average derivative volume was as follows:


Portfolio	Forward foreign currency contracts⁽¹⁾			Long futures contracts⁽²⁾			Short futures contracts⁽²⁾			Swap agreements⁽³⁾			Purchased options⁽²⁾			Written options⁽²⁾
Asset Strategy		$	—		$	—		$	—		$	968		$	23		$	—
High Income			4			—			—			—			—			—
International Core Equity			528			—			—			168			—			—
Mid Cap Growth			—			—			—			—			46			26
Natural Resources			3			—			—			—			—			—
Science and Technology			—			—			—			—			558			184
Small Cap Growth			—			—			—			11,102			—			—

(1)

Average absolute value of unrealized appreciation/depreciation during the period.

(2)

Average value outstanding during the period.

(3)

Average notional amount outstanding during the period.

BASIS FOR CONSOLIDATION OF THE ASSET STRATEGY PORTFOLIO($ amounts in thousands)

Ivy VIP ASF II, Ltd. (the “Subsidiary”), a Cayman Islands exempted company, was incorporated as a wholly owned subsidiary acting as an investment vehicle for Ivy VIP Asset Strategy (referred to as “the Portfolio” in this subsection). VIP ASF III (SBP), LLC (the “Company”), a Delaware limited liability company, was incorporated as a wholly owned company acting as an investment vehicle for the Portfolio. The Subsidiary and the Company act as an investment vehicle for the Portfolio, in order to affect certain investments for the Portfolio consistent with the Portfolio’s investment objectives and policies as specified in its prospectus and SAI.

2019

ANNUAL REPORT

113

The Portfolio’s investment portfolio has been consolidated and includes the portfolio holdings of the Portfolio, its Subsidiary and the Company. The consolidated financial statements include the accounts of the Portfolio, its Subsidiary and the Company. All inter-company transactions and balances have been eliminated. A subscription agreement was entered into between the Portfolio and its Subsidiary and the Company comprising the entire issued share capital of the Subsidiary and the Company with the intent that the Portfolio will remain the sole shareholder and retain all rights. Under the Articles of Association, shares issued by the Subsidiary and the Company confer upon a shareholder the right to receive notice of, to attend and to vote at general meetings of the Subsidiary and the Company and shall confer upon the shareholder rights in a winding-up or repayment of capital and the right to participate in the profits or assets of the Subsidiary and the Company.

See the table below for details regarding the structure, incorporation and relationship as of December 31, 2019 of the Subsidiary and the Company to the Portfolio (amounts in thousands).


Subsidiary/Company	Date of Incorporation		Subscription Agreement		Portfolio Net Assets			Subsidiary/Company Net Assets			Percentage of Portfolio Net Assets
Ivy VIP ASF II, Ltd.		1-31-13		4-10-13		$	772,608		$	44,367		5.74	%
VIP ASF III (SBP), LLC		4-9-13		4-23-13			772,608			432		0.01

INVESTMENT MANAGEMENT AND PAYMENTS TO AFFILIATED PERSONS($ amounts in thousands unless indicated otherwise)

Management Fees. IICO serves as each Portfolio’s investment adviser. The management fee is accrued daily by each Portfolio at the following annual rates as a percentage of average daily net assets:


Portfolio (M — Millions)	$0 to $500M			$500 to $1,000M			$1,000 to $1,500M			$1,500 to $2,000M			$2,000 to $3,000M			$3,000 to $5,000M			$5,000 to $10,000M			Over $10,000M
Asset Strategy		0.700	%		0.700	%		0.650	%		0.650	%		0.600	%		0.550	%		0.550	%		0.550	%
Balanced		0.700			0.700			0.650			0.650			0.600			0.550			0.550			0.550
Energy		0.850			0.850			0.830			0.830			0.800			0.760			0.760			0.760
Growth		0.700			0.700			0.650			0.650			0.600			0.550			0.550			0.550
High Income		0.625			0.600			0.550			0.500			0.500			0.500			0.500			0.500
International Core Equity		0.850			0.850			0.830			0.830			0.800			0.760			0.760			0.760
Mid Cap Growth		0.850			0.850			0.830			0.830			0.800			0.760			0.760			0.760
Natural Resources		0.850			0.850			0.830			0.830			0.800			0.760			0.730			0.700
Science and Technology		0.850			0.850			0.830			0.830			0.800			0.760			0.760			0.760
Small Cap Core		0.850			0.850			0.830			0.830			0.800			0.760			0.760			0.760
Small Cap Growth		0.850			0.850			0.830			0.830			0.800			0.760			0.760			0.760

IICO has voluntarily agreed to waive a Portfolio’s investment management fee on any Portfolio that is not subadvised on any day that the Portfolio’s net assets are less than $25 million, subject to IICO’s right to change or modify this waiver. See Expense Reimbursements and/or Waivers for more information.

Independent Trustees and Chief Compliance Officer Fees. Fees paid to the Independent Trustees can be paid in cash or deferred to a later date, at the election of the Trustees according to the Deferred Fee Agreement entered into between the Trust and the Trustee(s). Each Portfolio records its portion of the deferred fees as a liability on the Statement of Assets and Liabilities. All fees paid in cash plus any appreciation (depreciation) in the underlying deferred plan are shown on the Statement of Operations. Additionally, fees paid to the Chief Compliance Officer of the Portfolios are shown on the Statement of Operations.

Accounting Services Fees. The Trust has an Accounting and Administrative Services Agreement with Waddell & Reed Services Company (“WRSCO”), doing business as WI Services Company (“WISC”). Under the agreement, WISC acts as the agent in providing bookkeeping and accounting services and assistance to the Trust, including maintenance of Portfolio records, pricing of Portfolio shares and preparation of certain shareholder reports. For these services, each Portfolio pays WISC a monthly fee of one-twelfth of the annual fee based on the average net asset levels shown in the following table:

(M — Millions)

$0 to

$10M

$10 to
$25M

$25 to
$50M

$50 to
$100M

$100 to
$200M

$200 to
$350M

$350 to
$550M

$550 to
$750M

$750 to
$1,000M

Over
$1,000M

Annual Fee Rate

0.00

11.50

23.10

35.50

48.40

63.20

82.50

96.30

121.60

148.50

Each Portfolio also pays WISC a monthly administrative fee at the annual rate of 0.01%, or one basis point, for the first $1 billion of net assets with no fee charged for net assets in excess of $1 billion. This fee is voluntarily waived by WISC until a Portfolio’s net assets are at least $10 million and is included in “Accounting services fee” on the Statement of Operations.


114		ANNUAL REPORT		2019

Shareholder Servicing. Under the Transfer Agency Agreement between the Trust and WISC, each Portfolio reimburses WISC for certain out-of-pocket costs.

Service Plan. Class II. Under a Service Plan adopted by the Trust pursuant to Rule 12b–1 under the 1940 Act, each Portfolio may pay a service fee to Ivy Distributors, Inc. (“IDI”) for Class II shares in an amount not to exceed 0.25% of the Portfolio’s average annual net assets. The fee is to be paid to compensate IDI for amounts it expends in connection with the provision of personal services to Policyowners and/or maintenance of Policyowner accounts.

Expense Reimbursements and/or Waivers. IICO, the Portfolios’ investment manager, IDI, the Portfolios’ distributor, and/or Waddell & Reed Services Company, doing business as WISC, the Portfolios’ transfer agent, have contractually agreed to reimburse sufficient management fees, 12b-1 fees and/or shareholder servicing fees to cap the total annual ordinary fund operating expenses (which would exclude interest, taxes, brokerage commissions, acquired fund fees and expenses, and extraordinary expenses, if any). Portfolio and class expense limitations and related waivers/reimbursements for the year ended December 31, 2019 were as follows:


Fund Name	Share Class Name	Type of Expense Limit	Commencement Date		End Date		Expense Limit	Amount of Expense Waiver/ Reimbursement	Expense Reduced
Asset Strategy	Class I	Contractual		4-28-2017		4-30-2020	Class II less 0.25%		$	—	*	12b-1 Fees and/or Shareholder Servicing
Energy	Class I	Contractual		4-28-2017		4-30-2020	Class II less 0.25%		$	—		N/A
High Income	Class I	Contractual		4-28-2017		4-30-2020	Class II less 0.25%		$	—		N/A
Mid Cap Growth	All Classes	Contractual		4-28-2017		4-30-2020	N/A		$	242	⁽¹⁾	Investment Management Fee
	Class I	Contractual		4-28-2017		4-30-2020	0.85%		$	2		Shareholder Servicing
	Class I	Contractual		4-28-2017		4-30-2020	Class II less 0.25%		$	—		N/A
	Class II	Contractual		5-1-2012		4-30-2020	1.10%		$	16		12b-1 Fees and/or Shareholder Servicing
Science and Technology	Class I	Contractual		4-28-2017		4-30-2020	Class II less 0.25%		$	—		N/A
Small Cap Growth	All Classes	Contractual		4-28-2017		4-30-2020	N/A		$	76	⁽¹⁾	Investment Management Fee
	Class I	Contractual		11-5-2018		4-30-2020	Class II less 0.25%		$	1		Shareholder Servicing
	Class II	Contractual		10-1-2016		4-30-2020	1.14%		$	15		12b-1 Fees and/or Shareholder Servicing

*	Not shown due to rounding.

(1)

Due to Class I and/or Class II contractual expense limits, investment management fees were waived for all share classes.

Any amounts due to the Portfolios as a reimbursement but not paid as of December 31, 2019 are shown as a receivable from affiliates on the Statement of Assets and Liabilities.

INTERFUND LENDING PROGRAM

Pursuant to an exemptive order issued by the SEC (“Order”), the Ivy Funds, Ivy Variable Insurance Portfolios and InvestEd Portfolios (collectively, the “Funds” only for purposes of this footnote 7) have the ability to lend money to, and borrow money from, each other pursuant to a master interfund lending agreement (“Interfund Lending Program”). Under the Interfund Lending Program, the Funds may lend or borrow money for temporary purposes directly to or from one another (each an “Interfund Loan”), subject to meeting the conditions of the Order. The interest rate to be charged on an Interfund Loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The Funds made no Interfund Loans under the Interfund Lending Program during the year ended December 31, 2019.

2019

ANNUAL REPORT

115

AFFILIATED COMPANY TRANSACTIONS(All amounts in thousands)

A summary of the transactions in affiliated companies during the year ended December 31, 2019 follows:


Portfolio	12-31-18 Share Balance		Gross Additions		Gross Reductions		Realized Gain/ (Loss)		Distributions Received		12-31-19 Share Balance		12-31-19 Value		Net Change in Unrealized Appreciation
High Income
Larchmont Resources LLC^(1)(2)(3)		1		$—	$	—		$—		$—		1	$	252	$	—

	12-31-18 Principal Balance								Interest Received		12-31-19 Principal Balance				Net Change in Unrealized Depreciation
Larchmont Resources LLC (8.890% Cash or 8.890% PIK), 8.890%, 8-7-20⁽²⁾⁽⁴⁾	$	817	$	—	$	56	$	1		$77	$	757	$	697	$	(47	)

(1) No dividends were paid during the preceding 12 months.

(2) Securities whose value was determined using significant unobservable inputs.

(3) Restricted security.

(4) Payment-in-kind bond.

INVESTMENT SECURITIES TRANSACTIONS($ amounts in thousands)

The cost of purchases and the proceeds from maturities and sales of investment securities (excluding short-term securities) for the year ended December 31, 2019, were as follows:


	Purchases				Sales
	U.S. Government		Other Issuers		U.S. Government		Other Issuers
Asset Strategy	$	2,041	$	321,150	$	7,181	$	436,251
Balanced		29,917		111,232		20,768		146,327
Energy		—		10,455		—		8,644
Growth		—		224,922		—		337,541
High Income		—		287,374		—		309,435
International Core Equity		—		454,968		—		528,296
Mid Cap Growth		—		98,056		—		137,716
Natural Resources		—		30,559		—		36,460
Science and Technology		—		154,131		—		213,785
Small Cap Core		—		236,814		—		261,738
Small Cap Growth		—		153,171		—		188,925

10.

LOANS OF PORTFOLIO SECURITIES($ amounts in thousands)

The Portfolios may lend their portfolio securities only to borrowers that are approved by the Portfolio’s securities lending agent, The Bank of New York Mellon (“BNYM”). The borrower pledges and maintains with the Portfolio collateral consisting of cash or securities issued or guaranteed by the U.S. government. The collateral received by the Portfolio is required to have a value of at least 102% of the market value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% of the market value for all other securities, except in the case of loans of foreign securities which are denominated and payable in U.S. dollars, in which case the collateral is required to have a value of at least 102% of the market value of the loaned securities. The market value of the loaned securities is determined at the close of each business day and any additional required collateral is delivered to the Portfolio and any excess collateral is returned by the Portfolio on the next business day. During the term of the loan, the Portfolio is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

Cash received as collateral for securities on loan may be reinvested in the Dreyfus Institutional Preferred Government Money Market Fund — Institutional Shares or certain other registered money market funds and are disclosed in the Portfolio’s Schedule of Investments and are reflected in the Statement of Assets and Liabilities as cash collateral on securities loaned at value. Non-cash collateral, in the form of securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, is not disclosed in the Portfolio’s Statement of Assets and Liabilities as it is held by the lending agent on behalf of the Portfolio and the Portfolio does not have the ability to re-hypothecate these securities. The


116		ANNUAL REPORT		2019

securities on loan for each Portfolio are also disclosed in its Schedule of Investments. The total value of any securities on loan as of December 31, 2019 and the total value of the related cash collateral are disclosed in the Statement of Assets and Liabilities. Income earned by the Portfolios from securities lending activity is disclosed in the Statements of Operations.

The following is a summary of each Portfolio’s securities lending positions and related cash and non-cash collateral received as of December 31, 2019:


Portfolio	Market Value of Securities on Loan		Cash Collateral Received		Non-Cash Collateral Received		Total Collateral Received
Asset Strategy	$	5,144	$	616	$	6,006	$	6,622
Balanced		602		—		614		614
High Income		1,918		2,193		—		2,193
International Core Equity		72		76		—		76
Mid Cap Growth		3,229		—		3,293		3,293
Natural Resources		2,719		2,806		—		2,806
Science and Technology		5,497		—		5,608		5,608
Small Cap Core		4,705		4,768		40		4,808
Small Cap Growth		13,293		1,607		11,961		13,568

The cash collateral received amounts presented in the table above are transactions accounted for as secured borrowings and have an overnight and continuous maturity. The proceeds from the cash collateral received is invested in registered money market funds.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Portfolios benefit from a borrower indemnity provided by BNYM. BNYM’s indemnity allows for full replacement of securities lent wherein BNYM will purchase the unreturned loaned securities on the open market by applying the proceeds of the collateral or to the extent such proceeds are insufficient or the collateral is unavailable, BNYM will purchase the unreturned loan securities at BNYM’s expense. However, the Portfolio could suffer a loss if the value of the investments purchased with cash collateral falls below the value of the cash collateral received.

11. BORROWINGS

On May 24, 2019 the Trust, on behalf of High Income, along with certain other funds managed by the investment adviser (“Participating Funds”), entered into a 364-day senior unsecured revolving credit facility with Bank of New York Mellon and a group of financial institutions to be utilized to temporarily finance the repurchase or redemption of Fund shares and for other temporary or emergency purposes. The Participating Funds can borrow up to an aggregate commitment amount of $130 million at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit facility has the following terms: a commitment fee of 0.15% per annum of the daily amount of unused commitment amounts and interest at a rate equal to the higher of (a) the federal funds effective rate (but not below 0.0%) plus 1.00% per annum or (b) the one-month LIBOR rate (but not below 0.0%) plus 1.00% per annum on amounts borrowed. The agreement expires in May 2020 unless extended or renewed. As of December 31, 2019, if applicable, any outstanding borrowings would be disclosed as a payable for borrowing on the Statement of Assets and Liabilities. Commitment and interest fees, if any, paid by the Participating Funds are disclosed as part of commitment and interest expense for borrowing on the Statement of Operations. During the year ended December 31, 2019, the Participating Funds did not borrow under the credit facility.

2019

ANNUAL REPORT

117

12.

CAPITAL SHARE TRANSACTIONS(All amounts in thousands)

The Trust has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:


	Asset Strategy												Balanced
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class I		—		$	—			1		$	9			N/A			N/A			N/A			N/A
Class II		1,784			16,459			3,140			29,977			1,682		$	13,146			1,416		$	11,226
Shares issued in reinvestment of distributions to shareholders:
Class I		2			20			2			18			N/A			N/A			N/A			N/A
Class II		4,849			45,846			5,872			49,202			4,279			31,681			1,388			10,863
Shares redeemed:
Class I		—	*		—	*		—	*		—	*		N/A			N/A			N/A			N/A
Class II		(16,162	)		(148,939	)		(18,070	)		(171,936	)		(6,122	)		(47,906	)		(6,760	)		(53,838	)

Net decrease		(9,527	)	$	(86,614	)		(9,055	)	$	(92,730	)		(161	)	$	(3,079	)		(3,956	)	$	(31,749	)


	Energy												Growth
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class I		5		$	21			8		$	32			N/A			N/A			N/A			N/A
Class II		4,050			16,320			5,435			31,159			936		$	10,589			1,679		$	20,421
Shares issued in reinvestment of distributions to shareholders:
Class I		—			—			—			—			N/A			N/A			N/A			N/A
Class II		—			—			—			—			18,896			186,937			8,478			99,828
Shares redeemed:
Class I		(9	)		(34	)		—	*		—	*		N/A			N/A			N/A			N/A
Class II		(3,772	)		(15,434	)		(24,018	)		(137,602	)		(10,740	)		(120,227	)		(22,501	)		(274,185	)

Net increase (decrease)		274		$	873			(18,575	)	$	(106,411	)		9,092		$	77,299			(12,344	)	$	(153,936	)


	High Income												International Core Equity
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class I		765		$	2,711			1,713		$	5,956			N/A			N/A			N/A			N/A
Class II		26,909			92,614			32,626			116,310			2,003		$	30,385			4,963		$	83,359
Shares issued in reinvestment of distributions to shareholders:
Class I		936			3,156			1,015			3,506			N/A			N/A			N/A			N/A
Class II		16,418			55,287			16,234			56,012			4,945			70,370			1,813			32,980
Shares redeemed:
Class I		(7,167	)		(24,449	)		(4,836	)		(16,926	)		N/A			N/A			N/A			N/A
Class II		(36,409	)		(125,215	)		(52,101	)		(184,346	)		(8,396	)		(126,858	)		(5,580	)		(97,507	)

Net increase (decrease)		1,452		$	4,104			(5,349	)	$	(19,488	)		(1,448	)	$	(26,103	)		1,196		$	18,832

*Not shown due to rounding.


118		ANNUAL REPORT		2019


	Mid Cap Growth												Natural Resources
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class I		1,304		$	16,178			7,297		$	90,379			N/A			N/A			N/A			N/A
Class II		5,186			64,074			7,032			87,767			3,518		$	13,191			3,428		$	15,087
Shares issued in reinvestment of distributions to shareholders:
Class I		3,171			35,378			534			6,483			N/A			N/A			N/A			N/A
Class II		4,217			46,820			1,911			23,180			229			870			75			351
Shares redeemed:
Class I		(2,828	)		(34,889	)		(2,531	)		(31,811	)		N/A			N/A			N/A			N/A
Class II		(5,347	)		(66,009	)		(38,548	)		(467,934	)		(5,896	)		(22,418	)		(6,932	)		(30,567	)

Net increase (decrease)		5,703		$	61,552			(24,305	)	$	(291,936	)		(2,149	)	$	(8,357	)		(3,429	)	$	(15,129	)


	Science and Technology												Small Cap Core
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class I		5		$	144			6		$	184			N/A			N/A			N/A			N/A
Class II		2,087			58,421			2,736			79,209			564		$	7,839			841		$	13,662
Shares issued in reinvestment of distributions to shareholders:
Class I		3			80			4			85			N/A			N/A			N/A			N/A
Class II		1,692			49,737			2,937			65,600			2,817			36,690			3,561			56,235
Shares redeemed:
Class I		—	*		(17	)		(1	)		(26	)		N/A			N/A			N/A			N/A
Class II		(3,995	)		(110,540	)		(9,856	)		(284,003	)		(2,655	)		(36,555	)		(8,646	)		(141,910	)

Net increase (decrease)		(208	)	$	(2,175	)		(4,174	)	$	(138,951	)		726		$	7,974			(4,244	)	$	(72,013	)


	Small Cap Growth
	Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value
Shares issued from sale of shares:
Class I		477		$	4,296			6,845		$	58,514
Class II		2,202			19,523			3,202			32,902
Shares issued in connection with merger:
Class I		N/A			N/A			56			487
Class II		N/A			N/A			9,666			84,646
Shares issued in reinvestment of distributions to shareholders:
Class I		489			4,305			—			—
Class II		2,841			24,945			12,302			117,993
Shares redeemed:
Class I		(1,198	)		(10,725	)		(123	)		(980	)
Class II		(6,327	)		(56,749	)		(18,536	)		(187,990	)

Net increase (decrease)		(1,516	)	$	(14,405	)		13,412		$	105,572

*Not shown due to rounding.

2019

ANNUAL REPORT

119

13.

COMMITMENTS

Bridge loan commitments may obligate a Portfolio to furnish temporary financing to a borrower until permanent financing can be arranged. In connection with these commitments, the Portfolio earns a commitment fee, typically set as a percentage of the commitment amount. Such fee income is included in interest income on the Statements of Operations. At December 31, 2019, there were no outstanding bridge loan commitments.

14.

FEDERAL INCOME TAX MATTERS($ amounts in thousands)

For Federal income tax purposes, cost of investments owned at December 31, 2019 and the related unrealized appreciation (depreciation) were as follows:


Portfolio	Cost of Investments		Gross Appreciation		Gross Depreciation		Net Unrealized Appreciation (Depreciation)
Asset Strategy	$	727,863	$	116,007	$	73,478	$	42,529
Balanced		295,431		46,967		2,183		44,784
Energy		54,046		1,775		14,512		(12,737	)
Growth		544,537		249,624		3,439		246,185
High Income		929,758		29,314		82,641		(53,327	)
International Core Equity		703,632		54,901		61,521		(6,620	)
Mid Cap Growth		403,027		154,507		10,127		144,380
Natural Resources		100,344		6,000		15,462		(9,462	)
Science and Technology		317,265		272,236		9,070		263,166
Small Cap Core		175,685		19,695		2,629		17,066
Small Cap Growth		301,988		97,259		9,471		87,788

For Federal income tax purposes, the Portfolios’ undistributed earnings and profit for the year ended December 31, 2019 and the post-October and late-year ordinary activity updated with information available through the date of this report were as follows:


Portfolio	Undistributed Ordinary Income		Undistributed Long-Term Capital Gains		Tax Return of Capital		Post- October Capital Losses Deferred		Late-Year Ordinary Losses Deferred
Asset Strategy	$	1,311	$	1,768	$	—	$	—	$	—
Balanced		4,355		17,231		—		—		—
Energy		168		—		—		—		—
Growth		13,692		98,774		—		—		—
High Income		58,257		—		—		—		—
International Core Equity		14,565		111		—		—		—
Mid Cap Growth		5,351		33,888		—		—		—
Natural Resources		1,603		—		—		—		—
Science and Technology		992		23,177		—		—		—
Small Cap Core		1,998		6,738		—		—		—
Small Cap Growth		—		—		—		147		—

Internal Revenue Code regulations permit each Portfolio to elect to defer into its next fiscal year capital losses and certain specified ordinary items incurred between each November 1 and the end of its fiscal year. Each Portfolio is also permitted to defer into its next fiscal certain ordinary losses that generated between each January 1 and the end of its fiscal year.


120		ANNUAL REPORT		2019

The tax character of dividends and distributions paid during the two fiscal years ended December 31, 2019 and 2018 were as follows:


	December 31, 2019				December 31, 2018
Portfolio	Distributed Ordinary Income⁽¹⁾		Distributed Long-Term Capital Gains		Distributed Ordinary Income⁽¹⁾		Distributed Long-Term Capital Gains
Asset Strategy	$	15,765	$	30,101	$	15,495	$	33,725
Balanced		6,330		25,351		5,473		5,390
Energy		—		—		—		—
Growth		4,140		182,797		811		99,017
High Income		58,443		—		59,518		—
International Core Equity		13,997		56,373		28,472		4,508
Mid Cap Growth		—		82,198		2,816		26,847
Natural Resources		870		—		351		—
Science and Technology		1,227		48,590		—		65,685
Small Cap Core		12,737		23,953		27,706		28,529
Small Cap Growth		—		29,250		20,961		97,032

(1)

Includes short-term capital gains, if any.

Dividends from net investment income and short-term capital gains are treated as ordinary income dividends for federal income tax purposes.

Accumulated capital losses represent net capital loss carryovers as of December 31, 2019 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. As of December 31, 2019, the capital loss carryovers were as follows:


Portfolio	Short-Term Capital Loss Carryover			Long-Term Capital Loss Carryover
Asset Strategy	$	—		$	—
Balanced		—			—
Energy		11,755	⁽¹⁾		26,541	⁽¹⁾
Growth		—			—
High Income		—			61,563
International Core Equity		—			—
Mid Cap Growth		—			—
Natural Resources		7,291			45,325
Science and Technology		—			—
Small Cap Core		—			—
Small Cap Growth		—			—

(1)

$29,983 of these Capital Loss Carryovers are subject to an annual limitation of $3,708 plus any unused limitation from prior years.

Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from U.S. GAAP. These differences are due to differing treatments for items such as deferral of wash sales, post-October losses, late-year ordinary losses, foreign currency transactions, net operating losses, income from passive foreign investment companies (PFICs), investments held within the wholly-owned subsidiary and companies, partnership transactions and in-kind redemptions. At December 31, 2019, the following reclassifications were made:


Portfolio	Accumulated Earnings Gain (Loss)			Paid-In Capital
Asset Strategy	$	—		$	—
Balanced		—	*		—	*
Energy		(459	)		459
Growth		—			—
High Income		—	*		—	*
International Core Equity		—			—
Mid Cap Growth		(126	)		126
Natural Resources		1			(1	)
Science and Technology		—			—
Small Cap Core		—			—
Small Cap Growth		1,358			(1,358	)

*Not shown due to rounding.

2019

ANNUAL REPORT

121


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		IVY VIP

To the Shareholders and Board of Trustees of Ivy Variable Insurance Portfolios:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of assets and liabilities of Ivy VIP Asset Strategy, Ivy VIP Balanced, Ivy VIP Energy, Ivy VIP Growth, Ivy VIP High Income, Ivy VIP International Core Equity, Ivy VIP Mid Cap Growth, Ivy VIP Natural Resources, Ivy VIP Science and Technology, Ivy VIP Small Cap Core, and Ivy VIP Small Cap Growth, eleven of the series constituting the Ivy Variable Insurance Portfolios (the “Funds”), including the schedules of investments, as of December 31, 2019, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of December 31, 2019, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the custodian, agent banks, and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

LOGO

Kansas City, Missouri

February 14, 2020

We have served as the auditor of one or more Waddell & Reed investment companies since 1997.


122		ANNUAL REPORT		2019


INCOME TAX INFORMATION		IVY VIP

AMOUNTS NOT ROUNDED (UNAUDITED)

The Portfolios hereby designate the following amounts of dividends paid from net ordinary income as dividends qualifying for the 70% dividends received deduction for corporations for the tax period ended December 31, 2019:


	Dividends Received Deduction for Corporations
Asset Strategy	$	3,406,450
Balanced		4,458,742
Energy		—
Growth		4,139,160
High Income		1,330,507
International Core Equity		—
Mid Cap Growth		—
Natural Resources		869,454
Science and Technology		1,227,384
Small Cap Core		1,544,050
Small Cap Growth		—

The Portfolios hereby designate the following amounts as distributions of long-term capital gains:


Asset Strategy	$	30,101,622
Balanced		25,350,906
Energy		—
Growth		182,796,812
High Income		—
International Core Equity		56,372,903
Mid Cap Growth		82,197,639
Natural Resources		—
Science and Technology		48,589,986
Small Cap Core		23,953,069	⁽¹⁾
Small Cap Growth		29,249,969

(1)

Of this amount $13,024 is Unrecaptured Section 1250 Gain.

Internal Revenue Code regulations permit each qualifying Portfolio to elect to pass through a foreign tax credit to shareholders with respect to foreign taxes paid by the Portfolio. Each Portfolio elected to pass the following amounts of creditable foreign taxes through to their shareholders:


	Foreign Tax Credit		Foreign Derived Income
International Core Equity	$	1,440,560	$	18,481,961

2019

ANNUAL REPORT

123


BOARD OF TRUSTEES AND OFFICERS		IVY VIP

(UNAUDITED)

Each of the individuals listed below serves as a trustee for the Trust (28 portfolios), and for the rest of the funds within the Fund Complex, which also includes, in addition to the Trust, the Ivy Funds (45 portfolios), the Ivy High Income Opportunities Fund (aclosed-end fund) (“IVH”) and InvestEd Portfolios (“InvestEd”) (6 portfolios).

Board members who are not “interested persons” of the Funds as defined in Section 2(a)(19) of the 1940 Act (Disinterested Trustees) constitute at least 75% of the Board.

Joseph Harroz, Jr. serves as the Independent Chairman of the Trust’s Board and of the Board of Trustees of the other funds in the Fund Complex. Subject to the Trustee Emeritus and Retirement Policy, a Trustee serves until his or her successor is elected and qualified or until his or her earlier death, resignation or removal.

The Statement of Additional Information (the “SAI”) for the Trust includes additional information about the Trust’s trustees. The SAI is available without charge, upon request, by calling 1.888.923.3355. It is also available on the Ivy Investments website, www.ivyinvestments.com.

Disinterested Trustees


Name, Address and Year of Birth	Position(s) Held with the Trust	Trustee Since	Principal Occupation(s) During Past 5 Years	Other Directorships Held
James M. Concannon 6300 Lamar Avenue Overland Park, KS 66202 1947	Trustee	1997	Emeritus Dean and Professor of Law, Washburn University School of Law (1973 to present).	Director, Kansas Legal Services for Prisoners, Inc.(non-profit community service); Director, U.S. Alliance Corporation and wholly-owned subsidiaries: U.S. Alliance Life and Security Company — Montana and Dakota Capital Life Insurance Company (Insurance) (2009 to present); Director, Kansas Appleseed, Inc.(non-profit community service) (2007 to present); Trustee, WRA Funds (1997-2018); Trustee, Ivy NextShares (2017-2019); Trustee, InvestEd (2001 to present) (6 portfolios overseen); Trustee, Ivy Funds (2017 to present) (45 portfolios overseen); Trustee, IVH (2017 to present) (1 portfolio overseen).
H. Jeffrey Dobbs 6300 Lamar Avenue Overland Park, KS 66202 1955	Trustee	2019	Global Sector Chairman, Industrial Manufacturing, KPMG LLP (2010-2015).	Director, Valparaiso University (2012 to present); Director, TechAccel LLC (2015 to present) (Tech R&D); Board Member, Kansas City Repertory Theatre (2015 to present); Board Member, PatientsVoices, Inc. (technology) (2018 to present); Board Member, Kansas City Campus for Animal Care (2018 to present); Director, National Association of Manufacturers (2010-2015); Director, The Children’s Center (2003-2015); Director, Metropolitan Affairs Coalition (2003-2015); Director, Michigan Roundtable for Diversity and Inclusion (2003-2015); Trustee, Ivy NextShares (2019); Trustee, InvestEd (2019 to present) (6 portfolios overseen); Trustee, Ivy Funds (2019 to present) (45 portfolios overseen); Trustee, IVH (2019 to present) (1 portfolio overseen).
James D. Gressett 6300 Lamar Avenue Overland Park, KS 66202 1950	Trustee	2017	Chief Executive Officer (CEO) of CalPac Pizza LLC (2011 to present); CEO of CalPac Pizza II LLC (2012 to present); CEO of PacPizza LLC (Pizza Hut franchise) (2000 to present); Member/CEO, Southern Pac Pizza LLC (2013 to present); Partner, Century Bridge Partners (real estate investments) (2007 to present); Manager, Hartley Ranch Angus Beef, LLC (2013 to present); President, Penn Capital Corp. (1995 to present); Partner, Penn Capital Partners (1999 to present); Partner, 1788 Chicken, LLC (food franchise) (2016 to present).	Member/Secretary, The Metochoi Group LLC (1999 to present); Member/Chairman, Idea Homes LLC (homebuilding and development) (2013 to present); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (2002 to present) (45 portfolios overseen); Trustee; IVH (2013 to present) (1 portfolio overseen).


124		ANNUAL REPORT		2019


Name, Address and Year of Birth	Position(s) Held with the Trust	Trustee Since	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Joseph Harroz, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1967	Trustee Independent Chairman	1998 2015	Interim President (2019 to present), Vice President (2010-2019) and Dean (2010-2019), College of Law, University of Oklahoma; Managing Member, Harroz Investments, LLC, (commercial enterprises) (1998 to present).	Director and Shareholder, Valliance Bank (2007 to present); Director, Foundation Healthcare (formerly Graymark HealthCare) (2008-2017); Trustee, The Mewbourne Family Support Organization (2006 to present)(non-profit); Independent Director, LSQ Manager, Inc. (real estate) (2007-2016); Director, Oklahoma Foundation for Excellence(non-profit) (2008 to present); Independent Chairman and Trustee, WRA Funds (Independent Chairman: 2015-2018; Trustee: 1998-2018); Independent Chairman and Trustee, Ivy NextShares (2016-2019); Independent Chairman and Trustee, InvestEd (Independent Chairman: 2015 to present; Trustee: 2001 to present) (6 portfolios overseen); Independent Chairman and Trustee, Ivy Funds (Independent Chairman: 2006 to present; Trustee: 1998 to present) (45 portfolios overseen); Independent Chairman and Trustee, IVH (2013 to present) (1 portfolio overseen).
Glendon E. Johnson, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1951	Trustee	2017	Of Counsel, Lee & Smith, PC (law firm, emphasis on finance, securities, mergers and acquisitions law) (1996 to 2019); Owner and Manager, Castle Valley Ranches, LLC (ranching) and Castle Valley Outdoors, LLC (outdoor recreation) (1995 to present); Formerly, Partner, Kelly, Drye & Warren LLP (law firm) (1989-1996); Partner, Lane & Edson PC (law firm) (1987-1989).	Director, Thomas Foundation for Cancer Research(non-profit) (2005 to present); Director, Warriors Afield Legacy Foundation(non-profit) (2014 to present); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (2002 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).
Sandra A.J. Lawrence 6300 Lamar Avenue Overland Park, KS 66202 1957	Trustee	2019	Retired, formerly, Chief Administrative Officer, Children’s Mercy Hospitals and Clinics (2016-2019); CFO, Children’s Mercy Hospitals and Clinics (2005-2016).	Director, Hall Family Foundation (1993 to present); Director, Westar Energy (2004-2018); Trustee, Nelson-Atkins Museum of Art(non-profit) (2007 to present); Director, Turn the Page KC(non-profit) (2012-2016); Director, Kansas Metropolitan Business and Healthcare Coalition(non-profit) (2017-2019); Director, National Association of Corporate Directors(non-profit) (2017 to present); Director, American Shared Hospital Services (2017 to present); Director, Evergy, Inc., Kansas City Power & Light Company, KCP&L Greater Missouri Operations Company, Westar Energy, Inc. and Kansas Gas and Electric Company (related utility companies) (2018 to present); Director, Stowers (research) (2018); Trustee, Ivy NextShares (2019); Trustee, InvestEd (2019 to present) (6 portfolios overseen); Trustee, Ivy Funds (2019 to present) (45 portfolios overseen); Trustee, IVH (2019 to present) (1 portfolio overseen).
Frank J. Ross, Jr. Polsinelli PC 900 West 48th Place, Suite 900 Kansas City, MO 64112 1953	Trustee	1996	Shareholder/Director, Polsinelli PC (law firm) (1980 to present).	Trustee, WRA Funds (1996-2018); Trustee, Ivy NextShares (2017-2019); Trustee, InvestEd (2001 to present) (6 portfolios overseen); Trustee, Ivy Funds (2017 to present) (45 portfolios overseen); Trustee, IVH (2017 to present) (1 portfolio overseen).

2019

ANNUAL REPORT

125


Name, Address and Year of Birth	Position(s) Held with the Trust	Trustee Since	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Michael G. Smith 6300 Lamar Avenue Overland Park, KS 66202 1944	Trustee	2017	Retired; formerly, with Merrill Lynch as Managing Director of Global Investor Client Strategy (1996-1998), Head of Regional Institutional Sales (1995-1996) and of U.S. Central Region (1986-1995, 1999).	Director, Executive Board, Cox Business School, Southern Methodist University(1998-2019); Lead Director, Northwestern Mutual Funds (2003-2017) (29 portfolios overseen); Director, CTMG, Inc. (clinical testing) (2008-2015); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares(2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (2002 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).
Edward M. Tighe 6300 Lamar Avenue Overland Park, KS 66202 1942	Trustee	2017	Retired; formerly, CEO and Director of Asgard Holdings, LLC (computer network and security services) (2002-2004); President, Citco Technology Management (1995-2000); CEO, Global Mutual Fund Services (1993-2000); Sr. Vice President, Templeton Global Investors (1988-1992).	Trustee, Hansberger Institutional Funds (2000-2007); Director, The Research Coast Principium Foundation, Inc.(non-profit) (2012-2015); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (1999 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).

Interested Trustees

Messrs. Herrmann and Sanders are “interested” by virtue of their former engagement as an officer of Waddell & Reed Financial, Inc. (“WDR”) or its wholly-owned subsidiaries, including each Fund’s investment manager, Ivy Investment Management Company (“IICO”), each Fund’s principal underwriter, Ivy Distributors, Inc. (“IDI”), and each Fund’s shareholder servicing and accounting services agent, Waddell & Reed Services Company, doing business as WI Services Company (“WISC”), a subsidiary of Waddell & Reed, Inc. (“Waddell & Reed”), as well as by virtue of their personal ownership of shares of WDR. The address for each Interested Trustee and each of the officers in the following tables is 6300 Lamar Avenue, Overland Park, KS 66202.


Name and Year of Birth	Position(s) Held with the Trust	Trustee Since	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Henry J. Herrmann 1942	Trustee	1998	Retired,Non-Executive Chairman of the Board, WDR (2016-2018); Formerly Chairman, WDR (2010-2018); CEO, WDR (2005-2016); President, CEO and Chairman, IICO (2002-2016); President, CEO and Chairman, Waddell & Reed Investment Management Company (WRIMCO) (1993-2016); President of each of the funds in the Fund Complex (2001-2016).	Director, WDR, (1998 to present); Director, IICO (2002-2016); Director, WRIMCO (1991-2016); Director, WISC (2001-2016); Director, W&R Capital Management Group, Inc. (2008-2016); Director, Waddell & Reed (1993-2016); Director, Blue Cross Blue Shield of Kansas City (2007-2017); Trustee, WRA Funds (1998-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2001 to present) (6 portfolios overseen); Trustee, Ivy Funds (1998 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).
Philip J. Sanders 1959	Trustee	2019	CEO, WDR (2016 to present); President, CEO and Chairman, IICO (2016 to present); President of each of the funds in the Fund Complex (2016 to present); CIO, WDR (2011-2019); CIO, IICO (2010-2019).	Trustee, Ivy NextShares (2019); Trustee, InvestEd (2019 to present) (6 portfolios overseen); Trustee, Ivy Funds (2019 to present) (45 portfolios overseen); Trustee, IVH (2019 to present) (1 portfolio overseen).


126		ANNUAL REPORT		2019

Officers

The Board has appointed officers who are responsible for theday-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The Trust’s principal officers are:


Name and Year of Birth	Position(s) Held with The Trust	Officer of Trust Since	Officer of Fund Complex Since*	Principal Occupation(s) During Past 5 Years
Jennifer K. Dulski 1980	Secretary	2017	2017	Secretary for each of the funds in the Fund Complex (2017 to present); Senior Vice President and Associate General Counsel of Waddell & Reed, IICO and IDI (2018 to present).
Joseph W. Kauten 1969	Vice President Treasurer Principal Financial Officer	2009 2009 2009	2006 2006 2007	Principal Financial Officer of each of the funds in the Fund Complex (2007 to present); Vice President and Treasurer of each of the funds in the Fund Complex (2006 to present); Principal Accounting Officer of each of the funds in the Fund Complex (2006-2017); Assistant Treasurer of each of the funds in the Fund Complex (2003-2006); Vice President of Waddell & Reed Services Company (WRSCO) (2007 to present).
Philip J. Sanders** 1959	President	2016	2016	CEO of WDR (2016 to present); President, CEO and Chairman of IICO (2016 to present) and WRIMCO (2016-2018); President of each of the funds in the Fund Complex (2016 to present); CIO of WDR (2011-2019); CIO of IICO (2010-2019) and WRIMCO (2010-2018).
Scott J. Schneider 1968	Vice President Chief Compliance Officer	2009 2009	2006 2004	Chief Compliance Officer (2004 to present) and Vice President (2006 to present) of each of the funds in the Fund Complex; Vice President of IICO (2006 to present) and WRIMCO (2006-2018).
Philip A. Shipp 1969	Assistant Secretary	2012	2012	Assistant Secretary of each of the funds in the Fund Complex (2012 to present); Vice President of Waddell & Reed and IDI (2010-present).

*	This is the date when the Officer first became an officer of one or more of the funds that are the predecessors to current funds within the Fund Complex (if applicable).

**	Mr. Sanders was Vice President of the Trust since 2006, and of the other Trusts within the Fund Complex, until his appointment as President in 2016.

2019

ANNUAL REPORT

127


RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT		IVY VIP

(UNAUDITED)

At a meeting of the Board of Trustees (the “Board”) of Ivy Variable Insurance Portfolios (the “Trust”) held on August 13^th and 14^th, 2019, the Board, including all of the trustees who are not “interested persons” (the “Independent Trustees”), as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “1940 Act”), unanimously approved the continuance of the Investment Management Agreement (the “Management Agreement”) between Ivy Investment Management Company (“IICO”) and the Trust, and the continuance of the Investment Subadvisory Agreement between IICO and Securian Asset Management, Inc. (the “Subadviser”) with respect to Ivy VIP Securian Real Estate Securities, Ivy VIP Pathfinder Moderate – Managed Volatility, Ivy VIP Pathfinder Moderately Aggressive – Managed Volatility and Ivy VIP Pathfinder Moderately Conservative – Managed Volatility. The Management Agreement and the Investment Subadvisory Agreement are referred to collectively herein as the “Agreements.”

The Board’s Independent Trustees were assisted in their review by independent legal counsel and met with such counsel separately from representatives of IICO and the Subadviser. Independent legal counsel explained the factors that the Board should consider as part of its review of the Agreements, all as outlined in a memorandum it had provided to the Board prior to the meeting, including, among other things, the nature and the quality of the services provided by IICO and the Subadviser, profitability (including anyfall-out benefits) from IICO’s and the Subadviser’s relationships with each series of the Trust (each, a “Fund” and together, the “Funds”), economies of scale, the role played by the Independent Trustees, and information on comparative fees and expenses. The Independent Trustees also considered the written responses and materials produced by IICO and the Subadviser in response to 15(c) due diligence request lists submitted by the Independent Trustees’ legal counsel prior to the meeting, as well as materials produced in response to afollow-up request list sent to IICO by independent legal counsel on behalf of the Independent Trustees. Included in those responses, which had been provided to the Board prior to the meeting, was aFund-by-Fund profitability analysis prepared by IICO, as well as an explanation of the methodology by which the profitability analysis was calculated. The Board also received extensive materials on performance, expenses and comparable fund information from Broadridge, Inc. (“Broadridge”), an independent mutual fund rating service. Finally, the Independent Trustees received and reviewed a considerable amount of information that their independent fee consultant had provided to them. The Independent Trustees previously had reviewed and discussed these materials during a telephonic meeting in July 2019. They further reviewed these materials among themselves, with their independent legal counsel and the independent fee consultant, and with the other Board members at executive sessions of the Independent Trustees at the August13-14, 2019 Board meeting, during which the Board considered various factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Board’s determination to approve the Agreements are discussed separately below.

Nature, Extent and Quality of Services

The Board considered the nature, extent and quality of services provided to the Funds by IICO and the Subadviser, taking into account the large amount of materials produced by IICO and the Subadviser in response to the 15(c) due diligence requests submitted on its behalf by independent legal counsel to the Independent Trustees.

The Board also took into account the report from its Investment Oversight Committee (the “IOC”), in light of that committee’s duties to assist the Board in the 15(c) process. The IOC had reported to the Board on its review of the performance of the Funds, IICO’s investment risk management function, and the changes IICO and its affiliates have been undertaking for the Trust and the overall fund complex. As such, the Board examined all of IICO’s activities in light of performance and expense structure, as well as the overall rationalization of the fund complex (both completed and/or proposed), which is designed to provide economies of scale to the shareholders, reduce the Funds’ expenses and enhance the performance of the Funds, particularly in the context of substantial industry change and regulatory developments.

The Board likewise considered the knowledge it had received from its regular meetings, including from the materials provided in connection with those meetings, such as the resources and key personnel of IICO and the Subadviser, as well as the other services provided to the Funds by IICO and the Subadviser, as applicable (e.g.,managing the quality of execution of portfolio transactions and the selection of broker-dealers for those transactions, monitoring adherence to each Fund’s investment restrictions, producing reports, providing support services for the Board and its committees, communicating with shareholders and overseeing the activities of other service providers, including monitoring compliance with various Fund policies and procedures and with applicable laws and regulations). The Board also took into account the compliance environment at IICO and the Subadviser, noting the resources that each has dedicated towards compliance. The Board concluded that the nature and extent of the services provided by IICO and the Subadviser were appropriate, that the quality of those services had been consistent with quality norms in the industry and that the Funds were likely to benefit from the continued provision of those services.


128		ANNUAL REPORT		2019

Benefits from the Relationship with the Funds

The Board next discussed whether IICO or the Subadviser derives any other direct or indirect benefit from serving the Funds. In that regard, the Board discussed the transfer agency and shareholder servicing fees that Waddell & Reed Services Company (“WISC”), an affiliate of IICO, has provided the Funds. The Board took note of the caps that management previously had agreed to on shareholder servicing costs. The Board also considered the benefits that accrue to each service provider organization from its respective relationship with the Funds, including the fact that a variety of services are provided by affiliates of IICO, including distribution, administrative and Fund accounting services, and, as discussed above, shareholder servicing. The Board also considered management’s proposal to outsource the transactional processing operations of WISC to asub-agent for the Funds, which is designed to achieve greater efficiencies and savings for Fund shareholders over time. After full consideration of these and other factors, the Board concluded that none of IICO, the Subadviser or any of their affiliates receives any additional direct or indirect benefits that would preclude the Board from approving the continuation of the Management Agreement with IICO or the Investment Subadvisory Agreement with the Subadviser.

Economies of Scale

The Board discussed whether economies of scale are being realized by the Funds and whether fee levels reflect those economies of scale for the benefit of the Funds’ shareholders. The Board considered the fact that as a Fund’s assets have grown, the expenses of that Fund generally have fallen. Additionally, in that regard, the Board considered the various initiatives that IICO has undertaken to seek to rationalize the fund complex.

Performance of the Funds and Costs of Services Provided

The Board considered the performance of each Fund and the costs of the services provided, focusing in particular on a number of Funds that the independent fee consultant had identified. Specifically, the Board examined the investment performance of each Fund, including the percentile ranking of each Fund over various periods of time. The Board also examined the performance of each Fund against its respective benchmark index and peer funds for the same periods. After extensively reviewing all of the performance information provided, the Board concluded that the Funds’ performance in each asset class was acceptable. Although the performance of some of the focus Funds identified by the independent fee consultant lagged that of their peers or respective benchmark index, the Board recognized that IICO, or the Subadviser, had taken, or was taking, steps to address that underperformance, and determined to continue to monitor closely the performance of those Funds.

The Board also considered the expenses and expense ratio of each Fund, and the expense limitation and fee reduction arrangements entered into by IICO in light of the services provided by IICO and the Subadviser. The Board also compared each Fund’s expenses, including advisory, distribution and shareholder servicing fees, with the expenses and advisory fees of other investment advisers managing similarly situated funds, as well as the advisory fees that IICO (or an affiliate) charges for providing advisory services to other accounts in the same asset class for certain Funds. In that regard, the Board noted that IICO performs significant additional services for the Funds as compared to those other accounts. The Board also took into account the information on IICO’s profitability in managing the Funds, including the methodology used to calculate profitability. The Board finally considered the amount of assets in each Fund, each Fund’s average account size and how those factors affect the Funds’ expense ratios, noting that, as the Funds’ assets have increased or decreased over time, the expense ratios of the Funds generally have fallen or risen, respectively. After completing this examination, the Board concluded that each Fund’s expenses are appropriate at the current time.

Independent Fee Consultant Review

Independent legal counsel, on behalf of the Independent Trustees, engaged an independent fee consultant to assist them in evaluating the reasonableness of the management fees charged by IICO to all funds within the fund complex. The independent fee consultant’s review addressed the followingfee-related factors:

1.	The nature, extent and quality of IICO’s services to the Funds;

2.	Management fees and expenses in the context of performance;

3.	Product category expenses, including peers;

4.	Profit margins of IICO’s parent from supplying such services;

5.	Subadviser and institutional fee analyses; and

6.	Possible economies of scale as a Fund grows larger.

The following summarizes the findings of the independent fee consultant retained by the Independent Trustees.

2019

ANNUAL REPORT

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Summary Findings

The report stated that IICO delivered reasonable levels of performance in the longer-term periods and reasonable levels of service to the Funds in relation to its management fees as compared to the investment advisers of comparable funds. For the 36 months ended March 31, 2019, approximately 17% of the Funds were in the top quartile of performance and 29% of the Funds were in the top two quartiles of performance and that short-term performance of such Funds were showing signs of improvement. Specifically, the report noted that 58% of the Funds were in the top two quartiles in theone-year period, and that 28% of all such Funds had improving performance in theirone-year period. The independent fee consultant noted that the Funds’ performance appeared to be grounded in a number of institutional competitive advantages at IICO, including investment management depth, ability to attract top talent, proactive management, performance-focused culture, economic analysis and an effective trading infrastructure.

The report further indicated that total expenses of the funds in the complex, on average, were 3% over the average total expenses of their respective Broadridge Expense Group peers and 1% under the average total expenses for their Broadridge Expense Universe peers. The net management fees for the Funds were 2% over the average net management fees of their respective Broadridge Expense Group peers and 7% over the average net management fees for their Broadridge Expense Universes. The report also stated that, when compared to expenses from the prior year, net management fees deceased by 1.5%, while total expenses decreased by 1%.

The report also stated that the management fees IICO charges to the Funds are reasonable in relation to the management fees it charges to its institutional account clients. The report noted that these institutional account clients have different service and infrastructure needs and in addition, the average spread between management fees IICO charged to the Funds and those it charges to institutional account clients is reasonable relative to the average fee spreads computed from industry surveys.

The report stated that while it was difficult to confirm overall economies of scale, it was clear that the Funds’ shareholders generally are benefitting from lower expenses as the Funds’ assets grow.

The report also noted that the overall profitability of IICO’s parent relative to other complexes is reasonable.

Finally, the report also examined the fees that IICO retains on Funds that are subadvised by unaffiliated subadvisers and indicated that those fees are reasonable relative to the industry. The report also stated that the subadvisory fees that IICO earns for serving as a subadviser to an unaffiliated fund when compared to fees of similar funds likewise are reasonable relative to the industry.

Conclusions

The independent fee consultant’s report concluded that it believes that the services provided by IICO and its affiliates and expenses incurred by the Funds in the previous 12 months are reasonable and provide adequate justification for renewal of the Funds’ existing Agreements.


130		ANNUAL REPORT		2019


ANNUAL PRIVACY NOTICE		IVY VIP

(UNAUDITED)

Ivy Distributors, Inc., the Ivy Variable Insurance Portfolios and the InvestEd Portfolios (“Ivy”) are committed to ensuring their clients have access to a broad range of products and services to help them achieve their personal financial goals. Accurate information lies at the heart of our pledge to provide these products and services, and we strive to protect your personal nonpublic information. In the course of doing business with Ivy, clients are requested to share financial information and they may be asked to provide other personal details. Clients can be assured that Ivy is diligent in its efforts to keep such information confidential.

Recognition of a Client’s Expectation of Privacy

At Ivy, we believe the confidentiality and protection of client information is one of our fundamental responsibilities. And while information is critical to providing quality service, we recognize that one of our most important assets is our clients’ trust. Thus, the safekeeping of client information is a priority for Ivy.

Information Collected

In order to tailor available financial products to your specific needs, Ivy may request that you complete a variety of forms that require nonpublic personal information about your financial history and other personal details, including but not limited to, your name, address, social security number, assets, income and investments. Ivy may also gather information about your transactions with us, our affiliates and others.

Categories of Information that may be Disclosed

While Ivy may disclose information it collects from applications and other forms, as described above, we at Ivy also want to assure all of our clients that whenever information is used, it is done with discretion. The safeguarding of client information is an issue we take seriously.

Categories of Parties to whom we disclose nonpublic personal information

Ivy may disclose nonpublic personal information about you to selectively chosen financial service providers, whom we believe have valuable products or services that could benefit you. Whenever we do this, we carefully review the company and the product or service to make sure that it provides value to our clients. We share the minimum amount of information necessary for that company to offer its product or service. We may also share information with unaffiliated companies that assist us in providing our products and services to our clients; in the normal course of our business (for example, with consumer reporting agencies and government agencies); when legally required or permitted in connection with fraud investigations and litigation; and at the request or with the permission of a client.

In addition, Ivy has entered into a Protocol with a number of other brokerage firms intended to further our clients’ freedom of choice in connection with the movement of their financial advisors to new firms. In the event your account is maintained through Ivy and your financial advisor leaves Ivy to join a firm that has likewise entered the Protocol, Ivy may disclose your name, address and telephone number to the departed advisor’s new firm.

Opt Out Right

If you prefer that we not disclose nonpublic personal information about you to nonaffiliated third parties, you may opt out of those disclosures; that is, you may direct us not to make those disclosures (other than disclosures permitted by law). If you wish to opt out of disclosures to nonaffiliated third parties, you may make this request in writing to: Ivy, Attn: Opt Out Notices, P.O. Box 29220, Shawnee Mission, KS 66201, or you may call1-888-923-3355 and a Client Services Representative will assist you.

Confidentiality and Security

We restrict access to nonpublic personal information about you to those employees who need to know that information to provide products and services to you. We maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information. If you decide to close your account(s) or become an inactive client, we will adhere to the privacy policies and practices as described in this notice.

2019

ANNUAL REPORT

131


PROXY VOTING INFORMATION		IVY VIP

(UNAUDITED)

Proxy Voting Guidelines

A description of the policies and procedures Ivy Variable Insurance Portfolios uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 1.888.923.3355 and (ii) on the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov.

Proxy Voting Records

Information regarding how the Portfolio voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on FormN-PX at www.ivyinvestments.com and on the SEC’s website at www.sec.gov.


132		ANNUAL REPORT		2019


QUARTERLY PORTFOLIO SCHEDULE INFORMATION		IVY VIP

(UNAUDITED)

Portfolio holdings can be found on the Trust’s website at www.ivyinvestments.com. Alternatively, a complete schedule of portfolio holdings of each Portfolio for the first and third quarters of each fiscal year is filed with the SEC and can be found on the Trust’s FormN-Q and/or FormNPORT-EX. These holdings may be viewed in the following ways:

•

On the SEC’s website at www.sec.gov.

•

For review and copy at the SEC’s Public Reference Room in Washington, DC. Information on the operations of the Public Reference Room may be obtained by calling 1.800.SEC.0330.

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ANNUAL REPORT

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134		ANNUAL REPORT		2019


THE IVY VARIABLE INSURANCE PORTFOLIOS FAMILY

Global/International Portfolios

Global Equity Income

Global Growth

International Core Equity

Domestic Equity Portfolios

Core Equity

Growth

Mid Cap Growth

Small Cap Core

Small Cap Growth

Value

Fixed Income Portfolios

Corporate Bond

Global Bond

High Income

Limited-Term Bond

Money Market Portfolio

Government Money Market

Specialty Portfolios

Asset Strategy

Balanced

Energy

Natural Resources

Pathfinder Aggressive

Pathfinder Conservative

Pathfinder Moderate

Pathfinder Moderately Aggressive

Pathfinder Moderately Conservative

Pathfinder Moderate — Managed Volatility

Pathfinder Moderately Aggressive — Managed Volatility

Pathfinder Moderately Conservative — Managed Volatility

Science and Technology

Securian Real Estate Securities

The underlying portfolios discussed in this report are only available as investment options in variable annuity and variable life insurance contracts issued by life insurance companies. They are not offered or made available directly to the general public.

This report is submitted for the general information of the shareholders of Ivy Variable Insurance Portfolios. It is not authorized for distribution to prospective investors in a Portfolio unless accompanied with or preceded by the current Portfolio prospectus as well as the variable product prospectus.

2019

ANNUAL REPORT

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ANN-VIP1 (12/19)

LOGO

VARIABLE INSURANCE PORTFOLIOS

Annual Report

DECEMBER 31, 2019


Ivy Variable Insurance Portfolios

Core Equity							Class II

Corporate Bond							Class II

Global Bond							Class II

Global Equity Income							Class II

Global Growth							Class II

Limited-Term Bond							Class II

Securian Real Estate Securities							Class II

Value							Class II


CONTENTS		IVY VIP


President’s Letter			3
Illustration of Portfolio Expenses			4
Management Discussion, Portfolio Highlights and Schedule of Investments:
Core Equity			6
Corporate Bond			12
Global Bond			22
Global Equity Income			30
Global Growth			37
Limited-Term Bond			43
Securian Real Estate Securities			51
Value			57
Statements of Assets and Liabilities			63
Statements of Operations			64
Statements of Changes in Net Assets			65
Financial Highlights			68
Notes to Financial Statements			70
Report of Independent Registered Public Accounting Firm			84
Income Tax Information			85
Board of Trustees and Officers			86
Renewal of Investment Management Agreement			90
Annual Privacy Notice			93
Proxy Voting Information			94
Quarterly Portfolio Schedule Information			95


2		ANNUAL REPORT		2019


PRESIDENT’S LETTER		IVY VIP


		DECEMBER 31, 2019 (UNAUDITED)
Philip J. Sanders, CFA

Dear Shareholder,

Economic Snapshot



	12/31/2019			12/31/2018
S&P 500 Index		3,230.78			2,506.85
MSCI EAFE Index		2,036.94			1,719.88
10-Year Treasury Yield		1.92	%		2.69	%
U.S. unemployment rate		3.5	%		3.9	%
30-year fixed mortgage rate		3.74	%		4.55	%
Oil price per barrel		$61.14			$45.41

Sources: Bloomberg, U.S. Department of Labor, MBA, CME

Respectfully,

LOGO

Philip J. Sanders, CFA

President

2019

ANNUAL REPORT


ILLUSTRATION OF PORTFOLIO EXPENSES		IVY VIP

(UNAUDITED)

Expense Example

Actual Expenses

The first section in the following table provides information about actual investment values and actual expenses for each share class. You may use the information in this section, together with your initial investment in Portfolio shares, to estimate the expenses that you paid over the period. Simply divide the value of that investment by $1,000 (for example, a $7,500 initial investment divided by $1,000 = 7.5), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your investment during this period. In addition, there are fees and expenses imposed under the variable annuity or variable life insurance contract through which shares of the Portfolio are held. Additional fees have the effect of reducing investment returns.

Hypothetical Example for Comparison Purposes

Expenses paid may be impacted by expense reduction arrangements. If those arrangements had not been in place, expenses paid would have been higher. See Note 5 in Notes to Financial Statements for further information.


4		ANNUAL REPORT		2019


ILLUSTRATION OF PORTFOLIO EXPENSES		IVY VIP

(UNAUDITED)



	Actual⁽¹⁾						Hypothetical⁽²⁾

Portfolio	Beginning Account Value 6-30-19		Ending Account Value 12-31-19		Expenses Paid During Period*		Beginning Account Value 6-30-19		Ending Account Value 12-31-19		Expenses Paid During Period*		Annualized Expense Ratio Based on the Six-Month Period
Core Equity
Class II	$	1,000	$	1,110.70	$	5.07	$	1,000	$	1,020.41	$	4.85		0.95%
Corporate Bond
Class II	$	1,000	$	1,034.10	$	3.97	$	1,000	$	1,021.31	$	3.94		0.77%
Global Bond
Class II	$	1,000	$	1,024.50	$	2.23	$	1,000	$	1,023.05	$	2.23		0.43%
Global Equity Income
Class II	$	1,000	$	1,083.20	$	5.42	$	1,000	$	1,020.06	$	5.25		1.02%
Global Growth
Class II	$	1,000	$	1,067.40	$	5.89	$	1,000	$	1,019.50	$	5.76		1.13%
Limited-Term Bond
Class II	$	1,000	$	1,011.10	$	4.02	$	1,000	$	1,021.21	$	4.04		0.79%
Securian Real Estate Securities
Class II	$	1,000	$	1,074.70	$	6.33	$	1,000	$	1,019.12	$	6.16		1.21%
Value
Class II	$	1,000	$	1,116.30	$	5.29	$	1,000	$	1,020.18	$	5.05		1.00%

*	Portfolio expenses are equal to the Portfolio’s annualized expense ratio (provided in the table), multiplied by the average account value over the period, multiplied by 184 days in thesix-month period ended December 31, 2019, and divided by 365.

(1)

(2)

The above illustrations are based on ongoing costs only.

2019

ANNUAL REPORT


MANAGEMENT DISCUSSION		CORE EQUITY

(UNAUDITED)

Erik R. Becker

Below, Erik R. Becker, CFA, portfolio manager of Ivy VIP Core Equity, discusses positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Becker has managed the Portfolio since 2006, and has 21 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Core Equity (Class II shares at net asset value)			31.09%
Benchmark and Morningstar Category
S&P 500 Index			31.49%
(Generally reflects the performance of large- and medium-sized U.S. stocks)
Morningstar Large Growth Category Average			31.90%
(Generally reflects the performance of the universe of portfolios with similar investment objectives)

Key factors

The S&P 500 Index, the Portfolio’s benchmark, advanced more than 31% for the fiscal year ended December 31, 2019, delivering the index’s best performance since 2013, and the second best of the current, record-long cycle. The year was unique in that the market appreciation was accompanied by essentially no earnings growth for the market as a whole. That is, stocks were driven by investors’ willingness to pay a higher price for a given earnings stream. It could also be that market participants, as a whole, expected a significant acceleration in the rate of earnings growth in the future.

The information technology sector was far and away the best performing sector for the year, increasing 50% as a group. The sector accounted for nearly 20% of the overall market; it generated nearly one-third of the benchmark’s gain. Strong performance was driven by solid fundamentals, particularly for software and payments firms, as well as significant valuation expansion for some of the sectors largest constituents: Apple, Inc. and Microsoft Corporation.

The communication services and financials sectors also provided above-market returns for the year. Conversely, lagging sectors included energy and health care. While health care earnings growth exceeded the growth of the market, concerns around political risk heading into 2020 elections weighed on valuation for the sector. From a style perspective, growth significantly outperformed more value-oriented equities.

Contributors and detractors

Despite delivering a positive return, the Portfolio slightly lagged its benchmark and peer group for the period ended December 31, 2019. Individual stock selection within the financials sector was additive to performance, with Citigroup, Inc., The Blackstone Group, Inc. and S&P Global, Inc. providing a strong lift to the Portfolio. Sector selection also contributed to performance, particularly the decision to overweight information technology versus the benchmark. Cash was an offsetting negative for the year given the very strong equity market returns.

A notable laggard for the Portfolio was Boeing Company as delays mounted for the entry back into service for the 737 Max jet. Reentry into service for the airplane has been pushed back until the first quarter of 2020, as best we can tell, as the company continues to work to fix the flight control software. Without minimizing the tragic 737 Max crashes, we believe strongly in Boeing Company’s ability to correct deficiencies in the flight control software and pilot training that led to the disasters. The company remains a duopoly player in a relatively high growth market for air travel with nearly 5,000 units in backlog – nearly nine years of production – which we believe should produce significant profits and cash flows leading to a higher share price. While we reduced our exposure to the company, we continue to hold a position in Boeing Company.

The Portfolio has continued to shift into more value-oriented names that should benefit from any growth stabilization/improvement or even an extended period of moderate economic growth. Recent purchases, toward this end, include Cisco Systems, Inc. and Morgan Stanley, two companies trading well below historical valuation norms with attractive cash flow characteristics and strong buyback programs in place. We have also taken action based on the underperformance of the health care sector in 2019, which returned 21% for the period. We increased our stake in UnitedHealth Group, Inc. and Anthem, Inc. during the fourth quarter, while adding positions in CVS Health Corp. and Eli Lilly and Company.

Sector positioning is currently more balanced than other periods. We continue to be underweight the defensive sectors –utilities, real estate, consumer staples – given robust valuations in those stable groups.


6		ANNUAL REPORT		2019

Outlook

Many have argued, and we concur, that 2019 represented the third profits recession since the Great Financial Crisis. At present, consensus estimates suggest that the market anticipates aggregate earnings growth will accelerate in 2020 by slightly over 9%, which is certainly an improvement over no growth in 2019.

We think that industrials, information technology (the more cyclical areas within the sector), and commodity-sensitive industries should fare better as the global growth slowdown and trade-related inventory correction ultimately reverses in 2020. Global central banks have aggressively reduced short-term interest rates to stimulate business investment and risk-taking. That stated, we continue to be wary of the extent to which investors have pushed valuations higher in many of the stable and high-growth areas of the market that performed superbly as cyclical growth slowed in 2019.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

Because the Portfolio is generally invested in a small number of stocks, the performance of any one security held by the Portfolio will have a greater impact than if the Portfolio were invested in a larger number of securities. Although larger companies tend to be less volatile than companies with smaller market capitalizations, returns on investments in securities of large capitalization companies could trail the returns on investments in securities of smaller companies. These and other risks are more fully described in the Portfolio’s prospectus.

The index noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Core Equity.

2019

ANNUAL REPORT


PORTFOLIO HIGHLIGHTS		CORE EQUITY

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			99.5%
Information Technology			24.0%
Financials			17.7%
Communication Services			11.2%
Health Care			11.0%
Consumer Discretionary			10.8%
Industrials			10.1%
Consumer Staples			6.8%
Energy			2.9%
Materials			2.9%
Utilities			2.1%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			0.5%

Top 10 Equity Holdings



Company	Sector	Industry
Microsoft Corp.	Information Technology	Systems Software
Apple, Inc.	Information Technology	Technology Hardware, Storage & Peripherals
Citigroup, Inc.	Financials	Other Diversified Financial Services
JPMorgan Chase & Co.	Financials	Other Diversified Financial Services
Amazon.com, Inc.	Consumer Discretionary	Internet & Direct Marketing Retail
Boeing Co. (The)	Industrials	Aerospace & Defense
TE Connectivity Ltd.	Information Technology	Electronic Manufacturing Services
Wal-Mart Stores, Inc.	Consumer Staples	Hypermarkets & Super Centers
Comcast Corp., Class A	Communication Services	Cable & Satellite
Alphabet, Inc., Class A	Communication Services	Interactive Media & Services

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.


8		ANNUAL REPORT		2019


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		CORE EQUITY

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		31.09%
5-year period ended12-31-19		9.26%
10-year period ended12-31-19		12.76%

(2)

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		CORE EQUITY (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Communication Services

Cable & Satellite – 3.1%
Charter Communications, Inc., Class A (A)		7	$	3,571
Comcast Corp., Class A		416		18,706

				22,277


Interactive Home Entertainment – 1.7%
Take-Two Interactive Software, Inc. (A)		101		12,345


Interactive Media & Services – 4.5%
Alphabet, Inc., Class A (A)		14		18,575
Facebook, Inc., Class A (A)		69		14,112

				32,687


Movies & Entertainment – 1.9%
Walt Disney Co. (The)		96		13,955


Total Communication Services – 11.2%				81,264
Consumer Discretionary

Auto Parts & Equipment – 2.0%
Aptiv plc		151		14,343


Automotive Retail – 1.8%
AutoZone, Inc. (A)		11		13,312


Footwear – 2.0%
NIKE, Inc., Class B		145		14,681


Internet & Direct Marketing Retail – 5.0%
Alibaba Group Holding Ltd. ADR (A)		73		15,412
Amazon.com, Inc. (A)		11		20,326

				35,738


Total Consumer Discretionary – 10.8%				78,074
Consumer Staples

Drug Retail – 0.9%
CVS Caremark Corp.		90		6,710


Household Products – 1.6%
Procter & Gamble Co. (The)		89		11,142


Hypermarkets & Super Centers – 4.3%
Costco Wholesale Corp.		40		11,714
Wal-Mart Stores, Inc.		163		19,423

				31,137


Total Consumer Staples – 6.8%				48,989
Energy

Oil & Gas Refining & Marketing – 1.2%
Phillips 66		78		8,722


Oil & Gas Storage & Transportation – 1.7%
Enterprise Products Partners L.P.		428		12,058


Total Energy – 2.9%				20,780


COMMON STOCKS(Continued)	Shares		Value
Financials

Asset Management & Custody Banks – 2.4%
Blackstone Group, Inc. (The), Class A		206	$	11,501
KKR & Co.		209		6,082

				17,583


Financial Exchanges & Data – 2.0%
S&P Global, Inc.		54		14,625


Insurance Brokers – 1.7%
Aon plc		57		11,841


Investment Banking & Brokerage – 1.9%
Morgan Stanley		264		13,475


Other Diversified Financial Services – 8.0%
Citigroup, Inc.		295		23,549
Fidelity National Information Services, Inc.		78		10,796
JPMorgan Chase & Co.		167		23,339

				57,684


Property & Casualty Insurance – 1.7%
Progressive Corp. (The)		172		12,452


Total Financials – 17.7%				127,660
Health Care

Health Care Equipment – 4.2%
Danaher Corp.		87		13,292
Zimmer Holdings, Inc.		114		17,103

				30,395


Managed Health Care – 4.1%
Anthem, Inc.		42		12,826
UnitedHealth Group, Inc.		57		16,772

				29,598


Pharmaceuticals – 2.7%
Eli Lilly and Co.		66		8,739
Zoetis, Inc.		82		10,912

				19,651


Total Health Care – 11.0%				79,644
Industrials

Aerospace & Defense – 4.8%
Boeing Co. (The)		61		19,870
Lockheed Martin Corp.		39		15,256

				35,126


Environmental & Facilities Services – 1.5%
Waste Connections, Inc.		116		10,535


Railroads – 2.2%
Norfolk Southern Corp.		53		10,234
Union Pacific Corp.		30		5,401

				15,635


COMMON STOCKS(Continued)	Shares		Value
Trading Companies & Distributors – 1.6%
United Rentals, Inc. (A)		71	$	11,829


Total Industrials – 10.1%				73,125
Information Technology

Communications Equipment – 3.2%
Cisco Systems, Inc.		252		12,073
Motorola, Inc.		69		11,042

				23,115


Data Processing & Outsourced Services – 4.3%
Fiserv, Inc. (A)		136		15,672
MasterCard, Inc., Class A		52		15,462

				31,134


Electronic Manufacturing Services – 2.7%
TE Connectivity Ltd.		205		19,615


Semiconductors – 3.6%
Analog Devices, Inc.		122		14,484
Texas Instruments, Inc.		87		11,130

				25,614


Systems Software – 6.5%
Microsoft Corp.		298		46,922


Technology Hardware, Storage & Peripherals – 3.7%
Apple, Inc.		92		26,939


Total Information Technology – 24.0%				173,339
Materials

Commodity Chemicals – 1.4%
LyondellBasell Industries N.V., Class A		107		10,105


Specialty Chemicals – 1.5%
Sherwin-Williams Co. (The)		19		10,913


Total Materials – 2.9%				21,018
Utilities

Electric Utilities – 2.1%
NextEra Energy, Inc.		63		15,207


Total Utilities – 2.1%				15,207

TOTAL COMMON STOCKS – 99.5%			$	719,100
(Cost: $616,267)

SHORT-TERM SECURITIES
Money Market Funds (B) – 0.2%
State Street Institutional U.S. Government Money Market Fund – Premier Class,
1.550%		1,759		1,759


TOTAL SHORT-TERM SECURITIES – 0.2%			$	1,759
(Cost: $1,759)


10		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		CORE EQUITY (in thousands)

DECEMBER 31, 2019


	Value

TOTAL INVESTMENT SECURITIES – 99.7%	$	720,859
(Cost: $618,026)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.3%		2,416

NET ASSETS – 100.0%	$	723,275

Notes to Schedule of Investments

(A)	No dividends were paid during the preceding 12 months.

(B)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks	$	719,100	$	—	$	—
Short-Term Securities		1,759		—		—
Total	$	720,859	$	—	$	—

The following acronym is used throughout this schedule:

ADR = American Depositary Receipts

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


MANAGEMENT DISCUSSION		CORPORATE BOND

(UNAUDITED)

LOGO

Mark G. Beischel

LOGO

Susan Regan

Below, Mark G. Beischel, CFA and Susan Regan, co-portfolio managers of Ivy VIP Corporate Bond, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Beischel has managed the Portfolio since April 2018 and has 26 years of industry experience. Ms. Regan has managed the Portfolio since April 2018 and has 32 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Corporate Bond (Class II shares at net asset value)			12.18%
Benchmark and Morningstar Category
Bloomberg Barclays U.S. Credit Index			13.80%
(generally reflects the performance of securities representing the U.S. credit market)
Morningstar Corporate Bond Category Average			13.03%
(generally reflects the performance of the universe of funds with similar investment objectives)

Portfolio Performance

The Portfolio had a double-digit return, but underperformed its benchmark and Morningstar peer group category average for the year. The return was primarily driven by spreads tightening 53 basis points (bps) in the year, coupon income and a fall in U.S. Treasury yields.

Market Update

Calendar year 2019 saw strong returns across risk asset classes as trade tensions eased significantly between the U.S. and China, Brexit appeared headed toward a benign outcome and macro data strengthened. The S&P 500 returned an impressive 31.5% for the year.

Despite the improvements in the risk picture in 2019, U.S. Treasuries rallied with the 10-year yield falling 76 bps from 2.68% to 1.92%, while the yield on the 2-year U.S. Treasury fell 92 bps from 2.49% to 1.57%. Both were driven in part by the Federal Reserve (Fed) cutting rates a total of 75 bps during the fiscal year, lowering the federal funds rate range from 2.25-2.50% at the beginning of the fiscal year to 1.50-1.75% at fiscal year-end. The market is pricing in slightly more than 60% odds of one additional rate cut in 2020.

The yield curve steepened in the year with the difference between the 10-year U.S. Treasury note and the 2-year U.S. Treasury note rising 15 bps to 34 bps for the year, generally a sign the bond market is pricing in more robust future economic growth. However, in August 2019 this measure of the yield curve inverted briefly, and while inversion has been a reliable predictor of recession in the past, the lead time can be long and variable.

The spread on the Portfolio’s benchmark, the Bloomberg Barclays U.S. Credit Index, tightened from 143 bps to 90 bps at fiscal year-end, marking the tightest level for the index since early 2018. High yield delivered solid gains of 14.32% for the year due to carry and spread tightening, as the spread on the high yield index tightened 190 bps to 336 bps during the fiscal year. Surprisingly, it was the highest rating category of high yield that led returns – BB, B and CCC credits returned 15.51%, 14.80% and 9.52% for the fiscal year, respectively. CCC lagged the higher rated categories through the summer and fall, but staged a large rally in December relative to B and BB categories.

Debt growth in the investment grade universe, excluding the volatile commodity sectors, slowed to 4.3% in the third quarter of 2019 compared to last year, its slowest pace since 2011. The same universe saw a slowdown in EBITDA growth to 2%, resulting in leverage of 3.1-times, flat sequentially, and up 0.1-time year over year.

Despite concerns over the BBB space, BBB leverage declined 0.1-time year over year to 3.6-times, while A-rated company leverage increased 0.3-time year over year to 2.5-times at fiscal year-end. This is consistent with the trend in the earnings payout ratio (the proportion of EBITDA used for dividends and share repurchases) where BBB-rated issuers payout ratio declined 4% year over year to 30%, while the payout ratio for A-rated issuers rose 3% to approximately 55%. Thus, while credit trends were roughly stable at extremely weak levels, the trend worsened for the A-rated space and BBB saw modest improvement at fiscal year-end.


12		ANNUAL REPORT		2019

For the year, gross issuance was nearly $1.3 trillion, a 7% increase year over year, while net issuance was $356 billion up 5% year over year. BBB-rated issuance was 43% of gross issuance in 2019, in line with 2018 levels. Long-duration issuance increased during the year with 58% of issuance longer than six years, relative to 54% in 2018 as low rates encourage longer duration issuance.

Portfolio Positioning

The Portfolio’s duration rose slightly during the year but not to the degree of the benchmark and the Portfolio remained modestly below the benchmark’s duration of 7.6 years at fiscal year-end. Higher duration means higher price volatility for a given change in spreads as well as interest rates.

During the year, the Portfolio increased its allocation to A-rated credits, at the expense of the Portfolio’s exposure to BBB, AA and BB rated credits. The largest changes in sector positioning were increases in the consumer non-cyclical and industrial sectors and decreases in the financial and utility sectors.

Outlook

The principal risk of 2019 was trade policy, and given the likelihood of a trade deal in January 2020, we think this risk has abated. Replacing this risk is the 2020 U.S. presidential election, as the two political parties have starkly different candidates and policies that could dramatically impact risk assets. Additionally, we believe the Fed is less likely to be a material driver of risk assets in either direction in 2020 since expectations are either for one rate cut, or none. While we expect the Fed to remain “on hold” for 2020, rate cuts are possible if the macro picture worsens.

The final quarter of the fiscal year saw a notable change in high yield as CCC credits began to outperform higher rated high yield in December. While this bodes well for staving off a larger uptick in the default rate, we believe some of these companies and capital structures are broken and will need restructuring. We think an increase in the default rate is likely in 2020, although we don’t expect recession-level defaults.

The technical backdrop for spreads remains very positive. We expect net supply of investment-grade issuance in 2020 to be materially lower than 2019 due to smaller merger and acquisition volume, lessening leveraging trends and higher maturities in 2020. However, we expect a higher amount of total fixed income issuance principally from U.S. deficit funding. On the demand side, trends are modestly supportive of spreads. Mutual fund flows remain robust and are likely to continue, but demand may be reduced due to yield compression. Additionally, foreign demand is likely to remain strong given the yield gap between U.S. investment grade yields and those found in foreign countries.

We believe spreads will widen in 2020 as valuations are near historically tight levels, particularly when adjusting for declining credit fundamentals and increasing duration. One potential catalyst would be if rating agency action turns more negative. The agencies have been very lenient with companies pushing the envelope on leverage or failing to hit deleveraging targets. While the timing of such a change is hard to anticipate, this leniency is appearing in financial media and the political realm, which may catalyze rating action. As it stands, 2019 saw deterioration in the upgrade-to-downgrade ratio in investment grade, which was 1.46 in 2018 for Moody’s, dropping to 1.25 for 2019, and 1.07 in fourth quarter 2019.

Given our expectation for modest widening of spreads in 2020, we believe our conservative positioning relative to the benchmark is appropriate.

Past performance is not a guarantee of future results. As with any mutual fund, the value of the Portfolio’s shares will change, and you could lose money on your investment.

Certain U.S. government securities in which the Portfolio may invest, such as Treasury securities and securities issued by the Government National Mortgage Association (Ginnie Mae), are backed by the full faith and credit of the U.S. government. However, other U.S. government securities in which the Portfolio may invest, such as securities issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB), are not backed by the full faith and credit of the U.S. government, are not insured or guaranteed by the U.S. government and, instead, may be supported only by the right of the issuer to borrow from the U.S. Treasury or by the credit of the issuer.

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. These and other risks are more fully described in the Portfolio’s prospectus.

The index noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Corporate Bond.

2019

ANNUAL REPORT


PORTFOLIO HIGHLIGHTS		CORPORATE BOND

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Bonds			96.8%
Corporate Debt Securities			93.2%
Asset-Backed Securities			1.6%
Municipal Bonds – Taxable			1.2%
Other Government Securities			0.5%
United States Government Agency Obligations			0.2%
Mortgage-Backed Securities			0.1%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			3.2%

Quality Weightings


Investment Grade			96.5%
AAA			2.3%
AA			11.0%
A			34.6%
BBB			48.6%
Non-Investment Grade			0.3%
BB			0.2%
Non-rated			0.1%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			3.2%


14		ANNUAL REPORT		2019


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		CORPORATE BOND

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		12.18%
5-year period ended12-31-19		3.60%
10-year period ended12-31-19		3.91%

(2)

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		CORPORATE BOND (in thousands)

DECEMBER 31, 2019



ASSET-BACKED SECURITIES	Principal		Value
AerCap Ireland Capital Ltd. and AerCap Global Aviation Trust,
3.500%, 5-26-22	$	1,320	$	1,356
Air Canada Enhanced Equipment Trust, Series 2015-2, Class AA,
3.750%, 12-15-27 (A)		831		881
American Airlines Class AAPass-Through Certificates,Series 2016-2,
3.200%, 6-15-28		1,615		1,660
American Airlines, Inc. Pass-Through Certificates, Series 2016-1, Class AA,
3.575%, 1-15-28		857		899
American Airlines, Inc. Pass-Through Certificates, Series 2017-1, Class AA,
3.650%, 2-15-29		2,191		2,307
United Airlines Pass-Through Certificates, Series 2016-AA,
3.100%, 7-7-28		2,639		2,702


TOTAL ASSET-BACKED SECURITIES – 1.6%			$	9,805
(Cost: $9,336)

CORPORATE DEBT SECURITIES
Communication Services

Cable & Satellite – 1.2%
Charter Communications Operating LLC and Charter Communications Operating Capital Corp.,
4.464%, 7-23-22		1,000		1,050
Comcast Corp. (GTD by Comcast Cable Communications and NBCUniversal):
3.900%, 3-1-38		500		553
4.600%, 10-15-38		1,125		1,338
Comcast Corp. (GTD by Comcast Cable Communications LLC and NBCUniversal Media LLC),
3.250%, 11-1-39		3,875		3,926

				6,867


Integrated Telecommunication Services – 2.5%
AT&T, Inc.:
3.950%, 1-15-25		1,000		1,072
2.950%, 7-15-26		2,000		2,037
4.350%, 3-1-29		3,500		3,888
Verizon Communications, Inc.:
4.500%, 8-10-33		3,500		4,084
5.250%, 3-16-37		1,250		1,566
4.812%, 3-15-39		1,684		2,028

				14,675


Interactive Home Entertainment – 0.5%
Activision Blizzard, Inc.,
2.300%, 9-15-21		3,145		3,161


Movies & Entertainment – 0.5%
Walt Disney Co. (The),
4.125%, 6-1-44		2,574		3,030


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Publishing – 0.3%
Thomson Reuters Corp.,
5.850%, 4-15-40	$	1,500	$	1,779


Wireless Telecommunication Service – 1.0%
Crown Castle Towers LLC,
3.663%, 5-15-25 (A)		2,450		2,541
Sprint Spectrum L.P.,
3.360%, 9-20-21 (A)		1,531		1,545
Vodafone Group plc,
4.125%, 5-30-25		2,000		2,170

				6,256


Total Communication Services – 6.0%				35,768
Consumer Discretionary

Auto Parts & Equipment – 0.3%
Lear Corp.,
3.800%, 9-15-27		1,750		1,766


Automobile Manufacturers – 0.2%
General Motors Co.,
5.000%, 10-1-28		1,250		1,360


Casinos & Gaming – 0.3%
Las Vegas Sands Corp.,
3.500%, 8-18-26		1,600		1,644


Education Services – 0.1%
University of Southern California,
3.028%, 10-1-39		500		502


Footwear – 1.0%
NIKE, Inc.,
3.875%, 11-1-45		5,500		6,232


Home Improvement Retail – 0.6%
Home Depot, Inc. (The),
4.200%, 4-1-43		2,800		3,240


Hotels, Resorts & Cruise Lines – 0.9%
Royal Caribbean Cruises Ltd.:
2.650%, 11-28-20		1,875		1,885
3.700%, 3-15-28		3,500		3,597

				5,482


Restaurants – 0.3%
Starbucks Corp.,
4.450%, 8-15-49		1,500		1,734


Total Consumer Discretionary – 3.7%				21,960
Consumer Staples

Brewers – 1.5%
Anheuser-Busch Inbev Finance, Inc. (GTD by AB INBEV/BBR/COB),
4.700%, 2-1-36		6,750		7,785
Molson Coors Brewing Co.,
2.250%, 3-15-20		1,000		1,000

				8,785


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Distillers & Vintners – 0.2%
Constellation Brands, Inc.,
2.650%, 11-7-22	$	1,000	$	1,014


Drug Retail – 1.0%
CVS Health Corp.:
2.800%, 7-20-20		75		75
4.100%, 3-25-25		2,500		2,682
3.250%, 8-15-29		1,875		1,903
5.050%, 3-25-48		1,000		1,181

				5,841


Household Products – 0.3%
Procter & Gamble Co. (The),
2.700%, 2-2-26		2,000		2,081


Hypermarkets & Super Centers – 0.4%
Walmart, Inc.,
4.050%, 6-29-48		2,250		2,658


Packaged Foods & Meats – 2.3%
General Mills, Inc.,
3.200%, 4-16-21		4,045		4,117
Mars, Inc.:
3.200%, 4-1-30 (A)		1,625		1,719
3.950%, 4-1-49 (A)		1,000		1,128
Nestle Holdings, Inc.,
3.900%, 9-24-38 (A)		3,500		3,948
Smithfield Foods, Inc.:
2.650%, 10-3-21 (A)		1,250		1,242
3.350%, 2-1-22 (A)		1,500		1,504

				13,658


Personal Products – 0.3%
Estee Lauder Co., Inc. (The),
3.125%,12-1-49		2,000		1,994


Soft Drinks – 0.7%
Keurig Dr Pepper, Inc.,
4.057%,5-25-23		2,125		2,240
PepsiCo, Inc.,
3.375%,7-29-49		1,875		1,960

				4,200


Tobacco – 1.5%
Altria Group, Inc. (GTD by Philip Morris USA, Inc.):
3.490%,2-14-22		1,830		1,883
2.850%,8-9-22		2,550		2,598
Imperial Brands Finance plc,
3.125%,7-26-24 (A)		2,700		2,726
Philip Morris International, Inc.,
2.875%,5-1-24		1,900		1,954

				9,161


Total Consumer Staples – 8.2%				49,392


16		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		CORPORATE BOND (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Energy

Oil & Gas Equipment & Services – 0.9%
Baker Hughes, a GE Co. LLC and Baker HughesCo-Obligor, Inc.:
2.773%,12-15-22	$	3,000	$	3,059
3.337%,12-15-27		2,000		2,085

				5,144


Oil & Gas Exploration & Production – 2.1%
BP Capital Markets plc (GTD by BP plc):
3.216%,11-28-23		1,500		1,562
3.814%,2-10-24		3,000		3,200
Canadian Natural Resources Ltd.,
3.850%,6-1-27		5,500		5,861
ConocoPhillips Co. (GTD by ConocoPhillips),
4.150%,11-15-34		218		244
EQT Corp.,
3.000%,10-1-22 (B)		1,450		1,424

				12,291


Oil & Gas Refining & Marketing – 0.3%
Phillips 66 (GTD by Phillips 66 Co.)(3-Month U.S. LIBOR plus 60 bps),
2.517%,2-26-21 (C)		2,000		2,000


Oil & Gas Storage & Transportation – 5.6%
Boardwalk Pipelines L.P. (GTD by Boardwalk Pipeline Partners L.P.),
4.450%,7-15-27		2,000		2,068
Cameron LNG LLC,
3.302%,1-15-35 (A)		1,700		1,713
Colonial Pipeline Co.,
4.250%,4-15-48 (A)		1,000		1,117
Colorado Interstate Gas Co.,
4.150%,8-15-26 (A)		1,000		1,049
Enbridge, Inc. (GTD by Enbridge Energy Partners L.P. and Spectra Energy Partners L.P.),
3.125%,11-15-29		1,825		1,845
Energy Transfer Partners L.P.:
4.200%,4-15-27		2,000		2,092
6.000%,6-15-48		1,000		1,164
EQT Midstream Partners L.P.,
4.750%,7-15-23		1,000		1,003
Kinder Morgan, Inc.,
5.550%,6-1-45		1,000		1,195
Midwest Connector Capital Co. LLC,
3.900%,4-1-24 (A)		1,400		1,470
Plains All American Pipeline L.P. and PAA Finance Corp.:
3.600%,11-1-24		1,031		1,060
4.500%,12-15-26		1,750		1,862
Sabal Trail Transmission LLC,
4.246%,5-1-28 (A)		2,500		2,725
Sabine Pass Liquefaction LLC,
4.200%,3-15-28		1,500		1,588
Sunoco Logistics Partners Operations L.P. (GTD by Energy Transfer Partners L.P.),
4.000%,10-1-27		2,000		2,067


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Oil & Gas Storage & Transportation(Continued)
Sunoco Logistics Partners Operations L.P. (GTD by Sunoco Logistics Partners L.P.),
4.400%,4-1-21	$	500	$	512
Tennessee Gas Pipeline Co.,
7.000%,3-15-27		2,000		2,486
TransCanada Corp.,
5.100%,3-15-49		3,000		3,650
Transcontinental Gas Pipe Line Co. LLC,
4.600%,3-15-48		1,000		1,093
Williams Partners L.P.,
4.850%,3-1-48		1,750		1,910

				33,669


Total Energy – 8.9%				53,104
Financials

Asset Management & Custody Banks – 1.3%
BlackRock, Inc.,
3.250%,4-30-29		1,900		2,037
Blackstone Holdings Finance Co. LLC,
2.500%,1-10-30 (A)		1,875		1,849
Brookfield Finance, Inc. (GTD by Brookfield Asset Management, Inc.),
4.700%,9-20-47		500		573
Owl Rock Capital Corp.:
5.250%,4-15-24		675		716
4.000%,3-30-25		1,025		1,028
State Street Corp.,
4.375%,3-7-21		1,250		1,287

				7,490


Consumer Finance – 1.4%
American Express Credit Corp.,
2.200%,3-3-20		2,000		2,000
Capital One Financial Corp.,
3.750%,7-28-26		1,000		1,052
Experian Finance plc,
2.750%,3-8-30 (A)		2,000		1,967
Ford Motor Credit Co. LLC:
5.875%,8-2-21		1,500		1,570
3.810%,1-9-24		1,500		1,522
General Motors Financial Co., Inc. (GTD by AmeriCredit Financial Services, Inc.),
3.200%,7-6-21		500		507

				8,618


Diversified Banks – 9.3%
Banco Santander S.A.,
3.500%,4-11-22		1,250		1,283
Bank of America Corp.:
2.503%,10-21-22		4,000		4,039
4.244%,4-24-38		2,000		2,301
Bank of America Corp.(3-Month U.S. LIBOR plus 77 bps),
2.661%,2-5-26 (C)		4,000		3,997


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Diversified Banks(Continued)
Bank of New York Mellon Corp. (The),
3.550%,9-23-21	$	1,250	$	1,284
BB&T Corp.:
2.050%,5-10-21		1,000		1,002
2.750%,4-1-22		3,500		3,561
Citizens Bank N.A.,
3.250%,2-14-22		1,050		1,076
Commonwealth Bank of Australia,
2.000%,9-6-21 (A)		1,500		1,503
Danske Bank A.S.,
2.700%,3-2-22 (A)		1,500		1,511
Fifth Third Bank N.A.:
2.250%,6-14-21		500		502
3.350%,7-26-21		1,500		1,533
HSBC Holdings plc,
3.803%,3-11-25		2,250		2,360
Huntington Bancshares, Inc.,
2.300%,1-14-22		500		502
ING Groep N.V.,
3.550%,4-9-24		1,325		1,387
KeyBank N.A.,
3.300%,2-1-22		750		770
Korea Development Bank,
3.000%,3-19-22		1,125		1,146
Mitsubishi UFJ Financial Group, Inc.:
2.998%,2-22-22		500		510
3.218%,3-7-22		2,000		2,048
Mizuho Financial Group, Inc.,
2.953%,2-28-22		3,000		3,054
Royal Bank of Canada,
3.200%,4-30-21		3,000		3,053
Santander Holdings USA, Inc.,
3.400%,1-18-23		2,500		2,562
Toronto-Dominion Bank,
3.250%,3-11-24		1,875		1,962
U.S. Bancorp,
3.375%,2-5-24		1,000		1,049
U.S. Bank N.A.,
3.450%,11-16-21		7,000		7,206
Wells Fargo & Co.:
2.100%,7-26-21		1,000		1,001
3.069%,1-24-23		1,500		1,531
4.150%,1-24-29		1,000		1,113
Westpac Banking Corp.,
2.000%,8-19-21		1,000		1,001

				55,847


Diversified Capital Markets – 0.3%
Credit Suisse Group AG,
3.574%,1-9-23 (A)		2,000		2,054


Financial Exchanges & Data – 0.9%
Intercontinental Exchange, Inc.,
4.250%,9-21-48		2,750		3,272
S&P Global, Inc.,
3.250%,12-1-49		2,000		2,040

				5,312

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		CORPORATE BOND (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Insurance Brokers – 0.8%
Marsh & McLennan Cos., Inc.:
3.500%,12-29-20	$	1,000	$	1,015
2.750%,1-30-22		2,000		2,031
Willis North America, Inc.,
2.950%,9-15-29		1,700		1,682

				4,728


Investment Banking & Brokerage – 3.1%
Credit Suisse Group Funding (Guernsey) Ltd.,
3.125%,12-10-20		1,000		1,009
Daiwa Securities Group, Inc.,
3.129%,4-19-22 (A)		1,000		1,019
Goldman Sachs Group, Inc. (The):
3.000%,4-26-22		1,000		1,012
2.905%,7-24-23		1,000		1,018
3.272%,9-29-25		2,500		2,586
3.500%,11-16-26		2,000		2,102
4.017%,10-31-38		1,500		1,626
Morgan Stanley,
3.875%,1-27-26		6,000		6,439
Morgan Stanley(3-Month U.S. LIBOR plus 140 bps),
3.336%,10-24-23 (C)		1,500		1,532

				18,343


Life & Health Insurance – 3.4%
Aflac, Inc.,
4.750%,1-15-49		750		911
MetLife Global Funding I,
1.950%,9-15-21 (A)		2,000		2,001
Metropolitan Life Insurance Co.,
3.450%,10-9-21 (A)		3,000		3,083
New York Life Global Funding,
2.900%,1-17-24 (A)		5,500		5,671
Northwestern Mutual Life Insurance Co. (The),
3.850%,9-30-47 (A)		3,000		3,152
Principal Life Global Funding II,
3.000%,4-18-26 (A)		1,000		1,033
Protective Life Global Funding:
2.262%,4-8-20 (A)		2,500		2,502
2.700%,11-25-20 (A)		1,000		1,006
Sumitomo Life Insurance Co.,
4.000%,9-14-77 (A)		1,000		1,056

				20,415


Other Diversified Financial Services – 3.4%
Citigroup, Inc.:
2.700%,3-30-21		3,000		3,028
3.500%,5-15-23		2,000		2,081
3.980%,3-20-30		3,875		4,236
JPMorgan Chase & Co.:
2.700%,5-18-23		3,000		3,060
3.220%,3-1-25		6,000		6,216
3.540%,5-1-28		1,500		1,592

				20,213


Property & Casualty Insurance – 0.6%
Aon Corp. (GTD by Aon plc),
3.750%,5-2-29		3,500		3,746


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Regional Banks – 1.3%
PNC Bank N.A.:
2.450%,11-5-20	$	264	$	266
3.300%,10-30-24		1,000		1,051
PNC Financial Services Group, Inc. (The):
2.600%,7-23-26		1,875		1,898
3.450%,4-23-29		2,000		2,132
SunTrust Banks, Inc.,
3.200%,4-1-24		2,500		2,599

				7,946


Reinsurance – 0.3%
Reinsurance Group of America, Inc.,
3.900%,5-15-29		1,700		1,812


Specialized Finance – 0.8%
Diamond 1 Finance Corp. and Diamond 2 Finance Corp.:
4.420%,6-15-21 (A)		3,000		3,086
8.100%,7-15-36 (A)		1,500		1,969

				5,055


Total Financials – 26.9%				161,579
Health Care

Biotechnology – 1.3%
Amgen, Inc.:
2.200%,5-11-20		2,000		2,002
3.875%,11-15-21		2,500		2,578
3.625%,5-22-24		1,500		1,585
4.950%,10-1-41		1,500		1,782

				7,947


Health Care Distributors – 0.4%
McKesson Corp.,
3.650%,11-30-20		2,500		2,535


Health Care Equipment – 0.9%
Becton Dickinson & Co.,
2.894%,6-6-22		3,000		3,049
Boston Scientific Corp.,
4.550%,3-1-39		1,875		2,200

				5,249


Health Care Facilities – 0.3%
HCA, Inc. (GTD by HCA Holdings, Inc.),
4.125%,6-15-29		1,675		1,775


Health Care Services – 0.4%
Cigna Corp.,
3.400%,9-17-21		2,500		2,558


Health Care Supplies – 0.9%
Abbott Laboratories:
3.400%,11-30-23		700		736
4.750%,11-30-36		3,000		3,744
Shire Acquisitions Investments Ireland Designated Activity Co.,
2.400%,9-23-21		1,000		1,005

				5,485


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Life Sciences Tools & Services – 0.3%
PerkinElmer, Inc.,
3.300%,9-15-29	$	1,700	$	1,734


Managed Health Care – 1.3%
Humana, Inc.,
2.900%,12-15-22		5,000		5,092
UnitedHealth Group, Inc.,
3.500%,2-15-24		2,500		2,637

				7,729


Pharmaceuticals – 3.6%
AbbVie, Inc.:
2.600%,11-21-24 (A)		1,800		1,810
4.400%,11-6-42		1,800		1,943
Bayer U.S. Finance II LLC,
4.375%,12-15-28 (A)		3,500		3,816
Bayer U.S. Finance LLC,
3.000%,10-8-21 (A)		1,500		1,519
Bristol-Myers Squibb Co.,
2.900%,7-26-24 (A)		1,875		1,934
Elanco Animal Health, Inc.,
3.912%,8-27-21		1,250		1,282
Perrigo Finance Unlimited Co. (GTD by Perrigo Co. plc),
3.500%,3-15-21		1,000		1,009
Pfizer, Inc.,					��
3.900%,3-15-39		3,500		3,943
Zoetis, Inc.:
3.900%,8-20-28		1,500		1,626
4.700%,2-1-43		2,000		2,376

				21,258


Total Health Care – 9.4%				56,270
Industrials

Aerospace & Defense – 3.0%
BAE Systems Holdings, Inc.,
3.850%,12-15-25 (A)		1,500		1,591
Boeing Co. (The):
1.650%,10-30-20		500		499
3.750%,2-1-50		3,375		3,577
L3Harris Technologies, Inc.:
3.850%,12-15-26 (A)		500		536
4.400%,6-15-28 (A)		3,000		3,340
4.400%,6-15-28		1,250		1,392
Northrop Grumman Corp.:
3.250%,1-15-28		2,250		2,345
4.030%,10-15-47		3,000		3,345
Rockwell Collins, Inc.,
2.800%,3-15-22		1,500		1,526

				18,151


Agricultural & Farm Machinery – 0.2%
CNH Industrial N.V.,
3.850%,11-15-27		1,000		1,043


Air Freight & Logistics – 0.3%
FedEx Corp.,
3.100%,8-5-29		2,000		1,996


18		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		CORPORATE BOND (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Airlines – 0.7%
Aviation Capital Group Corp.,
2.875%,1-20-22 (A)	$	3,000	$	3,021
Sydney Airport Finance,
3.625%,4-28-26 (A)		1,000		1,047

				4,068


Building Products – 0.3%
Allegion plc,
3.500%,10-1-29		1,700		1,728


Environmental & Facilities Services – 1.4%
Waste Connections, Inc.,
3.500%,5-1-29		4,000		4,233
Waste Management, Inc. (GTD by Waste Management Holdings, Inc.):
4.100%,3-1-45		2,500		2,801
4.150%,7-15-49		1,000		1,141

				8,175


Industrial Machinery – 0.3%
Roper Technologies, Inc.,
2.950%,9-15-29		2,000		2,017


Railroads – 0.8%
Burlington Northern Santa Fe LLC,
4.550%,9-1-44		1,000		1,189
Kansas City Southern,
4.300%,5-15-43		1,475		1,605
Union Pacific Corp.,
3.550%,8-15-39		1,875		1,943

				4,737


Research & Consulting Services – 1.0%
RELX Capital, Inc. (GTD by RELX plc),
4.000%,3-18-29		1,875		2,034
Verisk Analytics, Inc.,
4.125%,3-15-29		3,950		4,332

				6,366


Total Industrials – 8.0%				48,281
Information Technology

Application Software – 0.2%
NXP Semiconductors N.V., NXP B.V. and NXP Funding LLC,
4.300%,6-18-29 (A)		925		999


Communications Equipment – 0.5%
Motorola Solutions, Inc.,
4.600%,5-23-29		2,825		3,080


Data Processing & Outsourced Services – 2.2%
Broadridge Financial Solutions, Inc.,
2.900%,12-1-29		2,000		1,997
Fiserv, Inc.,
3.500%,7-1-29		2,425		2,545
PayPal Holdings, Inc.,
2.650%,10-1-26		3,375		3,419
Visa, Inc.:
2.800%,12-14-22		3,000		3,085
3.650%,9-15-47		2,000		2,255

				13,301


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Electronic Components – 0.3%
Maxim Integrated Products, Inc.,
3.450%,6-15-27	$	1,700	$	1,749


Electronic Equipment & Instruments – 0.5%
Keysight Technologies, Inc.,
4.600%,4-6-27		2,500		2,770


IT Consulting & Other Services – 0.4%
International Business Machines Corp.,
3.000%,5-15-24		2,625		2,718


Semiconductor Equipment – 0.3%
Lam Research Corp.,
3.750%,3-15-26		1,875		2,008


Semiconductors – 2.7%
Broadcom, Inc.,
3.125%,4-15-21 (A)		1,417		1,434
Intel Corp.:
2.450%,11-15-29		1,950		1,942
4.000%,12-15-32		1,500		1,746
4.100%,5-19-46		4,000		4,604
QUALCOMM, Inc.:
4.800%,5-20-45		500		611
4.300%,5-20-47		1,500		1,715
Texas Instruments, Inc.,
3.875%,3-15-39		3,500		3,947

				15,999


Systems Software – 0.8%
Microsoft Corp.,
3.500%,2-12-35		4,500		4,947


Technology Hardware, Storage & Peripherals – 1.4%
Apple, Inc.:
2.400%,5-3-23		4,000		4,066
4.500%,2-23-36		2,500		3,031
NetApp, Inc.,
3.375%,6-15-21		1,038		1,055

				8,152


Total Information Technology – 9.3%				55,723
Materials

Diversified Metals & Mining – 0.3%
Anglo American Capital plc,
3.750%,4-10-22 (A)		1,500		1,539


Specialty Chemicals – 0.4%
Methanex Corp.,
5.250%,3-1-22		2,404		2,526


Total Materials – 0.7%				4,065
Real Estate

Hotel & Resort REITs – 0.6%
Hospitality Properties Trust,
3.950%,1-15-28		3,700		3,606


Industrial REITs – 0.1%
Aircastle Ltd.,
5.500%,2-15-22		598		636


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Specialized REITs – 3.8%
American Tower Corp.:
3.070%,3-15-23 (A)	$	1,500	$	1,519
3.000%,6-15-23		2,500		2,559
4.400%,2-15-26		1,000		1,091
3.700%,10-15-49		1,875		1,862
American Tower Trust I,
3.652%,3-23-28 (A)		1,000		1,044
Crown Castle International Corp.:
2.250%,9-1-21		500		502
5.250%,1-15-23		1,027		1,115
3.200%,9-1-24		1,250		1,292
4.000%,3-1-27		2,000		2,157
CubeSmart L.P. (GTD by CubeSmart):
4.375%, 2-15-29		1,375		1,508
3.000%, 2-15-30		1,125		1,111
Equinix, Inc.,
3.200%, 11-18-29		1,700		1,706
Public Storage, Inc.,
3.385%, 5-1-29		1,500		1,591
Ventas Realty L.P. (GTD by Ventas, Inc.):
2.650%, 1-15-25		1,875		1,888
4.875%, 4-15-49		1,500		1,761

				22,706


Total Real Estate – 4.5%				26,948
Utilities

Electric Utilities – 4.9%
AEP Transmission Co. LLC,
4.250%, 9-15-48		1,500		1,718
Ameren Illinois Co.,
3.250%, 3-15-50		1,525		1,539
CenterPoint Energy, Inc.,
4.250%, 11-1-28		5,000		5,423
Commonwealth Edison Co.,
3.650%, 6-15-46		3,000		3,176
Consumers Energy Co.,
4.350%, 4-15-49		1,500		1,815
Duke Energy Carolinas LLC,
3.750%, 6-1-45		1,625		1,748
Duke Energy Indiana LLC,
3.750%, 5-15-46		1,000		1,071
Entergy Arkansas, Inc.,
4.000%, 6-1-28		1,800		1,951
Florida Power & Light Co.,
3.990%, 3-1-49		1,875		2,145
Kansas City Power & Light Co.,
4.200%, 3-15-48		1,000		1,143
National Rural Utilities Cooperative Finance Corp.,
4.400%, 11-1-48		2,000		2,395
Southern California Edison Co.,
4.125%, 3-1-48		1,525		1,624
Virginia Electric and Power Co., Series B,
4.600%, 12-1-48		1,500		1,833
Wisconsin Electric Power Co.:
4.250%, 6-1-44		250		280
4.300%, 10-15-48		1,250		1,465

				29,326

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		CORPORATE BOND (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Gas Utilities – 0.3%
Southern California Gas Co.,
4.300%, 1-15-49	$	1,500	$	1,707


Independent Power Producers & Energy Traders – 0.3%
Black Hills Corp.,
4.350%, 5-1-33		2,000		2,216


Multi-Utilities – 1.6%
Baltimore Gas and Electric Co.,
4.250%, 9-15-48		1,500		1,711
Berkshire Hathaway Energy Co.,
2.800%, 1-15-23		1,500		1,535
Dominion Resources, Inc.,
2.750%, 1-15-22		3,000		3,042
Public Service Electric and Gas Co.:
1.900%, 3-15-21		2,000		2,007
2.250%, 9-15-26		1,500		1,485

				9,780


Water Utilities – 0.5%
American Water Capital Corp.,
4.150%, 6-1-49		2,500		2,823


Total Utilities – 7.6%				45,852

TOTAL CORPORATE DEBT SECURITIES – 93.2%			$	558,942
(Cost: $531,404)

MORTGAGE-BACKED SECURITIES

Non-Agency REMIC/CMO – 0.1%
MASTR Adjustable Rate Mortgages Trust, Series 2005-1, Class B1 (Mortgage spread to 10-year U.S. Treasury index),
4.048%, 3-25-35 (C)		947		787
Structured Adjustable Rate Mortgage Trust, Mortgage Pass-Through Certificates, Series 2004-1, Class B2-II (Mortgage spread to 3-year U.S. Treasury index),
4.451%, 2-25-34 (C)		5		—	^*

				787


TOTAL MORTGAGE-BACKED SECURITIES – 0.1%			$	787
(Cost: $948)



MUNICIPAL BONDS – TAXABLE	Principal		Value
New York – 0.7%
NYC Indl Dev Agy, Rental Rev Bonds (Yankee Stadium Proj), Ser 2009,
11.000%, 3-1-29 (A)	$	3,005	$	4,011


Ohio – 0.4%
OH State Univ, Gen Receipts Bonds (Multiyear Debt Issuance Prog), Ser 2016A,
3.798%, 12-1-46		2,000		2,224


Pennsylvania – 0.1%
Cmnwlth of PA, GO Bonds, Third Ser B of 2010 (Federally Taxable – Build America Bonds),
4.750%, 7-15-22		750		762


TOTAL MUNICIPAL BONDS – TAXABLE – 1.2%			$	6,997
(Cost: $5,763)

OTHER GOVERNMENT SECURITIES (D)

Canada – 0.5%
Province de Quebec,
7.140%, 2-27-26		2,500		3,111


TOTAL OTHER GOVERNMENT SECURITIES – 0.5%			$	3,111
(Cost: $2,696)

UNITED STATES GOVERNMENT AGENCY OBLIGATIONS

Agency Obligations – 0.2%
Tennessee Valley Authority,
2.875%, 2-1-27		1,000		1,049


Mortgage-Backed Obligations – 0.0%
Government National Mortgage Association Agency REMIC/CMO,
0.004%, 6-17-45 (E)		11		—	^*


TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS – 0.2%			$	1,049
(Cost: $1,002)



SHORT-TERM SECURITIES	Shares		Value
Money Market Funds (G) – 2.5%
Dreyfus Institutional Preferred Government Money Market Fund – Institutional Shares,
1.550% (F)		474	$	474
State Street Institutional U.S. Government Money Market Fund – Premier Class,
1.550%		14,484		14,484

				14,958


TOTAL SHORT-TERM SECURITIES – 2.5%			$	14,958
(Cost: $14,958)

TOTAL INVESTMENT SECURITIES – 99.3%			$	595,649
(Cost: $566,107)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.7%				4,153

NET ASSETS – 100.0%			$	599,802


20		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		CORPORATE BOND (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

*	Not shown due to rounding.

(A)

(B)	All or a portion of securities with an aggregate value of $463 are on loan.

(C)	Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2019. Description of the reference rate and spread, if applicable, are included in the security description.

(D)	Other Government Securities may include emerging markets sovereign, quasi-sovereign, corporate and supranational agency and organization debt securities.

(E)	Interest-only security. Amount shown as principal represents notional amount for computation of interest.

(F)	Investment made with cash collateral received from securities on loan.

(G)	Rate shown is the annualized 7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Asset-Backed Securities	$	—	$	9,805	$	—
Corporate Debt Securities		—		558,942		—
Mortgage-Backed Securities		—		787		—
Municipal Bonds		—		6,997		—
Other Government Securities		—		3,111		—
United States Government Agency Obligations		—		1,049		—
Short-Term Securities		14,958		—		—
Total	$	14,958	$	580,691	$	—

The following acronyms are used throughout this schedule:

CMO = Collateralized Mortgage Obligation

GTD = Guaranteed

LIBOR = London Interbank Offered Rate

REIT = Real Estate Investment Trust

REMIC = Real Estate Mortgage Investment Conduit

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


MANAGEMENT DISCUSSION		GLOBAL BOND

(UNAUDITED)

LOGO

Mark G. Beischel

Below, Mark G. Beischel, CFA, portfolio manager of Ivy VIP Global Bond, discusses positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Beischel has managed the Portfolio since its inception in 2010 and has 26 years of industry experience.

Fiscal Year Performance


For the 12 months ended December 31, 2019
Ivy VIP Global Bond (Class II shares at net asset value)			9.42%
Benchmark and Morningstar Category
Bloomberg Barclays Global Credit 1-10 Year Hedged Index			9.50%
(generally reflects the performance of the global investment grade local currency corporate and government-related bond markets with a maturity greater than 1 year and less than 10 years)
Morningstar World Bond Category Average			6.73%
(generally reflects the performance of the universe of funds with similar investment objectives)

Market review

In January 2019, the Federal Open Market Committee (FOMC) pivoted from its tightening bias to a new message of patience. Federal Reserve (Fed) Chairman Powell implied that rate hikes were off the table for the remainder of the year. Markets welcomed the pause as financial conditions eased in the new “risk-on” environment.

Early in 2019, the Trump Administration’s policies regarding international trade and investment emerged as an important source of downside risk for the global economy. President Trump was hopeful to use the U.S.-Mexico-Canada Agreement (USMCA) framework for negotiations with the European Union (EU) and Japan. Unfortunately, those negotiations lost momentum as the administration decided to focus its attention on China. Negotiations with China have been difficult, though the U.S. and China announced phase one of a trade deal that should be signed in January of 2020. The U.S. House of Representatives approved the USMCA and passed it to the Senate for approval, with the anticipation the agreement will go into effect in 2020.

The normalization of the Fed’s balance sheet ended in the third quarter as it stated it would reinvest maturing U.S. Treasuries and mortgage-backed securities. The Fed also announced it would start expanding its balance sheet to better align it with the size of nominal gross domestic product (GDP). It cut the fed funds rate 25 basis points (bp) in October to 1.50%. In addition, the Fed injected cash into the system to calm year-end funding pressures because of stress during the quarter in the short-term funding, or “repo,” market.

During the third quarter, the European Central Bank (ECB) and Bank of China started loosening monetary conditions by cutting deposit rates, strengthening forward guidance, relaunching asset purchase programs and reducing reserve requirements for the banking industries. This quarter, there was a change in leadership at the ECB with Christine Lagarde taking over as president. She has hinted at more of a fiscal response to the lack of growth in the region with a continuation of the easy monetary policies.

Political concerns emerged from elections in Italy and Argentina. Italy’s new government brought the EU’s sustainability back into the spotlight. The new government’s targeted budget deficit was more aggressive than market expectations, resulting in the euro weakening and Italian government rates increasing. Argentina’s perceived market friendly President lost in the first round of elections to a nominee with ties to the previous administration that governed during the country’s last default. U.K. Prime Minister Boris Johnson’s party won an election that kept him in power and reduced uncertainty about the planned Brexit.

Portfolio strategy and performance

The Portfolio performed in line with its benchmark and outperformed its Morningstar peer group for the fiscal year ended Dec. 31, 2019. Most of the outperformance was attributable to the Portfolio’s exposure to credit.

With heightened uncertainty on global growth and trade, the U.S. dollar strengthened throughout the first three quarters of 2019. That said, with renewed global growth prospects, the U.S. dollar weakened during the fourth quarter against other developed market currencies. For the fiscal year, the U.S. dollar witnessed a decline relative to both the British pound and


22		ANNUAL REPORT		2019

euro as those currencies appreciated 3.9% and 1.0%, respectively to the U.S. dollar. As such, the Portfolio’s 99.5% U.S. dollar exposure deterred from its relative performance to peers.

As we move forward, we continue to seek opportunities to reduce volatility in the Fund. We also have continued a low-duration strategy, as we feel it allows us a higher degree of certainty about those companies in which we can invest.

Looking ahead

The Fed’s interest rate cuts in 2019 paid out with strong support in the interest-sensitive segments of household activity. The benefit of lower rates continues to support the U.S. economy and counteract the loss of the “tailwind” supplied by tax cuts implemented in late 2017. We think exports and business investment will stabilize and rise from very low levels on the likely implementation of USMCA and phase one of a trade deal with China. We think the Fed will remain on hold throughout the first half of 2020 and watch to see if inflationary pressures build from an ever-tightening labor market.

We expect the U.S. budget deficit to rise in 2020 from structural forces that have deteriorated by a much greater amount than the offsetting cyclical improvement. Fundamentals in the credit markets remain stretched, with balance sheets still leveraged and debt levels at historic levels. Technical factors in credit are supported by international investors searching for yield, domestic demand for income and “reverse Yankee” issuance to tender for U.S. issues. A “reverse Yankee” refers to a U.S. company issuing debt in Europe at extremely low rates, taking the proceeds in euros, changing them into U.S. dollars and then tendering for the higher yielding dollar securities. It means fewer issues to buy for U.S. investors and the resulting supply/demand issue tends to compress spreads – which is considered a positive technical factor.

Given the current levels of credit spreads and our expectation for modest widening of these spreads during 2020, we believe our conservative positioning relative to the benchmark is appropriate. We will be opportunistic about our credit selection and overall positioning in order to seek to take advantage of perceived opportunities and dislocations as they present themselves.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

International investing involves additional risks including currency fluctuations, political or economic conditions affecting a foreign country, and differences in accounting standards and foreign regulations. 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. These and other risks are more fully described in the Portfolio’s prospectus.

The index noted is unmanaged, and includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of Ivy VIP Global Bond.

2019

ANNUAL REPORT


PORTFOLIO HIGHLIGHTS		GLOBAL BOND

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Bonds			97.5%
Corporate Debt Securities			73.6%
United States Government Obligations			13.7%
Other Government Securities			10.2%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			2.5%

Quality Weightings


Investment Grade			75.2%
AAA			8.8%
AA			9.6%
A			15.1%
BBB			41.7%
Non-Investment Grade			22.3%
BB			12.7%
B			6.3%
CCC			1.6%
Below CCC			1.2%
Non-rated			0.5%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			2.5%

Country Weightings


North America			35.9%
United States			27.9%
Mexico			6.2%
Other North America			1.8%
Europe			20.6%
United Kingdom			6.1%
Netherlands			5.2%
Other Europe			9.3%
Pacific Basin			16.8%
Indonesia			4.4%
Other Pacific Basin			12.4%
South America			13.3%
Brazil			3.6%
Other South America			9.7%
Other			6.9%
Middle East			1.2%
Bahamas/Caribbean			1.8%
Africa			1.0%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			2.5%


24		ANNUAL REPORT		2019


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		GLOBAL BOND

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		9.42%
5-year period ended12-31-19		3.48%
10-year period ended12-31-19		—
Since Inception of Class through12-31-19⁽³⁾		2.73%

(2)

(3)

8-23-10 (the date on which shares were first acquired by shareholders).

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		GLOBAL BOND (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES	Principal		Value
Argentina

Energy – 1.9%
Pampa Energia S.A.
7.500%,1-24-27 (A)(B)	$	150	$	128
Pan American Energy LLC
7.875%,5-7-21		67		69
YPF Sociedad Anonima
8.500%,3-23-21 (A)		200		198

				395


Total Argentina – 1.9%			$	395
Australia

Utilities – 1.0%
Ausgrid Finance Pty Ltd.
3.850%,5-1-23 (A)		200		208


Total Australia – 1.0%			$	208
Austria

Consumer Staples – 1.0%
ESAL GmbH (GTD by JBS S.A. and JBS Hungary Holdings Kft.)
6.250%,2-5-23 (A)		200		202


Total Austria – 1.0%			$	202
Bermuda

Consumer Staples – 0.5%
Bacardi Ltd.
4.450%,5-15-25 (A)		100		108


Total Bermuda – 0.5%			$	108
Brazil

Energy – 0.0%
Lancer Finance Co. (SPV) Ltd.
5.850%,12-12-16 (A)(C)		15		—	*


Financials – 0.0%
Banco Cruzeiro do Sul S.A.
7.000%,7-8-13 (C)		96		1


Industrials – 1.0%
Cosan Ltd.
5.500%,9-20-29 (A)		200		209


Materials – 1.6%
Fibria Overseas Finance Ltd.
4.000%,1-14-25		150		155
Vale Overseas Ltd.
6.250%,8-10-26		150		176

				331


Utilities – 1.0%
Aegea Finance S.a.r.l.
5.750%,10-10-24 (A)		200		210


Total Brazil – 3.6%			$	751


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Canada

Energy – 0.5%
TransCanada PipeLines Ltd.
4.250%,5-15-28	$	100	$	111


Financials – 0.3%
Royal Bank of Canada
4.650%,1-27-26		50		55


Materials – 1.0%
First Quantum Minerals Ltd.
7.250%,5-15-22 (A)		200		201


Total Canada – 1.8%			$	367
Cayman Islands

Industrials – 1.3%
Guanay Finance Ltd.
6.000%,12-15-20 (A)		56		57
LATAM Finance Ltd.
7.000%,3-1-26 (A)		200		217

				274


Total Cayman Islands – 1.3%			$	274
Chile

Materials – 1.0%
Celulosa Arauco y Constitucion S.A.
4.500%,8-1-24		200		210


Utilities – 0.4%
Enel Chile S.A.
4.875%,6-12-28		80		89


Total Chile – 1.4%			$	299
China

Communication Services – 2.0%
Tencent Holdings Ltd.
2.985%,1-19-23 (A)		200		203
Weibo Corp.
3.500%,7-5-24		200		203

				406


Consumer Discretionary – 1.0%
Alibaba Group Holding Ltd.
3.400%,12-6-27		200		208


Total China – 3.0%			$	614
Columbia

Financials – 1.0%
Banco de Bogota S.A.
5.375%,2-19-23 (A)(B)		200		212


Utilities – 1.5%
Emgesa S.A. E.S.P.
8.750%,1-25-21 (D)		COP302,000		95


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Utilities(Continued)
Empresas Publicas de Medellin E.S.P.
4.250%,7-18-29 (A)	$	200	$	208

				303


Total Columbia – 2.5%			$	515
Denmark

Financials – 1.0%
Danske Bank A.S.
2.700%,3-2-22 (A)		200		201


Total Denmark – 1.0%			$	201
France

Financials – 1.0%
BNP Paribas S.A.
7.625%,12-29-49 (A)		200		211


Total France – 1.0%			$	211
Hong Kong

Financials – 1.0%
Bangkok Bank Public Co. Ltd.
4.050%,3-19-24 (A)		200		211


Total Hong Kong – 1.0%			$	211
India

Utilities – 1.1%
Adani Green Energy (UP) Ltd., Parampujya Solar Energy Private Ltd. and Prayatna Developers Private Ltd.
6.250%,12-10-24 (A)		200		215


Total India – 1.1%			$	215
Indonesia

Utilities – 2.2%
Perusahaan Listrik Negara:
5.450%,5-21-28 (A)		200		230
5.375%,1-25-29 (A)		200		230

				460


Total Indonesia – 2.2%			$	460
Isle of Man

Consumer Discretionary – 1.0%
GOHL Capital Ltd.
4.250%, 1-24-27		200		209


Total Isle of Man – 1.0%			$	209
Japan

Financials – 1.6%
Mitsubishi UFJ Financial Group, Inc.
3.287%, 7-25-27		100		104


26		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		GLOBAL BOND (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Financials(Continued)
Sumitomo Mitsui Financial Group, Inc.:
3.748%, 7-19-23	$	110	$	115
3.936%, 10-16-23		100		106

				325


Total Japan – 1.6%			$	325
Luxembourg

Consumer Staples – 1.0%
Minerva Luxembourg S.A.
5.875%, 1-19-28 (A)		200		210


Industrials – 1.0%
Rumo Luxembourg S.a.r.l.
7.375%, 2-9-24 (A)		200		215


Information Technology – 0.8%
Atento Luxco 1 S.A.
6.125%, 8-10-22 (A)		175		172


Total Luxembourg – 2.8%			$	597
Mauritius

Industrials – 1.0%
HTA Group Ltd.
9.125%, 3-8-22 (A)		200		206


Total Mauritius – 1.0%			$	206
Mexico

Consumer Staples – 1.5%
Grupo Bimbo S.A.B. de C.V.:
4.875%, 6-30-20 (A)		100		101
3.875%, 6-27-24 (A)		200		209

				310


Energy – 0.5%
Petroleos Mexicanos
6.490%, 1-23-27 (A)		100		106


Financials – 0.8%
Banco Santander S.A.
4.125%, 11-9-22 (A)		150		156


Industrials – 1.1%
Alfa S.A.B. de C.V.
5.250%, 3-25-24 (A)		200		216


Materials – 1.0%
CEMEX S.A.B. de C.V.
7.750%, 4-16-26 (A)		200		217


Total Mexico – 4.9%			$	1,005
Netherlands

Communication Services – 1.0%
VTR Finance B.V.
6.875%, 1-15-24 (A)		200		205


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Financials – 2.2%
Enel Finance International N.V.
4.625%, 9-14-25 (A)	$	200	$	218
Syngenta Finance N.V.
5.182%, 4-24-28 (A)		200		215

				433


Health Care – 1.0%
Teva Pharmaceutical Finance Netherlands III B.V. (GTD by Teva Pharmaceutical Industries Ltd.)
6.750%, 3-1-28 (B)		200		203


Materials – 1.0%
Braskem Netherlands B.V.
4.500%, 1-31-30 (A)		200		199


Total Netherlands – 5.2%			$	1,040
Nigeria

Financials – 1.0%
Africa Finance Corp.
4.375%, 4-17-26 (A)		200		212


Total Nigeria – 1.0%			$	212
Norway

Energy – 1.5%
Aker BP ASA:
6.000%, 7-1-22 (A)		150		154
4.750%, 6-15-24 (A)		150		156

				310


Total Norway – 1.5%			$	310
Peru

Financials – 0.8%
Banco de Credito del Peru
4.250%, 4-1-23 (A)		150		158


Utilities – 0.9%
Fenix Power Peru S.A.
4.317%, 9-20-27		190		190


Total Peru – 1.7%			$	348
Qatar

Energy – 0.2%
Ras Laffan Liquefied Natural Gas Co. Ltd. II
5.298%, 9-30-20 (A)		28		29


Total Qatar – 0.2%			$	29
Singapore

Consumer Staples – 0.5%
Olam International Ltd.
7.500%, 8-12-20		100		102


Total Singapore – 0.5%			$	102


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
South Korea

Financials – 3.2%
Hyundai Capital Services, Inc.
2.983%, 8-29-22 (A)	$	210	$	212
Korea Development Bank
3.250%, 2-19-24		200		208
Woori Bank
2.625%, 7-20-21 (A)		250		252

				672


Total South Korea – 3.2%			$	672
Spain

Financials – 1.0%
Banco Santander S.A.
2.706%, 6-27-24		200		203


Total Spain – 1.0%			$	203
United Arab Emirates

Energy – 1.1%
Abu Dhabi National Energy Co.
4.375%, 4-23-25 (A)		200		215


Financials – 1.6%
ICICI Bank Ltd.
3.500%, 3-18-20 (A)		325		326


Total United Arab Emirates – 2.7%			$	541
United Kingdom

Consumer Staples – 1.0%
Imperial Tobacco Finance plc
3.750%,7-21-22 (A)		200		206


Financials – 5.1%
ANZ New Zealand International Ltd.
3.450%,1-21-28 (A)		200		211
HSBC Holdings plc:
4.583%,6-19-29		300		335
5.625%,12-29-49 (B)		200		200
Royal Bank of Scotland Group plc (The)
6.000%,12-19-23		100		111
State Bank of India
4.875%,4-17-24 (A)		200		214

				1,071


Total United Kingdom – 6.1%			$	1,277
United States

Communication Services – 1.1%
T-Mobile USA, Inc.
6.000%,3-1-23		230		234


Consumer Discretionary – 1.1%
Volkswagen Group of America, Inc.
4.250%,11-13-23 (A)		200		213

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		GLOBAL BOND (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Consumer Staples – 3.0%
Bunge Ltd. Finance Corp.
3.500%,11-24-20	$	250	$	253
Keurig Dr Pepper, Inc.
4.597%,5-25-28		125		140
Reynolds American, Inc.
4.450%,6-12-25		200		215

				608


Financials – 5.7%
Bank of America Corp.
3.593%,7-21-28		125		132
BBVA Bancomer S.A.
5.875%,9-13-34 (A)		200		209
Citigroup, Inc.
3.520%,10-27-28		125		132
Ford Motor Credit Co. LLC
3.096%,5-4-23		200		200
Goldman Sachs Group, Inc. (The)
3.814%,4-23-29		100		107
JPMorgan Chase & Co.
3.540%,5-1-28		118		125
TerraForm Global Operating LLC (GTD by TerraForm Global LLC)
6.125%,3-1-26 (A)		50		52
Wells Fargo & Co.
4.300%,7-22-27		125		137
Wells Fargo & Co.(3-Month U.S. LIBOR plus 377 bps)
5.664%,3-29-49 (E)		67		68

				1,162


Health Care – 0.9%
Fresenius U.S. Finance II, Inc.:
4.250%,2-1-21 (A)		100		102
4.500%,1-15-23 (A)		75		79

				181


Industrials – 1.4%
Azul Investments LLP
5.875%,10-26-24 (A)		200		207
BAE Systems Holdings, Inc.
3.800%,10-7-24 (A)		75		79

				286


Materials – 0.5%
Glencore Funding LLC
4.125%,3-12-24 (A)		100		105


Real Estate – 0.5%
Aircastle Ltd.
4.400%,9-25-23		100		106


Total United States – 14.2%			$	2,895


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Venezuela

Financials – 0.7%
Corporacion Andina de Fomento
3.250%,2-11-22	$	150	$	153


Total Venezuela – 0.7%			$	153

TOTAL CORPORATE DEBT SECURITIES – 73.6%			$	15,155
(Cost: $14,727)

OTHER GOVERNMENT SECURITIES (F)
Argentina – 1.2%
Republic of Argentina:
6.875%,4-22-21		350		189
5.625%,1-26-22		100		52

				241


Indonesia – 2.2%
Republic of Indonesia:
3.750%,4-25-22 (A)		250		258
2.950%,1-11-23		200		203

				461


Mexico – 1.3%
United Mexican States
3.625%,3-15-22		270		278


Panama – 1.0%
Republic of Panama
3.750%,4-17-26		200		210


Qatar – 2.0%
Qatar Government Bond:
2.375%,6-2-21 (A)		200		201
3.875%,4-23-23		200		211

				412


Saudi Arabia – 1.2%
Saudi Arabia Government Bond
2.375%,10-26-21 (A)		250		251


Turkey – 1.0%
Turkey Government Bond
6.350%,8-10-24		200		209


Uruguay – 0.3%
Republica Orient Uruguay
4.500%,8-14-24		50		54


TOTAL OTHER GOVERNMENT SECURITIES – 10.2%			$	2,116
(Cost: $2,280)


UNITED STATES GOVERNMENT OBLIGATIONS	Principal		Value
United States – 13.7%
U.S. Treasury Bonds
2.250%,11-15-25	$	450	$	462
U.S. Treasury Notes:
1.625%,12-15-22		150		150
2.125%,9-30-24		400		407
1.500%,11-30-24 (B)		250		248
1.875%,7-31-26		400		401
1.500%,8-15-26		110		108
2.375%,5-15-27		625		647
1.625%,8-15-29		200		195
1.750%,11-15-29		200		197

				2,815

TOTAL UNITED STATES GOVERNMENT OBLIGATIONS – 13.7%			$	2,815
(Cost: $2,787)

SHORT-TERM SECURITIES	Shares
Money Market Funds (G) – 3.9%
State Street Institutional U.S. Government Money Market Fund – Premier Class
1.550%		278		278
Dreyfus Institutional Preferred Government Money Market Fund – Institutional Shares
1.550% (H)		532		532

				810


TOTAL SHORT-TERM SECURITIES – 3.9%			$	810
(Cost: $810)

TOTAL INVESTMENT SECURITIES – 101.4%			$	20,896
(Cost: $20,604)

LIABILITIES, NET OF CASH AND OTHER ASSETS – (1.4)%				(294	)

NET ASSETS – 100.0%			$	20,602


28		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		GLOBAL BOND (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

*	Not shown due to rounding.

(A)

(B)	All or a portion of securities with an aggregate value of $526 are on loan.

(C)	Non-income producing as the issuer has either missed its most recent interest payment or declared bankruptcy.

(D)	Principal amounts are denominated in the indicated foreign currency, where applicable (COP—Columbian Peso).

(E)	Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2019. Description of the reference rate and spread, if applicable, are included in the security description.

(F)	Other Government Securities may include emerging markets sovereign, quasi-sovereign, corporate and supranational agency and organization debt securities.

(G)	Rate shown is the annualized7-day yield at December 31, 2019.

(H)	Investment made with cash collateral received from securities on loan.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Corporate Debt Securities	$	—	$	15,155	$	—
Other Government Securities		—		2,116		—
United States Government Obligations		—		2,815		—
Short-Term Securities		810		—		—
Total	$	810	$	20,086	$	—

The following acronyms are used throughout this schedule:

GTD = Guaranteed

LIBOR = London Interbank Offered Rate

Country Diversification


(as a % of net assets)
United States			27.9%
Mexico			6.2%
United Kingdom			6.1%
Netherlands			5.2%
Indonesia			4.4%
Brazil			3.6%
South Korea			3.2%
Argentina			3.1%
China			3.0%
Luxembourg			2.8%
United Arab Emirates			2.7%
Columbia			2.5%
Qatar			2.2%
Canada			1.8%
Peru			1.7%
Japan			1.6%
Norway			1.5%

Country Diversification(Continued)


Chile			1.4%
Cayman Islands			1.3%
Saudi Arabia			1.2%
India			1.1%
Nigeria			1.0%
France			1.0%
Hong Kong			1.0%
Isle of Man			1.0%
Panama			1.0%
Turkey			1.0%
Australia			1.0%
Mauritius			1.0%
Spain			1.0%
Austria			1.0%
Denmark			1.0%
Other Countries			2.0%
Other+			2.5%

+Includes liabilities (net of cash and other assets), and cash equivalents

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


MANAGEMENT DISCUSSION		GLOBAL EQUITY INCOME

(UNAUDITED)

LOGO

Christopher J. Parker

LOGO

Robert E. Nightingale

Below, Christopher Parker, CFA, and Robert E. Nightingale, portfolio managers of Ivy VIP Global Equity Income, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Parker has managed the Portfolio since 2014, and has 24 years of industry experience. Mr. Nightingale has managed the Portfolio since 2018 and has 24 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Global Equity Income (Class II shares at net asset value)			23.15%
Benchmark and Morningstar Category
FTSEAll-World High Dividend Yield Index			21.22%
(generally reflects the performance of securities with higher-than-average dividend yields in the global market)
Morningstar World Large Stock Category Average			25.68%
(generally reflects the performance of the universe of funds with similar investment objectives)

Please note that Portfolio returns include applicable fees and expenses, whereas the index returns do not include any such fees. Also, the Portfolio’s performance data does not take into account any product expenses or charges associated with owning a variable life or annuity policy, which is invested in Ivy Variable Insurance Portfolios.

A year in review

There is a saying about the weather in the Midwest: “If you don’t like the weather wait fifteen minutes because it will change entirely.” In reality, this saying applies to many areas. Weather in some areas is inherently dynamic with numerous factors combining to make accurate forecasting quite difficult. In the Midwest, this scenario became a reality last winter. A series of cold spells and winter storms made it feel as though there was a constant deep freeze. However, perhaps the most memorable storm was the one that never came. Conditions were in place for substantial snow and ice. It promised to be cold, messy and dangerous. This storm was viewed as such a foregone conclusion that schools werepre-emptively cancelled out of an abundance of caution – before the first flake even formed. However, as dawn broke the next day there was no snow or ice, and it was not much colder than average.

Financial markets in 2019 were in some ways the storm that wasn’t. Equities sold off steeply in the fourth quarter of 2018 on fears of slowing growth, worsened by the uncertainty created by trade frictions, and topped off by a view that policymakers were oblivious to growing risks to the global economy. Performance in the final quarter of 2018 was punctuated by the worst December in nearly half a century as equity markets began to discount a high probability of a global recession. However, predicting the stock market over somewhat short and arbitrary periods is much like predicting the weather. Often what appears to be certain does not unfold as expected.

Much like the winter storm that never materialized, the looming economic downturn did not come to fruition. A year later, growth slowed modestly, but worst-case scenarios did not come close to realization. Over the fiscal year, trade tensions eased significantly with the framework for a “phase one” trade deal between the U.S. and China being agreed to in concept during December. Additionally, policy makers globally pivoted from a clear tightening bias to a much more accommodative stance. Fiscal policy added fuel to near-term growth in various areas, most notably in China and the U.S.

Performance for the fiscal year was robust, and marked a strong finish to a historically positive decade. The Portfolio’s benchmark index increased by 21.22% for the year. Much of this performance stemmed from a low starting point, and the achievement of fundamentals that were not as bad as many investors feared. At a sector and industry level, performance was generally aligned with a view that growth was pivoting from a sharp decline to stabilization at a reasonable level. Within the Portfolio’s benchmark, the information technology and industrials sectors were standout performers. Utilities and consumer staples also performed well, in large part due to compounding growth at attractive levels in a slower growth environment. Energy, materials and communication services were the largest relative underperformers. In the case of energy and materials, supply growth outstripped demand in numerous markets which led to a cyclical step down in profitability in many product markets.

Portfolio contributors and detractors

The Portfolio outperformed its benchmark but underperformed its Morningstar peer group for the fiscal year ended Dec. 31, 2019. Relative outperformance to the index was driven primarily by strong stock selection across a number of sectors. Stock selection was notably strong in the information technology, financials, materials, industrials, consumer staples and consumer discretionary sectors. We believe the broad strength of stock selection across sectors is a clear outcome of the


30		ANNUAL REPORT		2019

Portfolio’s disciplined, fundamentally oriented approach to buying quality businesses at attractive valuations when fundamentals and sentiment are progressing positively relative to expectations.

Overall, sector allocation (excluding the modest drag from cash) was neutral to performance for the period. The Portfolio’s overweight positions in industrials, consumer staples and information technology as well as underweight positions in communications services and materials were the most notable contributors to performance from an allocation standpoint. The Portfolio’s overweight positions in energy and health care were noteworthy headwinds to performance during the period.

From a geographic perspective, allocation and stock selection were both positive, while currency effects were a slight headwind to performance for the fiscal year. The Portfolio’s underweight position in Japan and overweight position in Europe were the most favorable drivers of relative performance from an allocation viewpoint. Security selection was positive, with Europe, Asia ex Japan and Japan being top relative contributors. That said, the Portfolio’s overweight in Europe created a negative currency effect during the period.

From an individual security point of view, the most favorable contributors to performance for the fiscal year were Lockheed Martin Corp., Taiwan Semiconductor Manufacturing Co. Ltd., Citigroup, Inc., AstraZeneca plc and ENEL S.p.A. Lockheed Martin’s (the largest U.S. defense contractor) share price recovered from an especially weak end to 2018, with the rebound driven by improved confidence in the sustainability of U.S. defense spending. Taiwan Semiconductor, the leading global contract manufacturer of semiconductor chips, benefited from positive inflections in demand in several of company’s business lines, including mobile, internet of things and cloud computing. This was driven in part by the company’s position in leading-edge semiconductor manufacturing nodes. Citigroup performed well on reduced fears of recession, improving revenue growth dynamics in its credit card business, demonstrated continued strong expense management and its continued focus on aggressive return of capital to shareholders. Shares in AstraZeneca benefitted from a positive inflection in revenue growth and operating income, driven by strong growth in several recently launched products as well as several favorable late stage trial results. ENEL, a global diversified utility, performed well as the company continued to outline a strong and growing backlog of renewables focused power generation projects in several of its geographies. This provided greater confidence around the sustainability of growth and returns, which drove an improvement in the company’s valuation.

The most significant detractors to performance were Pfizer, Inc., Orange S.A., BOC Hong Kong (Holdings) Ltd., Total S.A. and Royal Dutch Shell plc, Class A. The Portfolio no longer holds BOC Hong Kong (Holdings) Ltd. so it will not show on the Dec. 31, 2019 Schedule of Investments. Pfizer underperformed following the unexpected announcement of a plan to exit its generic drug business via a transaction with Mylan Laboratories. French telecom operator Orange S.A. underperformed due to a more difficult-than-expected competitive environment in key markets. Additionally, capital intensity at Orange (and other European telecoms) continued to increase faster than investor expectations. Shares of BOC Hong Kong were hurt as the outlook for positive future earnings growth dimmed over the past year due to a shift in the outlook for interest rates and the impact of domestic unrest in Hong Kong. Total S.A. and Royal Dutch Shell lagged as the outlook for future cash flow generation weakened due to a deteriorating commodity price environment. Additionally, shares in both were negatively impacted by the especially weak global market for liquefied natural gas, which is key to future capital deployment for both operators.

Positioning

Our investment approach remains steadfastly focused on investing in what we believe are quality businesses with favorable near and intermediate fundamentals, rising dividends and attractive valuations. This approach is consistent across sectors and geographies. The core of our approach is based on stock selection as the key driver of portfolio inclusion and construction. As such, we do not significantly adjust portfolio positioning based on our short-term economic outlook or other factors that could impact a company’s earnings outlook over the short run. However, a core part of our focus is on finding quality businesses we believe are mispriced due to these shorter-term market dislocations or other factors the market has underappreciated.

Over the course of the year, we were able to take advantage of numerous opportunities to acquire shares in perceived high quality businesses at attractive valuations. These investments were broadly focused in companies we view as growth cyclicals (within information technology for example) or quality cyclicals at attractive prices (within financials for example). These positions were typically funded by selling positions in sectors or companies we believed were either less attractively valued, or where the changing dynamics of global growth was putting pressure on thenear-to-intermediate-term outlook for earnings growth and returns. Additionally, the Portfolio made purchases in a handful of stable growers in health care, utilities and consumer staples, which we believe offer better relative value and/or better intermediate-term growth than existing holdings in these sectors.

2019

ANNUAL REPORT

At fiscal year end, the Portfolio’s largest overweight was to the information technology sector. This overweight allocation increased substantially over the course of the fiscal year as we were able to find multiple opportunities to buy shares of perceived high-quality, well-positioned businesses at compelling valuations. The Portfolio also ended the year overweight the consumer staples sector, though the magnitude of this overweight declined over the course of the year as other opportunities within stable growers became more compelling, in our view. The Portfolio’s overweight position in energy also declined over the year as we found better perceived risk/reward elsewhere. The Portfolio’s other notable overweight position was to the health care sector. The Portfolio ended the fiscal year underweight financials, primarily due to underweight allocations to emerging-market financials and U.S. insurance companies, where we found limited opportunities that fit our investment process. The Portfolio also ended the fiscal year underweight the consumer discretionary and communication services sectors.

Outlook

Our prior view was that global growth was clearly slowing due to the direct impact and broader uncertainty created by U.S.-China trade uncertainty. Our belief was the pressure this was creating would drive the U.S. and China to reach a phase one agreement, likely limited in scope that would lift market uncertainty, help drive market stabilization and potentially reaccelerate economic growth. It looks as though this will likely happen as a phase one trade deal is scheduled to be signed early in 2020. We believe a trade deal, with stimulus from governments and central banks, may allow the global economy to regain some confidence and gather strength.

We will continue to focus new Portfolio positions to those securities we believe are both attractively valued and have company specific drivers that allow them to perform well despite broader slow to moderate global growth environment.

Trade disputes with China will continue, and in our view, will result in more uncertainty for corporations impacted by global trade. This has the potential to further earnings volatility in impacted sectors. Global employment growth has slowed, but consumer spending dynamics have been resilient. We believe consumer balance sheets and savings levels currently offer a cushion to consumption and therefore to overall earnings and economic growth. Under this set of events, the overall market appears reasonably valued, though different industries and corporations have different implied fundamentals that may offer opportunities for those with free cash flow and solid dividends.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

International investing involves additional risks including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. The value of the Portfolio’s investments, as measured in U.S. dollars, may be unfavorably affected by changes in foreign currency exchange rates and exchange control regulations. Focusing on a single geographic region involves increased currency, political, regulatory and other risks. These risks are magnified in emerging markets.

The opinions expressed in this report are those of the portfolio managers and are current only through the end of the period of the report as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.

The index noted is unmanaged, and includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of Ivy VIP Global Equity Income.


32		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		GLOBAL EQUITY INCOME

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			98.4%
Financials			21.7%
Consumer Staples			13.2%
Energy			12.7%
Health Care			11.7%
Information Technology			11.1%
Industrials			9.7%
Utilities			7.5%
Materials			4.5%
Communication Services			4.2%
Consumer Discretionary			2.1%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			1.6%

Country Weightings


Europe			44.0%
France			13.1%
United Kingdom			9.9%
Netherlands			6.0%
Switzerland			4.6%
Other Europe			10.4%
North America			36.3%
United States			32.6%
Canada			3.7%
Pacific Basin			18.1%
Taiwan			4.0%
Japan			3.8%
Other Pacific Basin			10.3%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			1.6%

Top 10 Equity Holdings



Company	Sector	Industry
Taiwan Semiconductor Manufacturing Co. Ltd.	Information Technology	Semiconductors
AstraZeneca plc	Health Care	Pharmaceuticals
Philip Morris International, Inc.	Consumer Staples	Tobacco
Samsung Electronics Co. Ltd.	Information Technology	Technology Hardware, Storage & Peripherals
Verizon Communications, Inc.	Communication Services	Integrated Telecommunication Services
Citigroup, Inc.	Financials	Other Diversified Financial Services
Royal Dutch Shell plc, Class A	Energy	Integrated Oil & Gas
Pfizer, Inc.	Health Care	Pharmaceuticals
Tokio Marine Holdings, Inc.	Financials	Property & Casualty Insurance
ENEL S.p.A.	Utilities	Electric Utilities

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.

2019

ANNUAL REPORT


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		GLOBAL EQUITY INCOME

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		23.15%
5-year period ended12-31-19		5.66%
10-year period ended12-31-19		8.93%

(2)


34		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		GLOBAL EQUITY INCOME (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Canada

Energy – 1.7%
Suncor Energy, Inc.		155	$	5,081


Financials – 2.0%
Bank of Montreal		78		6,076


Total Canada – 3.7%			$	11,157
China

Energy – 2.0%
CNOOC Ltd.		3,543		5,893


Total China – 2.0%			$	5,893
France

Communication Services – 1.1%
Orange S.A.		219		3,225


Consumer Staples – 2.0%
Danone S.A.		71		5,870


Energy – 2.5%
Total S.A.		137		7,534


Financials – 3.7%
Axa S.A.		231		6,498
BNP Paribas S.A.		77		4,588

				11,086


Health Care – 1.7%
Sanofi-Aventis		50		5,076


Industrials – 2.1%
Vinci		56		6,257


Total France – 13.1%			$	39,048
Germany

Utilities – 2.2%
E.ON AG		336		3,578
RWE Aktiengesellschaft		101		3,076

				6,654


Total Germany – 2.2%			$	6,654
Hong Kong

Utilities – 1.5%
Guangdong Investment Ltd.		2,070		4,330


Total Hong Kong – 1.5%			$	4,330
Indonesia

Financials – 1.1%
PT Bank Mandiri (Persero) Tbk		5,759		3,181


Total Indonesia – 1.1%			$	3,181


COMMON STOCKS(Continued)	Shares		Value
Ireland

Materials – 1.4%
CRH plc		102	$	4,065


Total Ireland – 1.4%			$	4,065
Italy

Utilities – 2.6%
ENEL S.p.A.		973		7,719


Total Italy – 2.6%			$	7,719
Japan

Financials – 3.8%
ORIX Corp.		208		3,438
Tokio Marine Holdings, Inc.		144		8,048

				11,486


Total Japan – 3.8%			$	11,486
Macau

Consumer Discretionary – 1.2%
Sands China Ltd.		664		3,551


Total Macau – 1.2%			$	3,551
Netherlands

Energy – 2.8%
Royal Dutch Shell plc, Class A		285		8,438


Financials – 1.3%
ING Groep N.V., Certicaaten Van Aandelen		316		3,794


Industrials – 1.9%
Koninklijke Philips Electronics N.V., Ordinary Shares		116		5,677


Total Netherlands – 6.0%			$	17,909
Norway

Consumer Staples – 1.2%
Mowi ASA		132		3,422


Total Norway – 1.2%			$	3,422
Russia

Energy – 1.6%
PJSC LUKOIL ADR		48		4,777


Total Russia – 1.6%			$	4,777
Singapore

Financials – 1.2%
DBS Group Holdings Ltd.		184		3,516


Total Singapore – 1.2%			$	3,516


COMMON STOCKS(Continued)	Shares		Value
South Korea

Information Technology – 3.3%
Samsung Electronics Co. Ltd.		204	$	9,759


Total South Korea – 3.3%			$	9,759
Spain

Financials – 1.4%
Banco Santander S.A.		992		4,150


Total Spain – 1.4%			$	4,150
Switzerland

Consumer Staples – 2.4%
Nestle S.A., Registered Shares		67		7,199


Health Care – 2.2%
Roche Holdings AG, Genusscheine		20		6,665


Total Switzerland – 4.6%			$	13,864
Taiwan

Information Technology – 4.0%
Taiwan Semiconductor Manufacturing Co. Ltd.		1,081		11,936


Total Taiwan – 4.0%			$	11,936
United Kingdom

Financials – 1.5%
3i Group plc		302		4,396


Health Care – 5.0%
AstraZeneca plc		103		10,387
GlaxoSmithKline plc		192		4,520

				14,907


Industrials – 1.4%
BAE Systems plc		556		4,161


Materials – 2.0%
Anglo American plc		207		5,972


Total United Kingdom – 9.9%			$	29,436
United States

Communication Services – 3.1%
Verizon Communications, Inc.		148		9,114


Consumer Discretionary – 0.9%
Home Depot, Inc. (The)		12		2,675


Consumer Staples – 7.6%
Philip Morris International, Inc.		120		10,172
Procter & Gamble Co. (The)		59		7,310
Wal-Mart Stores, Inc.		43		5,112

				22,594


Energy – 2.1%
Chevron Corp.		50		6,067

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		GLOBAL EQUITY INCOME (in thousands)

DECEMBER 31, 2019


COMMON STOCKS(Continued)	Shares		Value
Financials – 5.7%
Citigroup, Inc.		106	$	8,439
JPMorgan Chase & Co.		31		4,254
KeyCorp		201		4,062

				16,755


Health Care – 2.8%
Pfizer, Inc.		208		8,158


Industrials – 4.3%
Caterpillar, Inc.		24		3,515
Eaton Corp.		42		3,980
Lockheed Martin Corp.		14		5,316

				12,811


COMMON STOCKS(Continued)	Shares		Value
Information Technology – 3.8%
Intel Corp.		62	$	3,705
QUALCOMM, Inc.		84		7,417

				11,122


Materials – 1.1%
Eastman Chemical Co.		43		3,424

Utilities – 1.2%
Exelon Corp.		76		3,482


Total United States – 32.6%			$	96,202

TOTAL COMMON STOCKS – 98.4%			$	292,055
(Cost: $267,381)


SHORT-TERM SECURITIES	Shares		Value
Money Market Funds (A) – 1.4%
State Street Institutional U.S. Government Money Market Fund – Premier Class 1.550%		4,046	$	4,046


TOTAL SHORT-TERM SECURITIES – 1.4%			$	4,046
(Cost: $4,046)

TOTAL INVESTMENT SECURITIES – 99.8%			$	296,101
(Cost: $271,427)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.2%				483

NET ASSETS – 100.0%			$	296,584

Notes to Schedule of Investments

(A)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks
Communication Services	$	12,339	$	—	$	—
Consumer Discretionary		6,226		—		—
Consumer Staples		28,464		10,621		—
Energy		37,790		—		—
Financials		46,257		18,183		—
Health Care		28,141		6,665		—
Industrials		28,906		—		—
Information Technology		23,058		9,759		—
Materials		13,461		—		—
Utilities		7,812		14,373		—
Total Common Stocks	$	232,454	$	59,601	$	—
Short-Term Securities		4,046		—		—
Total	$	236,500	$	59,601	$	—

The following acronym is used throughout this schedule:

ADR = American Depositary Receipts

Market Sector Diversification


(as a % of net assets)
Financials			21.7%
Consumer Staples			13.2%
Energy			12.7%
Health Care			11.7%
Information Technology			11.1%
Industrials			9.7%

Market Sector Diversification(Continued)


Utilities			7.5%
Materials			4.5%
Communication Services			4.2%
Consumer Discretionary			2.1%
Other+			1.6%

+Includes cash and other assets (net of liabilities), and cash equivalents

See Accompanying Notes to Financial Statements.


36		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		GLOBAL GROWTH

(UNAUDITED)

LOGO

Sarah C. Ross

Below, Sarah C. Ross, CFA, portfolio manager of Ivy VIP Global Growth, discusses positioning, performance and results for the fiscal year ended December 31, 2019. Ms. Ross has 24 years of industry experience and has managed the Portfolio since August 2014.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Global Growth (Class II shares at net asset value)			25.93%
Benchmark and Morningstar Category
MSCI World Index			27.67%
(generally reflects the performance of securities markets around the world)
Morningstar World Large Stock Category Average			25.68%
(generally reflects the performance of the universe of funds with similar investment objectives)

A year in review

Calendar year 2019 was particularly strong for global equities with the MSCI World Index up more than 27% in the measurement period. Developed markets outperformed emerging markets, but most large markets generated strong positive returns in the fiscal year. Interestingly, the strength in equities occurred in an environment with relatively slow global growth. One contributor was that December 2018 was particularly weak – the benchmark was down 7% in the one month leading up to calendar year 2019. At that time, there were fears that the U.S. Federal Reserve (Fed) would remain hawkish and possibly raise interest rates further at the same time corporate earnings were weakening and global growth was slowing. The December 2018 move created a lower base to start from as we entered calendar year 2019.

As calendar year 2019 progressed, central banks became more accommodative with three interest rate cuts by the Fed and continued quantitative easing in Europe. Increased global liquidity and a positive resolution of the U.S.-China trade war drove expansion and contributed to equity market strength.

The single largest driver of the movement in equities throughout the period was the trade war between the U.S. and China. Tensions worsened in the summer with a possible deal falling apart in August, resulting in a yield curve inversion in U.S. Treasuries and fears of a global slow down. During that period, equity markets experienced a big fall off in momentum, particularly hitting technology names in the month of September. Markets then stabilized relatively quickly after a phase one trade deal was announced between the U.S. and China.

Growth outperformed value in the measurement period, which is a continuation of trends experienced since 2016. At a sector level, energy was the material underperformer in the fiscal year as commodity prices remained weak. Information technology was the standout performer in the fiscal year with strength also coming from industrials, communication services and consumer discretionary.

Performance for the year

The Portfolio modestly underperformed its benchmark for the fiscal year ended Dec. 31, 2019. Stock selection overall was a modest positive contributor to performance while sector allocation was the biggest negative factor. Health care was the biggest challenge in the period with an overweight to the underperforming sector and stock selection both dragging down performance. Stock selection in the information technology and communication services sectors was also negative. This was only partially offset by particularly strong stock selection in industrials. The single largest detractor to Portfolio performance in the period was not owning Apple, Inc., a significant benchmark holding that performed particularly well in the fiscal year. Other detractors included UnitedHealth Group, Inc. and Cigna Corp. on the insurance side, both of which faced pressure in 2019 on political concerns as U.S. Presidential candidates debated issues such as elimination of the Affordable Care Act and the possibility of transforming the domestic health care system into a Medicare for All program. Imperial Tobacco Group plc and Ubisoft Entertainment S.A. were also underperformers on product issues. In the case of Ubisoft, new game delays resulted in earnings weakness driving underperformance. Imperial Brands faced regulatory pressure around the company’s vaping products. The Portfolio no longer holds UnitedHealth Group, Inc., Cigna Corp. or Imperial Tobacco Group plc so they will not show on the Dec. 31, 2019 Schedule of Investments. Some of the strongest individual names included Airbus SE, Dollar General Corp., Ferrari N.V. and Infineon Technologies AG. The use of derivatives had little impact on Portfolio performance in the fiscal year.

2019

ANNUAL REPORT

Outlook

With phase one of the U.S. China trade deal complete, we believe 2020 equity markets will have less of a focus on trade. With the U.S. Presidential election approaching, we expect relative calm on the trade front as President Donald Trump is unlikely to want to unsettle markets in advance of an election. However, the U.S. political landscape is likely to be very relevant for domestic equities, which are over 50% of the Portfolio’s benchmark, given some of the populist candidates on the Democratic side. Given the macro overlay we apply in ourbottom-up portfolio construction, we try to avoid exposure to holdings with significant political or regulatory risk that we find hard to predict. In the second half of 2019, we increased our cyclical exposure in the Portfolio and continue to be overweight industrials and information technology. We’ve been gradually adding to financial stocks (including banks) and other holdings that we feel look undervalued in the current market environment. Appreciation of global equities in 2019 far exceeded earnings growth in the period and we do have some greater concerns about valuations. We have increased our exposure tonon-U.S. holdings, finding more compelling value outside of the U.S. at the current moment. While European economic growth remains anemic, we have found pockets of opportunity there along with parts of Asia that were under pressure from trade war concerns. We continue to believe our Portfolio of sustainable growth companies can outperform in this late cycle growth environment.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

The index noted is unmanaged, and includes reinvested dividends and does not include fees. One cannot invest directly in an index, nor is an index representative of Ivy VIP Global Growth.


38		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		GLOBAL GROWTH

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)


Asset Allocation
Stocks			97.6%
Information Technology			23.4%
Industrials			15.9%
Consumer Discretionary			15.6%
Financials			14.9%
Health Care			11.5%
Consumer Staples			6.6%
Energy			5.5%
Communication Services			4.2%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			2.4%


Country Weightings
North America			49.8%
United States			45.7%
Canada			4.1%
Europe			30.2%
France			10.8%
United Kingdom			5.9%
Netherlands			4.0%
Germany			3.7%
Other Europe			5.8%
Pacific Basin			16.7%
China			6.4%
Japan			3.8%
Other Pacific Basin			6.5%
South America			0.9%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			2.4%

Top 10 Equity Holdings



Company	Country	Sector	Industry
Airbus SE	France	Industrials	Aerospace & Defense
Amazon.com, Inc.	United States	Consumer Discretionary	Internet & Direct Marketing Retail
Microsoft Corp.	United States	Information Technology	Systems Software
Visa, Inc., Class A	United States	Information Technology	Data Processing & Outsourced Services
Thermo Fisher Scientific, Inc.	United States	Health Care	Life Sciences Tools & Services
Ping An Insurance (Group) Co. of China Ltd., H Shares	China	Financials	Life & Health Insurance
Alimentation Couche-Tard, Inc., Class B	Canada	Consumer Staples	Food Retail
Johnson & Johnson	United States	Health Care	Pharmaceuticals
Ferrari N.V.	Italy	Consumer Discretionary	Automobile Manufacturers
Infineon Technologies AG	Germany	Information Technology	Semiconductors

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.

2019

ANNUAL REPORT


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		GLOBAL GROWTH

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		25.93%
5-year period ended12-31-19		8.06%
10-year period ended12-31-19		8.34%

(2)


40		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		GLOBAL GROWTH (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Brazil

Consumer Discretionary – 0.8%
Magazine Luiza S.A. (A)		93	$	1,101


Financials – 0.1%
XP, Inc., Class A (A)		5		194


Total Brazil – 0.9%			$	1,295
Canada

Consumer Staples – 2.6%
Alimentation Couche-Tard, Inc., Class B		120		3,802


Energy – 1.5%
Canadian Natural Resources Ltd.		71		2,290


Total Canada – 4.1%			$	6,092
China

Communication Services – 1.1%
Tencent Holdings Ltd.		34		1,634


Consumer Discretionary – 1.7%
Alibaba Group Holding Ltd. ADR (A)		12		2,463


Financials – 2.6%
Ping An Insurance (Group) Co. of China Ltd., H Shares		326		3,853


Information Technology – 1.0%
Baidu.com, Inc. ADR (A)		12		1,551


Total China – 6.4%			$	9,501
France

Communication Services – 1.6%
Ubisoft Entertainment S.A. (A)		36		2,461


Consumer Discretionary – 0.6%
LVMH Moet Hennessy – Louis Vuitton		2		930


Energy – 1.5%
Total S.A. ADR		40		2,196


Industrials – 7.1%
Airbus SE		53		7,791
Schneider Electric S.A.		26		2,677

				10,468


Total France – 10.8%			$	16,055
Germany

Financials – 1.2%
Deutsche Boerse AG		12		1,834


Information Technology – 2.5%
Infineon Technologies AG		165		3,701


Total Germany – 3.7%			$	5,535


COMMON STOCKS(Continued)	Shares			Value
Hong Kong

Consumer Discretionary – 0.9%
Galaxy Entertainment Group		191		$	1,407


Financials – 1.3%
AIA Group Ltd.		180			1,892


Total Hong Kong – 2.2%				$	3,299
India

Energy – 1.7%
Reliance Industries Ltd.		118			2,504


Financials – 1.2%
HDFC Bank Ltd.		97			1,732


Total India – 2.9%				$	4,236
Italy

Consumer Discretionary – 2.5%
Ferrari N.V.		23			3,735


Total Italy – 2.5%				$	3,735
Japan

Consumer Discretionary – 1.1%
Isuzu Motors Ltd.		133			1,572


Industrials – 2.7%
Daikin Industries Ltd.		7			1,027
Recruit Holdings Co. Ltd.		81			3,024

					4,051


Total Japan – 3.8%			��	$	5,623
Netherlands

Consumer Staples – 1.4%
Heineken N.V.		19			2,063


Industrials – 1.8%
Koninklijke Philips Electronics N.V., Ordinary Shares		53			2,580


Information Technology – 0.8%
ASML Holding N.V., NY Registry Shares		4			1,207


Total Netherlands – 4.0%				$	5,850
Switzerland

Consumer Staples – 1.2%
Nestle S.A., Registered Shares		17			1,799


Health Care – 0.9%
Alcon, Inc. (A)		23			1,329


Industrials – 1.2%
Ferguson plc		20			1,822


Total Switzerland – 3.3%				$	4,950


COMMON STOCKS(Continued)	Shares		Value
Taiwan

Information Technology – 1.4%
Taiwan Semiconductor Manufacturing Co. Ltd. ADR		36	$	2,094


Total Taiwan – 1.4%			$	2,094
United Kingdom

Consumer Discretionary – 0.5%
Compass Group plc		30		755


Consumer Staples – 1.4%
Diageo plc		50		2,102


Financials – 2.2%
Prudential plc		169		3,237


Health Care – 1.8%
AstraZeneca plc		16		1,652
AstraZeneca plc ADR		19		930

				2,582


Total United Kingdom – 5.9%			$	8,676
United States

Communication Services – 1.5%
Facebook, Inc., Class A (A)		11		2,206


Consumer Discretionary – 7.5%
Amazon.com, Inc. (A)		4		6,977
Dollar General Corp.		18		2,871
Home Depot, Inc. (The)		6		1,393

				11,241


Energy – 0.8%
ConocoPhillips		18		1,193


Financials – 6.3%
CME Group, Inc.		7		1,473
Fidelity National Information Services, Inc.		19		2,680
Goldman Sachs Group, Inc. (The)		9		2,085
KeyCorp		87		1,760
SVB Financial Group (A)		6		1,393

				9,391


Health Care – 8.8%
Abbott Laboratories		35		2,998
HCA Holdings, Inc.		13		1,892
Johnson & Johnson		26		3,746
Thermo Fisher Scientific, Inc.		14		4,450

				13,086


Industrials – 3.1%
Eaton Corp.		22		2,037
Northrop Grumman Corp.		8		2,588

				4,625


Information Technology – 17.7%
Adobe, Inc. (A)		9		3,117
Ambarella, Inc. (A)		36		2,185

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		GLOBAL GROWTH (in thousands)

DECEMBER 31, 2019


COMMON STOCKS(Continued)	Shares		Value
Information Technology(Continued)
Garter, Inc., Class A (A)		10	$	1,599
MasterCard, Inc., Class A		9		2,745
Microsoft Corp.		40		6,319
PayPal, Inc. (A)		24		2,600
VeriSign, Inc. (A)		7		1,423
Visa, Inc., Class A		29		5,498
Western Digital Corp.		10		604

				26,090


Total United States – 45.7%			$	67,832

TOTAL COMMON STOCKS – 97.6%			$	144,773
(Cost: $106,182)


SHORT-TERM SECURITIES	Shares		Value
Money Market Funds (B) – 2.3%
State Street Institutional U.S. Government Money Market Fund – Premier Class 1.550%		3,347	$	3,347


TOTAL SHORT-TERM SECURITIES – 2.3%			$	3,347
(Cost: $3,347)

TOTAL INVESTMENT SECURITIES – 99.9%			$	148,120
(Cost: $109,529)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.1%				222

NET ASSETS – 100.0%			$	148,342

Notes to Schedule of Investments

(A)	No dividends were paid during the preceding 12 months.

(B)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks
Communication Services	$	6,301	$	—	$	—
Consumer Discretionary		16,796		6,408		—
Consumer Staples		7,967		1,799		—
Energy		8,183		—		—
Financials		20,299		1,834		—
Health Care		15,668		1,329		—
Industrials		19,495		4,051		—
Information Technology		30,942		3,701		—
Total Common Stocks	$	125,651	$	19,122	$	—
Short-Term Securities		3,347		—		—
Total	$	128,998	$	19,122	$	—

The following acronym is used throughout this schedule:

ADR = American Depositary Receipts

Market Sector Diversification


(as a % of net assets)
Information Technology			23.4%
Industrials			15.9%
Consumer Discretionary			15.6%
Financials			14.9%
Health Care			11.5%

Market Sector Diversification(Continued)


Consumer Staples			6.6%
Energy			5.5%
Communication Services			4.2%
Other+			2.4%

+Includes cash and other assets (net of liabilities), and cash equivalents

See Accompanying Notes to Financial Statements.


42		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		LIMITED-TERM BOND

(UNAUDITED)

LOGO

Susan Regan

Below, Susan K. Regan, portfolio manager of Ivy VIP Limited-Term Bond, discusses positioning, performance and results for the fiscal year ended December 31, 2019. She has managed the Portfolio since 2014 and has 32 years industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Limited-Term Bond (Class II shares at net asset value)			4.23%
Benchmark and Morningstar Category
Bloomberg Barclays1-5 Year U.S. Government/Credit Index			5.01%
(generally reflects the performance of securities representing the bond market that have maturities between 1 and 5 years)
Morningstar Short-Term Bond Category Average			4.72%
(generally reflects the performance of the universe of funds with similar investment objectives)

Performance

For the period ended December 31, 2019, the Portfolio had a positive return, but underperformed relative to its benchmark and Morningstar peer group.

Market Perspective

Calendar year 2019 was strong for investment-grade fixed income with solid returns across maturities and sectors. Following its January 2019 meeting, the Fed started a new message of patience and Fed Chairman Jerome Powell suggested that rate hikes were off the table for the remainder of the year. We saw an even greater pivot when the Fed cut rates three times during the year – in July, September and October. This policy shift brought the rate to its current range of 1.50% to 1.75%.

While the market was volatile and yields didn’t go down in a straight line, they fell significantly during calendar year 2019. The2-year U.S. Treasury note fell nearly 92 basis points (bps) to end the year at 1.57%, while the5-year U.S. Treasury note fell 82 bps to 1.69% byyear-end.

While decisions by the Fed were a significant cause of the move in the U.S. Treasury curve, other factors impacted rate movement. The ongoing trade war with China, slow growth and negative interest rates in Europe, Brexit uncertainty, and mixed economic data in the U.S. and abroad all drove volatility.

Similarly, credit had a strong year as equity markets continued to reach new highs and corporate bonds saw their prices risein-kind due to the rise in U.S. Treasuries and the tightening of credit spreads. The Bloomberg Barclays U.S. Credit Index, a standard gauge for U.S. credit, earned an excess return of 620 bps, its best since 2012. The spread on the index tightened significantly during calendar year 2019, starting the year at 143 bps and ending at 90 bps. The credit portion of the Portfolio’s benchmark is the1-5 year subset of the Bloomberg Barclays U.S. Credit Index.

The fiscal period also saw the inversion of two popular measures of the yield curve. The inversions attracted attention from the financial media and the market, as an inverted yield curve is often, but not always, a precursor to recession. The yield curve, as measured by the difference in yields on the10-year U.S. Treasury note and the2-year U.S. Treasury note, inverted for one week beginning Aug. 26 and peaked at 5 bps. The curve steepened in the fourth quarter, and at year end, the10-year U.S. Treasury note was yielding 35 bps more than the2-year U.S. Treasury note.

The Fed’s stated preferred method of measuring the yield curve is the difference between the yields on the10-year U.S. Treasury note and the3-month U.S. Treasury bill. This part of the yield curve inverted in May and remained inverted nearly every day until October 11 when the Phase 1 trade agreement with China was announced, which sent longer yields higher. That same day, the Fed announced it would start buying $60 billion monthly in U.S. Treasury bills, which sent yields on shorter maturities lower. After that point, this measure of the yield curve was not inverted for the remainder of 2019 and ended the year at 37 bps.

2019

ANNUAL REPORT

Portfolio Positioning

We began the year with the Portfolio’s duration at 81% of benchmark duration. The Fed had been hiking rates and maintaining the Portfolio’s duration well below benchmark duration was warranted. We began increasing duration in February once we were convinced that the Fed was finished hiking rates in this cycle. The Portfolio’s duration remained below the benchmark, in the92-96% range, for the remainder of calendar year 2019.

We reduced credit slightly during the year and added to the allocations in both U.S. Treasuries and agency commercial mortgage-backed securities (CMBS). We believe this CMBS product is attractive because it enhances the portfolio’s return and behaves more like a bullet security, paying its principal back in alump-sum near its maturity, rather than a little each month like a traditional mortgage-backed security. The agency CMBS allocation was a strong contributor to performance during the fiscal year.

The Portfolio’s allocation to credit is at benchmark weight, which we believe is appropriate. The sector had strong performance in the fiscal year, but we believe it is difficult for spreads to tighten substantially from this point, especially with dramatic increases in debt and leverage in the system the past few years.

Outlook

It is expected the Phase 1 trade deal with China will be signed January 15. Subsequently, talks would move to Phase 2, and then the markets will assess the likelihood of future agreements. We anticipate market volatility to continue based on headlines and tweets around the negotiations.

The Fed expects to be “on hold” for the remainder of 2020, with neither rate cuts nor rate hikes. It has communicated its willingness to let inflation exceed 2% for a time since it has been below 2% for so long. We believe the Fed will do all it can to keep the expansion going. Should the economic data weaken significantly, they will not hesitate to lower rates.

Past performance is not a guarantee of future results. As with any mutual fund, the value of the Portfolio’s shares will change, and you could lose money on your investment. Certain U.S. government securities in which the Portfolio may invest, such as Treasury securities and securities issued by the Government National Mortgage Association (Ginnie Mae), are backed by the full faith and credit of the U.S. government. However, other government securities in which the Portfolio may invest, such as securities issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks (FHLB), are not backed by the full faith and credit of the U.S. government, are not insured or guaranteed by the U.S. government and, instead, may be supported only by the right of the issuer to borrow from the U.S. Treasury or by the credit of the issuer.

Fixed-income securities are subject to interest rate risk and, as such, the Portfolio’s net asset value may fall as interest rates rise. These and other risks are more fully described in the Portfolio’s prospectus.

The index noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Ivy VIP Limited-Term Bond.


44		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		LIMITED-TERM BOND

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Bonds			97.5%
United States Government and Government Agency Obligations			63.5%
Corporate Debt Securities			33.0%
Mortgage-Backed Securities			0.8%
Asset-Backed Securities			0.2%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			2.5%

Quality Weightings


Investment Grade			94.8%
AAA			44.7%
AA			10.1%
A			10.7%
BBB			29.3%
Non-Investment Grade			2.7%
CCC			0.3%
Non-rated			2.4%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+			2.5%

2019

ANNUAL REPORT


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		LIMITED-TERM BOND

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		4.23%
5-year period ended12-31-19		1.84%
10-year period ended12-31-19		—
Since Inception of Class through12-31-19⁽³⁾		1.63%

(2)

(3)

8-23-10 (the date on which shares were first acquired by shareholders).


46		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		LIMITED-TERM BOND (in thousands)

DECEMBER 31, 2019


ASSET-BACKED SECURITIES	Principal		Value
American Airlines Class AA Pass-Through Certificates,Series 2016-2,
3.200%, 6-15-28	$	855	$	878


TOTAL ASSET-BACKED SECURITIES – 0.2%			$	878
(Cost: $854)

CORPORATE DEBT SECURITIES
Communication Services

Cable & Satellite – 0.9%
Comcast Corp. (GTD by Comcast Cable Communications and NBCUniversal),
3.700%, 4-15-24		2,000		2,131
SBA Tower Trust, Series 2014-2 (GTD by SBA Guarantor LLC and SBA Holdings LLC),
3.869%, 10-8-24 (A)		2,000		2,081

				4,212


Integrated Telecommunication Services – 0.5%
AT&T, Inc.,
3.400%, 5-15-25		950		995
Verizon Communications, Inc.,
3.376%, 2-15-25		1,250		1,323

				2,318


Wireless Telecommunication Service – 1.2%
Crown Castle Towers LLC:
3.222%, 5-15-22 (A)		4,300		4,345
3.663%, 5-15-25 (A)		950		985

				5,330


Total Communication Services – 2.6%				11,860
Consumer Discretionary

Automobile Manufacturers – 0.4%
Volkswagen Group of America, Inc.,
2.500%, 9-24-21 (A)		1,600		1,614


Casinos & Gaming – 0.4%
Las Vegas Sands Corp.,
3.200%, 8-8-24		1,900		1,959


General Merchandise Stores – 1.2%
Dollar General Corp.,
3.250%, 4-15-23		2,640		2,725
Family Dollar Stores, Inc.,
5.000%, 2-1-21		2,500		2,576

				5,301


Total Consumer Discretionary – 2.0%				8,874
Consumer Staples

Distillers & Vintners – 0.6%
Constellation Brands, Inc.:
3.200%, 2-15-23		1,500		1,540
4.250%, 5-1-23		1,188		1,262

				2,802


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Drug Retail – 0.6%
CVS Health Corp.:
3.500%, 7-20-22	$	1,425	$	1,471
2.750%, 12-1-22		1,405		1,427

				2,898


Soft Drinks – 0.7%
Coca-Cola Bottling Co. Consolidated,
3.800%, 11-25-25		1,695		1,773
Keurig Dr Pepper, Inc.,
4.057%, 5-25-23		1,200		1,265

				3,038


Total Consumer Staples – 1.9%				8,738
Energy

Oil & Gas Equipment & Services – 0.6%
Enterprise Products Operating LLC (GTD by Enterprise Products Partners L.P.):
2.800%, 2-15-21		800		808
3.500%, 2-1-22		2,000		2,062

				2,870


Oil & Gas Exploration & Production – 0.2%
Aker BP ASA,
6.000%, 7-1-22 (A)		1,000		1,027


Oil & Gas Storage & Transportation – 3.2%
Enbridge, Inc.,
2.900%, 7-15-22		2,470		2,516
Energy Transfer Partners L.P.,
4.150%, 10-1-20		3,860		3,901
EQT Midstream Partners L.P.,
4.750%, 7-15-23		1,500		1,504
Kinder Morgan Energy Partners L.P.:
3.500%, 3-1-21		1,000		1,013
3.450%, 2-15-23		1,646		1,697
Midwest Connector Capital Co. LLC,
3.625%, 4-1-22 (A)		1,000		1,025
Plains All American Pipeline L.P. and PAA Finance Corp.,
3.850%, 10-15-23		1,800		1,863
Sunoco Logistics Partners Operations L.P. (GTD by Sunoco Logistics Partners L.P.),
4.400%, 4-1-21		800		819

				14,338


Total Energy – 4.0%				18,235
Financials

Consumer Finance – 2.9%
Ally Financial, Inc.,
4.250%, 4-15-21		2,139		2,187
American Express Co.,
2.500%, 7-30-24		2,000		2,022
American Honda Finance Corp.,
2.150%, 9-10-24		1,600		1,601


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Consumer Finance(Continued)
Discover Bank:
3.100%, 6-4-20	$	1,500	$	1,505
3.350%, 2-6-23		1,580		1,630
Ford Motor Credit Co. LLC,
2.459%, 3-27-20		3,066		3,067
General Motors Financial Co., Inc. (GTD by AmeriCredit Financial Services, Inc.),
3.200%, 7-6-21		1,000		1,014

				13,026


Diversified Banks – 4.6%
Bank of America Corp.:
4.100%, 7-24-23		1,983		2,115
4.125%, 1-22-24		2,095		2,253
BB&T Corp.,
2.500%, 8-1-24		1,600		1,619
Citizens Bank N.A.,
3.250%, 2-14-22		1,200		1,229
Huntington Bancshares, Inc.,
4.000%, 5-15-25		2,250		2,429
Korea Development Bank,
3.250%, 2-19-24		750		780
Mitsubishi UFJ Financial Group, Inc.,
2.801%, 7-18-24		1,600		1,631
Mizuho Financial Group, Inc.,
2.953%, 2-28-22		2,100		2,138
Sumitomo Mitsui Financial Group, Inc.,
2.696%, 7-16-24		1,600		1,622
Synchrony Bank,
3.000%, 6-15-22		1,500		1,529
U.S. Bancorp,
5.125%, 1-15-68		3,380		3,475

				20,820


Financial Exchanges & Data – 0.3%
Intercontinental Exchange, Inc.,
3.450%, 9-21-23		1,500		1,573


Investment Banking & Brokerage – 2.2%
E*TRADE Financial Corp.,
2.950%, 8-24-22		1,580		1,609
Goldman Sachs Group, Inc. (The):
3.000%, 4-26-22		1,500		1,518
3.500%, 1-23-25		2,250		2,359
Morgan Stanley,
4.875%, 11-1-22		3,734		4,000
Morgan Stanley (3-Month U.S. LIBOR plus 110 bps),
3.007%, 5-31-23 (B)		300		307

				9,793


Other Diversified Financial Services – 1.3%
Citigroup, Inc.,
2.750%, 4-25-22		2,000		2,031
JPMorgan Chase & Co.:
2.972%, 1-15-23		1,500		1,530
3.125%, 1-23-25		1,359		1,418
3.000%, 2-27-30 (C)		850		834

				5,813

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		LIMITED-TERM BOND (in thousands)

DECEMBER 31, 2019


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Regional Banks – 1.3%
PNC Financial Services Group, Inc. (The),
3.500%, 1-23-24	$	3,674	$	3,867
SunTrust Banks, Inc.,
3.200%, 4-1-24		2,100		2,183

				6,050


Total Financials – 12.6%				57,075
Health Care

Health Care Equipment – 0.4%
Becton Dickinson & Co.,
2.894%, 6-6-22		1,900		1,931


Pharmaceuticals – 0.9%
AbbVie, Inc.,
2.300%, 11-21-22 (A)		1,400		1,406
Zoetis, Inc.,
3.250%, 2-1-23		2,415		2,485

				3,891


Total Health Care – 1.3%				5,822
Industrials

Aerospace & Defense – 0.9%
BAE Systems plc,
4.750%, 10-11-21 (A)		1,170		1,221
L3Harris Technologies, Inc.,
3.950%, 5-28-24 (A)		2,000		2,123
Northrop Grumman Corp.,
3.250%, 8-1-23		680		708

				4,052


Airlines – 0.4%
Delta Air Lines, Inc.,
3.400%, 4-19-21		1,800		1,825


Environmental & Facilities Services – 1.2%
Republic Services, Inc.,
2.500%, 8-15-24		2,600		2,628
Waste Management, Inc. (GTD by Waste Management Holdings, Inc.),
2.400%, 5-15-23		2,818		2,846

				5,474


Industrial Conglomerates – 0.2%
General Electric Capital Corp.,
5.012%, 1-1-24		849		869


Research & Consulting Services – 0.2%
RELX Capital, Inc. (GTD by RELX plc),
3.125%, 10-15-22		778		801


Total Industrials – 2.9%				13,021


CORPORATE DEBT SECURITIES (Continued)	Principal		Value
Information Technology

Data Processing & Outsourced Services – 0.4%
PayPal Holdings, Inc.,
2.400%, 10-1-24	$	1,600	$	1,615


IT Consulting & Other Services – 0.3%
Pioneer Holding Corp.,
9.000%, 11-1-22 (A)		1,200		1,254


Technology Hardware, Storage & Peripherals – 0.2%
NetApp, Inc.,
3.375%, 6-15-21		1,000		1,016


Total Information Technology – 0.9%				3,885
Real Estate

Specialized REITs – 1.8%
American Tower Corp.:
3.300%, 2-15-21		1,000		1,013
5.900%, 11-1-21		800		854
2.250%, 1-15-22		590		592
3.070%, 3-15-23 (A)		2,835		2,871
Crown Castle International Corp.,
4.875%, 4-15-22		1,000		1,059
Equinix, Inc.,
2.625%, 11-18-24		1,500		1,503

				7,892


Total Real Estate – 1.8%				7,892
Utilities

Electric Utilities – 2.7%
CenterPoint Energy, Inc.,
2.500%, 9-1-22		3,000		3,023
Entergy Texas, Inc.,
2.550%, 6-1-21		1,275		1,276
Evergy, Inc.:
5.292%, 6-15-22 (C)		1,154		1,226
2.450%, 9-15-24		1,600		1,608
MidAmerican Energy Co.,
3.700%, 9-15-23		1,045		1,098
National Rural Utilities Cooperative Finance Corp.,
2.400%, 4-25-22		2,000		2,021
Virginia Electric and Power Co., Series C,
2.750%, 3-15-23		2,000		2,036

				12,288


Multi-Utilities – 0.3%
Dominion Energy Gas Holdings LLC,
2.500%, 11-15-24		1,400		1,405


Total Utilities – 3.0%				13,693

TOTAL CORPORATE DEBT SECURITIES – 33.0%			$	149,095
(Cost: $146,545)


MORTGAGE-BACKED SECURITIES	Principal		Value
Non-Agency REMIC/CMO – 0.8%
JPMorgan Chase Commercial Mortgage Securities Corp., Series 2014-FRR1, Class A-K10,
4.286%, 11-27-49 (A)	$	3,700	$	3,690


TOTAL MORTGAGE-BACKED SECURITIES – 0.8%			$	3,690
(Cost: $3,660)

UNITED STATES GOVERNMENT AGENCY OBLIGATIONS
Agency Obligations – 1.0%
Federal Home Loan Bank,
2.250%, 7-21-31		1,640		1,629
U.S. Department of Transportation,
6.001%, 12-7-21 (A)		2,500		2,695

				4,324


Mortgage-Backed Obligations – 12.1%
Federal Home Loan Mortgage Corp. Agency REMIC/CMO,
2.500%, 5-15-44		515		519
Federal Home Loan Mortgage Corp. Agency REMIC/CMO (1-Month U.S. LIBOR plus 185 bps),
3.547%, 8-25-25 (A)(B)		2,403		2,382
Federal Home Loan Mortgage Corp. Agency REMIC/CMO (1-Month U.S. LIBOR plus 250 bps),
4.197%, 11-25-24 (A)(B)		499		501
Federal Home Loan Mortgage Corp. Agency REMIC/CMO (1-Month U.S. LIBOR plus 255 bps),
4.247%, 6-25-27 (A)(B)		546		553
Federal Home Loan Mortgage Corp. Agency REMIC/CMO (1-Month U.S. LIBOR plus 435 bps),
6.047%, 11-25-21 (A)(B)		2,923		2,980
Federal Home Loan Mortgage Corp. Agency REMIC/CMO (3-Year U.S. Treasury index plus 315 bps),
4.622%, 11-25-49 (A)(B)		2,120		2,154
Federal Home Loan Mortgage Corp. Agency REMIC/CMO (Mortgage spread to 1-Month U.S. LIBOR):
4.947%, 6-25-21 (A)(B)		593		595
5.697%, 9-25-22 (A)(B)		359		362
Federal Home Loan Mortgage Corp. Agency REMIC/CMO (Mortgage spread to 2-year U.S. Treasury index),
3.630%, 11-25-47 (A)(B)		1,500		1,524
Federal Home Loan Mortgage Corp. Agency REMIC/CMO (Mortgage spread to 3-year U.S. Treasury index):
5.522%, 4-25-20 (A)(B)		880		881
3.392%, 7-25-22 (A)(B)		1,720		1,749
3.971%, 2-25-46 (A)(B)		70		71
3.630%, 7-25-46 (A)(B)		2,000		2,045
3.565%, 11-25-47 (A)(B)		5,000		5,080


48		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		LIMITED-TERM BOND (in thousands)

DECEMBER 31, 2019


UNITED STATES GOVERNMENT AGENCY OBLIGATIONS(Continued)	Principal		Value
Mortgage-Backed Obligations(Continued)
Federal Home Loan Mortgage Corp. Agency REMIC/CMO (Mortgage spread to 5-year U.S. Treasury index):
3.485%, 11-25-23 (A)(B)	$	600	$	606
3.580%, 11-25-23 (A)(B)		10,870		11,057
3.868%, 5-25-45 (A)(B)		600		618
3.556%, 6-25-45 (A)(B)		1,000		1,027
3.565%, 11-25-47 (A)(B)		2,724		2,818
3.541%, 2-25-48 (A)(B)		1,000		1,019
3.587%, 6-25-48 (A)(B)		1,170		1,197
Federal Home Loan Mortgage Corp. Agency REMIC/CMO (Mortgage spread to 7-year U.S. Treasury index):
4.055%, 5-25-25 (A)(B)		225		233
3.779%, 10-25-48 (A)(B)		1,125		1,164
3.674%, 11-25-49 (A)(B)		1,900		1,947
3.647%, 11-25-50 (A)(B)		5,650		5,772
Federal Home Loan Mortgage Corp. Fixed Rate Participation Certificates:
3.000%, 9-1-28		1,857		1,905
4.500%, 8-1-30		510		546
Federal National Mortgage Association Agency REMIC/CMO,
2.000%, 10-25-41		1,319		1,312
Federal National Mortgage Association Fixed Rate Pass-Through Certificates:
4.646%, 7-1-20		347		348
3.680%, 2-1-21		345		348
4.381%, 6-1-21		858		879
Government National Mortgage Association Agency REMIC/CMO,
2.000%, 3-16-42		688		685

				54,877


TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS – 13.1%			$	59,201
(Cost: $58,532)


UNITED STATES GOVERNMENT OBLIGATIONS	Principal		Value
Treasury Obligations – 50.4%
U.S. Treasury Notes:
1.750%, 10-31-20	$	16,000	$	16,012
2.625%, 11-15-20		10,000		10,083
2.500%, 1-31-21		10,300		10,393
2.500%, 2-28-21		1,000		1,010
2.625%, 5-15-21		16,500		16,724
2.750%, 9-15-21		1,000		1,019
2.875%, 10-15-21		18,400		18,808
2.000%, 12-31-21		8,000		8,062
2.125%, 12-31-21		16,000		16,163
1.875%, 2-28-22		15,000		15,087
1.750%, 4-30-22		13,000		13,044
1.750%, 5-31-22		2,750		2,760
2.000%, 7-31-22		10,000		10,098
1.375%, 10-15-22		3,000		2,980
2.125%, 12-31-22		11,000		11,161
2.375%, 1-31-23		10,000		10,221
2.500%, 3-31-23		5,850		6,009
2.750%, 4-30-23		8,000		8,284
2.875%, 9-30-23		4,000		4,175
1.625%, 10-31-23		17,600		17,570
2.875%, 10-31-23		1,500		1,567
2.125%, 11-30-23		4,000		4,068
2.500%, 1-31-24		7,250		7,483
2.500%, 5-15-24		7,000		7,237
1.750%, 6-30-24		8,000		8,018

				228,036


TOTAL UNITED STATES GOVERNMENT OBLIGATIONS – 50.4%			$	228,036
(Cost: $224,181)


SHORT-TERM SECURITIES	Principal		Value
Commercial Paper (D) – 1.8%
General Motors Financial Co., Inc.,
2.560%, 2-3-20	$	2,000	$	1,995
Kellogg Co.,
1.800%, 1-2-20		1,791		1,791
Sonoco Products Co.,
1.780%, 1-2-20		3,025		3,025
Walgreens Boots Alliance, Inc.,
2.001%, 1-7-20		1,500		1,499

				8,310


Master Note – 0.2%
Toyota Motor Credit Corp. (1-Month U.S. LIBOR plus 15 bps),
1.860%, 1-6-20 (E)		1,006		1,006


	Shares
Money Market Funds (F) – 0.0%
State Street Institutional U.S. Government Money Market Fund – Premier Class,
1.550%		93		93


TOTAL SHORT-TERM SECURITIES – 2.0%			$	9,409
(Cost: $9,410)

TOTAL INVESTMENT SECURITIES – 99.5%			$	450,309
(Cost: $443,182)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.5%				2,233

NET ASSETS – 100.0%			$	452,542

Notes to Schedule of Investments

(A)

(B)	Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2019. Description of the reference rate and spread, if applicable, are included in the security description.

(C)	Step bond that pays an initial coupon rate for the first period and then a higher or lower coupon rate for the following periods. Interest rate disclosed is that which is in effect at December 31, 2019.

(D)	Rate shown is the yield to maturity at December 31, 2019.

(E)	Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2019. Date shown represents the date that the variable rate resets. Description of the reference rate and spread, if applicable, are included in the security description.

(F)	Rate shown is the annualized 7-day yield at December 31, 2019.

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		LIMITED-TERM BOND (in thousands)

DECEMBER 31, 2019


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Asset-Backed Securities	$	—	$	878	$	—
Corporate Debt Securities		—		149,095		—
Mortgage-Backed Securities		—		3,690		—
United States Government Agency Obligations		—		59,201		—
United States Government Obligations		—		228,036		—
Short-Term Securities		93		9,316		—
Total	$	93	$	450,216	$	—

The following acronyms are used throughout this schedule:

CMO = Collateralized Mortgage Obligation

GTD = Guaranteed

LIBOR = London Interbank Offered Rate

REIT = Real Estate Investment Trust

REMIC = Real Estate Mortgage Investment Conduit

See Accompanying Notes to Financial Statements.


50		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		SECURIAN REAL ESTATE SECURITIES

(UNAUDITED)

LOGO

Matthew K. Richmond

LOGO

Lowell R. Bolken

LOGO

Joshua M. Klaetsch

Ivy VIP Securian Real Estate Securities issub-advised by Securian Asset Management, Inc. Below, Lowell R. Bolken, CFA, Matthew K. Richmond and Joshua M. Klaetsch, theco-portfolio managers of Ivy VIP Securian Real Estate Securities discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Bolken has managed the Portfolio since 2006, and has 29 years of industry experience. Mr. Richmond hasco-managed the Portfolio since 2014 and has 25 years of industry experience. Mr. Klaetsch joined the portfolio management team in 2018 and has 13 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Securian Real Estate Securities (Class II shares at net asset value)			24.43%
Benchmark and Morningstar Category
FTSE Nareit Equity REITs Index			26.00%
(Generally reflects the performance of securities representing the commercial real estate market)
Morningstar Real Estate Category Average			27.28%
(Generally reflects the performance of the universe of portfolios with similar investment objectives)

Key Drivers

Real estate stocks delivered significantly positive returns for the year ending December 31, 2019, but failed to keep pace with the broader S&P 500 Index. Real estate investment trusts (REITs), similar to the broader market, were consistently positive throughout the year with very little volatility.

We believe the economy is poised to do modestly better in 2020. The consumer continues to drive growth with low unemployment and higher wages supporting spending. Although the stage is set for stronger growth in corporate America, the turn has not fully materialized due to weakness in the manufacturing and energy sectors. Still, the outlook appears brighter for 2020 as the shock from recent tariffs recedes. Corporate earnings should improve amid more stable global growth and easier year-over-year comparisons. In addition, a recession next year seems unlikely given economic fundamentals like unemployment at a nearly50-year low.

Macroeconomic conditions remain favorable for real estate operators and we see few, if any, conditions within the real estate markets that would disrupt a continued expansion. The current real estate recovery is entering its 11^th year, and many believe we are in a Goldilocks period for the sector. Occupancies across most every property segment remain at historically high levels, and speculative construction continues to be held in check with few exceptions. We believe 2020 earnings growth for REITs will approach 5% as landlords enjoy the benefit of contractual lease obligations from their tenants and the currentultra-low interest rate environment is providing a refinancing boost to the expense structure. This expected earnings growth should set the stage for another solid year of dividend increases across the sector.

Industrial REITs once again recordedall-time high occupancy levels in 2019, driven by a seemingly insatiable demand fore-commerce shopping andsame-day delivery. The shift in consumer preferences has had a pronounced impact on “bricks & mortar” retailers and retail property owners. Another year of significant store closures and bankruptcy filings resulted in dismal performance for mall REITs, whose returns lagged the index by over 30%. Unprecedented demand for datacenter space shows no signs of diminishing, driven by increased cloud storage, virtualization and artificial intelligence needs.

Single family rental REITs also delivered solid performance. A limited supply of affordable and available inventory, coupled with growing demand fornon-apartment residences by millennials drove nearly sector leading returns for single family

2019

ANNUAL REPORT

rental REITs. Office REITs also delivered above average returns. Occupancies remain relatively stable, and new office construction has been robust. Today’s office tenants are flocking to modern, more functional space that affords a more enjoyable and efficient environment for their employees.

Contributors and detractors

The Portfolio delivered a sharply positive total return for the year, but trailed its benchmark and peer group. Our investment philosophy consistently favors companies that we believe own well-located, high-quality properties that feature stable balance sheets, exhibit improving property fundamentals and have above-average cash flow growth prospects. Those characteristics have proven over time to result in favorable performance.

We increased the Portfolio’s holdings in more defensively oriented companies toward the end of 2018 and again in early 2019. Most notably we increased exposure to owners of both net lease and health care properties. These types of companies tend to offer above-average dividends and feature very low, but stable cash flow growth. In early 2019 market participants shifted to a decidedly “risk on” posture. Our defensive positioning caused the Portfolio’s index-relative performance to lag amid considerable uncertainty regarding the economic impact of the tariff wars and U.S. Federal Reserve (Fed) action.

From a property-type perspective, the Portfolio was overweight in owners of warehouses, data centers, single family homes and medical office/life science properties. We were consistently underweight shopping center and mall REITs, as well as hotel owners.

Significant contributors to performance included stock selection within office building ownership groups. We avoided exposure to owners of New York City offices given weak operating fundamentals. The recent struggles resulting from WeWork’s failed initial public offering only heighten our nervousness about further erosion in that market. The Portfolio’s positioning in office is primarily tilted to biomedical and West Coast-focused owners.

An overweighting to single family REITs also was a significant positive contributor to index-relative performance. Steady demand and enhanced cost controls led to these companies posting well above average earnings growth throughout the year. Within multifamily, once again, the manufactured housing (MH) companies delivered well above average performance. An overweighting to MH favorably contributed to performance. The Portfolio remains overweight to the segment, as we anticipate steady income growth amid very favorable demand dynamics.

Warehouse owners proved to be a modest detractor to relative performance. These companies continue to post spectacular total returns (49% on average last year). Burgeoninge-commerce activity has produced record demand for warehouse space, but new supply has begun to outstrip demand, leading to reduced rental rate and net income growth for the companies. That combination typically has resulted insub-par stock price performance and we believe a correction is due. We reduced our exposure to warehouse owners after a period of strong performance left these companies with what we believe are unsustainably inflated valuation levels.

Outlook

The big question investors have is whether this year’s extraordinary returns are justified or if we have simply pulled future returns forward. We previously acknowledged that if the Fed’s insurance cuts were effective, conditions would be good for risk assets. This scenario certainly was realized, and the market is pricing in a return to a Goldilocks economy where both growth and inflation are measured. This sets the stage for continued demand for risk assets. The Fed is on hold, and we believe that the record expansion is set to extend through next year. Rhetoric around the United Kingdom’s exit from the European Union and trade has become more positive, calming markets in the near term.

While we can identify much strength, these factors are tempered by real risks. A trade deal is good, but we think it is unlikely to produce steadily expanding global flows. Labor markets are tight, corporate margins peaked in 2018 and corporate leverage is high. Nationalistic populism remains on the rise and we believe that political risks will remain elevated. Late cycle gross domestic product growth around 2% is good, but provides little room for error. The Fed’s three rate cuts in 2019 used dry powder, increasing concerns about how policy makers will counter the next downturn.

Within the commercial real estate sector, we broadly expect stable operating trends to continue across the sector, with the recognition that today’s occupancy levels and tempered rental rate increases will result in modest earnings growth. We remain optimistic as we see few material concerns emerging, as in previous cycles. Bank lending, commercial construction, equity allocations, and overall pricing metrics remain much healthier than was often the case in previous cycle peaks.Ultra-low interest rates, continued favorable operating conditions and dependable cash flows have emboldened investors to see real estate as a relative “safe haven” in today’slow-growth,low-rate environment.

As we have stated repeatedly to our investors, short-term REIT price movements have been tightly tethered to changes in the10-Year U.S. Treasury yield for the past six years. While acquiescing to the new normal, we continue to believe that


52		ANNUAL REPORT		2019

longer-term share price performance will be heavily influenced by macro conditions and individual company portfolio decisions. Share price support will come from continued low interest rates, further employment gains, avoiding a textbook recession and supporting further vigilance in lending standards. Higher borrowing costs, such as a rising10-year U.S. Treasury yield, or a steepening yield curve could offer resistance.

Following a 26% total return for 2019, REITs now trade slightly higher than their net asset value. That stated, private market valuations have nudged higher along with improvement in operating earnings and continue to support current REIT valuations.

Past performance is not a guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

Investment risks associated with real estate securities, in addition to other risks, include rental income fluctuation, depreciation, property tax value changes and differences in real estate market values. Real estate securities are subject to interest-rate risk and, as such, the Portfolio’s net asset value may fall as interest rates rise. 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 Portfolio’s prospectus.

The index noted is unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Securian Real Estate Securities.

2019

ANNUAL REPORT


PORTFOLIO HIGHLIGHTS		SECURIAN REAL ESTATE SECURITIES

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)


Asset Allocation
Stocks	99.2	%
Real Estate	98.0	%
Consumer Discretionary	1.2	%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+	0.8	%

Top 10 Equity Holdings



Company	Sector	Industry
ProLogis, Inc.	Real Estate	Industrial REITs
Equinix, Inc.	Real Estate	Specialized REITs
Alexandria Real Estate Equities, Inc.	Real Estate	Office REITs
Digital Realty Trust, Inc.	Real Estate	Specialized REITs
Invitation Homes, Inc.	Real Estate	Residential REITs
Duke Realty Corp.	Real Estate	Industrial REITs
AvalonBay Communities, Inc.	Real Estate	Residential REITs
VICI Properties, Inc.	Real Estate	Specialized REITs
Simon Property Group, Inc.	Real Estate	Retail REITs
Healthpeak Properties, Inc.	Real Estate	Health Care REITs

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.


54		ANNUAL REPORT		2019


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		SECURIAN REAL ESTATE SECURITIES

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		24.43%
5-year period ended12-31-19		6.23%
10-year period ended12-31-19		10.96%

(2)

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		SECURIAN REAL ESTATE SECURITIES (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Consumer Discretionary

Hotels, Resorts & Cruise Lines – 1.2%
Marriott International, Inc., Class A		3	$	439


Total Consumer Discretionary – 1.2%				439
Real Estate

Diversified REITs – 3.3%
STORE Capital Corp.		15		540
VEREIT, Inc.		69		639

				1,179


Health Care REITs – 10.3%
Healthcare Trust of America, Inc., Class A		14		427
Healthpeak Properties, Inc.		31		1,055
Omega Healthcare Investors, Inc.		13		551
Physicians Realty Trust		16		295
Ventas, Inc.		6		352
Welltower, Inc.		12		981

				3,661


Hotel & Resort REITs – 4.8%
Host Hotels & Resorts, Inc.		55		1,017
Park Hotels & Resorts, Inc.		24		613
Pebblebrook Hotel Trust		3		78

				1,708


Industrial REITs – 11.4%
Duke Realty Corp.		39		1,335
First Industrial Realty Trust, Inc.		12		515
ProLogis, Inc.		25		2,203

				4,053


COMMON STOCKS(Continued)	Shares		Value
Office REITs – 13.4%
Alexandria Real Estate Equities, Inc.		11	$	1,704
Boston Properties, Inc.		6		800
Cousins Properties, Inc.		19		763
Douglas Emmett, Inc.		16		707
Kilroy Realty Corp.		8		671
Vornado Realty Trust		1		87

				4,732


Residential REITs – 22.0%
American Homes 4 Rent		38		985
Apartment Investment and Management Co., Class A		9		449
AvalonBay Communities, Inc.		6		1,229
Camden Property Trust		6		679
Equity Lifestyle Properties, Inc.		3		183
Equity Residential		7		592
Essex Property Trust, Inc.		2		678
Invitation Homes, Inc.		45		1,337
Sun Communities, Inc.		6		961
UDR, Inc.		15		696

				7,789


Retail REITs – 9.2%
Agree Realty Corp.		6		414
Brixmor Property Group, Inc.		6		123
Macerich Co. (The)		12		318
Realty Income Corp.		2		177
Regency Centers Corp.		4		257
Simon Property Group, Inc.		7		1,078
Spirit Realty Capital, Inc.		9		462
Weingarten Realty Investors		13		415

				3,244


COMMON STOCKS(Continued)	Shares		Value
Specialized REITs – 23.6%
Crown Castle International Corp.		4	$	569
CubeSmart		8		258
Digital Realty Trust, Inc.		11		1,353
Entertainment Properties Trust		5		332
Equinix, Inc.		3		2,039
Extra Space Storage, Inc.		5		518
Four Corners Property Trust, Inc.		13		358
Gaming and Leisure Properties, Inc.		8		362
Public Storage, Inc.		3		682
QTS Realty Trust, Inc., Class A		14		733
VICI Properties, Inc.		46		1,162

				8,366


Total Real Estate – 98.0%				34,732

TOTAL COMMON STOCKS – 99.2%			$	35,171
(Cost: $32,613)

SHORT-TERM SECURITIES

Money Market Funds (A) – 0.5%
State Street Institutional U.S. Government Money Market Fund – Premier Class, 1.550%		166		166


TOTAL SHORT-TERM SECURITIES – 0.5%			$	166
(Cost: $166)

TOTAL INVESTMENT SECURITIES – 99.7%			$	35,337
(Cost: $32,779)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.3%				124

NET ASSETS – 100.0%			$	35,461

Notes to Schedule of Investments

(A) Rate

shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks	$	35,171	$	—	$	—
Short-Term Securities		166		—		—
Total	$	35,337	$	—	$	—

The following acronym is used throughout this schedule:

REIT = Real Estate Investment Trust

See Accompanying Notes to Financial Statements.


56		ANNUAL REPORT		2019


MANAGEMENT DISCUSSION		VALUE

(UNAUDITED)

LOGO

Matthew T. Norris

Below, Matthew T. Norris, CFA, portfolio manager of Ivy VIP Value, discusses positioning, performance and results for the fiscal year ended December 31, 2019. He has managed the Fund since 2003 and has 28 years of industry experience.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Value (Class II shares at net asset value)			26.33%
Benchmark and Morningstar Category
Russell 1000 Value Index			26.54%
(generally reflects the performance of large-company value style stocks)
Morningstar Large Value Category Average			25.04%
(generally reflects the performance of the universe of funds with similar investment objectives)

Key drivers

The market pullback that closed out 2018 was followed immediately by a “hockey stick” recovery to begin 2019. While the upward trajectory slowed from this initial pace, the move higher continued throughout the measurement period. The stocks that lead the decline in December 2018 were the first to recover in January 2019, providing a painful sting to investors who decided the selloff was a signal to get even more defensive. In the third quarter of 2019, there was a brief break in the multi-year dominance of momentum stocks, which lead to a rotation to more traditional value stocks. This break was fleeting; however, as momentum picked back up in the fourth quarter of 2019.

A recent slowdown in gross domestic product (GDP) growth appears to be short-lived and the U.S. trade conflict with China had positive developments at year end. This has led to more value and cyclical stocks beginning to outperform. Despite themid-year rotation, value investing still lagged growth substantially in 2019. The Russell 1000 Growth Index was 36.39% in 2019, ahead of the Russell 1000 Value Index, the Portfolio’s benchmark, at 26.54%.

The Federal Reserve (Fed) has indicated that interest rates are on hold now and possibly for all of 2020, so we think this is one data point that investors can put at the bottom of the worry lists for the time being. Job growth continues at a steady pace, and there are little to no signs of inflation. All indications point to a rising market in 2020, although we believe it is highly unlikely to return 31.49% mark that the S&P 500 Index held in 2019. Of course, we’ll be on the lookout for any wild cards that could change the outlook, as a few of these always seem to surface.

The Russell 1000 Value Index was up 26.54% for the year. By comparison, the Portfolio was up 26.33% during the measurement period, slightly underperforming the benchmark. Value investing, while still lagging over the long term, has recently begun performing better relative to the growth indices. As usual, we try to ignore short-term fluctuations and keep our focus on the longer term.

Contributors and detractors

The Portfolio’s best relative sector was information technology, where our investment in Lam Research and Qualcomm drove the outperformance. Lam Research benefited from a resurgence in semiconductor spending that is still on an upward swing. Qualcomm stock was stronger due to the resolution of its long-standing dispute with Apple, Inc., in addition to being positioned as a key player in the upcoming 5G cycle. The Portfolio’s next best sector was consumer discretionary, where our investment in Target Corp. paid off with the stock nearly doubling during the measurement period. Target’s investment in technology, omni-channel fulfillment and private-label brands has helped to drive traffic and sales. Target also continues to change itsbrick-and-mortar stores to adapt to changing consumer behaviors.

The health care sector was the greatest detractor to Portfolio performance during the measurement period. Two specific holdings, Pfizer, Inc. and Humana, Inc., were responsible for much of the underperformance. Pfizer underperformed because the company announced the sale of its legacy and generics business to Mylan. The move caused investors to debate whether the higher-than-average valuation is justified by the outlook for the remaining business. A turnover in shareholders was also a concern as the new Pfizer is expected to pay a lower dividend. Humana underperformed due to the election-driven political rhetoric threatening the business models of all managed care providers. While there is probably still value in these names, we no longer own either stock, as we do not believe the risk justifies the reward.

2019

ANNUAL REPORT

The Portfolio does not attempt to make sector calls, but rather focuses primarily on stock selection. We seek to overweight or underweight sectors based on individual stock opportunity, with some limits to control risk or volatility. The Portfolio is overweight financials and information technology, where we continue to find value and yield. In these areas, we have been able to find what we feel are good companies with repeatable business models that are generating high rates of free cash flow, and low stock prices relative to our estimation of each company’s true intrinsic value. We are underweight real estate and utilities, simply due to a lack of compelling ideas.

Outlook

The U.S. economy has enjoyed a long successful run since the end of the 2008 recession. A great amount of ink has been spilled predicting when it will end, but it doesn’t appear imminent. 2020 estimates for S&P 500 Index earnings growth ranges from small negatives to single-digit positives, with the average probably falling somewhere in the5-7% range. Should this come to pass, we would expect the market to rise by that amount and add on the dividend for a high single-digit return. The U.S. consumer remains a bright spot with solid job numbers, stable auto sales and generally positive confidence readings. Until this outlook shifts, our focus will be on investments where we feel more confident in the underlying trends.

Given that 2020 is an election year, it is reasonable to expect more market volatility as new risks of the unknown drive the conversation and market direction. The Portfolio invests for the long term and we will evaluate idiosyncratic risks and take advantage of volatility if it occurs.

While the economic forces listed above are clearly important factors, our first approach is from the company level. We seek to find quality, growing companies whose stocks are trading below what we consider their intrinsic values. This often is due to short-term negative factors, and we become larger owners of a company if we feel those negatives are about to dissipate. We continue to search for and make investments one company at a time to seek to benefit clients over the long run.

Past performance is no guarantee of future results. The value of the Portfolio’s shares will change, and you could lose money on your investment.

Value stocks are stocks of companies that may have experienced adverse business or industry 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. The value of a security believed by the Portfolio’s manager to be undervalued may never reach what the manager believes to be its full value, or such security’s value may decrease. These and other risks are more fully described in the Portfolio’s prospectus.

The use of derivatives presents several risks, including the risk that these instruments may change in value in a manner that adversely affects the Portfolio’s value and the risk that fluctuations in the value of the derivatives may not correlate with the corresponding securities or fixed-income markets or the underlying asset upon which the derivative’s value is based.

The index noted is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of Ivy VIP Value.


58		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		VALUE

ALL DATA AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Stocks			97.3%
Financials			29.0%
Consumer Staples			10.7%
Information Technology			9.8%
Health Care			8.0%
Energy			8.0%
Consumer Discretionary			7.7%
Industrials			7.7%
Communication Services			5.9%
Utilities			5.3%
Real Estate			2.7%
Materials			2.5%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+			2.7%

Top 10 Equity Holdings



Company	Sector	Industry
Bank of America Corp.	Financials	Diversified Banks
Citigroup, Inc.	Financials	Other Diversified Financial Services
Wal-Mart Stores, Inc.	Consumer Staples	Hypermarkets & Super Centers
CVS Caremark Corp.	Consumer Staples	Drug Retail
Comcast Corp., Class A	Communication Services	Cable & Satellite
Philip Morris International, Inc.	Consumer Staples	Tobacco
Exelon Corp.	Utilities	Electric Utilities
AGNC Investment Corp.	Financials	Mortgage REITs
Valero Energy Corp.	Energy	Oil & Gas Refining & Marketing
Phillips 66	Energy	Oil & Gas Refining & Marketing

See your advisor or www.ivyinvestments.com for more information on the Portfolio’s most recently published Top 10 Equity Holdings.

2019

ANNUAL REPORT


COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT		VALUE

(UNAUDITED)

LOGO

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Class II
1-year period ended12-31-19		26.33%
5-year period ended12-31-19		7.08%
10-year period ended12-31-19		10.70%

(2)


60		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		VALUE (in thousands)

DECEMBER 31, 2019


COMMON STOCKS	Shares		Value
Communication Services

Advertising – 2.4%
Omnicom Group, Inc.		152	$	12,331


Cable & Satellite – 3.5%
Comcast Corp., Class A		401		18,029


Total Communication Services – 5.9%				30,360
Consumer Discretionary

Automotive Retail – 2.5%
AutoZone, Inc. (A)		11		12,628


General Merchandise Stores – 2.7%
Target Corp.		109		13,923


Home Improvement Retail – 2.5%
Lowe’s Co., Inc.		105		12,599


Total Consumer Discretionary – 7.7%				39,150
Consumer Staples

Drug Retail – 3.5%
CVS Caremark Corp.		243		18,082


Hypermarkets & Super Centers – 3.8%
Wal-Mart Stores, Inc.		162		19,228


Tobacco – 3.4%
Philip Morris International, Inc.		204		17,350


Total Consumer Staples – 10.7%				54,660
Energy

Oil & Gas Refining & Marketing – 5.7%
Phillips 66		129		14,417
Valero Energy Corp.		156		14,581

				28,998


Oil & Gas Storage & Transportation – 2.3%
Energy Transfer L.P.		926		11,880


Total Energy – 8.0%				40,878
Financials

Asset Management & Custody Banks – 2.3%
Ameriprise Financial, Inc.		70		11,727


Consumer Finance – 5.4%
Capital One Financial Corp.		140		14,397
Synchrony Financial		373		13,425

				27,822


Diversified Banks – 4.5%
Bank of America Corp.		659		23,221


COMMON STOCKS(Continued)	Shares		Value
Mortgage REITs – 5.0%
AGNC Investment Corp.		873	$	15,437
Annaly Capital Management, Inc.		1,060		9,986

				25,423


Other Diversified Financial Services – 6.9%
Citigroup, Inc.		270		21,594
Fidelity National Information Services, Inc.		97		13,464

				35,058


Property & Casualty Insurance – 2.8%
Allstate Corp. (The)		126		14,202


Reinsurance – 2.1%
Reinsurance Group of America, Inc.		65		10,517


Total Financials – 29.0%				147,970
Health Care

Biotechnology – 2.6%
Amgen, Inc.		56		13,596


Health Care Facilities – 2.8%
HCA Holdings, Inc.		97		14,323


Pharmaceuticals – 2.6%
GlaxoSmithKline plc ADR		281		13,200


Total Health Care – 8.0%				41,119
Industrials

Aerospace & Defense – 2.5%
Northrop Grumman Corp.		37		12,658


Airlines – 2.4%
Southwest Airlines Co.		225		12,151


Electrical Components & Equipment – 1.5%
Eaton Corp.		80		7,568


Industrial Machinery – 1.3%
Parker Hannifin Corp.		33		6,751


Total Industrials – 7.7%				39,128
Information Technology

Application Software – 2.7%
NXP Semiconductors N.V.		107		13,655


Semiconductor Equipment – 2.6%
Lam Research Corp.		45		13,158


Semiconductors – 2.4%
Broadcom Corp., Class A		40		12,609


COMMON STOCKS(Continued)	Shares		Value
Systems Software – 2.1%
Microsoft Corp.		68	$	10,692


Total Information Technology – 9.8%				50,114
Materials

Diversified Metals & Mining – 1.9%
BHP Billiton Ltd. ADR (B)		177		9,689


Paper Packaging – 0.6%
Graphic Packaging Holding Co.		182		3,031


Total Materials – 2.5%				12,720
Real Estate

Health Care REITs – 2.7%
Welltower, Inc.		168		13,747


Total Real Estate – 2.7%				13,747
Utilities

Electric Utilities – 5.3%
Evergy, Inc.		158		10,297
Exelon Corp.		364		16,572

				26,869


Total Utilities – 5.3%				26,869

TOTAL COMMON STOCKS – 97.3%			$	496,715
(Cost: $427,148)

SHORT-TERM SECURITIES
Money Market Funds (D) – 4.0%
Dreyfus Institutional Preferred Government Money Market Fund – Institutional Shares, 1.550% (C)		7,209		7,209
State Street Institutional U.S. Government Money Market Fund – Premier Class, 1.550%		13,461		13,461

				20,670


TOTAL SHORT-TERM SECURITIES – 4.0%			$	20,670
(Cost: $20,670)

TOTAL INVESTMENT SECURITIES – 101.3%			$	517,385
(Cost: $447,818)

LIABILITIES, NET OF CASH AND OTHER ASSETS (E) – (1.3)%				(6,508	)

NET ASSETS – 100.0%			$	510,877

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		VALUE (in thousands)

DECEMBER 31, 2019

Notes to Schedule of Investments

(A)	No dividends were paid during the preceding 12 months.

(B)	All or a portion of securities with an aggregate value of $8,149 are on loan.

(C)	Investment made with cash collateral received from securities on loan.

(D)	Rate shown is the annualized7-day yield at December 31, 2019.

(E)	Cash of $50 has been pledged as collateral on OTC written option contracts.

The following written options were outstanding at December 31, 2019 (contracts and exercise prices unrounded):


Underlying Security	Counterparty, if OTC	Type	Number of Contracts		Notional Amount		Expiration Month	Exercise Price		Premium Received		Value
Lam Research Corp.	N/A	Call		56		5	March 2020	$	310.00	$	67	$	(54	)
Reinsurance Group of America, Inc.	N/A	Put		79		8	January 2020		135.00		26		(1	)
	N/A	Put		79		8	January 2020		140.00		40		(4	)
	Goldman Sachs International	Put		158		16	January 2020		145.00		95		(3	)

										$	228	$	(62	)


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Common Stocks	$	496,715	$	—	$	—
Short-Term Securities		20,670		—		—
Total	$	517,385	$	—	$	—
Liabilities
Written Options	$	54	$	8	$	—

The following acronyms are used throughout this schedule:

ADR = American Depository Receipt

OTC = Over the Counter

REIT = Real Estate Investment Trust

See Accompanying Notes to Financial Statements.


62		ANNUAL REPORT		2019


STATEMENTS OF ASSETS AND LIABILITIES		IVY VIP

AS OF DECEMBER 31, 2019


(In thousands, except per share amounts)	Core Equity			Corporate Bond			Global Bond				Global Equity Income				Global Growth				Limited- Term Bond				Securian Real Estate Securities				Value
ASSETS
Investments in unaffiliated securities at value+^		$	720,859		$	595,649		$	20,896			$	296,101			$	148,120			$	450,309			$	35,337			$	517,385
Investments at Value			720,859			595,649			20,896				296,101				148,120				450,309				35,337				517,385
Restricted cash			—			—			—				—				—				—				—				50
Investment securities sold receivable			5,416			—			—				—				—				—				—				—
Dividends and interest receivable			303			5,059			243				761				323				2,553				158				1,152
Capital shares sold receivable			68			41			—	*			3				7				—	*			8				10
Receivable from affiliates			153			—			—				—				55				—				—				—
Receivable from securities lending income – net			8			1			1				1				—	*			—				—				1
Prepaid and other assets			5			3			—	*			—	*			2				—	*			1				2
Total Assets			726,812			600,753			21,140				296,866				148,507				452,862				35,504				518,600

LIABILITIES
Cash collateral on securities loaned at value			—			474			532				—				—				—				—				7,209
Investment securities purchased payable			2,940			—			—				—				—				—				—				—
Capital shares redeemed payable			351			356			4				225				80				269				34				365
Independent Trustees and Chief Compliance Officer fees payable			210			93			1				39				70				29				6				60
Distribution and service fees payable			5			4			—	*			2				1				3				—	*			3
Shareholder servicing payable			1			1			—	*			—	*			—	*			1				—	*			1
Investment management fee payable			14			8			—				6				4				6				1				10
Accounting services fee payable			14			13			1				8				5				11				2				11
Written options at value+			—			—			—				—				—				—				—				62
Other liabilities			2			2			—	*			2				5				1				—	*			2
Total Liabilities			3,537			951			538				282				165				320				43				7,723
Commitments and Contingencies (See Note 2 and Note 10)
Total Net Assets		$	723,275		$	599,802		$	20,602			$	296,584			$	148,342			$	452,542			$	35,461			$	510,877

NET ASSETS
Capital paid in (shares authorized – unlimited)		$	579,339		$	557,387		$	20,596			$	265,735			$	112,964			$	440,689			$	30,002			$	411,978
Accumulated earnings gain			143,936			42,415			6				30,849				35,378				11,853				5,459				98,899
Total Net Assets		$	723,275		$	599,802		$	20,602			$	296,584			$	148,342			$	452,542			$	35,461			$	510,877

CAPITAL SHARES OUTSTANDING:
Class II			57,272			107,160			4,064				49,363				41,473				91,444				4,406				75,983

NET ASSET VALUE PER SHARE:
Class II		$	12.63		$	5.60		$	5.07			$	6.01			$	3.58			$	4.95			$	8.05			$	6.72

+COST
Investments in unaffiliated securities at cost		$	618,026		$	566,107		$	20,604			$	271,427			$	109,529			$	443,182			$	32,779			$	447,818
Written options premiums received at cost			—			—			—				—				—				—				—				228
^Securities loaned at value			—			463			526				—				—				—				—				8,149

*Not shown due to rounding.

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


STATEMENTS OF OPERATIONS		IVY VIP

FOR THE YEAR ENDED DECEMBER 31, 2019


(In thousands)	Core Equity				Corporate Bond			Global Bond				Global Equity Income				Global Growth				Limited- Term Bond			Securian Real Estate Securities				Value
INVESTMENT INCOME
Dividends from unaffiliated securities		$	9,800			$	—		$	6			$	11,120			$	2,248			$	—		$	954			$	13,216
Foreign dividend withholding tax			(8	)			—			—				(902	)			(123	)			—			—				(38	)
Interest and amortization from unaffiliated securities			265				19,472			954				162				91				14,154			12				421
Foreign interest withholding tax			—				—			—	*			—				—				—			—				—
Securities lending income – net			135				5			4				46				18				7			—				16
Total Investment Income			10,192				19,477			964				10,426				2,234				14,161			966				13,615

EXPENSES
Investment management fee			4,815				2,638			135				2,062				1,233				2,621			331				3,386
Distribution and service fees:
Class II			1,720				1,388			54				736				363				1,318			92				1,209
Shareholder servicing:
Class II			20				16			3				9				7				13			4				14
Custodian fees			17				10			1				27				12				9			5				7
Independent Trustees and Chief Compliance Officer fees			50				37			2				19				14				30			3				28
Accounting services fee			165				145			14				93				63				134			27				131
Professional fees			33				39			30				28				32				38			30				34
Other			32				22			5				40				35				16			4				30
Total Expenses			6,852				4,295			244				3,014				1,759				4,179			496				4,839
Less:
Expenses in excess of limit			(320	)			—			(135	)			—				(121	)			—			(33	)			—
Total Net Expenses			6,532				4,295			109				3,014				1,638				4,179			463				4,839
Net Investment Income			3,660				15,182			855				7,412				596				9,982			503				8,776

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments in unaffiliated securities			38,930				7,968			71				(1,090	)			(3,611	)			2,068			2,485				17,767
Written options			—				—			—				—				—				—			—				695
Forward foreign currency contracts			166				—			—				—				—				—			—				—
Foreign currency exchange transactions			1				—			—	*			45				(11	)			—			—				—
Net change in unrealized appreciation (depreciation) on:
Investments in unaffiliated securities			142,032				40,261			1,023				54,976				36,181				10,182			4,986				84,634
Written options			—				—			—				—				—				—			—				92
Forward foreign currency contracts			(127	)			—			—				—				—				—			—				—
Foreign currency exchange transactions			1				—			1				7				(2	)			—			—				—
Net Realized and Unrealized Gain			181,003				48,229			1,095				53,938				32,557				12,250			7,471				103,188
Net Increase in Net Assets Resulting from Operations		$	184,663			$	63,411		$	1,950			$	61,350			$	33,153			$	22,232		$	7,974			$	111,964

*Not shown due to rounding.

See Accompanying Notes to Financial Statements.


64		ANNUAL REPORT		2019


STATEMENTS OF CHANGES IN NET ASSETS		IVY VIP


	Core Equity								Corporate Bond								Global Bond
(In thousands)	Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income		$	3,660			$	3,567			$	15,182			$	15,042			$	855			$	780
Net realized gain (loss) on investments			39,097				68,472				7,968				(9,986	)			71				(136	)
Net change in unrealized appreciation (depreciation)			141,906				(116,696	)			40,261				(15,819	)			1,024				(700	)
Net Increase (Decrease) in Net Assets Resulting from Operations			184,663				(44,657	)			63,411				(10,763	)			1,950				(56	)

Distributions to Shareholders From:
Accumulated earnings:
(combined net investment income and net realized gains)
Class II			(73,214	)			(35,537	)			(15,235	)			(11,579	)			(784	)			(626	)
Total Distributions to Shareholders			(73,214	)			(35,537	)			(15,235	)			(11,579	)			(784	)			(626	)
Capital Share Transactions			(14,607	)			261,848				7,718				18,662				(2,406	)			(642	)
Net Increase (Decrease) in Net Assets			96,842				181,654				55,894				(3,680	)			(1,240	)			(1,324	)
Net Assets, Beginning of Period			626,433				444,779				543,908				547,588				21,842				23,166
Net Assets, End of Period		$	723,275			$	626,433			$	599,802			$	543,908			$	20,602			$	21,842

	Global Equity Income								Global Growth								Limited-Term Bond
(In thousands)	Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income		$	7,412			$	7,986			$	596			$	1,232			$	9,982			$	9,884
Net realized gain (loss) on investments			(1,045	)			76,605				(3,622	)			95,174				2,068				(3,611	)
Net change in unrealized appreciation (depreciation)			54,983				(123,779	)			36,179				(83,839	)			10,182				(1,036	)
Net Increase (Decrease) in Net Assets Resulting from Operations			61,350				(39,188	)			33,153				12,567				22,232				5,237

Distributions to Shareholders From:
Accumulated earnings:
(combined net investment income and net realized gains)
Class II			(85,169	)			(45,707	)			(96,488	)			(27,187	)			(9,903	)			(7,043	)
Total Distributions to Shareholders			(85,169	)			(45,707	)			(96,488	)			(27,187	)			(9,903	)			(7,043	)
Capital Share Transactions			36,767				(158,714	)			77,403				(274,703	)			(101,449	)			100,680
Net Increase (Decrease) in Net Assets			12,948				(243,609	)			14,068				(289,323	)			(89,120	)			98,874
Net Assets, Beginning of Period			283,636				527,245				134,274				423,597				541,662				442,788
Net Assets, End of Period		$	296,584			$	283,636			$	148,342			$	134,274			$	452,542			$	541,662

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


STATEMENTS OF CHANGES IN NET ASSETS		IVY VIP


	Securian Real Estate Securities								Value
(In thousands)	Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income		$	503			$	569			$	8,776			$	5,189
Net realized gain on investments			2,485				67				18,462				26,767
Net change in unrealized appreciation (depreciation)			4,986				(2,818	)			84,726				(66,787	)
Net Increase (Decrease) in Net Assets Resulting from Operations			7,974				(2,182	)			111,964				(34,831	)

Distributions to Shareholders From:
Accumulated earnings:
(combined net investment income and net realized gains)
Class II			(744	)			(3,316	)			(30,616	)			(20,089	)
Total Distributions to Shareholders			(744	)			(3,316	)			(30,616	)			(20,089	)
Capital Share Transactions			(6,032	)			(3,612	)			(16,326	)			69,186
Net Increase (Decrease) in Net Assets			1,198				(9,110	)			65,022				14,266
Net Assets, Beginning of Period			34,263				43,373				445,855				431,589
Net Assets, End of Period		$	35,461			$	34,263			$	510,877			$	445,855

See Accompanying Notes to Financial Statements.


66		ANNUAL REPORT		2019

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2019

ANNUAL REPORT


FINANCIAL HIGHLIGHTS		IVY VIP

FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD



	Net Asset Value, Beginning of Period			Net Investment Income⁽¹⁾			Net Realized and Unrealized Gain (Loss) on Investments				Total from Investment Operations				Distributions From Net Investment Income				Distributions From Net Realized Gains				Total Distributions
Core Equity
Class II Shares
Year ended12-31-2019		$	10.80		$	0.06		$	3.10			$	3.16			$	(0.07	)		$	(1.26	)		$	(1.33	)
Year ended12-31-2018			12.30			0.07			(0.53	)			(0.46	)			(0.06	)			(0.98	)			(1.04	)
Year ended12-31-2017			10.67			0.05			2.09				2.14				(0.05	)			(0.46	)			(0.51	)
Year ended12-31-2016			11.75			0.05			0.32				0.37				(0.05	)			(1.40	)			(1.45	)
Year ended12-31-2015			14.18			0.05			(0.06	)			(0.01	)			(0.05	)			(2.37	)			(2.42	)

Corporate Bond
Class II Shares
Year ended12-31-2019			5.13			0.15			0.47				0.62				(0.15	)			—				(0.15	)
Year ended12-31-2018			5.35			0.14			(0.24	)			(0.10	)			(0.11	)			(0.01	)			(0.12	)
Year ended12-31-2017			5.27			0.12			0.08				0.20				(0.08	)			(0.04	)			(0.12	)
Year ended12-31-2016			5.20			0.12			0.09				0.21				(0.13	)			(0.01	)			(0.14	)
Year ended12-31-2015			5.34			0.10			(0.09	)			0.01				(0.15	)			—				(0.15	)

Global Bond
Class II Shares
Year ended12-31-2019			4.81			0.20			0.24				0.44				(0.18	)			—				(0.18	)
Year ended12-31-2018			4.96			0.17			(0.18	)			(0.01	)			(0.14	)			—				(0.14	)
Year ended12-31-2017			4.89			0.15			0.06				0.21				(0.14	)			—				(0.14	)
Year ended12-31-2016			4.74			0.16			0.17				0.33				(0.18	)			—				(0.18	)
Year ended12-31-2015			5.05			0.19			(0.31	)			(0.12	)			(0.19	)			—				(0.19	)

Global Equity Income
Class II Shares
Year ended12-31-2019			6.89			0.16			1.17				1.33				(0.22	)			(1.99	)			(2.21	)
Year ended12-31-2018			8.58			0.16			(1.07	)			(0.91	)			(0.14	)			(0.64	)			(0.78	)
Year ended12-31-2017			7.79			0.13			1.03				1.16				(0.10	)			(0.27	)			(0.37	)
Year ended12-31-2016			7.82			0.11			0.40				0.51				(0.10	)			(0.44	)			(0.54	)
Year ended12-31-2015			9.05			0.09			(0.23	)			(0.14	)			(0.11	)			(0.98	)			(1.09	)

Global Growth
Class II Shares
Year ended12-31-2019			8.67			0.02			1.45				1.47				(0.06	)			(6.50	)			(6.56	)
Year ended12-31-2018			9.87			0.05			(0.58	)			(0.53	)			(0.05	)			(0.62	)			(0.67	)
Year ended12-31-2017			8.14			0.04			1.93				1.97				—	^*			(0.24	)			(0.24	)
Year ended12-31-2016			8.68			0.01			(0.28	)			(0.27	)			(0.02	)			(0.25	)			(0.27	)
Year ended12-31-2015			8.84			0.02			0.31				0.33				(0.04	)			(0.45	)			(0.49	)

Limited-Term Bond
Class II Shares
Year ended12-31-2019			4.84			0.09			0.11				0.20				(0.09	)			—				(0.09	)
Year ended12-31-2018			4.88			0.09			(0.05	)			0.04				(0.08	)			—				(0.08	)
Year ended12-31-2017			4.89			0.08			(0.01	)			0.07				(0.08	)			—				(0.08	)
Year ended12-31-2016			4.87			0.08			0.01				0.09				(0.07	)			—				(0.07	)
Year ended12-31-2015			4.90			0.06			(0.02	)			0.04				(0.07	)			—				(0.07	)

Securian Real Estate Securities
Class II Shares
Year ended12-31-2019			6.60			0.17			1.43				1.60				(0.12	)			(0.03	)			(0.15	)
Year ended12-31-2018			7.64			0.10			(0.54	)			(0.44	)			(0.11	)			(0.49	)			(0.60	)
Year ended12-31-2017			8.40			0.11			0.27				0.38				(0.11	)			(1.03	)			(1.14	)
Year ended12-31-2016			8.98			0.10			0.25				0.35				(0.10	)			(0.84	)			(0.94	)
Year ended12-31-2015			9.59			0.10			0.31				0.41				(0.10	)			(0.92	)			(1.02	)

Value
Class II Shares
Year ended12-31-2019			5.69			0.11			1.32				1.43				(0.05	)			(0.35	)			(0.40	)
Year ended12-31-2018			6.44			0.07			(0.51	)			(0.44	)			(0.12	)			(0.19	)			(0.31	)
Year ended12-31-2017			5.93			0.11			0.61				0.72				(0.09	)			(0.12	)			(0.21	)
Year ended12-31-2016			6.15			0.08			0.49				0.57				(0.07	)			(0.72	)			(0.79	)
Year ended12-31-2015			7.39			0.06			(0.30	)			(0.24	)			(0.06	)			(0.94	)			(1.00	)

*	Not shown due to rounding.

(1)Based

on average weekly shares outstanding.

(2)

Based on net asset value. Total returns do not reflect a sales charge or contingent sales charge, if applicable. Total returns for periods less than one year are not annualized.

(3)

Ratios excluding expense waivers are included only for periods in which the class had waived or reimbursed expenses.


68		ANNUAL REPORT		2019


	Net Asset Value, End of Period			Total Return⁽²⁾			Net Assets, End of Period (in millions)			Ratio of Expenses to Average Net Assets Including Expense Waiver			Ratio of Net Investment Income to Average Net Assets Including Expense Waiver			Ratio of Expenses to Average Net Assets Excluding Expense Waiver⁽³⁾			Ratio of Net Investment Income to Average Net Assets Excluding Expense Waiver⁽³⁾			Portfolio Turnover Rate
Core Equity
Class II Shares
Year ended12-31-2019		$	12.63		31.09	%		$	723		0.95	%		0.53	%		1.00	%		0.48	%		80	%
Year ended12-31-2018			10.80		-4.51				626		0.95			0.59			1.00			0.54			99
Year ended12-31-2017			12.30		20.75				445		0.95			0.42			1.00			0.37			78
Year ended12-31-2016			10.67		3.74				420		0.95			0.45			1.01			0.39			75
Year ended12-31-2015			11.75		-0.69				454		0.95			0.38			1.00			0.33			60

Corporate Bond
Class II Shares
Year ended12-31-2019			5.60		12.18				600		0.77			2.73			—			—			66
Year ended12-31-2018			5.13		-1.90				544		0.77			2.77			—			—			63
Year ended12-31-2017			5.35		4.01				548		0.78			2.32			—			—			66
Year ended12-31-2016			5.27		4.03				416		0.79			2.17			—			—			84
Year ended12-31-2015			5.20		0.20				280		0.78			1.87			—			—			59

Global Bond
Class II Shares
Year ended12-31-2019			5.07		9.42				21		0.50			3.96			1.13			3.33			43
Year ended12-31-2018			4.81		-0.18				22		0.50			3.52			1.12			2.90			37
Year ended12-31-2017			4.96		4.27				23		0.50			3.08			1.12			2.46			49
Year ended12-31-2016			4.89		7.04				22		0.50			3.28			1.13			2.65			18
Year ended12-31-2015			4.74		-2.65				20		0.51			3.80			1.14			3.17			26

Global Equity Income
Class II Shares
Year ended12-31-2019			6.01		23.15				297		1.02			2.52			—			—			39
Year ended12-31-2018			6.89		-11.68				284		1.01			2.01			—			—			93
Year ended12-31-2017			8.58		15.56				527		1.00			1.60			—			—			35
Year ended12-31-2016			7.79		6.95				509		1.01			1.43			—			—			59
Year ended12-31-2015			7.82		-2.06				515		1.00			1.14			—			—			50

Global Growth
Class II Shares
Year ended12-31-2019			3.58		25.93				148		1.13			0.41			1.21			0.33			26
Year ended12-31-2018			8.67		-6.27				134		1.13			0.46			1.18			0.41			40
Year ended12-31-2017			9.87		24.52				424		1.14			0.47			1.17			0.44			54
Year ended12-31-2016			8.14		-3.04				408		1.13			0.09			1.16			0.06			71
Year ended12-31-2015			8.68		3.39				507		1.14			0.23			1.17			0.20			54

Limited-Term Bond
Class II Shares
Year ended12-31-2019			4.95		4.23				453		0.79			1.89			—			—			54
Year ended12-31-2018			4.84		0.78				542		0.79			1.91			—			—			53
Year ended12-31-2017			4.88		1.40				443		0.80			1.62			—			—			55
Year ended12-31-2016			4.89		1.94				395		0.81			1.53			—			—			60
Year ended12-31-2015			4.87		0.87				385		0.80			1.31			—			—			44

Securian Real Estate Securities
Class II Shares
Year ended12-31-2019			8.05		24.43				35		1.26			1.36			1.35			1.27			54
Year ended12-31-2018			6.60		-5.57				34		1.24			1.45			1.33			1.36			71
Year ended12-31-2017			7.64		5.39				43		1.22			1.38			1.31			1.29			73
Year ended12-31-2016			8.39		4.26				49		1.20			1.26			1.29			1.17			79
Year ended12-31-2015			8.98		4.78				47		1.19			1.10			1.28			1.01			57

Value
Class II Shares
Year ended12-31-2019			6.72		26.33				511		1.00			1.81			—			—			62
Year ended12-31-2018			5.69		-7.24				446		1.00			1.09			—			—			56
Year ended12-31-2017			6.44		12.49				432		1.00			1.74			—			—			67
Year ended12-31-2016			5.93		11.14				379		1.02			1.38			1.03			1.37			54
Year ended12-31-2015			6.15		-3.91				384		0.99			0.91			1.00			0.90			74

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


NOTES TO FINANCIAL STATEMENTS		IVY VIP

DECEMBER 31, 2019

ORGANIZATION

Ivy Variable Insurance Portfolios, a Delaware statutory trust (the “Trust”), is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company. Core Equity, Corporate Bond, Global Bond, Global Equity Income, Global Growth, Limited-Term Bond, Securian Real Estate Securities and Value (each, a “Portfolio”) are eight series of the Trust and are the only series of the Trust included in these financial statements. The assets belonging to each Portfolio are held separately by the custodian. The investment objective, policies and risk factors of each Portfolio are described more fully in the Prospectus and Statement of Additional Information (“SAI”). Each Portfolio’s investment adviser is Ivy Investment Management Company (“IICO”).

SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by each Portfolio.

Security Transactions and Related Investment Income. Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses are calculated on the identified cost basis. Interest income is recorded on the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums. Dividend income is recorded on theex-dividend date, except certain dividends from foreign securities where theex-dividend date may have passed, which are recorded as soon as the Portfolio is informed of theex-dividend date. All or a portion of the distributions received from a real estate investment trust or publicly traded partnership may be designated as a reduction of cost of the related investment or realized gain.

Dividends and Distributions to Shareholders.Dividends and distributions to shareholders are recorded by each Portfolio on the business day following record date. Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America (“U.S. GAAP”). If the total dividends and distributions made in any tax year exceeds net investment income and accumulated realized capital gains, a portion of the total distribution may be treated as a tax return of capital.

Income Taxes.It is the policy of each Portfolio to distribute all of its taxable income and capital gains to its shareholders and to otherwise qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. In addition, each Portfolio intends to pay distributions as required to avoid imposition of excise tax. Accordingly, no provision has been made for Federal income taxes. The Portfolios file income tax returns in U.S. federal and applicable state jurisdictions. The Portfolios’ tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax returns. Management of the Trust periodically reviews all tax positions to assess whether it is more likely than not that the position would be sustained upon examination by the relevant tax authority based on the technical merits of each position. As of the date of these financial statements, management believes that no liability for unrecognized tax positions is required.

Segregation and Collateralization.In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”), the Dodd Frank Wall Street Reform and Consumer Protection Act, or the interpretive rules and regulations of the U.S. Commodities Futures Trading Commission require that a Portfolio either deliver collateral or segregate assets in connection with certain investments (e.g., dollar rolls, financial futures contracts, foreign currency exchange contracts, options written, securities with extended settlement periods, and swaps), the Portfolio will segregate collateral or designate on its books and records, cash or other liquid securities having a value at least equal to the amount that is required to be physically segregated for the benefit of the counterparty. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit cash or securities as collateral for certain investments. Certain countries require that cash reserves be held while investing in companies incorporated in that country. These cash reserves and cash collateral that has been pledged to cover obligations of the Portfolios under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as “Restricted cash”. Securities collateral pledged for the same purpose, if any, is noted on the Schedule of Investments.


70		ANNUAL REPORT		2019

all its obligations (issuer credit risk). The value of securities held by the Portfolios may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Portfolios; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Portfolios may be exposed to counterparty credit risk, or the risk that an entity with which the Portfolios have unsettled or open transactions may fail to or be unable to perform on its commitments. The Portfolios manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Portfolios to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Portfolios’ exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded on the Portfolios’ Statement of Assets and Liabilities, less any collateral held by the Portfolios.

Certain Portfolios may hold high-yield ornon-investment-grade bonds, that may be subject to a greater degree of credit risk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Portfolios may acquire securities in default and are not obligated to dispose of securities whose issuers subsequently default.

Certain Portfolios may enter into financial instrument transactions (such as swaps, futures, options and other derivatives) that may haveoff-balance sheet market risk.Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument, as reflected on the Statement of Assets and Liabilities.

As the impacts of the transition become clearer during the next year, Management will be evaluating the impacts of these changes.

Inflation-Indexed Bonds.Certain Portfolios may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond will be included as interest income on the Statement of Operations, even though investors do not receive their principal until maturity.

2019

ANNUAL REPORT

distinct interest-only and principal-only securities. As the principal (par) amount of a bond or pool of mortgages is paid down, the amount of interest income earned by the owner will decline as well.

PaymentIn-Kind Securities.Certain Portfolios may invest in paymentin-kind securities (“PIKs”). PIKs give the issuer the option at each interest payment date of making interest payments in cash or in additional debt securities. Those additional debt securities usually have the same terms, including maturity dates and interest rates, and associated risks as the original bonds. The daily market quotations of the original bonds may include the accrued interest (referred to as a dirty price) and require apro-rata adjustment from the unrealized appreciation or depreciation on investments to interest receivable on the Statement of Assets and Liabilities.

Indemnification.The Trust’s organizational documents provide current and former Trustees and Officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Trust. In the normal course of business, the Trust may also enter into contracts that provide general indemnification. The Trust’s maximum exposure under these arrangements is unknown and is dependent on future claims that may be made against the Trust. The risk of material loss from such claims is considered remote.


72		ANNUAL REPORT		2019

accompanying financial statements were prepared in accordance with U.S. GAAP, including but not limited to ASC 946. U.S. GAAP requires the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity.

Subsequent Events. Management has performed a review for subsequent events through the date this report was issued.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

The Board has delegated to WRSCO the responsibility for monitoring significant events that may materially affect the values of a Portfolio’s securities or financial instruments and for determining whether the value of the applicable securities or financial instruments should bere-evaluated in light of such significant events. IICO, pursuant to authority delegated by the Board, has established a Valuation Committee to administer and oversee the valuation process, including the use of third party pricing vendors.

The Board has adopted methods for valuing securities and financial instruments in circumstances where market quotes are not readily available. For instances in which daily market quotes are not readily available, investments may be valued, pursuant to procedures established by the Board, with reference to other securities or indices. In the event that the security or financial instrument cannot be valued pursuant to one of the valuation methods established by the Board, the value of the security or financial instrument will be determined in good faith by the Valuation Committee in accordance with the procedures adopted by the Board.

2019

ANNUAL REPORT

reviewed and submitted to the Valuation Committee, and 3) daily review of unpriced, stale, and variance reports with exceptions reviewed by management and the Valuation Committee.

An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs which are significant to the overall valuation.

The three-tier hierarchy of inputs is summarized as follows:

•

Level 1 – Observable inputs such as quoted prices, available in active markets, for identical assets or liabilities.

•

A description of the valuation techniques applied to the Portfolios’ major classes of assets and liabilities measured at fair value on a recurring basis follows:

Derivative Instruments. Forward foreign currency contracts are valued based upon the closing prices of the forward currency rates determined at the close of the NYSE, which are provided by an independent pricing service. Swaps derive their value from underlying asset prices, indices, reference rates and other inputs or a combination of these factors. Swaps are valued by an independent pricing service unless the price is unavailable, in which case they are valued at the price provided by a dealer in that security. Exchange-traded futures contracts are generally valued at the settlement price. Listed options are ordinarily valued at the mean of the last bid and ask price provided by an independent pricing service unless the price is unavailable, in which case they are valued at a quotation obtained from a broker-dealer. Over the counter (“OTC”) options are ordinarily valued at the mean of the last bid and ask price for a comparable listed option provided by an independent pricing service unless such a price is unavailable, in which case they are valued at a quotation obtained from a broker-dealer.


74		ANNUAL REPORT		2019

Equity Securities.Equity securities traded on U.S. or foreign securities exchanges or included in a national market system are valued at the official closing price at the close of each business day unless otherwise stated below. OTC equity securities and listed securities for which no price is readily available are valued at the average of the last bid and ask prices.

Mutual funds, including investment funds, typically are valued at the NAV reported as of the valuation date.

Foreign securities, for which the primary trading market closes at the same time or after the NYSE, are valued based on quotations from the primary market in which they are traded and categorized in Level 1. Because many foreign securities markets and exchanges close prior to the close of the NYSE, closing prices for foreign securities in those markets or on those exchanges do not reflect the events that occur after that close. Certain foreign securities may be fair valued using a pricing service that considers the correlation of the trading patterns of the foreign security to theintra-day trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, exchange-traded funds, and the movement of certain indices of securities based on a statistical analysis of their historical relationship; such valuations generally are categorized in Level 2.

Preferred stock, repurchase agreements, and other equities traded on inactive markets or valued by reference to similar instruments are also generally categorized in Level 2.

Municipal Bonds. Municipal bonds are fair valued based on pricing models used by and obtained from an independent pricing service that take into account, among other factors, information received from market makers and broker-dealers, current trades,bid-wants lists, offerings, market movements, the callability of the bond, state of issuance, benchmark yield curves, and bond insurance. To the extent that these inputs are observable and timely, the fair values of municipal bonds would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.

Restricted Securities. Restricted securities that are deemed to be Rule 144A securities and illiquid, as well as restricted securities held innon-public entities, are included in Level 3 of the fair value hierarchy to the extent that significant inputs to valuation are unobservable, because they trade infrequently, if at all and, therefore, the inputs are unobservable. Restricted securities that are valued at a discount to similar publicly traded securities may be categorized as Level 2 of the fair value hierarchy to the extent that the discount is considered to be insignificant to the fair value measurement in its entirety; otherwise they may be categorized as Level 3.

2019

ANNUAL REPORT

DERIVATIVE INSTRUMENTS($ amounts in thousands unless indicated otherwise)

Forward Foreign Currency Contracts. Each Portfolio is authorized to enter into forward foreign currency contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date. Forward contracts are reported on a schedule following the Schedule of Investments. Forward contracts are valued daily based upon the closing prices of the forward currency rates provided by an independent pricing service determined at the close of the NYSE. The resulting unrealized appreciation and depreciation is reported on the Statement of Assets and Liabilities as a receivable or payable and on the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) on the Statement of Operations.

Core Equity enters into forward foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to obtain exposure to, or hedge exposure away from foreign currencies (foreign currency exchange rate risk).

Option Contracts.Options purchased by a Portfolio are accounted for in the same manner as portfolio securities. The cost of the underlying instruments acquired through the exercise of call options is increased by the premium paid to purchase the call. The proceeds from instruments sold through the exercise of put options are decreased by the premium paid to purchase the put.

Value purchases and writes call and put options to increase or decrease hedging exposure to underlying instruments (which include credit risk, equity risk, foreign currency exchange rate risk, event risk and/or interest rate risk), increase exposure to various equity markets or certain sectors, gain exposure to or facilitate trading in certain securities and/or, in the case of options written, to generate returns from options premiums.

Collateral and rights of offset. A Portfolio mitigates credit risk with respect to OTC derivative counterparties through credit support annexes (“CSA”) included with an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement which is the standard contract governing all OTC derivative transactions between the Portfolio and each of its counterparties. Although it is not possible to eliminate credit risk entirely, the CSA allows the Portfolio and its counterparty to reduce their exposure to the risk of payment default by the other party by holding an amount in collateral equivalent to the realized and unrealized amount of exposure to the counterparty, which is generally held by the Portfolio’s custodian. An amount of collateral is moved to/from applicable counterparties only if the amount of collateral required to be posted surpasses both the threshold and the minimum transfer amountpre-agreed in the CSA between the Portfolio and the counterparty. See Note 2 “Segregation and Collateralization” for additional information with respect to collateral practices.


76		ANNUAL REPORT		2019

Liabilities


							Gross Amounts Not Offset on the Statement of Assets and Liabilities
Portfolio	Gross Amounts of Recognized Liabilities		Gross Amounts Offset on the Statement of Assets and Liabilities		Net Amounts of Liabilities Presented on the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset		Non-Cash Collateral Pledged		Cash Collateral Pledged			Net Amount Payable
Value
Written options at value	$	3	$	—	$	3	$	—	$	—	$	(3	)	$	—

Additional Disclosure Related to Derivative Instruments

Fair values of derivative instruments as of December 31, 2019:

Assets

Liabilities

Portfolio

Type of Risk
Exposure

Statement of Assets & Liabilities

Location

Value

Statement of Assets & Liabilities

Location

Value

Value

Equity

—

Written options at value

Amount of realized gain (loss) on derivatives recognized on the Statement of Operations for the year ended December 31, 2019:


		Net realized gain (loss) on:
Portfolio	Type of Risk Exposure	Investments in unaffiliated securities*		Swap agreements		Futures contracts		Written options		Forward foreign currency contracts		Total
Core Equity	Foreign currency	$	—	$	—	$	—	$	—	$	166	$	166
Value	Equity		—		—		—		695		—		695

*Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule of Investments.

Change in unrealized appreciation (depreciation) on derivatives recognized on the Statement of Operations for the year ended December 31, 2019:


		Net change in unrealized appreciation (depreciation) on:
Portfolio	Type of Risk Exposure	Investments in unaffiliated securities*		Swap agreements		Futures contracts		Written options		Forward foreign currency contracts			Total
Core Equity	Foreign currency	$	—	$	—	$	—	$	—	$	(127	)	$	(127	)
Value	Equity		—		—		—		92		—			92

*Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule of Investments.

During the year ended December 31, 2019, the average derivative volume was as follows:


Portfolio	Forward foreign currency contracts⁽¹⁾			Long futures contracts⁽²⁾			Short futures contracts⁽²⁾			Swap agreements⁽³⁾			Purchased options⁽²⁾			Written options⁽²⁾
Core Equity		$	10		$	—		$	—		$	—		$	—		$	—
Value			—			—			—			—			—			156

(1)

Average absolute value of unrealized appreciation/depreciation during the period.

(2)

Average value outstanding during the period.

(3)

Average notional amount outstanding during the period.

2019

ANNUAL REPORT

INVESTMENT MANAGEMENT AND PAYMENTS TO AFFILIATED PERSONS($ amounts in thousands unless indicated otherwise)

Management Fees. IICO serves as each Portfolio’s investment adviser. The management fee is accrued daily by each Portfolio at the following annual rates as a percentage of average daily net assets:


Portfolio (M – Millions)	$0 to $500M			$500 to $1,000M			$1,000 to $1,500M			$1,500 to $2,000M			$2,000 to $3,000M			Over $3,000M
Core Equity		0.700	%		0.700	%		0.650	%		0.650	%		0.600	%		0.550	%
Corporate Bond		0.475			0.475			0.450			0.400			0.400			0.400
Global Bond		0.625			0.600			0.550			0.500			0.500			0.500
Global Equity Income		0.700			0.700			0.650			0.650			0.600			0.550
Global Growth		0.850			0.850			0.830			0.830			0.800			0.760
Limited-Term Bond		0.500			0.450			0.400			0.350			0.350			0.350
Securian Real Estate Securities		0.900			0.900			0.870			0.870			0.840			0.800
Value		0.700			0.700			0.650			0.650			0.600			0.550

IICO has entered into a Subadvisory Agreement with the following entity on behalf of Securian Real Estate Securities:

Securian Asset Management, Inc. (“Securian”) serves as subadvisor to Securian Real Estate Securities. The subadvisor makes investment decisions in accordance with the Portfolio’s investment objectives, policies and restrictions under the supervision of IICO and the Board of Trustees. IICO pays all applicable costs of the subadvisor.

Accounting Services Fees. The Trust has an Accounting and Administrative Services Agreement with Waddell & Reed Services Company (“WRSCO”), doing business as WI Services Company (“WISC”). Under the agreement, WISC acts as the agent in providing bookkeeping and accounting services and assistance to the Trust, including maintenance of Portfolio records, pricing of Portfolio shares and preparation of certain shareholder reports. For these services, each Portfolio pays WISC a monthly fee ofone-twelfth of the annual fee based on the average net asset levels shown in the following table:


(M – Millions)	$0 to $10M		$10 to $25M		$25 to $50M		$50 to $100M		$100 to $200M		$200 to $350M		$350 to $550M		$550 to $750M		$750 to $1,000M		Over $1,000M
Annual Fee Rate	$	0.00	$	11.50	$	23.10	$	35.50	$	48.40	$	63.20	$	82.50	$	96.30	$	121.60	$	148.50

Shareholder Servicing. Under the Transfer Agency Agreement between the Trust and WISC, each Portfolio reimburses WISC for certainout-of-pocket costs.

Service Plan. Class II. Under a Service Plan adopted by the Trust pursuant to Rule 12b–1 under the 1940 Act, each Portfolio may pay a service fee to Ivy Distributors, Inc. (“IDI”) for Class II shares in an amount not to exceed 0.25% of the Portfolio’s average annual net assets. The fee is to be paid to compensate IDI for amounts it expends in connection with the provision of personal services to Policyowners and/or maintenance of Policyowner accounts.

Expense Reimbursements and/or Waivers.IICO, the Portfolios’ investment manager, IDI, the Portfolios’ distributor, and/or Waddell & Reed Services Company, doing business as WISC, the Portfolios’ transfer agent, have contractually agreed to reimburse sufficient management fees,12b-1 fees and/or shareholder servicing fees to cap the total annual ordinary fund operating expenses (which would exclude interest, taxes, brokerage commissions, acquired fund fees and expenses, and


78		ANNUAL REPORT		2019

extraordinary expenses, if any). Portfolio and class expense limitations and related waivers/reimbursements for the year ended December 31, 2019 were as follows:

Portfolio Name

Share
Class
Name

Type of
Expense
Limit

Commencement
Date

End Date

Expense Limit

Amount of
Expense Waiver/
Reimbursement

Expense
Reduced

Core Equity

Class II

Contractual

10-1-2016

4-30-2020

0.95%

$320

12b-1 Fees
and/or
Shareholder
Servicing

Global Bond

Class II

Voluntary

N/A

$135⁽¹⁾

Investment
Management
Fee

Global Growth

Class II

Contractual

10-1-2016

4-30-2020

1.13%

$121

12b-1 Fees
and/or
Shareholder
Servicing

Securian Real Estate Securities

Class II

Contractual

12-3-2012

4-30-2020

N/A

$33⁽²⁾

Investment
Management
Fee

(1)

For Portfolios managed solely by IICO, IICO has voluntarily agreed to waive its management fee for any day that a portfolio’s net assets are less than $25 million, subject to IICO’s right to change or modify this waiver.

(2)

The Portfolio’s investment management fee is being reduced by 0.09% of average daily net assets until April 30, 2020.

Any amounts due to the Portfolios as a reimbursement but not paid as of December 31, 2019 are shown as a receivable from affiliates on the Statement of Assets and Liabilities.

INTERFUND LENDING PROGRAM

Pursuant to an exemptive order issued by the SEC (“Order”), the Ivy Funds, Ivy Variable Insurance Portfolios and InvestEd Portfolios (collectively, the “Funds” only for purposes of this footnote 6) have the ability to lend money to, and borrow money from, each other pursuant to a master interfund lending agreement (“Interfund Lending Program”). Under the Interfund Lending Program, the Funds may lend or borrow money for temporary purposes directly to or from one another (each an “Interfund Loan”), subject to meeting the conditions of the Order. The interest rate to be charged on an Interfund Loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The Funds made no Interfund Loans under the Interfund Lending Program during the year ended December 31, 2019.

INVESTMENT SECURITIES TRANSACTIONS($ amounts in thousands)

The cost of purchases and the proceeds from maturities and sales of investment securities (excluding short-term securities) for the year ended December 31, 2019, were as follows:


	Purchases				Sales
	U.S. Government		Other Issuers		U.S. Government		Other Issuers
Core Equity	$	—	$	542,181	$	—	$	584,371
Corporate Bond		13,946		347,687		19,076		339,512
Global Bond		1,203		7,841		1,429		8,471
Global Equity Income		—		111,726		—		144,760
Global Growth		—		36,912		—		52,907
Limited-Term Bond		139,988		131,192		161,538		173,537
Securian Real Estate Securities		—		19,555		—		24,240
Value		—		287,798		—		316,229

LOANS OF PORTFOLIO SECURITIES($ amounts in thousands)

2019

ANNUAL REPORT

day and any additional required collateral is delivered to the Portfolio and any excess collateral is returned by the Portfolio on the next business day. During the term of the loan, the Portfolio is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.

Cash received as collateral for securities on loan may be reinvested in the Dreyfus Institutional Preferred Government Money Market Fund – Institutional Shares or certain other registered money market funds and are disclosed in the Portfolio’s Schedule of Investments and are reflected in the Statement of Assets and Liabilities as cash collateral on securities loaned at value.Non-cash collateral, in the form of securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, is not disclosed in the Portfolio’s Statement of Assets and Liabilities as it is held by the lending agent on behalf of the Portfolio and the Portfolio does not have the ability tore-hypothecate these securities. The securities on loan for each Portfolio are also disclosed in its Schedule of Investments. The total value of any securities on loan as of December 31, 2019 and the total value of the related cash collateral are disclosed in the Statement of Assets and Liabilities. Income earned by the Portfolios from securities lending activity is disclosed in the Statements of Operations.

The following is a summary of each Portfolio’s securities lending positions and related cash andnon-cash collateral received as of December 31, 2019:


Portfolio	Market Value of Securities on Loan		Cash Collateral Received		Non-Cash Collateral Received		Total Collateral Received
Corporate Bond	$	463	$	474	$	—	$	474
Global Bond		526		532		7		539
Value		8,149		7,209		1,198		8,407

CAPITAL SHARE TRANSACTIONS(All amounts in thousands)

The Trust has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:


	Core Equity												Corporate Bond
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class II		2,145		$	25,198			27,121		$	327,646			15,860		$	87,364			20,518		$	105,157
Shares issued in reinvestment of distributions to shareholders:
Class II		6,669			73,214			2,972			35,537			2,907			15,235			2,297			11,579
Shares redeemed:
Class II		(9,534	)		(113,019	)		(8,275	)		(101,335	)		(17,580	)		(94,881	)		(19,109	)		(98,074	)

Net increase (decrease)		(720	)	$	(14,607	)		21,818		$	261,848			1,187		$	7,718			3,706		$	18,662


80		ANNUAL REPORT		2019



	Global Bond												Global Equity Income
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class II		750		$	3,702			665		$	3,209			861		$	5,716			2,705		$	20,924
Shares issued in reinvestment of distributions to shareholders:
Class II		162			784			133			626			15,944			85,169			5,843			45,707
Shares redeemed:
Class II		(1,391	)		(6,892	)		(928	)		(4,477	)		(8,600	)		(54,118	)		(28,835	)		(225,345	)

Net increase (decrease)		(479	)	$	(2,406	)		(130	)	$	(642	)		8,205		$	36,767			(20,287	)	$	(158,714	)


	Global Growth												Limited-Term Bond
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class II		948		$	4,338			1,061		$	10,764			9,392		$	46,061			40,811		$	194,572
Shares issued in reinvestment of distributions to shareholders:
Class II		30,123			96,488			2,748			27,187			2,048			9,903			1,482			7,043
Shares redeemed:
Class II		(5,094	)		(23,423	)		(31,245	)		(312,654	)		(32,011	)		(157,413	)		(21,008	)		(100,935	)

Net increase (decrease)		25,977		$	77,403			(27,436	)	$	(274,703	)		(20,571	)	$	(101,449	)		21,285		$	100,680


	Securian Real Estate Securities												Value
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class II		428		$	3,239			569		$	3,987			4,195		$	26,513			21,135		$	132,306
Shares issued in reinvestment of distributions to shareholders:
Class II		99			744			509			3,316			5,212			30,616			3,219			20,089
Shares redeemed:
Class II		(1,311	)		(10,015	)		(1,564	)		(10,915	)		(11,823	)		(73,455	)		(12,988	)		(83,209	)

Net increase (decrease)		(784	)	$	(6,032	)		(486	)	$	(3,612	)		(2,416	)	$	(16,326	)		11,366		$	69,186

10.

COMMITMENTS

2019

ANNUAL REPORT

11.

FEDERAL INCOME TAX MATTERS($ amounts in thousands)

For Federal income tax purposes, cost of investments owned at December 31, 2019 and the related unrealized appreciation (depreciation) were as follows:


Portfolio	Cost of Investments		Gross Appreciation		Gross Depreciation		Net Unrealized Appreciation
Core Equity	$	617,914	$	108,444	$	5,499	$	102,945
Corporate Bond		566,109		29,935		395		29,540
Global Bond		20,605		726		435		291
Global Equity Income		272,064		34,624		10,587		24,037
Global Growth		109,555		39,969		1,404		38,565
Limited-Term Bond		443,199		7,496		386		7,110
Securian Real Estate Securities		32,851		3,569		1,083		2,486
Value		445,288		75,448		3,412		72,036


Portfolio	Undistributed Ordinary Income		Undistributed Long-Term Capital Gains		Tax Return of Capital		Post- October Capital Losses Deferred		Late-Year Ordinary Losses Deferred
Core Equity	$	9,948	$	31,253	$	—	$	—	$	—
Corporate Bond		15,224		—		—		—		—
Global Bond		781		—		—		—		—
Global Equity Income		8,009		—		—		—		—
Global Growth		581		—		—		—		—
Limited-Term Bond		10,690		—		—		—		—
Securian Real Estate Securities		942		1,940		—		—		—
Value		9,455		17,064		—		—		—

The tax character of dividends and distributions paid during the two fiscal years ended December 31, 2019 and 2018 were as follows:


	December 31, 2019				December 31, 2018
Portfolio	Distributed Ordinary Income⁽¹⁾		Distributed Long-Term Capital Gains		Distributed Ordinary Income⁽¹⁾		Distributed Long-Term Capital Gains
Core Equity	$	4,416	$	68,798	$	6,304	$	29,233
Corporate Bond		15,235		—		11,579		—
Global Bond		784		—		626		—
Global Equity Income		8,357		76,812		10,709		34,998
Global Growth		11,998		84,490		6,600		20,587
Limited-Term Bond		9,903		—		7,043		—
Securian Real Estate Securities		582		162		1,197		2,119
Value		3,917		26,699		7,704		12,385

(1)

Includes short-term capital gains distributed, if any.

Dividends from net investment income and short-term capital gains are treated as ordinary income dividends for federal income tax purposes.


82		ANNUAL REPORT		2019


Portfolio	Short-Term Capital Loss Carryover		Long-Term Capital Loss Carryover
Core Equity	$	—	$	—
Corporate Bond		—		2,256
Global Bond		305		758
Global Equity Income		1,165		—
Global Growth		3,567		128
Limited-Term Bond		1,018		4,899
Securian Real Estate Securities		—		—
Value		—		—

Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from U.S. GAAP. These differences are due to differing treatments for items such as deferral of wash sales, post-October losses, late-year ordinary losses, foreign currency transactions, net operating losses, income from passive foreign investment companies (PFICs) and partnership transactions. At December 31, 2019, the following reclassifications were made:


Portfolio	Accumulated Earnings Gain (Loss)			Paid-In Capital
Core Equity	$	—	*	$	—	*
Corporate Bond		—			—
Global Bond		—			—
Global Equity Income		—	*		—	*
Global Growth		—			—
Limited-Term Bond		—			—
Securian Real Estate Securities		—			—
Value		5			(5	)

*Not shown due to rounding.

2019

ANNUAL REPORT


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		IVY VIP

To the Shareholders and Board of Trustees of Ivy Variable Insurance Portfolios:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of assets and liabilities of Ivy VIP Core Equity, Ivy VIP Corporate Bond, Ivy VIP Global Bond, Ivy VIP Global Equity Income, Ivy VIP Global Growth, Ivy VIP Limited-Term Bond, Ivy VIP Securian Real Estate Securities, and Ivy VIP Value, eight of the series constituting the Ivy Variable Insurance Portfolios (the “Funds”), including the schedules of investments, as of December 31, 2019, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of December 31, 2019, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

LOGO

Kansas City, Missouri

February 14, 2020

We have served as the auditor of one or more Waddell & Reed investment companies since 1997.


84		ANNUAL REPORT		2019


INCOME TAX INFORMATION		IVY VIP

AMOUNTS NOT ROUNDED (UNAUDITED)


	Dividends Received Deduction for Corporations
Core Equity	$	4,414,433
Corporate Bond		—
Global Bond		—
Global Equity Income		6,355,661
Global Growth		1,445,554
Limited-Term Bond		—
Securian Real Estate Securities		—
Value		3,917,290

The Portfolios hereby designate the following amounts as distributions of long-term capital gains:


Core Equity	$	68,797,774
Corporate Bond		—
Global Bond		—
Global Equity Income		76,812,451
Global Growth		84,490,396
Limited-Term Bond		—
Securian Real Estate Securities		162,711
Value		26,698,422


	Foreign Tax Credit		Foreign Derived Income
Global Equity Income	$	615,948	$	6,037,002
Global Growth		121,691		1,498,034

2019

ANNUAL REPORT


BOARD OF TRUSTEES AND OFFICERS		IVY VIP

(UNAUDITED)

Board members who are not “interested persons” of the Funds as defined in Section 2(a)(19) of the 1940 Act (Disinterested Trustees) constitute at least 75% of the Board.

Disinterested Trustees


Name, Address and Year of Birth	Position(s) Held with the Trust	Trustee Since	Principal Occupation(s) During Past 5 Years	Other Directorships Held
James M. Concannon 6300 Lamar Avenue Overland Park, KS 66202 1947	Trustee	1997	Emeritus Dean and Professor of Law, Washburn University School of Law (1973 to present).	Director, Kansas Legal Services for Prisoners, Inc.(non-profit community service); Director, U.S. Alliance Corporation and wholly-owned subsidiaries: U.S. Alliance Life and Security Company – Montana and Dakota Capital Life Insurance Company (Insurance) (2009 to present); Director, Kansas Appleseed, Inc.(non-profit community service) (2007 to present); Trustee, WRA Funds (1997-2018); Trustee, Ivy NextShares (2017-2019); Trustee, InvestEd (2001 to present) (6 portfolios overseen); Trustee, Ivy Funds (2017 to present) (45 portfolios overseen); Trustee, IVH (2017 to present) (1 portfolio overseen).
H. Jeffrey Dobbs 6300 Lamar Avenue Overland Park, KS 66202 1955	Trustee	2019	Global Sector Chairman, Industrial Manufacturing, KPMG LLP (2010-2015).	Director, Valparaiso University (2012 to present); Director, TechAccel LLC (2015 to present) (Tech R&D); Board Member, Kansas City Repertory Theatre (2015 to present); Board Member, PatientsVoices, Inc. (technology) (2018 to present); Board Member, Kansas City Campus for Animal Care (2018 to present); Director, National Association of Manufacturers (2010-2015); Director, The Children’s Center (2003-2015); Director, Metropolitan Affairs Coalition (2003-2015); Director, Michigan Roundtable for Diversity and Inclusion (2003-2015); Trustee, Ivy NextShares (2019); Trustee, InvestEd (2019 to present) (6 portfolios overseen); Trustee, Ivy Funds (2019 to present) (45 portfolios overseen); Trustee, IVH (2019 to present) (1 portfolio overseen).
James D. Gressett 6300 Lamar Avenue Overland Park, KS 66202 1950	Trustee	2017	Chief Executive Officer (CEO) of CalPac Pizza LLC (2011 to present); CEO of CalPac Pizza II LLC (2012 to present); CEO of PacPizza LLC (Pizza Hut franchise) (2000 to present); Member/CEO, Southern Pac Pizza LLC (2013 to present); Partner, Century Bridge Partners (real estate investments) (2007 to present); Manager, Hartley Ranch Angus Beef, LLC (2013 to present); President, Penn Capital Corp. (1995 to present); Partner, Penn Capital Partners (1999 to present); Partner, 1788 Chicken, LLC (food franchise) (2016 to present).	Member/Secretary, The Metochoi Group LLC (1999 to present); Member/Chairman, Idea Homes LLC (homebuilding and development) (2013 to present); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (2002 to present) (45 portfolios overseen); Trustee; IVH (2013 to present) (1 portfolio overseen).


86		ANNUAL REPORT		2019


Name, Address and Year of Birth	Position(s) Held with the Trust	Trustee Since	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Joseph Harroz, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1967	Trustee Independent Chairman	1998 2015	Interim President (2019 to present), Vice President (2010-2019) and Dean (2010-2019), College of Law, University of Oklahoma; Managing Member, Harroz Investments, LLC, (commercial enterprises) (1998 to present).	Director and Shareholder, Valliance Bank (2007 to present); Director, Foundation Healthcare (formerly Graymark HealthCare) (2008-2017); Trustee, The Mewbourne Family Support Organization (2006 to present)(non-profit); Independent Director, LSQ Manager, Inc. (real estate) (2007-2016); Director, Oklahoma Foundation for Excellence(non-profit) (2008 to present); Independent Chairman and Trustee, WRA Funds (Independent Chairman: 2015-2018; Trustee: 1998-2018); Independent Chairman and Trustee, Ivy NextShares (2016-2019); Independent Chairman and Trustee, InvestEd (Independent Chairman: 2015 to present; Trustee: 2001 to present) (6 portfolios overseen); Independent Chairman and Trustee, Ivy Funds (Independent Chairman: 2006 to present; Trustee: 1998 to present) (45 portfolios overseen); Independent Chairman and Trustee, IVH (2013 to present) (1 portfolio overseen).
Glendon E. Johnson, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1951	Trustee	2017	Of Counsel, Lee & Smith, PC (law firm, emphasis on finance, securities, mergers and acquisitions law) (1996 to 2019); Owner and Manager, Castle Valley Ranches, LLC (ranching) and Castle Valley Outdoors, LLC (outdoor recreation) (1995 to present); Formerly, Partner, Kelly, Drye & Warren LLP (law firm) (1989-1996); Partner, Lane & Edson PC (law firm) (1987-1989).	Director, Thomas Foundation for Cancer Research(non-profit) (2005 to present); Director, Warriors Afield Legacy Foundation(non-profit) (2014 to present); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (2002 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).
Sandra A.J. Lawrence 6300 Lamar Avenue Overland Park, KS 66202 1957	Trustee	2019	Retired, formerly, Chief Administrative Officer, Children’s Mercy Hospitals and Clinics (2016-2019); CFO, Children’s Mercy Hospitals and Clinics (2005-2016).	Director, Hall Family Foundation (1993 to present); Director, Westar Energy (2004-2018); Trustee, Nelson-Atkins Museum of Art(non-profit) (2007 to present); Director, Turn the Page KC(non-profit) (2012-2016); Director, Kansas Metropolitan Business and Healthcare Coalition(non-profit) (2017-2019); Director, National Association of Corporate Directors(non-profit) (2017 to present); Director, American Shared Hospital Services (2017 to present); Director, Evergy, Inc., Kansas City Power & Light Company, KCP&L Greater Missouri Operations Company, Westar Energy, Inc. and Kansas Gas and Electric Company (related utility companies) (2018 to present); Director, Stowers (research) (2018); Trustee, Ivy NextShares (2019); Trustee, InvestEd (2019 to present) (6 portfolios overseen); Trustee, Ivy Funds (2019 to present) (45 portfolios overseen); Trustee, IVH (2019 to present) (1 portfolio overseen).
Frank J. Ross, Jr. Polsinelli PC 900 West 48th Place, Suite 900 Kansas City, MO 64112 1953	Trustee	1996	Shareholder/Director, Polsinelli PC (law firm) (1980 to present).	Trustee, WRA Funds (1996-2018); Trustee, Ivy NextShares (2017-2019); Trustee, InvestEd (2001 to present) (6 portfolios overseen); Trustee, Ivy Funds (2017 to present) (45 portfolios overseen); Trustee, IVH (2017 to present) (1 portfolio overseen).
Michael G. Smith 6300 Lamar Avenue Overland Park, KS 66202 1944	Trustee	2017	Retired; formerly, with Merrill Lynch as Managing Director of Global Investor Client Strategy (1996-1998), Head of Regional Institutional Sales (1995-1996) and of U.S. Central Region (1986-1995, 1999).	Director, Executive Board, Cox Business School, Southern Methodist University (1998-2019); Lead Director, Northwestern Mutual Funds (2003-2017) (29 portfolios overseen); Director, CTMG, Inc. (clinical testing) (2008-2015); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (2002 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).

2019

ANNUAL REPORT

Name, Address and
Year of Birth

Position(s) Held with
the Trust

Trustee Since

Principal Occupation(s)
During Past 5 Years

Other Directorships Held

Edward M. Tighe

6300 Lamar Avenue

Overland Park, KS 66202

1942

Trustee

2017

Retired; formerly, CEO and Director of Asgard Holdings, LLC (computer network and security services) (2002-2004); President, Citco Technology Management (1995-2000); CEO, Global Mutual Fund Services (1993-2000); Sr. Vice President, Templeton Global Investors (1988-1992).

Trustee, Hansberger Institutional Funds (2000-2007); Director, The Research Coast Principium Foundation, Inc.(non-profit) (2012-2015); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (1999 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).

Interested Trustees


Name and Year of Birth	Position(s) Held with the Trust	Trustee Since	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Henry J. Herrmann 1942	Trustee	1998	Retired,Non-Executive Chairman of the Board, WDR (2016-2018); Formerly Chairman, WDR (2010-2018); CEO, WDR (2005-2016); President, CEO and Chairman, IICO (2002-2016); President, CEO and Chairman, Waddell & Reed Investment Management Company (WRIMCO) (1993-2016); President of each of the funds in the Fund Complex (2001-2016).	Director, WDR, (1998 to present); Director, IICO (2002-2016); Director, WRIMCO (1991-2016); Director, WISC (2001-2016); Director, W&R Capital Management Group, Inc. (2008-2016); Director, Waddell & Reed (1993-2016); Director, Blue Cross Blue Shield of Kansas City (2007-2017); Trustee, WRA Funds (1998-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2001 to present) (6 portfolios overseen); Trustee, Ivy Funds (1998 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).
Philip J. Sanders 1959	Trustee	2019	CEO, WDR (2016 to present); President, CEO and Chairman, IICO (2016 to present); President of each of the funds in the Fund Complex (2016 to present); CIO, WDR (2011-2019); CIO, IICO (2010-2019).	Trustee, Ivy NextShares (2019); Trustee, InvestEd (2019 to present) (6 portfolios overseen); Trustee, Ivy Funds (2019 to present) (45 portfolios overseen); Trustee, IVH (2019 to present) (1 portfolio overseen).

Officers


Name and Year of Birth	Position(s) Held with the Trust	Officer of Trust Since	Officer of Fund Complex Since*	Principal Occupation(s) During Past 5 Years
Jennifer K. Dulski 1980	Secretary	2017	2017	Secretary for each of the funds in the Fund Complex (2017 to present); Senior Vice President and Associate General Counsel of Waddell & Reed, IICO and IDI (2018 to present).
Joseph W. Kauten 1969	Vice President Treasurer Principal Financial Officer	2009 2009 2009	2006 2006 2007	Principal Financial Officer of each of the funds in the Fund Complex (2007 to present); Vice President and Treasurer of each of the funds in the Fund Complex (2006 to present); Principal Accounting Officer of each of the funds in the Fund Complex (2006-2017); Assistant Treasurer of each of the funds in the Fund Complex (2003-2006); Vice President of Waddell & Reed Services Company (WRSCO) (2007 to present).
Philip J. Sanders** 1959	President	2016	2016	CEO of WDR (2016 to present); President, CEO and Chairman of IICO (2016 to present) and WRIMCO (2016-2018); President of each of the funds in the Fund Complex (2016 to present); CIO of WDR (2011-2019); CIO of IICO (2010-2019) and WRIMCO (2010-2018).


88		ANNUAL REPORT		2019


Name and Year of Birth	Position(s) Held With the Trust and Fund Complex	Officer of Trust Since	Officer of Fund Complex Since*	Principal Occupation(s) During Past 5 Years
Scott J. Schneider 1968	Vice President Chief Compliance Officer	2009 2009	2006 2004	Chief Compliance Officer (2004 to present) and Vice President (2006 to present) of each of the funds in the Fund Complex; Vice President of IICO (2006 to present) and WRIMCO (2006-2018).
Philip A. Shipp 1969	Assistant Secretary	2012	2012	Assistant Secretary of each of the funds in the Fund Complex (2012 to present); Vice President of Waddell & Reed and IDI (2010-present).

* This is the date when the Officer first became an officer of one or more of the funds that are the predecessors to current funds within the Fund Complex (if applicable).

** Mr. Sanders was Vice President of the Trust since 2006, and of the other Trusts within the Fund Complex, until his appointment as President in 2016.

2019

ANNUAL REPORT


RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT		IVY VIP

(UNAUDITED)

Nature, Extent and Quality of Services


90		ANNUAL REPORT		2019

Benefits from the Relationship with the Funds

Economies of Scale

Performance of the Funds and Costs of Services Provided

Independent Fee Consultant Review

1.	The nature, extent and quality of IICO’s services to the Funds;

2.	Management fees and expenses in the context of performance;

3.	Product category expenses, including peers;

4.	Profit margins of IICO’s parent from supplying such services;

5.	Subadviser and institutional fee analyses; and

6.	Possible economies of scale as a Fund grows larger.

The following summarizes the findings of the independent fee consultant retained by the Independent Trustees.

2019

ANNUAL REPORT

Summary Findings

The report also noted that the overall profitability of IICO’s parent relative to other complexes is reasonable.

Conclusions


92		ANNUAL REPORT		2019


ANNUAL PRIVACY NOTICE		IVY VIP

(UNAUDITED)

Recognition of a Client’s Expectation of Privacy

Information Collected

Categories of Information that may be Disclosed

Categories of Parties to whom we disclose nonpublic personal information

Opt Out Right

Confidentiality and Security

2019

ANNUAL REPORT


PROXY VOTING INFORMATION		IVY VIP

(UNAUDITED)

Proxy Voting Guidelines

A description of the policies and procedures Ivy Variable Insurance Portfolios uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling1.888.923-3355 and (ii) on the Securities and Exchange Commission’s (“SEC”) website at www.sec.gov.

Proxy Voting Records


94		ANNUAL REPORT		2019


QUARTERLY PORTFOLIO SCHEDULE INFORMATION		IVY VIP

(UNAUDITED)

Portfolio holdings can be found on the Trust’s website at www.ivyinvestments.com. Alternatively, a complete schedule of portfolio holdings of each Portfolio for the first and third quarters of each fiscal year is filed with the SEC and can be found on the Trust’s FormN-Q and/or FormNPORT-EX . These holdings may be viewed in the following ways:

•

On the SEC’s website at www.sec.gov.

•

For review and copy at the SEC’s Public Reference Room in Washington, DC. Information on the operations of the Public Reference Room may be obtained by calling 1.800.SEC.0330.

2019

ANNUAL REPORT

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96		ANNUAL REPORT		2019

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2019

ANNUAL REPORT

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98		ANNUAL REPORT		2019


THE IVY VARIABLE INSURANCE PORTFOLIOS FAMILY

Global/International Portfolios

Global Equity Income

Global Growth

International Core Equity

Domestic Equity Portfolios

Core Equity

Growth

Mid Cap Growth

Small Cap Core

Small Cap Growth

Value

Fixed Income Portfolios

Corporate Bond

Global Bond

High Income

Limited-Term Bond

Money Market Portfolio

Government Money Market

Specialty Portfolios

Asset Strategy

Balanced

Energy

Natural Resources

Pathfinder Aggressive

Pathfinder Conservative

Pathfinder Moderate

Pathfinder Moderately Aggressive

Pathfinder Moderately Conservative

Pathfinder Moderate – Managed Volatility

Pathfinder Moderately Aggressive – Managed Volatility

Pathfinder Moderately Conservative – Managed Volatility

Science and Technology

Securian Real Estate Securities

2019

ANNUAL REPORT

ANN-VIP2 (12/19)

LOGO

VARIABLE INSURANCE PORTFOLIOS

Annual Report

DECEMBER 31, 2019


Ivy Variable Insurance Portfolios

Pathfinder Aggressive			Class II

Pathfinder Conservative			Class II

Pathfinder Moderate			Class II

Pathfinder Moderately Aggressive			Class II

Pathfinder Moderately Conservative			Class II

Pathfinder Moderate — Managed Volatility			Class II

Pathfinder Moderately Aggressive — Managed Volatility			Class II

Pathfinder Moderately Conservative — Managed Volatility			Class II

Government Money Market			Class II


CONTENTS		IVY VIP


President’s Letter			3
Illustration of Portfolio Expenses			4
Management Discussion, Portfolio Highlights and Schedule of Investments:			6
Pathfinder Portfolios			6
Managed Volatility Portfolios			6
Government Money Market			22
Statements of Assets and Liabilities			25
Statements of Operations			27
Statements of Changes in Net Assets			29
Financial Highlights			32
Notes to Financial Statements			36
Report of Independent Registered Public Accounting Firm			49
Income Tax Information			50
Board of Trustees and Officers			51
Renewal of Investment Management Agreement			55
Annual Privacy Notice			58
Proxy Voting Information			59
Quarterly Portfolio Schedule Information			60


2		ANNUAL REPORT		2019


PRESIDENT’S LETTER		IVY VIP


		DECEMBER 31, 2019 (UNAUDITED)
Philip J. Sanders, CFA

Dear Shareholder,

Economic Snapshot



	12/31/2019			12/31/2018
S&P 500 Index		3,230.78			2,506.85
MSCI EAFE Index		2,036.94			1,719.88
10-Year Treasury Yield		1.92	%		2.69	%
U.S. unemployment rate		3.5	%		3.9	%
30-year fixed mortgage rate		3.74	%		4.55	%
Oil price per barrel		$61.14			$45.41

Sources: Bloomberg, U.S. Department of Labor, MBA, CME

Respectfully,

LOGO

Philip J. Sanders, CFA

President

2019

ANNUAL REPORT


ILLUSTRATION OF PORTFOLIO EXPENSES		IVY VIP

(UNAUDITED)

Expense Example

As a shareholder of a Portfolio, you incur ongoing costs, including management fees, distribution and service fees, and other Portfolio expenses. The following table is intended to help you understand your ongoing costs (in dollars) of investing in a Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. As a shareholder in the underlying Ivy VIP Portfolios, the Pathfinder Aggressive, Pathfinder Conservative, Pathfinder Moderate, Pathfinder Moderately Aggressive and Pathfinder Moderately Conservative Portfolios (collectively, the “Pathfinder Portfolios”) and the Pathfinder Moderate — Managed Volatility, Pathfinder Moderately Aggressive — Managed Volatility and Pathfinder Moderately Conservative — Managed Volatility Portfolios (collectively, the “Managed Volatility Portfolios”) will indirectly bear their pro rata share of the expenses incurred by the underlying funds. These expenses are not included in the Pathfinder Portfolios’ or Managed Volatility Portfolios’ annualized expense ratios or the expenses paid during the period. These expenses are, however, included in the effective expenses paid during the period. The example is based on an investment of $1,000 invested at the beginning of the period and held for thesix-month period ended December 31, 2019.

Actual Expenses

Hypothetical Example for Comparison Purposes


4		ANNUAL REPORT		2019


ILLUSTRATION OF PORTFOLIO EXPENSES		IVY VIP

(UNAUDITED)



	Actual⁽¹⁾						Hypothetical⁽²⁾

Portfolio	Beginning Account Value 6-30-19		Ending Account Value 12-31-19		Expenses Paid During Period*		Beginning Account Value 6-30-19		Ending Account Value 12-31-19		Expenses Paid During Period*		Annualized Expense Ratio Based on the Six-Month Period
Pathfinder Aggressive
Class II	$	1,000	$	1,075.10	$	0.42	$	1,000	$	1,024.78	$	0.40		0.08%
Pathfinder Conservative
Class II	$	1,000	$	1,047.60	$	0.31	$	1,000	$	1,024.88	$	0.30		0.06%
Pathfinder Moderate
Class II	$	1,000	$	1,061.60	$	0.21	$	1,000	$	1,025.03	$	0.20		0.04%
Pathfinder Moderately Aggressive
Class II	$	1,000	$	1,068.80	$	0.21	$	1,000	$	1,025.03	$	0.20		0.04%
Pathfinder Moderately Conservative
Class II	$	1,000	$	1,054.50	$	0.21	$	1,000	$	1,024.96	$	0.20		0.05%
Pathfinder Moderate — Managed Volatility
Class II	$	1,000	$	1,055.80	$	1.13	$	1,000	$	1,024.07	$	1.11		0.23%
Pathfinder Moderately Aggressive — Managed Volatility
Class II	$	1,000	$	1,063.30	$	1.34	$	1,000	$	1,023.86	$	1.32		0.27%
Pathfinder Moderately Conservative — Managed Volatility
Class II	$	1,000	$	1,048.90	$	1.43	$	1,000	$	1,023.83	$	1.42		0.27%
Government Money Market
Class II	$	1,000	$	1,008.40	$	2.11	$	1,000	$	1,023.11	$	2.12		0.42%

*	Portfolio expenses are equal to the Portfolio’s annualized expense ratio (provided in the table), multiplied by the average account value over the period, multiplied by 184 days in thesix-month period ended December 31, 2019, and divided by 365.

(1)

(2)

The above illustrations are based on ongoing costs only.

2019

ANNUAL REPORT


MANAGEMENT DISCUSSION		PATHFINDER PORTFOLIOS

(UNAUDITED)

LOGO

F. Chace Brundige

LOGO

Aaron D. Young

LOGO

W. Jeffery Surles

Below, F. Chace Brundige, CFA, Aaron D. Young and W. Jeffery Surles, CFA, portfolio managers of each of the five Ivy VIP Pathfinder Portfolios and the three Ivy VIP Pathfinder Managed Volatility Portfolios, discuss positioning, performance and results for the fiscal year ended December 31, 2019. Mr. Brundige has 26 years of industry experience and has managed each VIP Pathfinder Portfolio and VIP Pathfinder Managed Volatility Portfolio since 2016. Mr. Young has 14 years of industry experience and has managed the Portfolios since 2016. Mr. Surles has 18 years of industry experience and has managed the Portfolios since 2018. Since the Ivy VIP Pathfinder Managed Volatility Portfolios’ inception, Securian Asset Management, Inc., (Securian) has served as the subadvisor for the volatility management strategy. Craig Stapleton, CFA, of Securian has 17 years of industry experience and has managed the volatility management strategy since inception. Merlin Erickson, with 27 years of industry experience, and Jeremy Gogos, Ph.D., CFA, with 7 years of industry experience, both of Securian, have managed the strategy since 2017.

Fiscal Year Performance


For the 12 Months Ended December 31, 2019
Ivy VIP Pathfinder Aggressive			23.24%
55% Russell 3000 Index + 30% MSCI EAFE Index + 15% Bloomberg Barclays U.S. Universal Bond Index			24.99%
Ivy VIP Pathfinder Conservative			14.66%
35% Russell 3000 Index + 35% Bloomberg Barclays U.S. Universal Bond Index + 20% Bloomberg Barclays1-5 Year U.S. Government/Credit Index + 10% MSCI EAFE Index			17.11%
Ivy VIP Pathfinder Moderate			19.05%
45% Russell 3000 Index + 25% Bloomberg Barclays U.S. Universal Bond Index + 20% MSCI EAFE Index + 10% Bloomberg Barclays1-5 Year U.S. Government/Credit Index			21.03%
Ivy VIP Pathfinder Moderately Aggressive			21.40%
50% Russell 3000 Index + 25% MSCI EAFE Index + 20% Bloomberg Barclays U.S. Universal Bond Index + 5% Bloomberg Barclays1-5 Year U.S. Government/Credit Index			23.01%
Ivy VIP Pathfinder Moderately Conservative			16.85%
40% Russell 3000 Index + 30% Bloomberg Barclays U.S. Universal Bond Index + 15% Bloomberg Barclays1-5 Year U.S. Government/Credit Index + 15% MSCI EAFE Index			19.06%
Ivy VIP Pathfinder Moderate — Managed Volatility			17.32%
45% Russell 3000 Index + 25% Bloomberg Barclays U.S. Universal Bond Index + 20% MSCI EAFE Index + 10% Bloomberg Barclays1-5 Year U.S. Government/Credit Index			21.03%
Ivy VIP Pathfinder Moderately Aggressive — Managed Volatility			19.29%
50% Russell 3000 Index + 25% MSCI EAFE Index + 20% Bloomberg Barclays U.S. Universal Bond Index + 5% Bloomberg Barclays1-5 Year U.S. Government/Credit Index			23.01%
Ivy VIP Pathfinder Moderately Conservative — Managed Volatility			14.89%
40% Russell 3000 Index + 30% Bloomberg Barclays U.S. Universal Bond Index + 15% Bloomberg Barclays1-5 Year U.S. Government/Credit Index + 15% MSCI EAFE Index			19.06%

Index Performance


Russell 3000 Index			31.02%
(generally reflects the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.)
Bloomberg Barclays U.S. Universal Bond Index			9.29%
(generally reflects the performance ofUSD-denominated, taxable bonds that are rated either investment grade or high yield.)
MSCI EAFE Index			22.01%
(generally reflects the performance of equity securities across 21 developed market countries in Europe, Australasia and the Far East.)
Bloomberg Barclays1-5 Year U.S. Government/Credit Index			5.01%
(generally reflects the performance of Treasuries, agencies, publicly issued U.S. corporate and foreign debentures and secured notes with at least one but less than five years to maturity.)

Multiple indexes are shown because the Portfolios invest in multiple asset classes.


6		ANNUAL REPORT		2019

Past performance is not a guarantee of future results. For additional performance information for each Portfolio, please see the Comparison of Change in Value of a $10,000 Investment and the Average Annual Total Return information for each Portfolio found in this report.

Please note that the Portfolio returns include applicable investment fees and expenses, whereas the index returns do not include any such fees. Also, each Portfolio’s performance data does not take into account any product expenses or charges associated with owning a variable life or annuity policy, which is invested in Ivy Variable Insurance Portfolios.

Markets show relief

After a volatile end to 2018, returns were very robust across asset classes in 2019 as markets expressed relief from many of the risk factors that added to volatility in the prior year. Monetary policy in the U.S. pivoted from tightening in 2018 to easing in 2019 as the Federal Reserve (Fed) reduced its policy interest rate three times and even resumed balance sheet expansion.

U.S.-China trade tensions deescalated late in the fiscal year, including a “Phase 1” agreement and a cancelation of December tariff increases. In the U.K., Brexit concerns were alleviated after the Conservative Party won a clear election mandate.

The economic backdrop remained sound with persistently low inflation, very strong labor markets and continuing strength in housing and consumption, all of which provided reassurance that the global slowdown in manufacturing had been worked through without leading to a recession. All these developments improved sentiment among investors, businesses and consumers.

Dealing with improving markets

The Pathfinder Portfolios finished the fiscal year with robust, positive returns in 2019, although each slightly trailed the returns of its blended benchmark. The broad strength across asset classes was reflected by the Portfolios’ benchmarks, with the U.S. equity benchmark’s return exceeding 30% and the international equity benchmark’s return exceeding 20%.

Fixed income returns were also positive for the fiscal year as interest rates declined significantly across the yield curve. The performance of the Portfolios reflects the mix of returns in the underlying funds during the year and their allocation weightings.

The most notable detractor to relative performance was being underweight duration risk in fixed income and modestly underweight equity exposure compared with the benchmarks in an unusual environment. For example, interest rates declined precipitously, equities rallied and credit spreads narrowed. This positioning had benefitted the Portfolios by reducing volatility in late 2018 but was a headwind to relative performance in the latest fiscal year, given the strong returns simultaneously exhibited in both equities and fixed income.

In the fourth quarter of the fiscal year — given an improving backdrop in fundamentals, the decline in short-term interest rates and an increase in longer-term interest rates (i.e., the yield curve steepened) — we reallocated a modest amount of exposure in the Portfolios from money market securities to equity investments and longer-duration fixed income, thereby reducing those underweights that were a headwind to relative performance.

Solid economy but risks remain

Recent economic data suggest the economy remains in good condition. Unemployment is very low, wages are strong, inflation remains moderate and consumer spending remains robust. The Fed has indicated a willingness to maintain accommodative monetary policy until a “persistent” and “significant” increase in inflation is observed, which we think is likely to support markets and alleviate upward pressure on the U.S. dollar.

More adverse outcomes of U.S.-China trade negotiations and Brexit seem to have been avoided, leading economic indicators have generally stabilized or improved, and corporate earnings are estimated to grow in the mid-single digits in 2020. However, several significant risks remain: The global trade issue is not fully resolved, markets will face uncertainty in discounting election outcomes and geopolitical risks abound.

Given this balanced outlook, equity allocations are rather neutral with respect to geography, industry and style such that we believe the most significant driver of relative returns is likely to be our underlying active managers’ ability to add alpha through security selection. However, the Portfolios maintain a slight underweight exposure to equity and a shorter duration profile than the benchmark to mitigate risk should inflation accelerate or should conditions deteriorate, which may offer a benefit to the Portfolios if markets experience an extended risk-off scenario.

Past performance is not a guarantee of future results. As with any mutual fund, the value of each Portfolio’s shares will change, and you could lose money on your investment.

2019

ANNUAL REPORT

The ability of each Portfolio to meet its investment objective depends both on the allocation of its assets among the Underlying Funds and the ability of those funds to meet their respective investment objectives. Each Portfolio’s share price will likely change daily based on the performance of the Underlying Funds in which it invests. In general, each Portfolio is subject to the same risks as those of the Underlying Funds it holds. Because the Portfolios are weighted toward Underlying Funds that invest in stocks, both U.S. and foreign, including mid cap and small cap stocks, as well as bonds and short-term instruments, the Portfolios are more subject to the risks associated with those investments.

Securian Asset Management, Inc., may be unsuccessful in managing volatility, and there is a risk that the Ivy VIP Managed Volatility Portfolios may experience a high level of volatility in their returns. The Portfolios’ holdings are subject to price volatility, and the Portfolios may not be any less volatile than the market as a whole and could be more volatile. In addition, there can be no guarantee that the Portfolios will achieve their goal of managing the volatility of their equity returns. Furthermore, while the management of volatility seeks competitive returns with more consistent volatility, the management of volatility does not ensure that the Portfolios will deliver competitive returns. Additionally, even if successful, the Portfolios’ management of volatility may also generally result in the Portfolios’ NAV increasing to a lesser degree than the markets (for example, in a rising market with relatively high volatility) or decreasing to a greater degree than the market (for example, in a declining market with relatively low volatility). The Portfolios’ managed volatility strategy may expose the Portfolios to losses (some of which may be sudden) to which it would not have otherwise been exposed if invested only in Underlying Funds. Additionally, the derivatives used by Securian Asset Management to hedge the value of the Portfolios are not identical to the Underlying Funds, and as a result, the Portfolios’ investment in derivatives may decline in value at the same time as the Portfolios’ investment in Underlying Funds. Securian Asset Management does not intend to attempt to manage the volatility of the Portfolios’ fixed-income returns. It is possible that the fixed-income portion of the Portfolios, whose volatility would not be managed by the volatility management strategy, could become more volatile than the equity portion of the Portfolios.

The indexes noted are unmanaged and include reinvested dividends. One cannot invest directly in an index, nor is an index representative of any Ivy VIP Pathfinder Portfolio or Ivy VIP Pathfinder Portfolio — Managed Volatility.


8		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		PATHFINDER PORTFOLIOS

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Pathfinder Aggressive – Asset Allocation


Ivy VIP International Core Equity, Class II		17.7%
Ivy VIP Growth, Class II		13.5%
Ivy VIP Core Equity, Class II		13.4%
Ivy VIP Value, Class II		13.1%
Ivy VIP Global Equity Income, Class II		11.9%
Ivy VIP Mid Cap Growth, Class I		9.6%
Ivy VIP Corporate Bond, Class II		8.9%
Ivy VIP Limited-Term Bond, Class II		7.0%
Ivy VIP Small Cap Growth, Class I		2.5%
Ivy VIP Small Cap Core, Class II		1.3%
Ivy VIP High Income, Class I		0.5%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+		0.6%

Pathfinder Conservative – Asset Allocation


Ivy VIP Limited-Term Bond, Class II		26.6%
Ivy VIP Corporate Bond, Class II		18.9%
Ivy VIP Government Money Market, Class II		8.7%
Ivy VIP Growth, Class II		8.6%
Ivy VIP Core Equity, Class II		8.5%
Ivy VIP Value, Class II		8.3%
Ivy VIP Mid Cap Growth, Class I		6.7%
Ivy VIP International Core Equity, Class II		6.0%
Ivy VIP Global Equity Income, Class II		4.0%
Ivy VIP Small Cap Growth, Class I		1.6%
Ivy VIP High Income, Class I		1.5%
Ivy VIP Small Cap Core, Class II		0.3%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+		0.3%

Pathfinder Moderate – Asset Allocation


Ivy VIP Limited-Term Bond, Class II		15.8%
Ivy VIP Corporate Bond, Class II		13.9%
Ivy VIP International Core Equity, Class II		12.0%
Ivy VIP Growth, Class II		11.1%
Ivy VIP Core Equity, Class II		11.0%
Ivy VIP Value, Class II		10.8%
Ivy VIP Mid Cap Growth, Class I		8.2%
Ivy VIP Global Equity Income, Class II		8.0%
Ivy VIP Government Money Market, Class II		5.3%
Ivy VIP Small Cap Growth, Class I		2.1%
Ivy VIP High Income, Class I		1.0%
Ivy VIP Small Cap Core, Class II		0.8%
Liabilities (Net of Cash and Other Assets), and Cash Equivalents+		0.0%

Pathfinder Moderately Aggressive – Asset Allocation


Ivy VIP International Core Equity, Class II		14.9%
Ivy VIP Growth, Class II		12.4%
Ivy VIP Core Equity, Class II		12.2%
Ivy VIP Value, Class II		12.0%
Ivy VIP Corporate Bond, Class II		11.9%
Ivy VIP Global Equity Income, Class II		10.0%
Ivy VIP Limited-Term Bond, Class II		9.9%
Ivy VIP Mid Cap Growth, Class I		9.0%
Ivy VIP Government Money Market, Class II		3.6%
Ivy VIP Small Cap Growth, Class I		2.3%
Ivy VIP Small Cap Core, Class II		1.0%
Ivy VIP High Income, Class I		0.7%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+		0.1%

Pathfinder Moderately Conservative – Asset Allocation


Ivy VIP Limited-Term Bond, Class II		21.7%
Ivy VIP Corporate Bond, Class II		15.9%
Ivy VIP Growth, Class II		9.9%
Ivy VIP Core Equity, Class II		9.7%
Ivy VIP Value, Class II		9.6%
Ivy VIP International Core Equity, Class II		9.0%
Ivy VIP Mid Cap Growth, Class I		7.5%
Ivy VIP Government Money Market, Class II		7.0%
Ivy VIP Global Equity Income, Class II		6.0%
Ivy VIP Small Cap Growth, Class I		1.8%
Ivy VIP High Income, Class I		1.2%
Ivy VIP Small Cap Core, Class II		0.5%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+		0.2%

Pathfinder Moderate – Managed Volatility – Asset Allocation


Ivy VIP Limited-Term Bond, Class II		15.5%
Ivy VIP Corporate Bond, Class II		13.6%
Ivy VIP International Core Equity, Class II		11.7%
Ivy VIP Growth, Class II		10.9%
Ivy VIP Core Equity, Class II		10.7%
Ivy VIP Value, Class II		10.6%
Ivy VIP Mid Cap Growth, Class I		8.0%
Ivy VIP Global Equity Income, Class II		7.8%
Ivy VIP Government Money Market, Class II		5.2%
Ivy VIP Small Cap Growth, Class I		2.0%
Ivy VIP High Income, Class I		1.0%
Ivy VIP Small Cap Core, Class II		0.8%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+		2.2%

2019

ANNUAL REPORT


PORTFOLIO HIGHLIGHTS		PATHFINDER PORTFOLIOS

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Pathfinder Moderately Aggressive – Managed Volatility – Asset Allocation


Ivy VIP International Core Equity, Class II		14.6%
Ivy VIP Growth, Class II		12.1%
Ivy VIP Core Equity, Class II		12.0%
Ivy VIP Value, Class II		11.8%
Ivy VIP Corporate Bond, Class II		11.7%
Ivy VIP Global Equity Income, Class II		9.8%
Ivy VIP Limited-Term Bond, Class II		9.7%
Ivy VIP Mid Cap Growth, Class I		8.8%
Ivy VIP Government Money Market, Class II		3.6%
Ivy VIP Small Cap Growth, Class I		2.2%
Ivy VIP Small Cap Core, Class II		1.0%
Ivy VIP High Income, Class I		0.7%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+		2.0%

Pathfinder Moderately Conservative – Managed Volatility – Asset Allocation


Ivy VIP Limited-Term Bond, Class II		21.2%
Ivy VIP Corporate Bond, Class II		15.5%
Ivy VIP Growth, Class II		9.6%
Ivy VIP Core Equity, Class II		9.5%
Ivy VIP Value, Class II		9.4%
Ivy VIP International Core Equity, Class II		8.8%
Ivy VIP Mid Cap Growth, Class I		7.3%
Ivy VIP Government Money Market, Class II		6.9%
Ivy VIP Global Equity Income, Class II		5.9%
Ivy VIP Small Cap Growth, Class I		1.8%
Ivy VIP High Income, Class I		1.2%
Ivy VIP Small Cap Core, Class II		0.5%
Cash and Other Assets (Net of Liabilities), and Cash Equivalents+		2.4%

The percentages of investments in the underlying funds may not currently be within the target allocation ranges disclosed in the Portfolios’ prospectus due to market movements; these percentages are expected to change over time, and deviation from the target allocation ranges due to market movements is permitted by the prospectus.

+ Cash equivalents are defined as highly liquid securities with maturities of less than three months. Cash equivalents may include U.S. Government Treasury bills, bank certificates of deposit, bankers’ acceptances, corporate commercial paper and other money market instruments.


10		ANNUAL REPORT		2019

COMPARISON OF CHANGE IN VALUE

OF $10,000 INVESTMENT

PATHFINDER PORTFOLIOS

(UNAUDITED)

LOGO

Growth of 10K

+The Blended Benchmark is computed using a combination of 55% Russell 3000 Index + 30% MSCI EAFE Index + 15% Bloomberg Barclays U.S. Universal Bond Index.

LOGO

Growth of 10K

++The Blended Benchmark is computed using a combination of 35% Russell 3000 Index + 35% Bloomberg Barclays U.S. Universal Bond Index + 20% Bloomberg Barclays 1-5 Year U.S. Government/Credit Index + 10% MSCI EAFE Index.

See footnotes on page 13.

2019

ANNUAL REPORT

COMPARISON OF CHANGE IN VALUE

OF $10,000 INVESTMENT

PATHFINDER PORTFOLIOS

(UNAUDITED)

LOGO

Growth of 10K

+++The Blended Benchmark is computed using a combination of 45% Russell 3000 Index + 25% Bloomberg Barclays U.S. Universal Bond Index + 20% MSCI EAFE Index + 10% Bloomberg Barclays 1-5 Year U.S. Government/Credit Index.

LOGO

Growth of 10K

++++The Blended Benchmark is computed using a combination of 50% Russell 3000 Index + 25% MSCI EAFE Index + 20% Bloomberg Barclays U.S. Universal Bond Index + 5% Bloomberg Barclays 1-5 Year U.S. Government/Credit Index.

See footnotes on page 13.


12		ANNUAL REPORT		2019

COMPARISON OF CHANGE IN VALUE

OF $10,000 INVESTMENT

PATHFINDER PORTFOLIOS

(UNAUDITED)

LOGO

Growth of 10K

+++++The Blended Benchmark is computed using a combination of 40% Russell 3000 Index + 30% Bloomberg Barclays U.S. Universal Bond Index + 15% Bloomberg Barclays1-5 Year U.S. Government/Credit Index + 15% MSCI EAFE Index.

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Pathfinder Aggressive		Pathfinder Conservative		Pathfinder Moderate		Pathfinder Moderately Aggressive		Pathfinder Moderately Conservative
1-year period ended12-31-19		23.24%		14.66%		19.05%		21.40%		16.85%
5-year period ended12-31-19		8.25%		5.12%		6.41%		7.15%		5.81%
10-year period ended12-31-19		9.43%		6.02%		7.64%		8.45%		6.91%

(2)

2019

ANNUAL REPORT

COMPARISON OF CHANGE IN VALUE

OF $10,000 INVESTMENT

PATHFINDER PORTFOLIOS

(UNAUDITED)

LOGO

Growth of 10K

^ The Blended Benchmark is computed using a combination of 45% Russell 3000 Index + 25% Bloomberg Barclays U.S. Universal Bond Index + 20% MSCI EAFE Index + 10% Bloomberg Barclays1-5 Year U.S. Government/Credit Index.

LOGO

Growth of 10K

^^ The Blended Benchmark is computed using a combination of 50% Russell 3000 Index + 25% MSCI EAFE Index + 20% Bloomberg Barclays U.S. Universal Bond Index + 5% Bloomberg Barclays1-5 Year U.S. Government/Credit Index.

See footnotes on page 15.


14		ANNUAL REPORT		2019

COMPARISON OF CHANGE IN VALUE

OF $10,000 INVESTMENT

PATHFINDER PORTFOLIOS

(UNAUDITED)

LOGO

Growth of 10K

^^^The Blended Benchmark is computed using a combination of 40% Russell 3000 Index + 30% Bloomberg Barclays U.S. Universal Bond Index + 15% Bloomberg Barclays1-5 Year U.S. Government/Credit Index + 15% MSCI EAFE Index.

(1)

The value of the investment in the Portfolio is impacted by the ongoing expenses of the Portfolio and assumes reinvestment of dividends and distributions.



Average Annual Total Return⁽²⁾	Pathfinder Moderate — Managed Volatility		Pathfinder Moderately Aggressive — Managed Volatility		Pathfinder Moderately Conservative — Managed Volatility
1-year period ended12-31-19		17.32%		19.29%		14.89%
5-year period ended12-31-19		5.38%		5.97%		4.67%
10-year period ended12-31-19		—		—		—
Since inception of Portfolio⁽³⁾ through12-31-19		5.95%		6.56%		5.10%

(2)

(3)

8-1-13 Pathfinder Moderate — Managed Volatility,8-1-13 Pathfinder Moderately Aggressive — Managed Volatility and8-1-13 Pathfinder Moderately Conservative — Managed Volatility (the date on which shares were first acquired by shareholders).

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		PATHFINDER PORTFOLIOS (in thousands)

DECEMBER 31, 2019

Pathfinder Aggressive


AFFILIATED MUTUAL FUNDS	Shares		Value
Ivy VIP Core Equity, Class II		700	$	8,842
Ivy VIP Corporate Bond, Class II		1,053		5,896
Ivy VIP Global Equity Income, Class II		1,307		7,851
Ivy VIP Growth, Class II		790		8,952
Ivy VIP High Income, Class I		93		323
Ivy VIP International Core Equity, Class II		749		11,721
Ivy VIP Limited-Term Bond, Class II		929		4,595
Ivy VIP Mid Cap Growth, Class I		500		6,379
Ivy VIP Small Cap Core, Class II		60		828
Ivy VIP Small Cap Growth, Class I		190		1,671
Ivy VIP Value, Class II		1,293		8,690


TOTAL AFFILIATED MUTUAL FUNDS – 99.4%			$	65,748
(Cost: $69,098)

SHORT-TERM SECURITIES

Money Market Funds (A) – 0.5%
State Street Institutional U.S. Government Money Market Fund - Premier Class, 1.550%		308		308


TOTAL SHORT-TERM SECURITIES – 0.5%			$	308
(Cost: $308)

TOTAL INVESTMENT SECURITIES – 99.9%			$	66,056
(Cost: $69,406)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.1%				82

NET ASSETS – 100.0%			$	66,138

Notes to Schedule of Investments

(A)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Affiliated Mutual Funds	$	65,748	$	—	$	—
Short-Term Securities		308		—		—

Total	$	66,056	$	—	$	—

Pathfinder Conservative


AFFILIATED MUTUAL FUNDS	Shares		Value
Ivy VIP Core Equity, Class II		662	$	8,365
Ivy VIP Corporate Bond, Class II		3,334		18,661
Ivy VIP Global Equity Income, Class II		662		3,977
Ivy VIP Government Money Market, Class II		8,639		8,639
Ivy VIP Growth, Class II		748		8,472
Ivy VIP High Income, Class I		424		1,474
Ivy VIP International Core Equity, Class II		379		5,937
Ivy VIP Limited-Term Bond, Class II		5,311		26,285
Ivy VIP Mid Cap Growth, Class I		519		6,620
Ivy VIP Small Cap Core, Class II		19		254
Ivy VIP Small Cap Growth, Class I		173		1,524
Ivy VIP Value, Class II		1,223		8,223


TOTAL AFFILIATED MUTUAL FUNDS – 99.7%			$	98,431
(Cost: $99,828)

SHORT-TERM SECURITIES

Money Market Funds (A) – 0.3%
State Street Institutional U.S. Government Money Market Fund - Premier Class, 1.550%		340		340


TOTAL SHORT-TERM SECURITIES – 0.3%			$	340
(Cost: $340)

TOTAL INVESTMENT SECURITIES – 100.0%			$	98,771
(Cost: $100,168)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.0%				42

NET ASSETS – 100.0%			$	98,813

Notes to Schedule of Investments

(A)	Rate shown is the annualized7-day yield at December 31, 2019.


16		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		PATHFINDER PORTFOLIOS (in thousands)

DECEMBER 31, 2019


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Affiliated Mutual Funds	$	98,431	$	—	$	—
Short-Term Securities		340		—		—

Total	$	98,771	$	—	$	—

Pathfinder Moderate


AFFILIATED MUTUAL FUNDS	Shares		Value
Ivy VIP Core Equity, Class II		5,919	$	74,751
Ivy VIP Corporate Bond, Class II		16,921		94,712
Ivy VIP Global Equity Income, Class II		9,073		54,513
Ivy VIP Government Money Market, Class II		36,306		36,306
Ivy VIP Growth, Class II		6,683		75,699
Ivy VIP High Income, Class I		1,934		6,732
Ivy VIP International Core Equity, Class II		5,199		81,384
Ivy VIP Limited-Term Bond, Class II		21,675		107,267
Ivy VIP Mid Cap Growth, Class I		4,382		55,941
Ivy VIP Small Cap Core, Class II		378		5,183
Ivy VIP Small Cap Growth, Class I		1,583		13,931
Ivy VIP Value, Class II		10,925		73,454


TOTAL AFFILIATED MUTUAL FUNDS – 100.0%			$	679,873
(Cost: $697,919)

SHORT-TERM SECURITIES

Money Market Funds (A) – 0.2%
State Street Institutional U.S. Government Money Market Fund - Premier Class, 1.550%		1,068		1,068


TOTAL SHORT-TERM SECURITIES – 0.2%			$	1,068
(Cost: $1,068)

TOTAL INVESTMENT SECURITIES – 100.2%			$	680,941
(Cost: $698,987)

LIABILITIES, NET OF CASH AND OTHER ASSETS – (0.2)%				(1,022	)

NET ASSETS – 100.0%			$	679,919

Notes to Schedule of Investments

(A)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Affiliated Mutual Funds	$	679,873	$	—	$	—
Short-Term Securities		1,068		—		—

Total	$	680,941	$	—	$	—

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		PATHFINDER PORTFOLIOS (in thousands)

DECEMBER 31, 2019

Pathfinder Moderately Aggressive


AFFILIATED MUTUAL FUNDS	Shares		Value
Ivy VIP Core Equity, Class II		8,015	$	101,226
Ivy VIP Corporate Bond, Class II		17,635		98,711
Ivy VIP Global Equity Income, Class II		13,761		82,676
Ivy VIP Government Money Market, Class II		30,144		30,144
Ivy VIP Growth, Class II		9,050		102,502
Ivy VIP High Income, Class I		1,762		6,132
Ivy VIP International Core Equity, Class II		7,885		123,429
Ivy VIP Limited-Term Bond, Class II		16,567		81,987
Ivy VIP Mid Cap Growth, Class I		5,817		74,252
Ivy VIP Small Cap Core, Class II		611		8,375
Ivy VIP Small Cap Growth, Class I		2,160		19,011
Ivy VIP Value, Class II		14,795		99,473


TOTAL AFFILIATED MUTUAL FUNDS – 99.9%			$	827,918
(Cost: $856,135)

SHORT-TERM SECURITIES

Money Market Funds (A) – 0.1%
State Street Institutional U.S. Government Money Market Fund - Premier Class, 1.550%		609		609


TOTAL SHORT-TERM SECURITIES – 0.1%			$	609
(Cost: $609)

TOTAL INVESTMENT SECURITIES – 100.0%			$	828,527
(Cost: $856,744)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.0%				380

NET ASSETS – 100.0%			$	828,907

Notes to Schedule of Investments

(A)	Rate shown is the annualized7-day yield at December 31, 2019.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Affiliated Mutual Funds	$	827,918	$	—	$	—
Short-Term Securities		609		—		—

Total	$	828,527	$	—	$	—

Pathfinder Moderately Conservative


AFFILIATED MUTUAL FUNDS	Shares		Value
Ivy VIP Core Equity, Class II		1,555	$	19,638
Ivy VIP Corporate Bond, Class II		5,737		32,110
Ivy VIP Global Equity Income, Class II		2,023		12,156
Ivy VIP Government Money Market, Class II		14,197		14,197
Ivy VIP Growth, Class II		1,756		19,888
Ivy VIP High Income, Class I		719		2,500
Ivy VIP International Core Equity, Class II		1,159		18,149
Ivy VIP Limited-Term Bond, Class II		8,835		43,724
Ivy VIP Mid Cap Growth, Class I		1,180		15,062
Ivy VIP Small Cap Core, Class II		75		1,029
Ivy VIP Small Cap Growth, Class I		412		3,624
Ivy VIP Value, Class II		2,870		19,300


TOTAL AFFILIATED MUTUAL FUNDS – 99.8%			$	201,377
(Cost: $205,679)

SHORT-TERM SECURITIES

Money Market Funds (A) – 0.2%
State Street Institutional U.S. Government Money Market Fund - Premier Class, 1.550%		339		339


TOTAL SHORT-TERM SECURITIES – 0.2%			$	339
(Cost: $339)

TOTAL INVESTMENT SECURITIES – 100.0%			$	201,716
(Cost: $206,018)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.0%				15

NET ASSETS – 100.0%			$	201,731

Notes to Schedule of Investments

(A)	Rate shown is the annualized7-day yield at December 31, 2019.


18		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		PATHFINDER PORTFOLIOS (in thousands)

DECEMBER 31, 2019


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Affiliated Mutual Funds	$	201,377	$	—	$	—
Short-Term Securities		339		—		—

Total	$	201,716	$	—	$	—

Pathfinder Moderate – Managed Volatility


AFFILIATED MUTUAL FUNDS	Shares		Value
Ivy VIP Core Equity, Class II		6,012	$	75,930
Ivy VIP Corporate Bond, Class II		17,189		96,210
Ivy VIP Global Equity Income, Class II		9,228		55,446
Ivy VIP Government Money Market, Class II		36,995		36,995
Ivy VIP Growth, Class II		6,789		76,894
Ivy VIP High Income, Class I		1,976		6,879
Ivy VIP International Core Equity, Class II		5,288		82,775
Ivy VIP Limited-Term Bond, Class II		22,074		109,238
Ivy VIP Mid Cap Growth, Class I		4,450		56,810
Ivy VIP Small Cap Core, Class II		385		5,279
Ivy VIP Small Cap Growth, Class I		1,608		14,154
Ivy VIP Value, Class II		11,102		74,645


TOTAL AFFILIATED MUTUAL FUNDS – 97.8%			$	691,255
(Cost: $698,185)

SHORT-TERM SECURITIES

Money Market Funds (A) – 2.1%
State Street Institutional U.S. Government Money Market Fund - Premier Class, 1.550%		15,030		15,030


TOTAL SHORT-TERM SECURITIES – 2.1%			$	15,030
(Cost: $15,030)

TOTAL INVESTMENT SECURITIES – 99.9%			$	706,285
(Cost: $713,215)

CASH AND OTHER ASSETS, NET OF LIABILITIES (B) – 0.1%				807

NET ASSETS – 100.0%			$	707,092

Notes to Schedule of Investments

(A)	Rate shown is the annualized7-day yield at December 31, 2019.

(B)	Cash of $864 has been pledged as collateral on open futures contracts.

The following futures contracts were outstanding at December 31, 2019 (contracts unrounded):


Description	Type	Number of Contracts		Expiration Date		Notional Amount		Value			Unrealized Dep reciation
E-mini Russell 2000 Index	Short		15		3-20-20		1	$	(1,253	)	$	(26	)
S&P 500 Index	Short		26		3-20-20		6		(21,002	)		(553	)

								$	(22,255	)	$	(579	)


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Affiliated Mutual Funds	$	691,255	$	—	$	—
Short-Term Securities		15,030		—		—

Total	$	706,285	$	—	$	—

Liabilities
Futures Contracts	$	579	$	—	$	—

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		PATHFINDER PORTFOLIOS (in thousands)

DECEMBER 31, 2019

Pathfinder Moderately Aggressive – Managed Volatility


AFFILIATED MUTUAL FUNDS	Shares		Value
Ivy VIP Core Equity, Class II		884	$	11,170
Ivy VIP Corporate Bond, Class II		1,947		10,897
Ivy VIP Global Equity Income, Class II		1,520		9,131
Ivy VIP Government Money Market, Class II		3,321		3,321
Ivy VIP Growth, Class II		999		11,311
Ivy VIP High Income, Class I		195		680
Ivy VIP International Core Equity, Class II		871		13,631
Ivy VIP Limited-Term Bond, Class II		1,835		9,079
Ivy VIP Mid Cap Growth, Class I		642		8,193
Ivy VIP Small Cap Core, Class II		67		925
Ivy VIP Small Cap Growth, Class I		238		2,098
Ivy VIP Value, Class II		1,633		10,980


TOTAL AFFILIATED MUTUAL FUNDS – 98.0%			$	91,416
(Cost: $94,996)

SHORT-TERM SECURITIES

Money Market Funds (A) – 1.8%
State Street Institutional U.S. Government Money Market Fund - Premier Class, 1.550%		1,680		1,680


TOTAL SHORT-TERM SECURITIES – 1.8%			$	1,680
(Cost: $1,680)

TOTAL INVESTMENT SECURITIES – 99.8%			$	93,096
(Cost: $96,676)

CASH AND OTHER ASSETS, NET OF LIABILITIES (B) – 0.2%				184

NET ASSETS – 100.0%			$	93,280

Notes to Schedule of Investments

*	Not shown due to rounding.

(A)	Rate shown is the annualized7-day yield at December 31, 2019.

(B)	Cash of $101 has been pledged as collateral on open futures contracts.

The following futures contracts were outstanding at December 31, 2019 (contracts unrounded):


Description	Type	Number of Contracts		Expiration Date		Notional Amount			Value			Unrealized Depreciation
E-mini Russell 2000 Index	Short		2		3-20-20		—	*	$	(167	)	$	(3	)
S&P 500 Index	Short		3		3-20-20		1			(2,423	)		(64	)

									$	(2,590	)	$	(67	)


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Affiliated Mutual Funds	$	91,416	$	—	$	—
Short-Term Securities		1,680		—		—

Total	$	93,096	$	—	$	—

Liabilities
Futures Contracts	$	67	$	—	$	—

Pathfinder Moderately Conservative – Managed Volatility


AFFILIATED MUTUAL FUNDS	Shares		Value
Ivy VIP Core Equity, Class II		606	$	7,649
Ivy VIP Corporate Bond, Class II		2,234		12,506
Ivy VIP Global Equity Income, Class II		789		4,740
Ivy VIP Government Money Market, Class II		5,560		5,560
Ivy VIP Growth, Class II		684		7,747
Ivy VIP High Income, Class I		282		980
Ivy VIP International Core Equity, Class II		452		7,076
Ivy VIP Limited-Term Bond, Class II		3,445		17,048
Ivy VIP Mid Cap Growth, Class I		460		5,866
Ivy VIP Small Cap Core, Class II		29		403
Ivy VIP Small Cap Growth, Class I		160		1,412
Ivy VIP Value, Class II		1,118		7,519


TOTAL AFFILIATED MUTUAL FUNDS – 97.6%			$	78,506
(Cost: $79,430)

SHORT-TERM SECURITIES

Money Market Funds (A) – 2.3%
State Street Institutional U.S. Government Money Market Fund - Premier Class, 1.550%		1,848		1,848


TOTAL SHORT-TERM SECURITIES – 2.3%			$	1,848
(Cost: $1,848)

TOTAL INVESTMENT SECURITIES – 99.9%			$	80,354
(Cost: $81,278)

CASH AND OTHER ASSETS, NET OF LIABILITIES (B) – 0.1%				92

NET ASSETS – 100.0%			$	80,446

Notes to Schedule of Investments

*	Not shown due to rounding.

(A)	Rate shown is the annualized7-day yield at December 31, 2019.

(B)	Cash of $101 has been pledged as collateral on open futures contracts.


20		ANNUAL REPORT		2019


SCHEDULE OF INVESTMENTS		PATHFINDER PORTFOLIOS (in thousands)

DECEMBER 31, 2019

The following futures contracts were outstanding at December 31, 2019 (contracts unrounded):


Description	Type	Number of Contracts		Expiration Date		Notional Amount			Value			Unrealized Depreciation
E-mini Russell 2000 Index	Short		2		3-20-20		—	*	$	(167	)	$	(3	)
S&P 500 Index	Short		3		3-20-20		1			(2,423	)		(64	)

									$	(2,590	)	$	(67	)


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Affiliated Mutual Funds	$	78,506	$	—	$	—
Short-Term Securities		1,848		—		—

Total	$	80,354	$	—	$	—

Liabilities
Futures Contracts	$	67	$	—	$	—

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


MANAGEMENT DISCUSSION		GOVERNMENT MONEY MARKET

(UNAUDITED)

LOGO

Mira Stevovich

Below, Mira Stevovich, CFA, portfolio manager of Ivy VIP Government Money Market, discusses positioning, performance and results for the fiscal year ended December 31, 2019. She has managed the Portfolio for 21 years and has 33 years of industry experience.

The Portfolio’s fiscal year ended on December 31, 2019 with short-term rates lower after three rate cuts of 0.25% each by the Federal Reserve (Fed) in July, September and October. The rate cuts followed a December 2018 rate increase. The economy continued to show growth, but with signs of slowing, the Fed was prompted to lower rates to prolong economic growth.

The Fed reversed its rate path

The Portfolio’s fiscal year started with the federal funds rate between 2.25-2.50% and ended in a range of 1.50-1.75%. The Fed continued to use an interest rate band of a quarter percentage point to manage the federal funds rate. The Reverse Repo Program continued as a tool to manage the band floor. Due to a narrowing of the spread between the effective federal funds rate and the interest on excess reserves (IOER), the IOER was set five basis points (bps) below the top of the federal interest rate band at the end

of 2018. To maintain control of short-term rates, the Fed made subsequent adjustments to the IOER, setting it 10 bps below the top of the Fed fund band in January 2019, 15 bps below the top rate at the May meeting and moved to 20 bps below the top rate at the September meeting. In the final quarter of the Portfolio’s fiscal year, it was necessary for the Fed to execute open market operations to inject bank reserves into the system to lower short-term rates that had increased substantially due to technical reasons. It was determined that it would be necessary for the Fed to continue to do this until bank reserves normalized. As part of this plan, the Fed began purchasing $60 billion U.S. Treasury Bills on a monthly basis. The Fed’s plan succeeded in maintaining an acceptable level of short-term rates over year-end. However, short-term U.S. Treasury Bill rates were pushed lower. The Fed has indicated that it will maintain the current level of the federal funds rate throughout 2020, pending unusual circumstances. We will continue to manage the Portfolio with this in mind.

The higher rates of interest early in the fiscal year boosted the performance of the Portfolio and rates on money market investments, in general. However, the interest rate cuts late in the fiscal year lowered yield on money market securities and eventually caused the yield on the Portfolio to decline. The Securities and Exchange Commission (SEC) regulation requiring at least 30% of the Portfolio’s holdings mature in five business days or less continues to affect the Portfolio’s return because very short maturities tend to carry the lowest interest rates. Also, the restriction to government investments can affect the overall performance of the Portfolio.

Staying the course

This past fiscal year, we invested a minimum of 99.5% of the Portfolio’s total assets in government securities, cash, sweep funds and/or repurchase agreements that are collateralized fully, per SEC regulations for government money market funds. The Portfolio has been structured to comply with the “know your investor” mandate, such that a short average maturity is maintained to provide ample liquidity for our investors. We anticipate continuing to use short floating-rate securities in the coming fiscal year as part of our liquidity management of the Portfolio.

We have managed the Portfolio to comply with all SEC regulations that apply to “government money market funds” since the conversion of the Portfolio in 2016. The SEC reformed money fund regulations in 2010 and further modified those regulations in July 2014 to provide money market investors with greater protection and more timely information about the fund in which they invest. To this end, we seek to maintain daily and weekly liquidity levels according to those regulations, to provide for the liquidity needs of our shareholders. We intend to continue to manage the Portfolio in a prudent manner and in accordance with SEC regulations for “government money market funds.”

You could lose money by investing in Ivy VIP Government Money Market. Although the Portfolio seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Portfolio is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Portfolio’s sponsor has no legal obligation to provide financial support to the Portfolio, and you should not expect that the sponsor will provide financial support to the Portfolio at any time.

Interest rate increases can cause the price of a money market security to decrease. A decline in the credit quality of an issuer or a provider of credit support or a maturity-shortening structure for a security can cause the price of a money market security to decrease. Portfolio shares are not guaranteed by the U.S. Government. These and other risks are more fully described in the Portfolio’s prospectus.


22		ANNUAL REPORT		2019


PORTFOLIO HIGHLIGHTS		GOVERNMENT MONEY MARKET

ALL DATA IS AS OF DECEMBER 31, 2019 (UNAUDITED)

Asset Allocation


Investment Funds			7.6%
Money Market Funds			7.6%
Corporate Obligations			0.4%
Master Note			0.4%
United States Government Agency Obligations			91.8%
Cash and Other Assets (Net of Liabilities)			0.2%

2019

ANNUAL REPORT


SCHEDULE OF INVESTMENTS		GOVERNMENT MONEY MARKET (in thousands)

DECEMBER 31, 2019


INVESTMENT FUNDS	Shares		Value
Money Market Funds (A) – 7.6%
State Street Institutional U.S. Government Money MarketFund - Premier Class,1.550%, 1-2-20		14,057	$	14,057


TOTAL INVESTMENT FUNDS – 7.6%			$	14,057
(Cost: $14,057)

CORPORATE OBLIGATIONS	Principal
Master Note
Toyota Motor Credit Corp.(1-Month U.S. LIBOR plus 15 bps),1.860%, 1-6-20 (B)	$	812		812


Total Master Note – 0.4%				812

TOTAL CORPORATE OBLIGATIONS – 0.4%			$	812
(Cost: $812)


UNITED STATES GOVERNMENT AGENCY OBLIGATIONS	Principal		Value
United States Government Agency Obligations – 91.8%
Federal Home Loan Mortgage Corp., 1.350%,1-2-20	$	41,000	$	40,998
Overseas Private Investment Corp. (GTD by U.S. Government)(3-Month U.S. TB Rate):
1.980%,1-1-20 (B)		6,400		6,400
1.960%,1-7-20 (B)		22,330		22,331
1.980%,1-7-20 (B)		54,577		54,577
1.990%,1-7-20 (B)		25,500		25,500
2.030%,1-7-20 (B)		18,987		18,987

				168,793


TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS – 91.8%			$	168,793
(Cost: $168,793)

TOTAL INVESTMENT SECURITIES – 99.8%			$	183,662
(Cost: $183,662)

CASH AND OTHER ASSETS, NET OF LIABILITIES – 0.2%				361

NET ASSETS – 100.0%			$	184,023

Notes to Schedule of Investments

(A)	Rate shown is the annualized7-day yield at December 31, 2019.

(B)	Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2019. Date shown represents the date that the variable rate resets. Description of the reference rate and spread, if applicable, are included in the security description.


	Level 1		Level 2		Level 3
Assets
Investments in Securities
Investment Funds	$	14,057	$	—	$	—
Corporate Obligations		—		812		—
United States Government Agency Obligations		—		168,793		—

Total	$	14,057	$	169,605	$	—

The following acronyms are used throughout this schedule:

GTD = Guaranteed

LIBOR = London Interbank Offered Rate

TB = Treasury Bill

See Accompanying Notes to Financial Statements.


24		ANNUAL REPORT		2019


STATEMENTS OF ASSETS AND LIABILITIES		IVY VIP

AS OF DECEMBER 31, 2019


(In thousands, except per share amounts)	Pathfinder Aggressive				Pathfinder Conservative				Pathfinder Moderate				Pathfinder Moderately Aggressive			Pathfinder Moderately Conservative				Pathfinder Moderate – Managed Volatility			Pathfinder Moderately Aggressive – Managed Volatility				Pathfinder Moderately Conservative – Managed Volatility
ASSETS
Investments in unaffiliated securities at value+		$	308			$	340			$	1,068			$	609		$	339			$	15,030		$	1,680			$	1,848
Investments in affiliated securities at value+			65,748				98,431				679,873				827,918			201,377				691,255			91,416				78,506
Investments at Value			66,056				98,771				680,941				828,527			201,716				706,285			93,096				80,354
Cash			—				—				—				—			—				94			—				11
Restricted cash			—				—				—				—			—				864			101				101
Investment securities sold receivable			91				60				431				890			61				—			—				—
Dividends and interest receivable			—	*			1				1				1			—	*			21			2				2
Capital shares sold receivable			3				—	*			—	*			1			—	*			1			89				—
Variation margin receivable			—				—				—				—			—				—			11				—
Prepaid and other assets			1				1				9				11			3				8			1				1
Total Assets			66,151				98,833				681,382				829,430			201,780				707,273			93,300				80,469

LIABILITIES
Capital shares redeemed payable			4				8				1,387				432			23				93			8				11
Independent Trustees and Chief Compliance Officer fees payable			7				9				64				76			20				20			3				3
Shareholder servicing payable			—	*			—	*			1				1			1				1			—	*			—	*
Investment management fee payable			—				—				—				—			—				4			1				1
Accounting services fee payable			2				2				10				12			4				10			2				2
Variation margin payable			—				—				—				—			—				52			6				6
Other liabilities			—	*			1				1				2			1				1			—	*			—	*
Total Liabilities			13				20				1,463				523			49				181			20				23
Total Net Assets		$	66,138			$	98,813			$	679,919			$	828,907		$	201,731			$	707,092		$	93,280			$	80,446

NET ASSETS
Capital paid in (shares authorized – unlimited)		$	60,762			$	92,290			$	618,549			$	747,543		$	185,983			$	653,466		$	87,189			$	75,350
Accumulated earnings gain			5,376				6,523				61,370				81,364			15,748				53,626			6,091				5,096
Total Net Assets		$	66,138			$	98,813			$	679,919			$	828,907		$	201,731			$	707,092		$	93,280			$	80,446

CAPITAL SHARES OUTSTANDING:
Class II			13,219				19,173				130,889				155,793			38,657				121,166			16,575				14,409

NET ASSET VALUE PER SHARE:
Class II		$	5.00			$	5.15			$	5.19			$	5.32		$	5.22			$	5.84		$	5.63			$	5.58

+COST
Investments in unaffiliated securities at cost		$	308			$	340			$	1,068			$	609		$	339			$	15,030		$	1,680			$	1,848
Investments in affiliated securities at cost			69,098				99,828				697,919				856,135			205,679				698,185			94,996				79,430

*Not shown due to rounding.

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


STATEMENTS OF ASSETS AND LIABILITIES		IVY VIP

AS OF DECEMBER 31, 2019


(In thousands, except per share amounts)	Government Money Market
ASSETS
Investments in unaffiliated securities at value+		$	183,662
Investments at Value			183,662
Dividends and interest receivable			291
Capital shares sold receivable			443
Prepaid and other assets			1
Total Assets			184,397

LIABILITIES
Capital shares redeemed payable			81
Distributions payable			236
Independent Trustees and Chief Compliance Officer fees payable			49
Shareholder servicing payable			—	*
Investment management fee payable			2
Accounting services fee payable			5
Other liabilities			1
Total Liabilities			374
Total Net Assets		$	184,023

NET ASSETS
Capital paid in (shares authorized – unlimited)		$	184,023
Accumulated earnings loss			—	*
Total Net Assets		$	184,023

CAPITAL SHARES OUTSTANDING:
Class II			184,027

NET ASSET VALUE PER SHARE:
Class II		$	1.00

+COST
Investments in unaffiliated securities at cost		$	183,662

*Not shown due to rounding.

See Accompanying Notes to Financial Statements.


26		ANNUAL REPORT		2019


STATEMENTS OF OPERATIONS		IVY VIP

FOR THE YEAR ENDED DECEMBER 31, 2019


(In thousands)	Pathfinder Aggressive			Pathfinder Conservative			Pathfinder Moderate			Pathfinder Moderately Aggressive			Pathfinder Moderately Conservative			Pathfinder Moderate – Managed Volatility				Pathfinder Moderately Aggressive – Managed Volatility				Pathfinder Moderately Conservative – Managed Volatility
INVESTMENT INCOME
Dividends from affiliated securities		$	954		$	1,742		$	11,677		$	13,653		$	3,591		$	10,409			$	1,399			$	1,296
Interest and amortization from unaffiliated securities			14			14			23			20			11			400				53				49
Total Investment Income			968			1,756			11,700			13,673			3,602			10,809				1,452				1,345

EXPENSES
Investment management fee			—			—			—			—			—			1,283				182				157
Shareholder servicing:
Class II			3			1			19			22			7			16				4				3
Custodian fees			2			3			3			3			2			4				2				2
Independent Trustees and Chief Compliance Officer fees			4			5			40			48			12			34				5				4
Insurance fees			2			3			22			27			6			18				3				2
Printing fees			3			4			12			13			5			11				2				2
Accounting services fee			24			28			119			147			53			115				27				26
Professional fees			22			23			32			34			24			32				24				16
Other			1			2			1			3			2			3				—	*			—	*
Total Expenses			61			69			248			297			111			1,516				249				212
Net Investment Income			907			1,687			11,452			13,376			3,491			9,293				1,203				1,133

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments in unaffiliated securities			—			—			—			—			—			—	*			—				—
Investments in affiliated securities			565			607			6,327			9,259			1,465			2,198				576				319
Distributions of realized capital gains from affiliated securities			7,303			5,714			61,790			87,104			15,193			55,095				8,928				5,487
Futures contracts			—			—			—			—			—			(4,638	)			(727	)			(712	)
Net change in unrealized appreciation (depreciation) on:
Investments in unaffiliated securities			—			—			—			—			—			—	*			—				—
Investments in affiliated securities			4,449			5,418			44,037			55,859			12,370			44,308				6,103				4,722
Futures contracts			—			—			—			—			—			(1,341	)			(278	)			(185	)
Net Realized and Unrealized Gain			12,317			11,739			112,154			152,222			29,028			95,622				14,602				9,631
Net Increase in Net Assets Resulting from Operations		$	13,224		$	13,426		$	123,606		$	165,598		$	32,519		$	104,915			$	15,805			$	10,764

*Not shown due to rounding.

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


STATEMENTS OF OPERATIONS		IVY VIP

FOR THE YEAR ENDED DECEMBER 31, 2019


(In thousands)	Government Money Market
INVESTMENT INCOME
Interest and amortization from unaffiliated securities		$	4,837
Total Investment Income			4,837

EXPENSES
Investment management fee			758
Shareholder servicing:
Class II			7
Custodian fees			8
Independent Trustees and Chief Compliance Officer fees			15
Accounting services fee			82
Professional fees			23
Other			7
Total Expenses			900
Net Investment Income			3,937

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments in unaffiliated securities			—	*
Net change in unrealized appreciation (depreciation) on:
Investments in unaffiliated securities			—
Net Realized and Unrealized Gain			—	*
Net Increase in Net Assets Resulting from Operations		$	3,937

*Not shown due to rounding.

See Accompanying Notes to Financial Statements.


28		ANNUAL REPORT		2019


STATEMENTS OF CHANGES IN NET ASSETS		IVY VIP


	Pathfinder Aggressive								Pathfinder Conservative								Pathfinder Moderate
(In thousands)	Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income		$	907			$	1,760			$	1,687			$	1,986			$	11,452			$	18,492
Net realized gain on investments			7,868				5,579				6,321				4,848				68,117				57,056
Net change in unrealized appreciation (depreciation)			4,449				(9,373	)			5,418				(8,469	)			44,037				(101,333	)
Net Increase (Decrease) in Net Assets Resulting from Operations			13,224				(2,034	)			13,426				(1,635	)			123,606				(25,785	)

Distributions to Shareholders From:
Accumulated earnings:
(combined net investment income and net realized gains)
Class II			(7,374	)			(5,067	)			(6,905	)			(4,722	)			(75,615	)			(48,519	)
Total Distributions to Shareholders			(7,374	)			(5,067	)			(6,905	)			(4,722	)			(75,615	)			(48,519	)
Capital Share Transactions			1,498				(9,874	)			(1,287	)			(8,982	)			(70,658	)			(100,492	)
Net Increase (Decrease) in Net Assets			7,348				(16,975	)			5,234				(15,339	)			(22,667	)			(174,796	)
Net Assets, Beginning of Period			58,790				75,765				93,579				108,918				702,586				877,382
Net Assets, End of Period		$	66,138			$	58,790			$	98,813			$	93,579			$	679,919			$	702,586

	Pathfinder Moderately Aggressive								Pathfinder Moderately Conservative								Pathfinder Moderate – Managed Volatility
(In thousands)	Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income		$	13,376			$	23,303			$	3,491			$	4,888			$	9,293			$	12,479
Net realized gain on investments			96,363				79,227				16,658				13,480				52,655				30,590
Net change in unrealized appreciation (depreciation)			55,859				(139,803	)			12,370				(23,345	)			42,967				(68,891	)
Net Increase (Decrease) in Net Assets Resulting from Operations			165,598				(37,273	)			32,519				(4,977	)			104,915				(25,822	)

Distributions to Shareholders From:
Accumulated earnings:
(combined net investment income and net realized gains)
Class II			(102,589	)			(65,728	)			(18,438	)			(12,955	)			(43,825	)			(24,303	)
Total Distributions to Shareholders			(102,589	)			(65,728	)			(18,438	)			(12,955	)			(43,825	)			(24,303	)
Capital Share Transactions			(72,019	)			(111,539	)			(17,598	)			(28,163	)			40,173				56,327
Net Increase (Decrease) in Net Assets			(9,010	)			(214,540	)			(3,517	)			(46,095	)			101,263				6,202
Net Assets, Beginning of Period			837,917				1,052,457				205,248				251,343				605,829				599,627
Net Assets, End of Period		$	828,907			$	837,917			$	201,731			$	205,248			$	707,092			$	605,829

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


STATEMENTS OF CHANGES IN NET ASSETS		IVY VIP


	Pathfinder Moderately Aggressive – Managed Volatility								Pathfinder Moderately Conservative – Managed Volatility								Government Money Market
(In thousands)	Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18				Year ended 12-31-19				Year ended 12-31-18
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income		$	1,203			$	1,880			$	1,133			$	1,340			$	3,937			$	4,342
Net realized gain on investments			8,777				5,456				5,094				3,446				—	*			38
Net change in unrealized appreciation (depreciation)			5,825				(11,434	)			4,537				(6,965	)			—				—
Net Increase (Decrease) in Net Assets Resulting from Operations			15,805				(4,098	)			10,764				(2,179	)			3,937				4,380

Distributions to Shareholders From:
Accumulated earnings:
(combined net investment income and net realized gains)
Class II			(7,558	)			(4,062	)			(4,908	)			(2,876	)			(3,964	)			(4,344	)
Total Distributions to Shareholders			(7,558	)			(4,062	)			(4,908	)			(2,876	)			(3,964	)			(4,344	)
Capital Share Transactions			1,066				(176	)			1,754				3,753				(54,886	)			(78,127	)
Net Increase (Decrease) in Net Assets			9,313				(8,336	)			7,610				(1,302	)			(54,913	)			(78,091	)
Net Assets, Beginning of Period			83,967				92,303				72,836				74,138				238,936				317,027
Net Assets, End of Period		$	93,280			$	83,967			$	80,446			$	72,836			$	184,023			$	238,936

*Not shown due to rounding.

See Accompanying Notes to Financial Statements.


30		ANNUAL REPORT		2019

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2019

ANNUAL REPORT


FINANCIAL HIGHLIGHTS		IVY VIP

FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD



	Net Asset Value, Beginning of Period			Net Investment Income⁽¹⁾			Net Realized and Unrealized Gain (Loss) on Investments				Total from Investment Operations				Distributions From Net Investment Income				Distributions From Net Realized Gains				Total Distributions
Pathfinder Aggressive
Class II Shares
Year ended12-31-2019		$	4.60		$	0.07		$	0.92			$	0.99			$	(0.14	)		$	(0.45	)		$	(0.59	)
Year ended12-31-2018			5.16			0.13			(0.32	)			(0.19	)			(0.09	)			(0.28	)			(0.37	)
Year ended12-31-2017			4.68			0.08			0.80				0.88				(0.05	)			(0.35	)			(0.40	)
Year ended12-31-2016			5.05			0.04			0.15				0.19				(0.07	)			(0.49	)			(0.56	)
Year ended12-31-2015			5.73			0.07			(0.01	)			0.06				(0.16	)			(0.58	)			(0.74	)

Pathfinder Conservative							��
Class II Shares
Year ended12-31-2019			4.83			0.09			0.59				0.68				(0.10	)			(0.26	)			(0.36	)
Year ended12-31-2018			5.16			0.10			(0.20	)			(0.10	)			(0.06	)			(0.17	)			(0.23	)
Year ended12-31-2017			4.90			0.05			0.46				0.51				(0.04	)			(0.21	)			(0.25	)
Year ended12-31-2016			5.15			0.04			0.09				0.13				(0.06	)			(0.32	)			(0.38	)
Year ended12-31-2015			5.54			0.06			(0.03	)			0.03				(0.06	)			(0.36	)			(0.42	)

Pathfinder Moderate
Class II Shares
Year ended12-31-2019			4.89			0.08			0.79				0.87				(0.14	)			(0.43	)			(0.57	)
Year ended12-31-2018			5.40			0.12			(0.31	)			(0.19	)			(0.08	)			(0.24	)			(0.32	)
Year ended12-31-2017			5.02			0.07			0.64				0.71				(0.04	)			(0.29	)			(0.33	)
Year ended12-31-2016			5.34			0.04			0.13				0.17				(0.07	)			(0.42	)			(0.49	)
Year ended12-31-2015			5.87			0.07			(0.02	)			0.05				(0.10	)			(0.48	)			(0.58	)

Pathfinder Moderately Aggressive
Class II Shares
Year ended12-31-2019			4.98			0.08			0.92				1.00				(0.15	)			(0.51	)			(0.66	)
Year ended12-31-2018			5.59			0.13			(0.37	)			(0.24	)			(0.10	)			(0.27	)			(0.37	)
Year ended12-31-2017			5.14			0.09			0.74				0.83				(0.05	)			(0.33	)			(0.38	)
Year ended12-31-2016			5.50			0.04			0.17				0.21				(0.09	)			(0.48	)			(0.57	)
Year ended12-31-2015			6.14			0.09			(0.06	)			0.03				(0.14	)			(0.53	)			(0.67	)

Pathfinder Moderately Conservative
Class II Shares
Year ended12-31-2019			4.90			0.08			0.70				0.78				(0.12	)			(0.34	)			(0.46	)
Year ended12-31-2018			5.32			0.11			(0.24	)			(0.13	)			(0.07	)			(0.22	)			(0.29	)
Year ended12-31-2017			4.99			0.06			0.56				0.62				(0.04	)			(0.25	)			(0.29	)
Year ended12-31-2016			5.30			0.04			0.10				0.14				(0.07	)			(0.38	)			(0.45	)
Year ended12-31-2015			5.80			0.07			(0.03	)			0.04				(0.09	)			(0.45	)			(0.54	)

(1)

Based on average weekly shares outstanding.

(2)

Based on net asset value. Total returns do not reflect a sales charge or contingent deferred sales charge, if applicable. Total returns for periods less than one year are not annualized.

(3)

Does not include expenses of underlying Ivy VIP Portfolios in which the Portfolio invests.


32		ANNUAL REPORT		2019


	Net Asset Value, End of Period			Total Return⁽²⁾			Net Assets, End of Period (in millions)			Ratio of Expenses to Average Net Assets⁽³⁾			Ratio of Net Investment Income to Average Net Assets⁽³⁾			Portfolio Turnover Rate
Pathfinder Aggressive
Class II Shares
Year ended12-31-2019		$	5.00		23.24	%		$	66		0.09	%		1.41	%		18	%
Year ended12-31-2018			4.60		-4.27				59		0.09			2.49			51
Year ended12-31-2017			5.16		19.83				76		0.07			1.68			20
Year ended12-31-2016			4.68		4.80				75		0.08			0.88			23
Year ended12-31-2015			5.05		0.34				85		0.07			1.36			13

Pathfinder Conservative
Class II Shares
Year ended12-31-2019			5.15		14.66				99		0.07			1.71			31
Year ended12-31-2018			4.83		-1.93				94		0.07			1.89			39
Year ended12-31-2017			5.16		10.51				109		0.06			1.06			30
Year ended12-31-2016			4.90		2.84				114		0.07			0.71			26
Year ended12-31-2015			5.15		0.45				117		0.06			1.09			17

Pathfinder Moderate
Class II Shares
Year ended12-31-2019			5.19		19.05				680		0.04			1.62			17
Year ended12-31-2018			4.89		-3.90				703		0.03			2.26			36
Year ended12-31-2017			5.40		14.70				877		0.03			1.30			22
Year ended12-31-2016			5.02		3.65				860		0.03			0.78			19
Year ended12-31-2015			5.34		0.32				893		0.03			1.22			13

Pathfinder Moderately Aggressive
Class II Shares
Year ended12-31-2019			5.32		21.40				829		0.03			1.56			19
Year ended12-31-2018			4.98		-4.71				838		0.03			2.35			39
Year ended12-31-2017			5.59		16.72				1,052		0.03			1.66			20
Year ended12-31-2016			5.14		4.52				1,020		0.04			0.85			17
Year ended12-31-2015			5.50		0.06				1,054		0.03			1.50			12

Pathfinder Moderately Conservative
Class II Shares
Year ended12-31-2019			5.22		16.85				202		0.05			1.67			18
Year ended12-31-2018			4.90		-2.67				205		0.05			2.07			34
Year ended12-31-2017			5.32		12.77				251		0.05			1.22			24
Year ended12-31-2016			4.99		3.10				261		0.05			0.80			16
Year ended12-31-2015			5.30		0.33				272		0.04			1.20			16

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


FINANCIAL HIGHLIGHTS		IVY VIP

FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD



	Net Asset Value, Beginning of Period			Net Investment Income⁽¹⁾				Net Realized and Unrealized Gain (Loss) on Investments				Total from Investment Operations				Distributions From Net Investment Income				Distributions From Net Realized Gains				Total Distributions
Pathfinder Moderate – Managed Volatility
Class II Shares
Year ended12-31-2019		$	5.33		$	0.08			$	0.82			$	0.90			$	(0.11	)		$	(0.28	)		$	(0.39	)
Year ended12-31-2018			5.78			0.11				(0.33	)			(0.22	)			(0.06	)			(0.17	)			(0.23	)
Year ended12-31-2017			5.25			0.06				0.65				0.71				(0.03	)			(0.15	)			(0.18	)
Year ended12-31-2016			5.37			0.03				0.06				0.09				(0.03	)			(0.18	)			(0.21	)
Year ended12-31-2015			5.39			0.05				(0.07	)			(0.02	)			—				—				—

Pathfinder Moderately Aggressive – Managed Volatility
Class II Shares
Year ended12-31-2019			5.15			0.07				0.88				0.95				(0.12	)			(0.35	)			(0.47	)
Year ended12-31-2018			5.66			0.11				(0.37	)			(0.26	)			(0.07	)			(0.18	)			(0.25	)
Year ended12-31-2017			5.06			0.07				0.71				0.78				(0.02	)			(0.16	)			(0.18	)
Year ended12-31-2016			5.25			0.03				0.09				0.12				(0.05	)			(0.26	)			(0.31	)
Year ended12-31-2015			5.29			0.06				(0.10	)			(0.04	)			—				—				—

Pathfinder Moderately Conservative – Managed Volatility
Class II Shares
Year ended12-31-2019			5.19			0.08				0.66				0.74				(0.10	)			(0.25	)			(0.35	)
Year ended12-31-2018			5.55			0.10				(0.24	)			(0.14	)			(0.05	)			(0.17	)			(0.22	)
Year ended12-31-2017			5.10			0.05				0.53				0.58				(0.02	)			(0.11	)			(0.13	)
Year ended12-31-2016			5.23			0.02				0.04				0.06				(0.03	)			(0.16	)			(0.19	)
Year ended12-31-2015			5.27			0.04				(0.07	)			(0.03	)			—				(0.01	)			(0.01	)

Government Money Market
Class II Shares
Year ended12-31-2019			1.00			0.02				0.00	*			0.02				(0.02	)			—	*			(0.02	)
Year ended12-31-2018			1.00			0.02				0.00	*			0.02				(0.02	)			—	*			(0.02	)
Year ended12-31-2017			1.00			0.01				0.00	*			0.01				(0.01	)			—	*			(0.01	)
Year ended12-31-2016			1.00			0.00	*			0.00	*			0.00	*			—	*			—	*			—	*
Year ended12-31-2015			1.00			0.00	*			0.00	*			0.00	*			—	*			—				—	*


34		ANNUAL REPORT		2019


	Net Asset Value, End of Period			Total Return⁽²⁾			Net Assets, End of Period (in millions)			Ratio of Expenses to Average Net Assets Including Expense Waiver			Ratio of Net Investment Income to Average Net Assets Including Expense Waiver			Ratio of Expenses to Average Net Assets Excluding Expense Waiver⁽³⁾			Ratio of Net Investment Income (Loss) to Average Net Assets Excluding Expense Waiver⁽³⁾			Portfolio Turnover Rate
Pathfinder Moderate – Managed Volatility
Class II Shares
Year ended12-31-2019		$	5.84		17.32	%		$	707		0.23	%⁽⁴⁾		1.39	%⁽⁴⁾		—	%		—	%		9	%
Year ended12-31-2018			5.33		-4.00				606		0.23	⁽⁴⁾		2.00	⁽⁴⁾		—			—			28
Year ended12-31-2017			5.78		13.80				600		0.23	⁽⁴⁾		1.07	⁽⁴⁾		—			—			21
Year ended12-31-2016			5.25		1.81				511		0.24	⁽⁴⁾		0.55	⁽⁴⁾		—			—			14
Year ended12-31-2015			5.37		-0.43				396		0.24	⁽⁴⁾		0.88	⁽⁴⁾		—			—			7

Pathfinder Moderately Aggressive – Managed Volatility
Class II Shares
Year ended12-31-2019			5.63		19.29				93		0.27	⁽⁴⁾		1.32	⁽⁴⁾		—			—			16
Year ended12-31-2018			5.15		-4.75				84		0.27	⁽⁴⁾		2.04	⁽⁴⁾		—			—			37
Year ended12-31-2017			5.66		15.70				92		0.27	⁽⁴⁾		1.38	⁽⁴⁾		—			—			19
Year ended12-31-2016			5.06		2.36				78		0.31	⁽⁴⁾		0.56	⁽⁴⁾		—			—			12
Year ended12-31-2015			5.25		-0.71				67		0.30	⁽⁴⁾		1.13	⁽⁴⁾		—			—			7

Pathfinder Moderately Conservative – Managed Volatility
Class II Shares
Year ended12-31-2019			5.58		14.89				80		0.27	⁽⁴⁾		1.45	⁽⁴⁾		—			—			14
Year ended12-31-2018			5.19		-2.90				73		0.29	⁽⁴⁾		1.79	⁽⁴⁾		—			—			28
Year ended12-31-2017			5.55		11.84				74		0.27	⁽⁴⁾		0.96	⁽⁴⁾		—			—			26
Year ended12-31-2016			5.10		1.21				67		0.30	⁽⁴⁾		0.49	⁽⁴⁾		—			—			11
Year ended12-31-2015			5.23		-0.52				54		0.30	⁽⁴⁾		0.78	⁽⁴⁾		—			—			9

Government Money Market
Class II Shares
Year ended12-31-2019			1.00		1.83				184		0.42			1.82			—			—			—
Year ended12-31-2018			1.00		1.53				239		0.40			1.49			—			—			—
Year ended12-31-2017			1.00		0.59				317		0.41			0.56			0.42			0.55			—
Year ended12-31-2016			1.00		0.13				414		0.45			0.13			0.46			0.12			—
Year ended12-31-2015			1.00		0.02				539		0.20			0.02			0.45			-0.23			—

See Accompanying Notes to Financial Statements.

2019

ANNUAL REPORT


NOTES TO FINANCIAL STATEMENTS		IVY VIP

DECEMBER 31, 2019

ORGANIZATION

Ivy Variable Insurance Portfolios, a Delaware statutory trust (the “Trust”), is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company. Pathfinder Aggressive, Pathfinder Conservative, Pathfinder Moderate, Pathfinder Moderately Aggressive and Pathfinder Moderately Conservative (collectively, the “Pathfinder Portfolios”), Pathfinder Moderate – Managed Volatility, Pathfinder Moderately Aggressive – Managed Volatility and Pathfinder Moderately Conservative – Managed Volatility (collectively, the “Managed Volatility Portfolios”) and Government Money Market (each, a “Portfolio”) are nine series of the Trust and are the only series of the Trust included in the financial statements. The assets belonging to Government Money Market are held separately by the custodian. The assets belonging to each Pathfinder Portfolio and Managed Volatility Portfolio are held separately by the transfer agent for the underlying funds and the custodian. The investment objective, policies and risk factors of each Portfolio are described more fully in the Prospectus and Statement of Additional Information (“SAI”). Each Portfolio’s investment adviser is Ivy Investment Management Company (“IICO”).

SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by each Portfolio.

Security Transactions and Related Investment Income.Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses are calculated on the identified cost basis. Interest income is recorded on the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums. Dividend income is recorded on theex-dividend date, except certain dividends from foreign securities where theex-dividend date may have passed, which are recorded as soon as the Portfolio is informed of theex-dividend date. All or a portion of the distributions received from a real estate investment trust or publicly traded partnership may be designated as a reduction of cost of the related investment or realized gain. Income or short-term capital gain distributions received from registered investment companies, if any, are recorded as dividend income. Long-term capital gain distributions received from registered investment companies, if any, are recorded as realized gains.

Dividends and Distributions to Shareholders.Dividends and distributions to shareholders are recorded by each Portfolio on the business day following record date. Net investment income dividends and capital gains distributions are determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America (“U.S. GAAP”). If the total dividends and distributions made in any tax year exceeds net investment income and accumulated realized capital gains, a portion of the total distribution may be treated as a tax return of capital.

Income Taxes.It is the policy of each Portfolio to distribute all of its taxable income and capital gains to its shareholders and to otherwise qualify as a regulated investment company under Subchapter M of the Internal Revenue Code. In addition, each Portfolio intends to pay distributions as required to avoid imposition of excise tax. Accordingly, no provision has been made for Federal income taxes. The Portfolios file income tax returns in U.S. federal and applicable state jurisdictions. The Portfolios’ tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax returns. Management of the Trust periodically reviews all tax positions to assess whether it is more likely than not that the position would be sustained upon examination by the relevant tax authority based on the technical merits of each position. As of the date of these financial statements, management believes that no liability for unrecognized tax positions is required.


36		ANNUAL REPORT		2019

agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit cash or securities as collateral for certain investments. Certain countries require that cash reserves be held while investing in companies incorporated in that country. These cash reserves and cash collateral that has been pledged to cover obligations of the Portfolios under derivative contracts, if any, will be reported separately on the Statement of Assets and Liabilities as “Restricted cash”. Securities collateral pledged for the same purpose, if any, is noted on the Schedule of Investments.

Concentration of Market and Credit Risk. Because each Pathfinder Portfolio and Managed Volatility Portfolio invests substantially all of its assets in Ivy Variable Insurance Portfolios mutual funds (“Underlying Funds”), the risks associated with investing in the Portfolios are closely related to the risks associated with the securities and other investments held by the Underlying Funds.

In the normal course of business, Government Money Market and the Underlying Funds may invest in securities and enter into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by Government Money Market and the Underlying Funds may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Underlying Funds; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, Government Money Market and the Underlying Funds may be exposed to counterparty credit risk, or the risk that an entity with which Government Money Market or the Underlying Funds have unsettled or open transactions may fail to or be unable to perform on its commitments. Government Money Market and the Underlying Funds manage counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Underlying Funds to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties.

Certain Underlying Funds may hold high-yield ornon-investment-grade bonds, that may be subject to a greater degree of credit risk. Credit risk relates to the ability of the issuer to meet interest or principal payments or both as they become due. The Underlying Funds may acquire securities in default and are not obligated to dispose of securities whose issuers subsequently default.

Certain Underlying Funds may enter into financial instrument transactions (such as swaps, futures, options and other derivatives) that may haveoff-balance sheet market risk.Off-balance sheet market risk exists when the maximum potential loss on a particular financial instrument is greater than the value of such financial instrument.

If an Underlying Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in financial derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Underlying Funds, or, in the case of hedging positions, that the Underlying Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad.

Management believes that, with respect to any significant investments by a Portfolio or Underlying Fund in instruments linked to LIBOR, the impact on investments and discontinuation of LIBOR may represent a significant risk.

However, management acknowledges that the anticipated transition away from LIBOR will occur after 2021 and certain of the current investments will mature prior to that time. Furthermore, the ways in which LIBOR’s discontinuation potentially could impact an Underlying Fund’s investments is not fully known. The extent of that impact may vary depending on various factors, which include, but are not limited to: (i) existing fallback or termination provisions in individual contracts and (ii) whether, how, and when industry participants develop and adopt new successor reference rates and/or fallbacks for both legacy and new instruments.

2019

ANNUAL REPORT

In addition, the transition to a successor rate could potentially cause (i) increased volatility or illiquidity in markets for instruments that currently rely on LIBOR, (ii) a reduction in the value of certain instruments held by an Underlying Fund, or (iii) reduced effectiveness of related Underlying Fund transactions, such as hedging.

As the impacts of the transition become clearer during the next year, Management will be evaluating the impacts of these changes.

Indemnification.The Trust’s organizational documents provide current and former Trustees and Officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Trust. In the normal course of business, the Trust may also enter into contracts that provide general indemnification. The Trust’s maximum exposure under these arrangements is unknown and is dependent on future claims that may be made against the Trust. The risk of material loss from such claims is considered remote.

Basis of Preparation.Each Portfolio is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 (“ASC 946”). The accompanying financial statements were prepared in accordance with U.S. GAAP, including but not limited to ASC 946. U.S. GAAP requires the use of estimates made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale or maturity.

Subsequent Events. Management has performed a review for subsequent events through the date this report was issued.

INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investments in affiliated mutual funds within the Ivy Variable Insurance Portfolios family are valued at their Net Asset Value (“NAV”) as reported by the Underlying Funds. Investments in Government Money Market are valued on the basis of amortized cost (which approximates value), whereby a portfolio security is valued at its cost initially, and thereafter valued to reflect a constant amortization to maturity of any discount or premium. Short-term securities with maturities of 60 days or less held in all Portfolios (with the exception of Government Money Market) are valued based on quotes that are obtained from an independent pricing service approved by the Board.

Fair value is defined as the price that each Portfolio would receive upon selling an asset or would pay upon satisfying a liability in an orderly transaction between market participants at the measurement date. For purposes of calculating the NAV, the portfolio securities are valued on each business day using pricing and valuation methods as adopted by the Board. Where market quotes are readily available, fair value is generally determined on the basis of the last reported sales price, or if no sales are reported, based on quotes obtained from a quotation reporting system, established market makers, or pricing services.

An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs which are significant to the overall valuation.

The three-tier hierarchy of inputs is summarized as follows:

• Level 1 – Observable inputs such as quoted prices, available in active markets, for identical assets or liabilities.

• Level 2 – Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs.


38		ANNUAL REPORT		2019

• Level 3 – Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, which may include assumptions made by the Board or persons acting at its direction that are used in determining the fair value of investments.

A description of the valuation techniques applied to the Portfolios’ major classes of assets and liabilities measured at fair value on a recurring basis follows:

Derivative Instruments. Exchange-traded futures contracts are generally valued at the settlement price.

Equity Securities. Investments in registeredopen-end investment management companies will be valued based upon the NAV of such investments and are categorized as Level 1 of the fair value hierarchy.

Short-term Investments. Short-term investments having a maturity of 60 days or less are valued based on quotes that are obtained from an independent pricing service authorized by the Board. These investments are categorized as Level 2 of the fair value hierarchy.

DERIVATIVE INSTRUMENTS($ amounts in thousands unless indicated otherwise)

Futures Contracts. Each Managed Volatility Portfolio is authorized to engage in buying and selling futures contracts. Upon entering into a futures contract, a Portfolio is required to deposit, in a segregated account, an amount equal to a varying specified percentage of the contract amount. This amount is known as the initial margin. Subsequent amounts, known as variation margin, are paid or received by the Portfolio each day, dependent on the daily fluctuations in the value of the underlying debt security or index. Options on futures contracts may also be purchased or sold by a Portfolio.

Futures contracts are reported on a schedule following the Schedule of Investments. Securities held in collateralized accounts to cover initial margin requirements on open futures contracts are identified on the Schedule of Investments. Cash held by the broker to cover initial margin requirements on open futures contracts and the receivable and/or payable for the daily mark to market for the variation margin are noted on the Statement of Assets and Liabilities. The net change in unrealized appreciation (depreciation) is reported on the Statement of Operations. Realized gains (losses) are reported on the Statement of Operations at the closing or expiration of futures contracts.

Risks of entering into futures contracts include the possibility of loss of securities or cash held as collateral, that there may be an illiquid market where the Portfolio is unable to close the contract or enter into an offsetting position and, if used for hedging purposes, the risk that the price of the contract will correlate imperfectly with the prices of the Portfolio’s securities.

Pathfinder Moderate — Managed Volatility, Pathfinder Moderately Aggressive — Managed Volatility and Pathfinder Moderately Conservative — Managed Volatility invest in long and/or short positions in futures contracts to gain exposure to, or economically hedge against, changes in the value of equity securities (equity risk).

2019

ANNUAL REPORT

Additional Disclosure Related to Derivative Instruments

Fair values of derivative instruments as of December 31, 2019:

Assets

Liabilities

Portfolio

Type of Risk
Exposure

Statement of Assets & Liabilities

Location

Value

Statement of Assets & Liabilities
Location

Value

Pathfinder Moderate – Managed Volatility

Equity

—

Unrealized depreciation on futures contracts*

579

Pathfinder Moderately Aggressive – Managed Volatility

Equity

—

Unrealized depreciation on futures contracts*

Pathfinder Moderately Conservative – Managed Volatility

Equity

—

Unrealized depreciation on futures contracts*

* The value presented includes cumulative gain (loss) on open futures contracts; however, the value reflected on the accompanying Statement of Assets and Liabilities is only the unsettled variation margin receivable (payable) as of December 31, 2019.

Amount of realized gain (loss) on derivatives recognized on the Statement of Operations for the year ended December 31, 2019:


		Net realized gain (loss) on:
Portfolio	Type of Risk Exposure	Investments in unaffiliated securities*		Swap agreements		Futures contracts			Written options		Forward foreign currency contracts		Total
Pathfinder Moderate – Managed Volatility	Equity	$	—	$	—	$	(4,638	)	$	—	$	—	$	(4,638	)
Pathfinder Moderately Aggressive – Managed Volatility	Equity		—		—		(727	)		—		—		(727	)
Pathfinder Moderately Conservative – Managed Volatility	Equity		—		—		(712	)		—		—		(712	)

* Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule of Investments.

Change in unrealized appreciation (depreciation) on derivatives recognized on the Statement of Operations for the year ended December 31, 2019:


		Net change in unrealized appreciation (depreciation) on:
Portfolio	Type of Risk Exposure	Investments in unaffiliated securities*		Swap agreements		Futures contracts			Written options		Forward foreign currency contracts		Total
Pathfinder Moderate – Managed Volatility	Equity	$	—	$	—	$	(1,341	)	$	—	$	—	$	(1,341	)
Pathfinder Moderately Aggressive – Managed Volatility	Equity		—		—		(278	)		—		—		(278	)
Pathfinder Moderately Conservative – Managed Volatility	Equity		—		—		(185	)		—		—		(185	)

* Purchased options are reported as investments in unaffiliated securities and are reflected on the accompanying Schedule of Investments.

During the year ended December 31, 2019, the average derivative volume was as follows:


Portfolio	Forward foreign currency contracts⁽¹⁾			Long futures contracts⁽²⁾			Short futures contracts⁽²⁾			Swap agreements⁽³⁾			Purchased options⁽²⁾			Written options⁽²⁾
Pathfinder Moderate – Managed Volatility		$			$	—		$	19,745		$	—		$	—		$	—
Pathfinder Moderately Aggressive – Managed Volatility			—			—			3,224			—			—			—
Pathfinder Moderately Conservative – Managed Volatility			—			—			3,016			—			—			—

(1)

Average absolute value of unrealized appreciation/depreciation during the period.

(2)

Average value outstanding during the period.

(3)

Average notional amount outstanding during the period.


40		ANNUAL REPORT		2019

INVESTMENT MANAGEMENT AND PAYMENTS TO AFFILIATED PERSONS($ amounts in thousands unless indicated otherwise)

Management Fees. IICO serves as each Portfolio’s investment adviser. The management fee is accrued daily by Government Money Market at the following annual rates as a percentage of average daily net assets:

Portfolio (M – Millions)

$0 to

$1,000M

Over

$1,000M

Government Money Market

0.350

0.300

Each Managed Volatility Portfolio pays a management fee to IICO for providing investment advice and supervising its investments at the following annual rates as a percentage of average daily net assets:


Portfolio (M – Millions)	$0 to $500M			$500 to $1,000M			Over $1,000M
Pathfinder Moderate – Managed Volatility		0.200	%		0.170	%		0.150	%
Pathfinder Moderately Aggressive – Managed Volatility		0.200			0.170			0.150
Pathfinder Moderately Conservative – Managed Volatility		0.200			0.170			0.150

IICO uses all of the management fee it receives from the Managed Volatility Portfolios to pay Securian Asset Management Inc. (“Securian”). Accordingly, Securian receives a fee based on the average daily net assets of the Managed Volatility Portfolios.

The Pathfinder Portfolios pay no management fees; however, IICO receives management fees from the underlying funds.

IICO has entered into Subadvisory Agreements with the following entity on behalf of certain Portfolios:

Securian serves as subadvisor to the Managed Volatility Portfolios. The subadvisor makes investment decisions in accordance with the Portfolio’s investment objectives, policies and restrictions under the supervision of IICO and the Board of Trustees. IICO pays all applicable costs of the subadvisor.

Independent Trustees and Chief Compliance Officer Fees.Fees paid to the Independent Trustees can be paid in cash or deferred to a later date, at the election of the Trustees according to the Deferred Fee Agreement entered into between the Trust and the Trustee(s). Each Portfolio records its portion of the deferred fees as a liability on the Statement of Assets and Liabilities. All fees paid in cash plus any appreciation (depreciation) in the underlying deferred plan are shown on the Statement of Operations. Additionally, fees paid to the Chief Compliance Officer of the Portfolios are shown on the Statement of Operations.

Accounting Services Fees.The Trust has an Accounting and Administrative Services Agreement with Waddell & Reed Services Company (“WRSCO”), doing business as WI Services Company (“WISC”). Under the agreement, WISC acts as the agent in providing bookkeeping and accounting services and assistance to the Trust, including maintenance of Portfolio records, pricing of Portfolio shares and preparation of certain shareholder reports. For these services Government Money Market pays WISC a monthly fee ofone-twelfth of the annual fee based on the average net asset levels shown in the following table:


(M – Millions)	$0 to $10M		$10 to $25M		$25 to $50M		$50 to $100M		$100 to $200M		$200 to $350M		$350 to $550M		$550 to $750M		$750 to $1,000M		Over $1,000M
Annual Fee Rate	$	0.00	$	11.50	$	23.10	$	35.50	$	48.40	$	63.20	$	82.50	$	96.30	$	121.60	$	148.50

Under the Accounting Services Agreement, each Pathfinder Portfolio and Managed Volatility Portfolio pays WISC a monthly fee ofone-twelfth of the annual fee shown in the following table:


(M – Millions)	$0 to $10M		$10 to $25M		$25 to $50M		$50 to $100M		$100 to $200M		$200 to $350M		$350 to $550M		$550 to $750M		$750 to $1,000M		Over $1,000M
Annual Fee Rate	$	0.00	$	5.75	$	11.55	$	17.75	$	24.20	$	31.60	$	41.25	$	48.15	$	60.80	$	74.25

Shareholder Servicing.Under the Transfer Agency Agreement between the Trust and WISC, each Portfolio reimburses WISC for certainout-of-pocket costs.

2019

ANNUAL REPORT

INTERFUND LENDING PROGRAM

Pursuant to an exemptive order issued by the SEC (“Order”), the Ivy Funds, Ivy Variable Insurance Portfolios and InvestEd Portfolios (collectively, the “Funds” only for purposes of this footnote 6) have the ability to lend money to, and borrow money from, each other pursuant to a master interfund lending agreement (“Interfund Lending Program”). Under the Interfund Lending Program, the Funds may lend or borrow money for temporary purposes directly to or from one another (each an “Interfund Loan”), subject to meeting the conditions of the Order. The interest rate to be charged on an Interfund Loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The Funds made no Interfund Loans under the Interfund Lending Program during the year ended December 31, 2019.

AFFILIATED COMPANY TRANSACTIONS(All amounts in thousands)

A summary of the transactions in affiliated companies during the year ended December 31, 2019 follows:


	12-31-18 Share Balance		Gross Additions			Gross Reductions			Realized Gain/(Loss)⁽¹⁾				Distributions Received			12-31-19 Share Balance		12-31-19 Value			Net Change in Unrealized Appreciation/ (Depreciation)
Pathfinder Aggressive
Ivy VIP Core Equity, Class II		655		$	1,736		$	1,208		$	878			$	52		700		$	8,842		$	1,238
Ivy VIP Corporate Bond, Class II		1,078			843			949			33				161		1,053			5,896			469
Ivy VIP Global Equity Income, Class II		1,006			2,716			1,158			1,984				213		1,307			7,851			(641	)
Ivy VIP Growth, Class II		658			2,621			1,294			2,123				46		790			8,952			376
Ivy VIP High Income, Class I		177			105			416			(24	)			43		93			323			41
Ivy VIP International Core Equity, Class II		706			2,256			1,617			942				219		749			11,721			729
Ivy VIP Limited-Term Bond, Class II		1,263			465			2,050			64				105		929			4,595			73
Ivy VIP Mid Cap Growth, Class I		444			1,526			750			1,152				—		500			6,379			673
Ivy VIP Small Cap Core, Class II		51			243			119			100				51		60			828			16
Ivy VIP Small Cap Growth, Class I		182			338			253			137				—		190			1,671			189
Ivy VIP Value, Class II		1,236			1,513			1,139			479				64		1,293			8,690			1,286

										$	7,868			$	954				$	65,748		$	4,449


	12-31-18 Share Balance		Gross Additions			Gross Reductions			Realized Gain/(Loss)⁽¹⁾				Distributions Received			12-31-19 Share Balance		12-31-19 Value			Net Change in Unrealized Appreciation/ (Depreciation)
Pathfinder Conservative
Ivy VIP Core Equity, Class II		613		$	2,350		$	1,743		$	854			$	49		662		$	8,365		$	1,139
Ivy VIP Corporate Bond, Class II		2,898			5,886			3,336			121				430		3,334			18,661			1,234
Ivy VIP Global Equity Income, Class II		523			1,676			976			1,034				110		662			3,977			(330	)
Ivy VIP Government Money Market, Class II		17,079			2,392			10,833			1				288		8,639			8,639			—
Ivy VIP Growth, Class II		615			2,946			1,584			2,039				44		748			8,472			336
Ivy VIP High Income, Class I		692			501			1,427			(14	)			167		424			1,474			86
Ivy VIP International Core Equity, Class II		367			1,511			1,323			515				113		379			5,937			363
Ivy VIP Limited-Term Bond, Class II		4,731			7,923			4,947			111				433		5,311			26,285			430
Ivy VIP Mid Cap Growth, Class I		415			2,338			997			1,085				—		519			6,620			671
Ivy VIP Small Cap Core, Class II		48			251			758			(25	)			48		19			254			118
Ivy VIP Small Cap Growth, Class I		170			393			349			133				—		173			1,524			174
Ivy VIP Value, Class II		1,157			2,017			1,572			467				60		1,223			8,223			1,197

										$	6,321			$	1,742				$	98,431		$	5,418

See footnotes on page 45.


42		ANNUAL REPORT		2019


	12-31-18 Share Balance		Gross Additions			Gross Reductions			Realized Gain/(Loss)⁽¹⁾				Distributions Received			12-31-19 Share Balance		12-31-19 Value			Net Change in Unrealized Appreciation/ (Depreciation)
Pathfinder Moderate
Ivy VIP Core Equity, Class II		6,268		$	11,978		$	16,063		$	8,019			$	469		5,919		$	74,751		$	11,131
Ivy VIP Corporate Bond, Class II		16,128			23,507			17,993			793				2,265		16,921			94,712			6,421
Ivy VIP Global Equity Income, Class II		8,026			17,004			12,975			14,922				1,598		9,073			54,513			(4,829	)
Ivy VIP Government Money Market, Class II		58,192			910			22,796			4				906		36,306			36,306			—
Ivy VIP Growth, Class II		6,290			18,880			15,585			19,730				418		6,683			75,699			3,086
Ivy VIP High Income, Class I		3,714			1,208			7,753			(481	)			849		1,934			6,732			853
Ivy VIP International Core Equity, Class II		5,635			11,538			18,153			7,274				1,644		5,199			81,384			5,396
Ivy VIP Limited-Term Bond, Class II		28,715			9,731			43,431			966				2,485		21,675			107,267			2,112
Ivy VIP Mid Cap Growth, Class I		4,246			12,389			9,627			10,805				—		4,382			55,941			6,025
Ivy VIP Small Cap Core, Class II		487			1,541			3,363			588				463		378			5,183			428
Ivy VIP Small Cap Growth, Class I		1,738			2,001			3,237			1,214				—		1,583			13,931			1,809
Ivy VIP Value, Class II		11,831			8,950			14,386			4,283				580		10,925			73,454			11,605

										$	68,117			$	11,677				$	679,873		$	44,037


	12-31-18 Share Balance		Gross Additions			Gross Reductions			Realized Gain/(Loss)⁽¹⁾				Distributions Received			12-31-19 Share Balance		12-31-19 Value			Net Change in Unrealized Appreciation/ (Depreciation)
Pathfinder Moderately Aggressive
Ivy VIP Core Equity, Class II		8,468		$	15,623		$	20,953		$	10,845			$	638		8,015		$	101,226		$	15,086
Ivy VIP Corporate Bond, Class II		18,935			14,889			20,740			1,044				2,680		17,635			98,711			7,375
Ivy VIP Global Equity Income, Class II		12,046			25,711			18,485			22,711				2,417		13,761			82,676			(7,565	)
Ivy VIP Government Money Market, Class II		26,203			15,555			11,614			1				378		30,144			30,144			—
Ivy VIP Growth, Class II		8,499			25,802			21,064			26,772				566		9,050			102,502			4,095
Ivy VIP High Income, Class I		3,186			1,132			6,368			(387	)			734		1,762			6,132			711
Ivy VIP International Core Equity, Class II		8,457			17,701			26,677			10,555				2,485		7,885			123,429			8,438
Ivy VIP Limited-Term Bond, Class II		26,766			10,167			59,157			1,299				2,334		16,567			81,987			1,545
Ivy VIP Mid Cap Growth, Class I		5,737			15,411			12,915			14,671				—		5,817			74,252			8,045
Ivy VIP Small Cap Core, Class II		658			2,080			2,775			1,235				631		611			8,375			186
Ivy VIP Small Cap Growth, Class I		2,348			2,773			4,261			1,653				—		2,160			19,011			2,450
Ivy VIP Value, Class II		15,983			12,382			19,295			5,964				790		14,795			99,473			15,493

										$	96,363			$	13,653				$	827,918		$	55,859

See footnotes on page 45.

2019

ANNUAL REPORT


	12-31-18 Share Balance		Gross Additions			Gross Reductions			Realized Gain/(Loss)⁽¹⁾				Distributions Received			12-31-19 Share Balance		12-31-19 Value			Net Change in Unrealized Appreciation/ (Depreciation)
Pathfinder Moderately Conservative
Ivy VIP Core Equity, Class II		1,587		$	3,544		$	3,896		$	2,096			$	121		1,555		$	19,638		$	2,850
Ivy VIP Corporate Bond, Class II		5,496			7,270			5,637			226				785		5,737			32,110			2,265
Ivy VIP Global Equity Income, Class II		1,742			3,968			2,757			3,293				353		2,023			12,156			(1,059	)
Ivy VIP Government Money Market, Class II		27,363			835			14,001			2				441		14,197			14,197			—
Ivy VIP Growth, Class II		1,592			5,184			3,677			5,063				109		1,756			19,888			832
Ivy VIP High Income, Class I		1,382			489			2,839			(92	)			322		719			2,500			229
Ivy VIP International Core Equity, Class II		1,223			2,814			3,789			1,603				363		1,159			18,149			1,196
Ivy VIP Limited-Term Bond, Class II		9,402			6,020			8,572			230				828		8,835			43,724			810
Ivy VIP Mid Cap Growth, Class I		1,075			3,766			2,251			2,744				—		1,180			15,062			1,610
Ivy VIP Small Cap Core, Class II		123			427			1,256			56				119		75			1,029			194
Ivy VIP Small Cap Growth, Class I		440			564			782			314				—		412			3,624			460
Ivy VIP Value, Class II		2,996			2,748			3,467			1,123				150		2,870			19,300			2,983

										$	16,658			$	3,591				$	201,377		$	12,370


	12-31-18 Share Balance		Gross Additions			Gross Reductions			Realized Gain/(Loss)⁽¹⁾				Distributions Received			12-31-19 Share Balance		12-31-19 Value			Net Change in Unrealized Appreciation/ (Depreciation)
Pathfinder Moderate – Managed Volatility
Ivy VIP Core Equity, Class II		5,262		$	11,193		$	2,713		$	6,810			$	417		6,012		$	75,930		$	10,605
Ivy VIP Corporate Bond, Class II		13,521			23,131			2,683			132				2,015		17,189			96,210			6,363
Ivy VIP Global Equity Income, Class II		6,737			15,328			2,289			13,286				1,423		9,228			55,446			(4,017	)
Ivy VIP Government Money Market, Class II		48,794			1,034			12,833			3				822		36,995			36,995			—
Ivy VIP Growth, Class II		5,279			17,132			2,324			16,670				372		6,789			76,894			3,909
Ivy VIP High Income, Class I		3,115			1,115			5,236			(258	)			756		1,976			6,879			580
Ivy VIP International Core Equity, Class II		4,730			10,437			2,323			6,206				1,463		5,288			82,775			5,331
Ivy VIP Limited-Term Bond, Class II		24,077			9,009			18,328			649				2,212		22,074			109,238			2,129
Ivy VIP Mid Cap Growth, Class I		3,566			11,551			1,120			8,292				—		4,450			56,810			6,780
Ivy VIP Small Cap Core, Class II		409			1,383			1,735			786				412		385			5,279			106
Ivy VIP Small Cap Growth, Class I		1,460			1,984			618			1,090				—		1,608			14,154			1,569
Ivy VIP Value, Class II		9,935			8,325			1,135			3,627				517		11,102			74,645			10,953

										$	57,293			$	10,409				$	691,255		$	44,308

See footnotes on page 45.


44		ANNUAL REPORT		2019


	12-31-18 Share Balance		Gross Additions			Gross Reductions			Realized Gain/(Loss)⁽¹⁾				Distributions Received			12-31-19 Share Balance		12-31-19 Value			Net Change in Unrealized Appreciation/ (Depreciation)
Pathfinder Moderately Aggressive – Managed Volatility
Ivy VIP Core Equity, Class II		829		$	1,699		$	1,074		$	1,081			$	65		884		$	11,170		$	1,585
Ivy VIP Corporate Bond, Class II		1,853			1,655			1,068			68				275		1,947			10,897			798
Ivy VIP Global Equity Income, Class II		1,180			2,693			964			2,288				247		1,520			9,131			(726	)
Ivy VIP Government Money Market, Class II		2,565			1,689			932			—	*			39		3,321			3,321			—
Ivy VIP Growth, Class II		832			2,737			1,127			2,628				58		999			11,311			528
Ivy VIP High Income, Class I		312			124			553			(33	)			75		195			680			65
Ivy VIP International Core Equity, Class II		828			1,911			1,285			1,084				255		871			13,631			867
Ivy VIP Limited-Term Bond, Class II		2,620			1,126			4,852			157				239		1,835			9,079			136
Ivy VIP Mid Cap Growth, Class I		562			1,656			657			1,356				—		642			8,193			953
Ivy VIP Small Cap Core, Class II		64			220			181			125				65		67			925			17
Ivy VIP Small Cap Growth, Class I		230			315			229			166				—		238			2,098			245
Ivy VIP Value, Class II		1,566			1,350			907			584				81		1,633			10,980			1,635

										$	9,504			$	1,399				$	91,416		$	6,103


	12-31-18 Share Balance		Gross Additions			Gross Reductions			Realized Gain/(Loss)⁽¹⁾				Distributions Received			12-31-19 Share Balance		12-31-19 Value			Net Change in Unrealized Appreciation/ (Depreciation)
Pathfinder Moderately Conservative – Managed Volatility
Ivy VIP Core Equity, Class II		550		$	1,244		$	598		$	737			$	44		606		$	7,649		$	1,064
Ivy VIP Corporate Bond, Class II		1,901			2,677			782			43				283		2,234			12,506			855
Ivy VIP Global Equity Income, Class II		603			1,400			432			1,201				127		789			4,740			(386	)
Ivy VIP Government Money Market, Class II		9,464			244			4,148			1				160		5,560			5,560			—
Ivy VIP Growth, Class II		551			1,831			525			1,771				39		684			7,747			364
Ivy VIP High Income, Class I		478			166			848			(15	)			116		282			980			63
Ivy VIP International Core Equity, Class II		424			961			540			568				131		452			7,076			448
Ivy VIP Limited-Term Bond, Class II		3,252			2,105			1,123			34				299		3,445			17,048			341
Ivy VIP Mid Cap Growth, Class I		373			1,350			281			912				—		460			5,866			660
Ivy VIP Small Cap Core, Class II		43			148			371			40				43		29			403			48
Ivy VIP Small Cap Growth, Class I		153			203			124			116				—		160			1,412			161
Ivy VIP Value, Class II		1,038			948			435			398				54		1,118			7,519			1,104

										$	5,806			$	1,296				$	78,506		$	4,722

*	Not shown due to rounding.

(1)

Included in Realized Gain/Loss, if applicable, are distributions from capital gains from the underlying securities.

2019

ANNUAL REPORT

INVESTMENT SECURITIES TRANSACTIONS($ amounts in thousands)

The cost of purchases and the proceeds from maturities and sales of investment securities (excluding short-term securities) for the year ended December 31, 2019, were as follows:


	Purchases				Sales
	U.S. Government		Other Issuers		U.S. Government		Other Issuers
Pathfinder Aggressive	$	—	$	14,362	$	—	$	11,518
Pathfinder Conservative		—		30,184		—		30,452
Pathfinder Moderate		—		119,637		—		191,689
Pathfinder Moderately Aggressive		—		159,226		—		233,563
Pathfinder Moderately Conservative		—		37,629		—		54,389
Pathfinder Moderate – Managed Volatility		—		111,622		—		55,535
Pathfinder Moderately Aggressive – Managed Volatility		—		17,175		—		14,405
Pathfinder Moderately Conservative – Managed Volatility		—		13,277		—		10,526
Government Money Market		—		—		—		—

CAPITAL SHARE TRANSACTIONS(All amounts in thousands)

The Trust has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:


	Pathfinder Aggressive												Pathfinder Conservative
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class II		904		$	4,399			671		$	3,490			2,758		$	13,757			1,999		$	10,202
Shares issued in reinvestment of distributions to shareholders:
Class II		1,655			7,374			1,005			5,067			1,443			6,905			942			4,722
Shares redeemed:
Class II		(2,113	)		(10,275	)		(3,579	)		(18,431	)		(4,383	)		(21,949	)		(4,701	)		(23,906	)

Net increase (decrease)		446		$	1,498			(1,903	)	$	(9,874	)		(182	)	$	(1,287	)		(1,760	)	$	(8,982	)


	Pathfinder Moderate												Pathfinder Moderately Aggressive
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class II		183		$	932			702		$	3,722			411		$	2,138			1,237		$	6,817
Shares issued in reinvestment of distributions to shareholders:
Class II		16,016			75,614			9,296			48,519			21,454			102,589			12,169			65,728
Shares redeemed:
Class II		(29,129	)		(147,204	)		(28,797	)		(152,733	)		(34,231	)		(176,746	)		(33,636	)		(184,084	)

Net decrease		(12,930	)	$	(70,658	)		(18,799	)	$	(100,492	)		(12,366	)	$	(72,019	)		(20,230	)	$	(111,539	)


46		ANNUAL REPORT		2019


	Pathfinder Moderately Conservative												Pathfinder Moderate – Managed Volatility
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class II		617		$	3,094			448		$	2,338			5,714		$	32,066			10,060		$	57,624
Shares issued in reinvestment of distributions to shareholders:
Class II		3,846			18,438			2,514			12,955			8,200			43,825			4,281			24,303
Shares redeemed:
Class II		(7,714	)		(39,130	)		(8,312	)		(43,456	)		(6,337	)		(35,718	)		(4,470	)		(25,600	)

Net increase (decrease)		(3,251	)	$	(17,598	)		(5,350	)	$	(28,163	)		7,577		$	40,173			9,871		$	56,327


	Pathfinder Moderately Aggressive – Managed Volatility												Pathfinder Moderately Conservative – Managed Volatility
	Year ended 12-31-19						Year ended 12-31-18						Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value			Shares			Value			Shares			Value
Shares issued from sale of shares:
Class II		915		$	4,945			1,170		$	6,562			1,302		$	7,038			1,486		$	8,146
Shares issued in reinvestment of distributions to shareholders:
Class II		1,483			7,558			731			4,062			950			4,908			529			2,876
Shares redeemed:
Class II		(2,123	)		(11,437	)		(1,923	)		(10,800	)		(1,885	)		(10,192	)		(1,321	)		(7,269	)

Net increase (decrease)		275		$	1,066			(22	)	$	(176	)		367		$	1,754			694		$	3,753


	Government Money Market
	Year ended 12-31-19						Year ended 12-31-18
	Shares			Value			Shares			Value
Shares issued from sale of shares:
Class II		54,880		$	54,880			56,637		$	56,637
Shares issued in reinvestment of distributions to shareholders:
Class II		3,958			3,958			4,349			4,349
Shares redeemed:
Class II		(113,724	)		(113,724	)		(139,112	)		(139,112	)

Net decrease		(54,886	)	$	(54,886	)		(78,126	)	$	(78,126	)

10.

FEDERAL INCOME TAX MATTERS($ amounts in thousands)

For Federal income tax purposes, cost of investments owned at December 31, 2019 and the related unrealized appreciation (depreciation) were as follows:


Portfolio	Cost of Investments		Gross Appreciation		Gross Depreciation		Net Unrealized Depreciation
Pathfinder Aggressive	$	69,437	$	1,605	$	4,986	$	(3,381	)
Pathfinder Conservative		100,216		1,529		2,974		(1,445	)
Pathfinder Moderate		699,077		12,835		30,971		(18,136	)
Pathfinder Moderately Aggressive		856,824		17,974		46,271		(28,297	)
Pathfinder Moderately Conservative		206,057		3,467		7,808		(4,341	)
Pathfinder Moderate – Managed Volatility		713,222		19,883		26,820		(6,937	)
Pathfinder Moderately Aggressive – Managed Volatility		96,679		2,352		5,935		(3,583	)
Pathfinder Moderately Conservative – Managed Volatility		81,278		2,014		2,938		(924	)
Government Money Market		183,662		—		—		—

2019

ANNUAL REPORT


Portfolio	Undistributed Ordinary Income			Undistributed Long-Term Capital Gains			Tax Return of Capital			Post- October Capital Losses Deferred			Late- Year Ordinary Losses Deferred
Pathfinder Aggressive		$	1,186		$	7,577		$	—		$	—		$	—
Pathfinder Conservative			2,096			5,881			—			—			—
Pathfinder Moderate			14,424			65,145			—			—			—
Pathfinder Moderately Aggressive			17,237			92,499			—			—			—
Pathfinder Moderately Conservative			4,260			15,849			—			—			—
Pathfinder Moderate – Managed Volatility			9,288			51,310			—			—			—
Pathfinder Moderately Aggressive – Managed Volatility			1,199			8,494			—			—			—
Pathfinder Moderately Conservative – Managed Volatility			1,131			4,908			—			—			—
Government Money Market			49			—			—			—			—

The tax character of dividends and distributions paid during the two fiscal years ended December 31, 2019 and 2018 were as follows:


	December 31, 2019						December 31, 2018
Portfolio	Distributed Ordinary Income⁽¹⁾			Distributed Long-Term Capital Gains			Distributed Ordinary Income⁽¹⁾			Distributed Long-Term Capital Gains
Pathfinder Aggressive		$	1,922		$	5,452		$	1,675		$	3,392
Pathfinder Conservative			2,143			4,762			1,750			2,972
Pathfinder Moderate			19,550			56,065			15,410			33,109
Pathfinder Moderately Aggressive			24,441			78,148			24,003			41,725
Pathfinder Moderately Conservative			5,005			13,433			4,186			8,769
Pathfinder Moderate – Managed Volatility			12,479			31,346			8,544			15,759
Pathfinder Moderately Aggressive – Managed Volatility			2,045			5,513			1,570			2,492
Pathfinder Moderately Conservative – Managed Volatility			1,340			3,568			1,057			1,819
Government Money Market			3,948			16			4,344			—

(1)

Includes short-term capital gains distributed, if any.

Dividends from net investment income and short-term capital gains are treated as ordinary income dividends for federal income tax purposes.


48		ANNUAL REPORT		2019


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		IVY VIP

To the Shareholders and Board of Trustees of Ivy Variable Insurance Portfolios:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of assets and liabilities of Ivy VIP Pathfinder Aggressive, Ivy VIP Pathfinder Conservative, Ivy VIP Pathfinder Moderate, Ivy VIP Pathfinder Moderately Aggressive, Ivy VIP Pathfinder Moderately Conservative, Ivy VIP Pathfinder Moderate – Managed Volatility, Ivy VIP Pathfinder Moderately Aggressive – Managed Volatility, Ivy VIP Pathfinder Moderately Conservative – Managed Volatility, and Ivy VIP Government Money Market, nine of the series constituting the Ivy Variable Insurance Portfolios (the “Funds”), including the schedules of investments, as of December 31, 2019, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Funds as of December 31, 2019, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the custodian, transfer agent, and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

LOGO

Kansas City, Missouri

February 14, 2020

We have served as the auditor of one or more Waddell & Reed investment companies since 1997.

2019

ANNUAL REPORT


INCOME TAX INFORMATION		IVY VIP

AMOUNTS NOT ROUNDED (UNAUDITED)


	Dividends Received Deduction for Corporations
Pathfinder Aggressive	$	320,197
Pathfinder Conservative		412,845
Pathfinder Moderate		4,875,967
Pathfinder Moderately Aggressive		6,371,332
Pathfinder Moderately Conservative		1,075,806
Pathfinder Moderate – Managed Volatility		3,495,186
Pathfinder Moderately Aggressive – Managed Volatility		561,522
Pathfinder Moderately Conservative – Managed Volatility		326,537
Government Money Market		—

The Portfolios hereby designate the following amounts as distributions of long-term capital gains:


Pathfinder Aggressive	$	5,452,160
Pathfinder Conservative		4,761,424
Pathfinder Moderate		56,064,833
Pathfinder Moderately Aggressive		78,148,117
Pathfinder Moderately Conservative		13,433,665
Pathfinder Moderate – Managed Volatility		31,345,760
Pathfinder Moderately Aggressive – Managed Volatility		5,513,106
Pathfinder Moderately Conservative – Managed Volatility		3,568,012
Government Money Market		16,470


	Foreign Tax Credit		Foreign Derived Income
Pathfinder Aggressive	$	35,734	$	321,984
Pathfinder Conservative		18,509		166,778
Pathfinder Moderate		268,318		2,417,704
Pathfinder Moderately Aggressive		405,765		3,656,175
Pathfinder Moderately Conservative		59,270		534,059
Pathfinder Moderate – Managed Volatility		238,890		2,152,529
Pathfinder Moderately Aggressive – Managed Volatility		41,567		374,545
Pathfinder Moderately Conservative – Managed Volatility		21,389		192,728


50		ANNUAL REPORT		2019


BOARD OF TRUSTEES AND OFFICERS		IVY VIP

(UNAUDITED)

Board members who are not “interested persons” of the Funds as defined in Section 2(a)(19) of the 1940 Act (Disinterested Trustees) constitute at least 75% of the Board.

Disinterested Trustees


Name, Address and Year of Birth	Position(s) Held with the Trust	Trustee Since	Principal Occupation(s) During Past 5 Years	Other Directorships Held
James M. Concannon 6300 Lamar Avenue Overland Park, KS 66202 1947	Trustee	1997	Emeritus Dean and Professor of Law, Washburn University School of Law (1973 to present).	Director, Kansas Legal Services for Prisoners, Inc.(non-profit community service); Director, U.S. Alliance Corporation and wholly-owned subsidiaries: U.S. Alliance Life and Security Company — Montana and Dakota Capital Life Insurance Company (Insurance) (2009 to present); Director, Kansas Appleseed, Inc.(non-profit community service) (2007 to present); Trustee, WRA Funds (1997-2018); Trustee, Ivy NextShares (2017-2019); Trustee, InvestEd (2001 to present) (6 portfolios overseen); Trustee, Ivy Funds (2017 to present) (45 portfolios overseen); Trustee, IVH (2017 to present) (1 portfolio overseen).
H. Jeffrey Dobbs 6300 Lamar Avenue Overland Park, KS 66202 1955	Trustee	2019	Global Sector Chairman, Industrial Manufacturing, KPMG LLP (2010-2015).	Director, Valparaiso University (2012 to present); Director, TechAccel LLC (2015 to present) (Tech R&D); Board Member, Kansas City Repertory Theatre (2015 to present); Board Member, PatientsVoices, Inc. (technology) (2018 to present); Board Member, Kansas City Campus for Animal Care (2018 to present); Director, National Association of Manufacturers (2010-2015); Director, The Children’s Center (2003-2015); Director, Metropolitan Affairs Coalition (2003-2015); Director, Michigan Roundtable for Diversity and Inclusion (2003-2015); Trustee, Ivy NextShares (2019); Trustee, InvestEd (2019 to present) (6 portfolios overseen); Trustee, Ivy Funds (2019 to present) (45 portfolios overseen); Trustee, IVH (2019 to present) (1 portfolio overseen).
James D. Gressett 6300 Lamar Avenue Overland Park, KS 66202 1950	Trustee	2017	Chief Executive Officer (CEO) of CalPac Pizza LLC (2011 to present); CEO of CalPac Pizza II LLC (2012 to present); CEO of PacPizza LLC (Pizza Hut franchise) (2000 to present); Member/CEO, Southern Pac Pizza LLC (2013 to present); Partner, Century Bridge Partners (real estate investments) (2007 to present); Manager, Hartley Ranch Angus Beef, LLC (2013 to present); President, Penn Capital Corp. (1995 to present); Partner, Penn Capital Partners (1999 to present); Partner, 1788 Chicken, LLC (food franchise) (2016 to present).	Member/Secretary, The Metochoi Group LLC (1999 to present); Member/Chairman, Idea Homes LLC (homebuilding and development) (2013 to present); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (2002 to present) (45 portfolios overseen); Trustee; IVH (2013 to present) (1 portfolio overseen).

2019

ANNUAL REPORT


Name, Address and Year of Birth	Position(s) Held with the Trust	Trustee Since	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Joseph Harroz, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1967	Trustee Independent Chairman	1998 2015	Interim President (2019 to present), Vice President (2010-2019) and Dean (2010-2019), College of Law, University of Oklahoma; Managing Member, Harroz Investments, LLC, (commercial enterprises) (1998 to present).	Director and Shareholder, Valliance Bank (2007 to present); Director, Foundation Healthcare (formerly Graymark HealthCare) (2008-2017); Trustee, The Mewbourne Family Support Organization (2006 to present)(non-profit); Independent Director, LSQ Manager, Inc. (real estate) (2007-2016); Director, Oklahoma Foundation for Excellence(non-profit) (2008 to present); Independent Chairman and Trustee, WRA Funds (Independent Chairman: 2015-2018; Trustee: 1998-2018); Independent Chairman and Trustee, Ivy NextShares (2016-2019); Independent Chairman and Trustee, InvestEd (Independent Chairman: 2015 to present; Trustee: 2001 to present) (6 portfolios overseen); Independent Chairman and Trustee, Ivy Funds (Independent Chairman: 2006 to present; Trustee: 1998 to present) (45 portfolios overseen); Independent Chairman and Trustee, IVH (2013 to present) (1 portfolio overseen).
Glendon E. Johnson, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1951	Trustee	2017	Of Counsel, Lee & Smith, PC (law firm, emphasis on finance, securities, mergers and acquisitions law) (1996 to 2019); Owner and Manager, Castle Valley Ranches, LLC (ranching) and Castle Valley Outdoors, LLC (outdoor recreation) (1995 to present); Formerly, Partner, Kelly, Drye & Warren LLP (law firm) (1989-1996); Partner, Lane & Edson PC (law firm) (1987-1989).	Director, Thomas Foundation for Cancer Research(non-profit) (2005 to present); Director, Warriors Afield Legacy Foundation(non-profit) (2014 to present); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (2002 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).
Sandra A.J. Lawrence 6300 Lamar Avenue Overland Park, KS 66202 1957	Trustee	2019	Retired, formerly, Chief Administrative Officer, Children’s Mercy Hospitals and Clinics (2016-2019); CFO, Children’s Mercy Hospitals and Clinics (2005-2016).	Director, Hall Family Foundation (1993 to present); Director, Westar Energy (2004-2018); Trustee, Nelson-Atkins Museum of Art(non-profit) (2007 to present); Director, Turn the Page KC(non-profit) (2012-2016); Director, Kansas Metropolitan Business and Healthcare Coalition(non-profit) (2017-2019); Director, National Association of Corporate Directors(non-profit) (2017 to present); Director, American Shared Hospital Services (2017 to present); Director, Evergy, Inc., Kansas City Power & Light Company, KCP&L Greater Missouri Operations Company, Westar Energy, Inc. and Kansas Gas and Electric Company (related utility companies) (2018 to present); Director, Stowers (research) (2018); Trustee, Ivy NextShares (2019); Trustee, InvestEd (2019 to present) (6 portfolios overseen); Trustee, Ivy Funds (2019 to present) (45 portfolios overseen); Trustee, IVH (2019 to present) (1 portfolio overseen).
Frank J. Ross, Jr. Polsinelli PC 900 West 48th Place, Suite 900 Kansas City, MO 64112 1953	Trustee	1996	Shareholder/Director, Polsinelli PC (law firm) (1980 to present).	Trustee, WRA Funds (1996-2018); Trustee, Ivy NextShares (2017-2019); Trustee, InvestEd (2001 to present) (6 portfolios overseen); Trustee, Ivy Funds (2017 to present) (45 portfolios overseen); Trustee, IVH (2017 to present) (1 portfolio overseen).
Michael G. Smith 6300 Lamar Avenue Overland Park, KS 66202 1944	Trustee	2017	Retired; formerly, with Merrill Lynch as Managing Director of Global Investor Client Strategy (1996-1998), Head of Regional Institutional Sales (1995-1996) and of U.S. Central Region (1986-1995, 1999).	Director, Executive Board, Cox Business School, Southern Methodist University (1998-2019); Lead Director, Northwestern Mutual Funds (2003-2017) (29 portfolios overseen); Director, CTMG, Inc. (clinical testing) (2008-2015); Trustee, WRA Funds (2017-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2017 to present) (6 portfolios overseen); Trustee, Ivy Funds (2002 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).


52		ANNUAL REPORT		2019

Name, Address and
Year of Birth

Position(s) Held with
the Trust

Trustee Since

Principal Occupation(s)
During Past 5 Years

Other Directorships Held

Edward M. Tighe

6300 Lamar Avenue

Overland Park, KS 66202

1942

Trustee

2017

Interested Trustees


Name and Year of Birth	Position(s) Held with the Trust	Trustee Since	Principal Occupation(s) During Past 5 Years	Other Directorships Held
Henry J. Herrmann 1942	Trustee	1998	Retired,Non-Executive Chairman of the Board, WDR (2016-2018); Formerly Chairman, WDR (2010-2018); CEO, WDR (2005-2016); President, CEO and Chairman, IICO (2002-2016); President, CEO and Chairman, Waddell & Reed Investment Management Company (WRIMCO) (1993-2016); President of each of the funds in the Fund Complex (2001-2016).	Director, WDR, (1998 to present); Director, IICO (2002-2016); Director, WRIMCO (1991-2016); Director, WISC (2001-2016); Director, W&R Capital Management Group, Inc. (2008-2016); Director, Waddell & Reed (1993-2016); Director, Blue Cross Blue Shield of Kansas City (2007-2017); Trustee, WRA Funds (1998-2018); Trustee, Ivy NextShares (2016-2019); Trustee, InvestEd (2001 to present) (6 portfolios overseen); Trustee, Ivy Funds (1998 to present) (45 portfolios overseen); Trustee, IVH (2013 to present) (1 portfolio overseen).
Philip J. Sanders 1959	Trustee	2019	CEO, WDR (2016 to present); President, CEO and Chairman, IICO (2016 to present); President of each of the funds in the Fund Complex (2016 to present); CIO, WDR (2011-2019); CIO, IICO (2010-2019).	Trustee, Ivy NextShares (2019); Trustee, InvestEd (2019 to present) (6 portfolios overseen); Trustee, Ivy Funds (2019 to present) (45 portfolios overseen); Trustee, IVH (2019 to present) (1 portfolio overseen).

Officers


Name and Year of Birth	Position(s) Held with the Trust	Officer of Trust Since	Officer of Fund Complex Since*	Principal Occupation(s) During Past 5 Years
Jennifer K. Dulski 1980	Secretary	2017	2017	Secretary for each of the funds in the Fund Complex (2017 to present); Senior Vice President and Associate General Counsel of Waddell & Reed, IICO and IDI (2018 to present).
Joseph W. Kauten 1969	Vice President Treasurer Principal Financial Officer	2009 2009 2009	2006 2006 2007	Principal Financial Officer of each of the funds in the Fund Complex (2007 to present); Vice President and Treasurer of each of the funds in the Fund Complex (2006 to present); Principal Accounting Officer of each of the funds in the Fund Complex (2006-2017); Assistant Treasurer of each of the funds in the Fund Complex (2003-2006); Vice President of Waddell & Reed Services Company (WRSCO) (2007 to present).

2019

ANNUAL REPORT


Name and Year of Birth	Position(s) Held with the Trust and Fund Complex	Officer of Trust Since	Officer of Fund Complex Since*	Principal Occupation(s) During Past 5 Years
Philip J. Sanders** 1959	President	2016	2016	CEO of WDR (2016 to present); President, CEO and Chairman of IICO (2016 to present) and WRIMCO (2016-2018); President of each of the funds in the Fund Complex (2016 to present); CIO of WDR (2011-2019); CIO of IICO (2010-2019) and WRIMCO (2010-2018).
Scott J. Schneider 1968	Vice President Chief Compliance Officer	2009 2009	2006 2004	Chief Compliance Officer (2004 to present) and Vice President (2006 to present) of each of the funds in the Fund Complex; Vice President of IICO (2006 to present) and WRIMCO (2006-2018).
Philip A. Shipp 1969	Assistant Secretary	2012	2012	Assistant Secretary of each of the funds in the Fund Complex (2012 to present); Vice President of Waddell & Reed and IDI (2010-present).

*This is the date when the Officer first became an officer of one or more of the funds that are the predecessors to current funds within the Fund Complex (if applicable).

**Mr. Sanders was Vice President of the Trust since 2006, and of the other Trusts within the Fund Complex, until his appointment as President in 2016.


54		ANNUAL REPORT		2019


RENEWAL OF INVESTMENT MANAGEMENT AGREEMENT		IVY VIP

(UNAUDITED)

Nature, Extent and Quality of Services

Benefits from the Relationship with the Funds

2019

ANNUAL REPORT

previously had agreed to on shareholder servicing costs. The Board also considered the benefits that accrue to each service provider organization from its respective relationship with the Funds, including the fact that a variety of services are provided by affiliates of IICO, including distribution, administrative and Fund accounting services, and, as discussed above, shareholder servicing. The Board also considered management’s proposal to outsource the transactional processing operations of WISC to asub-agent for the Funds, which is designed to achieve greater efficiencies and savings for Fund shareholders over time. After full consideration of these and other factors, the Board concluded that none of IICO, the Subadviser or any of their affiliates receives any additional direct or indirect benefits that would preclude the Board from approving the continuation of the Management Agreement with IICO or the Investment Subadvisory Agreement with the Subadviser.

Economies of Scale

Performance of the Funds and Costs of Services Provided

Independent Fee Consultant Review

1.	The nature, extent and quality of IICO’s services to the Funds;

2.	Management fees and expenses in the context of performance;

3.	Product category expenses, including peers;

4.	Profit margins of IICO’s parent from supplying such services;

5.	Subadviser and institutional fee analyses; and

6.	Possible economies of scale as a Fund grows larger.

The following summarizes the findings of the independent fee consultant retained by the Independent Trustees.

Summary Findings


56		ANNUAL REPORT		2019

of improvement. Specifically, the report noted that 58% of the Funds were in the top two quartiles in theone-year period, and that 28% of all such Funds had improving performance in theirone-year period. The independent fee consultant noted that the Funds’ performance appeared to be grounded in a number of institutional competitive advantages at IICO, including investment management depth, ability to attract top talent, proactive management, performance-focused culture, economic analysis and an effective trading infrastructure.

The report also noted that the overall profitability of IICO’s parent relative to other complexes is reasonable.

Conclusions

2019

ANNUAL REPORT


ANNUAL PRIVACY NOTICE		IVY VIP

(UNAUDITED)

Recognition of a Client’s Expectation of Privacy

Information Collected

Categories of Information that may be Disclosed

Categories of Parties to whom we disclose nonpublic personal information

Opt Out Right

Confidentiality and Security


58		ANNUAL REPORT		2019


PROXY VOTING INFORMATION		IVY VIP

(UNAUDITED)

Proxy Voting Guidelines

Proxy Voting Records

2019

ANNUAL REPORT


QUARTERLY PORTFOLIO SCHEDULE INFORMATION		IVY VIP

(UNAUDITED)

•

On the SEC’s website at www.sec.gov.

•

For review and copy at the SEC’s Public Reference Room in Washington, DC. Information on the operations of the Public Reference Room may be obtained by calling 1.800.SEC.0330.


60		ANNUAL REPORT		2019

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2019

ANNUAL REPORT

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62		ANNUAL REPORT		2019


THE IVY VARIABLE INSURANCE PORTFOLIOS FAMILY

Global/International Portfolios

Global Equity Income

Global Growth

International Core Equity

Domestic Equity Portfolios

Core Equity

Growth

Mid Cap Growth

Small Cap Core

Small Cap Growth

Value

Fixed Income Portfolios

Corporate Bond

Global Bond

High Income

Limited-Term Bond

Money Market Portfolio

Government Money Market

Specialty Portfolios

Asset Strategy

Balanced

Energy

Natural Resources

Pathfinder Aggressive

Pathfinder Conservative

Pathfinder Moderate

Pathfinder Moderately Aggressive

Pathfinder Moderately Conservative

Pathfinder Moderate – Managed Volatility

Pathfinder Moderately Aggressive – Managed Volatility

Pathfinder Moderately Conservative – Managed Volatility

Science and Technology

Securian Real Estate Securities

2019

ANNUAL REPORT

ANN-VIP-PF (12/19)

ITEM 2. CODE OF ETHICS

(a)

As of December 31, 2019, the Registrant has adopted a code of ethics (the Code), as defined in Item 2 of FormN-CSR, that applies to the Principal Executive Officer and Principal Financial Officer or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. A copy of this code of ethics is filed as an exhibit to this FormN-CSR.

(b)

There have been no amendments, during the period covered by this report, to a provision of the Code that applies to the registrant’s Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the Code.

(c)

During the period covered by this report, the registrant did not grant any waivers, including an implicit waiver, from a provision of the Code that applies to the registrant’s Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer or Controller, or persons performing similar functions, regardless of whether those individuals were employed by the registrant or a third party, that related to one or more of the items set forth in paragraph (b) of this item’s instructions.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

The Board of Trustees of the Registrant has determined that each of H. Jeffrey Dobbs, James D. Gressett and Edward M. Tighe is an audit committee financial expert, as defined in Item 3 of Form N-CSR, serving on its audit committee. Each of Mr. Dobbs, Mr. Gressett and Mr. Tighe is independent for purposes of Item 3 of Form N-CSR. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liability that are greater than the duties, obligations, and liability imposed on such person as a member of the audit committee and board of trustees in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of trustees.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a)	Audit Fees

The aggregate fees billed for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the

accountant in connection with statutory and regulatory filings or engagements for each of the last two fiscal years are as follows:


2018	$	403,250
2019		418,300

(b)	Audit-Related Fees

The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s annual financial statements and are not reported under paragraph (a) of this Item are as follows:


2018	$	0
2019		0

These fees are related to the review of FormN-1A.

(c)

Tax Fees

The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning are as follows:


2018	$	171,479
2019		153,170

These fees are related to the review of the registrant’s tax returns.

(d)	All Other Fees

The aggregate fees billed for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this item are as follows:


2018	$	46,611
2019		34,116

These fees are related to the review of internal control.


(e)		(1)		Registrant’s audit committee considers with the principal accountants all audit services to be provided by the principal accountants andpre-approves all such audit services.

The audit committee shallpre-approve allnon-audit services to be provided by the principal accountants to the registrant; provided that thepre-approval requirement does not apply tonon-audit services that (i) were not identified as such at the time of thepre-approval and (ii) do not aggregate more than 5% of total fees paid to the principal accountants by the registrant during the fiscal year in which the services are provided, if the audit committee approves the provision of suchnon-audit services prior to the completion of the audit.

The audit committee shallpre-approve allnon-audit services to be provided by the principal accountants to the investment adviser (not including any subadvisor whose role is primarily portfolio management and is subcontracted and overseen by the investment advisor) or any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant if the engagement relates directly to the operations or financial reporting of the registrant; provided that thepre-approval requirement does not apply tonon-audit services that (i) were not identified as such at the time of thepre-approval and (ii) do not aggregate more than 5% of total fees paid to the principal accountants by the registrant for all services and by the registrant’s investment adviser fornon-audit services if the engagement relates directly to the operations or financial reporting of the registrant during the fiscal year in which those services are provided, if the audit committee approves the provision of suchnon-audit services prior to the completion of the audit.


(e)		(2)		None of the services described in each of paragraphs (b) through (d) of this Item were approved by the audit committee pursuant to the waiver provisions of paragraph (c)(7)(i)(C) of Rule2-01 ofRegulation S-X.

(f)	Not applicable

(g)

$218,090 and $187,286 are the aggregatenon-audit fees billed in each of the last two fiscal years for services rendered by the principal accountant to the registrant. $91,000 and $73,500 are the aggregatenon-audit fees billed in each of the last two fiscal years for services rendered by the principal accountant to the investment adviser (not including anysub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant.

(h)	Not Applicable.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS

Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.

(a)	See Item 1 Shareholder Report.

(b)	Not Applicable.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OFCLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BYCLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees.

ITEM 11. CONTROLS AND PROCEDURES.

(a)

The Registrant’s Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, based on their evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, have concluded that such controls and procedures (as defined in Rule30a-3(c) under the Investment Company Act of 1940, as amended) are effective and adequately designed to ensure that information required to be disclosed by the Registrant in its reports that it files or submits is accumulated and communicated to the Registrant’s management, including the Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

(b)

There were no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 13. EXHIBITS.

(a)(1) The Code described in Item 2 of this FormN-CSR.

Attached hereto as Exhibit 99.CODE.

(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule30a-2(a) under the Investment Company Act of 1940 (17 CFR270.30a-2(a)).

Attached hereto as Exhibit 99.CERT.

(b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule30a-2(b) under the Investment Company Act of 1940 (17 CFR270.30a-2(b)).

Attached hereto as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

IVY VARIABLE INSURANCE PORTFOLIOS

(Registrant)


By		/s/ Jennifer K. Dulski
		Jennifer K. Dulski, Secretary

Date:		March 6, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By		/s/ Philip J. Sanders
		Philip J. Sanders, Principal Executive Officer

Date:		March 6, 2020

By		/s/ Joseph W. Kauten
		Joseph W. Kauten, Principal Financial Officer

Date:		March 6, 2020

Ivy Variable Insurance Portfolios N-CSRCertified annual shareholder report (management investment company)