485BPOS

File No. 811-5017

File No. 33-11466

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                    X

Post-Effective Amendment No. 49

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT

OF 1940                                                                                                                               X

Amendment No. 49

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS
(a Delaware statutory trust as successor to
Ivy Funds Variable Insurance Portfolios, Inc.,
a Maryland corporation)

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(Exact Name as Specified in Charter)

6300 Lamar Avenue, Overland Park, Kansas 66202-4200

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(Address of Principal Executive Office) (Zip Code)

Registrant's Telephone Number, including Area Code (913) 236-2000

Kristen A. Richards, 6300 Lamar Avenue, Overland Park, Kansas 66202-4200

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(Name and Address of Agent for Service)

It is proposed that this filing will become effective
	_____	immediately upon filing pursuant to paragraph (b)
	__X__	on April 30, 2009 pursuant to paragraph (b)
	__ __	60 days after filing pursuant to paragraph (a)(1)
	_____	on (date) pursuant to paragraph (a)(1)
	_____	75 days after filing pursuant to paragraph (a)(2)
	_____	on (date) pursuant to paragraph (a)(2) of Rule 485
	_____	this post-effective amendment designates a new effective date for a previously filed post-effective amendment

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DECLARATION REQUIRED BY RULE 24f-2 (a)(1)

The issuer has registered an indefinite amount of its securities under the Securities Act of 1933 pursuant to Rule 24f-2(a)(1). Notice for the Registrant's fiscal year ended December 31, 2008 was filed on March 25, 2009.

The Registrant is the successor issuer to the Predecessor Registrant, a Maryland corporation (the "Predecessor Registrant"). By filing this Post Effective Amendment to the currently effective Registration Statement on Form N-1A of the Predecessor Registrant (File No. 33-11466), the Registrant expressly adopts the Registration Statement of the Predecessor Registrant as its own Registration Statement for all purposes of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, effective April 30, 2009, immediately following the closing of a series of shell reorganization transactions between the Predecessor Registrant and the Registrant.

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS

PROSPECTUS

6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217

913-236-2000
888-WADDELL

April 30, 2009

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Ivy Funds Variable Insurance Portfolios (formerly, Ivy Funds Variable Insurance Portfolios, Inc.) (Trust) is a management investment company, commonly known as a mutual fund, that has twenty-five separate portfolios (each, a Portfolio, and collectively, the Portfolios), each with separate objectives and investment policies.

Domestic Equity Portfolios

Ivy Funds VIP Core Equity seeks capital growth and income.

Ivy Funds VIP Dividend Opportunities seeks to provide total return.

Ivy Funds VIP Growth seeks capital growth, with current income as a secondary objective.

Ivy Funds VIP Micro Cap Growth seeks long-term capital appreciation.

Ivy Funds VIP Mid Cap Growth seeks to provide growth of your investment.

Ivy Funds VIP Small Cap Growth seeks growth of capital.

Ivy Funds VIP Small Cap Value seeks long-term accumulation of capital.

Ivy Funds VIP Value seeks long-term capital appreciation.

Fixed Income Portfolios

Ivy Funds VIP Bond seeks a reasonable return with emphasis on preservation of capital.

Ivy Funds VIP High Income seeks, as its primary objective, a high level of current income. As a secondary objective, the Portfolio seeks capital growth when consistent with its primary objective.

Ivy Funds VIP Mortgage Securities seeks a high level of current income consistent with prudent investment risk.

Global/International Portfolios

Ivy Funds VIP International Growth seeks, as a primary objective, long-term appreciation of capital. As a secondary objective, the Portfolio seeks current income.

Ivy Funds VIP International Value seeks long-term capital growth.

Specialty Portfolios

Ivy Funds VIP Asset Strategy seeks high total return over the long term.

Ivy Funds VIP Balanced seeks, as a primary objective, to provide current income to the extent that, in the opinion of Waddell & Reed Investment Management Company (WRIMCO), the Portfolio's investment manager, market and economic conditions permit. As a secondary objective, the Portfolio seeks long-term appreciation of capital.

Ivy Funds VIP Energy seeks to provide long-term capital appreciation.

Ivy Funds VIP Global Natural Resources seeks to provide long-term growth. Any income realized will be incidental.

Ivy Funds VIP Real Estate Securities seeks total return through a combination of capital appreciation and current income.

Ivy Funds VIP Science and Technology seeks long-term capital growth.

Money Market Portfolio

Ivy Funds VIP Money Market seeks maximum current income consistent with stability of principal.

Ivy Funds VIP Pathfinder Portfolios

Ivy Funds VIP Pathfinder Aggressive seeks maximum growth of capital consistent with a more aggressive level of risk as compared to the other Ivy Funds VIP Pathfinder Portfolios.

Ivy Funds VIP Pathfinder Moderately Aggressive seeks growth of capital, but also seeks income consistent with a moderately aggressive level of risk as compared to the other Ivy Funds VIP Pathfinder Portfolios.

Ivy Funds VIP Pathfinder Moderate seeks a high level of total return consistent with a moderate level of risk as compared to the other Ivy Funds VIP Pathfinder Portfolios.

Ivy Funds VIP Pathfinder Moderately Conservative seeks a high level of total return consistent with a moderately conservative level of risk as compared to the other Ivy Funds VIP Pathfinder Portfolios.

Ivy Funds VIP Pathfinder Conservative seeks a high level of total return consistent with a conservative level of risk as compared to the other Ivy Funds VIP Pathfinder Portfolios.

This Prospectus contains concise information about the Portfolios of which you should be aware before applying for certain variable life insurance policies and variable annuity contracts (collectively, Policies) offered by certain select insurance companies (Participating Insurance Companies). This Prospectus should be read together with the Prospectus for the particular Policy.

The Securities and Exchange Commission has not approved or disapproved these securities, or determined whether this Prospectus is accurate or complete. It is a criminal offense to state otherwise.

TABLE OF CONTENTS

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Fund Overviews                   

         Domestic Equity Portfolios                   

         Fixed Income Portfolios                   

         Global/International Portfolios                   

         Specialty Portfolios                   

         Money Market Portfolio                   

         Ivy Funds VIP Pathfinder Portfolios                   

More about the Portfolios                   

         Additional Information about Principal Investment Strategies,

                  Other Investments and Risks                   

         Fund of Fund Risks                   

         Additional Investment Considerations                   

         Defining Risks                   

The Management of the Portfolios                   

Buying and Selling Portfolio Shares                   

Distributions and Taxes                   

Financial Highlights                  

Appendix A: Hypothetical Investment and Expense Information                  

FUND OVERVIEWS

General Information

The following sections are the Fund Overviews - one for each of the twenty-five Portfolios. Each Fund Overview provides specific information about the applicable Portfolio, including information regarding the Portfolio's investment objective(s), principal strategies, principal risks, performance and fees. Each Portfolio's investment objective(s) can be changed by the Trust's Board of Trustees without shareholder approval. You can use these Fund Overviews to compare the Portfolios with other mutual funds. More detailed information about the risks and investment techniques of the Portfolios can be found in "More about the Portfolios." "You" and "your" refer to both direct shareholders (the Participating Insurance Companies' separate accounts (Variable Accounts) that invest assets on behalf of their contract holders) and contract holders who invest in the Portfolios indirectly through their Policies (Policyowners).

The Fund Overviews contain a discussion of the principal risks of investing in each Portfolio. As with any mutual fund, there can be no guarantee that a Portfolio will meet its objective(s) or that a Portfolio's performance will be positive for any period of time.

DOMESTIC EQUITY PORTFOLIOS

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IVY FUNDS VIP CORE EQUITY

(formerly, W&R Target Core Equity Portfolio)

OBJECTIVES

Ivy Funds VIP Core Equity seeks capital growth and income.

PRINCIPAL STRATEGIES

Ivy Funds VIP Core Equity seeks to achieve its objectives by investing, under normal market conditions, at least 80% of its net assets in equity securities, primarily in common stocks of large cap domestic and foreign companies with dominant market positions in their industries. Large cap companies typically are companies with market capitalizations of at least $8 billion. The Portfolio invests in securities that have the potential for capital appreciation, or that Waddell & Reed Investment Management Company (WRIMCO), the Portfolio's investment manager, expects to resist market decline. Although the Portfolio typically invests in large companies, it may invest in securities of any size company. The Portfolio also may invest up to 20% of its net assets in foreign securities.

WRIMCO utilizes both a top-down (assess the market environment) and a bottom-up (research individual issuers) analysis in its selection process. It attempts to select securities with growth and income possibilities by looking at many factors that may include a company's:

• projected long-term earnings power compared to market expectations over a multi-year horizon
• competitive position in the global economy
• history of improving sales and profits
• management strength
• leadership position in its industry
• stock price value
• dividend payment history

Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities in order to determine whether the security has ceased to offer the prospect of significant growth potential and/or the prospect of continued dividend payments or has performed below WRIMCO's expectations regarding its long-term earnings potential. WRIMCO also may sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Core Equity. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to those of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• WRIMCO's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the net asset values (NAVs) of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

An investment in foreign securities presents additional risks such as currency fluctuations and political or economic conditions affecting the foreign country. Accounting and disclosure standards also differ from country to country, which makes obtaining reliable research more difficult. There is the possibility that, under unusual international monetary or political conditions, the Portfolio's assets might be more volatile than would be the case with other investments. The risks of investing in foreign securities are more acute in emerging markets. Emerging markets historically have been more volatile than the markets of developed countries with more mature economies, since emerging market countries tend to have economic structures that are less diverse and mature and political systems that are less stable than those of developed countries.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Core Equity may be appropriate for investors who seek capital growth and income. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Core Equity by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	12.52%
2000	9.28%
2001	-14.91%
2002	-21.63%
2003	17.27%
2004	9.57%
2005	9.01%
2006	16.99%
2007	14.03%
2008	-34.77%
In the period shown in the chart, the highest quarterly return was 11.97% (the fourth quarter of 2001) and the lowest quarterly return was -20.48% (the fourth quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP Core Equity		-34.77%	0.77%	-0.01%
S&P 500 Index1		-37.00%	-2.19%	-1.39%
Lipper Variable Annuity Large-Cap
	Core Funds Universe Average2	-38.76%	-2.91%	-1.62%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to those of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Core Equity. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees1	0.70%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.06%
Total Annual Portfolio Operating Expenses	1.01%

¹The expenses shown for Management Fees reflect the maximum annual fee payable; however, a reduction in the Portfolio's management fee rate pursuant to a management fee waiver became effective October 1, 2006, and will remain in effect through September 30, 2016. If this waiver were reflected in the above table, the Management Fees would have been 0.65% and the Total Annual Portfolio Operating Expenses would have been 0.96%.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$103	$322	$558	$1,237

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IVY FUNDS VIP DIVIDEND OPPORTUNITIES

(formerly, W&R Target Dividend Income Portfolio)

OBJECTIVE

Ivy Funds VIP Dividend Opportunities seeks to provide total return.

PRINCIPAL STRATEGIES

Ivy Funds VIP Dividend Opportunities seeks to achieve its objective by investing primarily in dividend-paying common stocks that WRIMCO, the Portfolio's investment manager, believes also demonstrate favorable prospects for total return. Under normal market conditions, the Portfolio invests at least 80% of its net assets in dividend-paying equity securities of domestic and, to a lesser extent, foreign companies which may include without limitation dividend-paying common stocks, preferred stocks or convertible preferred stocks. Although the Portfolio invests primarily in large cap companies (typically, companies with capitalizations of at least $8 billion), it may invest in companies of any size.

The Portfolio primarily focuses on companies:

• with high dividend yields that are, in the opinion of WRIMCO, relatively safe
• with above-average market yield that WRIMCO expects will continue to grow their dividend
• that pay a small dividend, but could grow their dividend over the next few years
• that pay no dividend, but may initiate a dividend

Generally, in determining whether to sell a security, WRIMCO considers many factors, including: changes in economic or market factors in general or with respect to a particular industry, changes in the market trends or other factors affecting an individual security, and changes in the relative market performance or appreciation possibilities offered by individual securities. WRIMCO also may sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Dividend Opportunities. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• WRIMCO's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Dividend Opportunities may be appropriate for investors seeking total return through a portfolio of primarily dividend-paying common stocks. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Dividend Opportunities by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns for each full calendar year since these shares were first offered.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
2004	9.96%
2005	13.03%
2006	15.91%
2007	16.72%
2008*	-35.91%
In the period shown in the chart, the highest quarterly return was 9.28% (the fourth quarter of 2004) and the lowest quarterly return was -21.43% (the fourth quarter of 2008).
* Effective July 31 2008 the Portfolio changed its investment objective from seeking to provide income and long-term capital growth to seeking to provide total return.

Average Annual Total Returns
as of December 31, 2008
				Life of
		1 Year	5 Years	Portfolio*
Shares of Ivy Funds VIP Dividend
	Opportunities (began on 12-30-03)	-35.91%	1.51%	1.50%
Russell 1000® Index1		-37.60%	-2.04%	-2.04%
Lipper Variable Annuity Equity Income
	Funds Universe Average2	-35.83%	-1.18%	-1.18%

*Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above index (including income) are not available, index performance is calculated from December 31, 2003.

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Dividend Opportunities. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.70%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.12%
Total Annual Portfolio Operating Expenses	1.07%

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$109	$340	$590	$1,306

____________________________________________________________________________________

IVY FUNDS VIP GROWTH

(formerly, W&R Target Growth Portfolio)

OBJECTIVES

Ivy Funds VIP Growth seeks capital growth, with current income as a secondary objective.

PRINCIPAL STRATEGIES

Ivy Funds VIP Growth seeks to achieve its primary objective by investing primarily in a diversified portfolio of common stocks issued by higher-quality, growth-oriented large to mid-cap sized domestic and, to a lesser extent, foreign companies that WRIMCO, the Portfolio's investment manager, believes have appreciation possibilities. Growth stocks are those whose earnings WRIMCO believes are likely to grow faster than the economy. Although WRIMCO anticipates the majority of the Portfolio's investments to be in large-cap companies (typically, companies with market capitalizations of at least $8 billion), the Portfolio may invest in companies of any size.

WRIMCO primarily utilizes a bottom-up strategy in selecting securities for the Portfolio and seeks companies that have dominant market positions and established competitive advantages. WRIMCO believes that these characteristics can help to mitigate competition and lead to more sustainable revenue and earnings growth.

WRIMCO attempts to focus on companies with sustainable competitive advantages in their industries and typically also considers the following factors:

• the company's market position, product line, technological position, profit margins and prospects for sustainability and/or increased earnings
• the quality of management
• the short-term and long-term outlook for the industry
• changes in economic and political conditions

WRIMCO also may analyze the demands of investors for the security relative to its price. WRIMCO may select a security when it anticipates a development or identifies a catalyst that might have an effect on the value of the security.

In general, WRIMCO may sell a security when, in WRIMCO's opinion, a company experiences deterioration in its growth and/or profitability characteristics, or a fundamental breakdown of its sustainable competitive advantages. WRIMCO also may sell a security if it determines that the security no longer presents sufficient appreciation potential; this may be caused by, or be an effect of, changes in the industry of the issuer, loss by the company of its competitive position, and/or poor use of resources. WRIMCO also may sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Growth. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to those of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• WRIMCO's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Growth may be appropriate for investors seeking long-term investment growth. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Growth by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	34.35%
2000	1.41%
2001	-14.34%
2002	-21.30%
2003	23.06%
2004	3.31%
2005	11.23%
2006	5.04%
2007	25.81%
2008	-36.27%
In the period shown in the chart, the highest quarterly return was 22.48% (the fourth quarter of 1999) and the lowest quarterly return was -20.44% (the fourth quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP Growth		-36.27%	-0.65%	0.90%
Russell 1000® Growth Index1		-38.44%	-3.42%	-4.26%
Lipper Variable Annuity Large-Cap
	Growth Funds Universe Average2	-41.68%	-3.88%	-2.87%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to those of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Growth. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees1	0.70%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.05%
Total Annual Portfolio Operating Expenses	1.00%

¹The expenses shown for Management Fees reflect the maximum annual fee payable; however, a reduction in the Portfolio's management fee rate pursuant to a management fee waiver became effective October 1, 2006, and will remain in effect through September 30, 2016. If this waiver were reflected in the above table, the Management Fees would have been 0.67% and the Total Annual Portfolio Operating Expenses would have been 0.97%.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$102	$318	$553	$1,225

____________________________________________________________________________________

IVY FUNDS VIP MICRO CAP GROWTH

(formerly, W&R Target Micro Cap Growth Portfolio)

OBJECTIVE

Ivy Funds VIP Micro Cap Growth seeks long-term capital appreciation.

PRINCIPAL STRATEGIES

Ivy Funds VIP Micro Cap Growth seeks to achieve its objective by investing, under normal market conditions, at least 80% of its net assets in equity securities of primarily domestic and, to a lesser extent, foreign micro cap companies. Micro cap companies typically are companies with market capitalizations below $1 billion. The Portfolio's investment in equity securities may include common stocks that are part of initial public offerings, or IPOs. The Portfolio primarily invests in common stock but also may invest in preferred stock and securities convertible into equity securities.

In selecting equity securities for the Portfolio, Wall Street Associates, LLC (WSA), the Portfolio's investment subadvisor, utilizes a bottom-up stock selection process and seeks to invest in securities of companies that it believes show improving profitability, sustainable earnings growth potential, fundamental strength and management vision.

Generally, in determining whether to sell a security, WSA uses the same type of analysis that it uses in buying securities. For example, WSA may sell a security if it determines that the issuer's growth and/or profitability characteristics are deteriorating or the issuer no longer maintains a competitive advantage, when more attractive investment opportunities arise, when WSA believes a company's valuation has become unattractive relative to industry leaders and industry-specific metrics, to reduce the Portfolio's holding in that security or its exposure to a particular sector, or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Micro Cap Growth. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• potentially greater price volatility of the equity securities of micro cap companies held by the Portfolio
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors and industries
• the impact of the Portfolio's investments in IPOs
• WSA's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Market risk for small-sized companies may be greater than that for medium or large companies. Smaller companies are more likely to have limited financial resources and inexperienced management. Stocks of smaller companies, as well as stocks of companies with high-growth expectations reflected in their stock price, may experience volatile trading and price fluctuations. Furthermore, when the economy enters a recession, there tends to be a "flight to quality," which may exacerbate the increased risk and greater price volatility normally associated with smaller companies.

Due to the nature of the Portfolio's permitted investments, primarily stocks of new and/or unseasoned companies, companies in their early stages of development or smaller companies in new or emerging industries, the Portfolio may be subject to the following additional risks:

• products offered may fail to sell as anticipated
• a period of unprofitability may be experienced before a company develops the expertise and clientele to succeed in an industry
• the company may never achieve profitability
• economic, market and technological factors may cause the new industry itself to lose favor with the public

Investing a majority of the Portfolio's holdings in a single asset class such as micro cap securities may cause the Portfolio to experience more volatility than a fund with greater diversification.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Micro Cap Growth may be appropriate for investors seeking long-term capital appreciation from investments in faster-growing, potentially more volatile companies. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Micro Cap Growth by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns compare with those of a broad measure of market performance and a peer group average. For periods prior to September 22, 2003, the performance shown below is the performance of the Advantus Micro-Cap Growth Portfolio which was reorganized as the W&R Target Micro Cap Growth Portfolio on September 22, 2003. On July 31, 2008, the name of the Portfolio was changed to Ivy Funds VIP Micro Cap Growth. The Portfolio would have had substantially similar annual returns and would have differed from the Advantus Micro Cap Growth Portfolio only to the extent that the Portfolio had different expenses. Performance prior to September 22, 2003 has not been restated to reflect the estimated annual operating expenses of the Portfolio. If those expenses were reflected, performance of the Portfolio would differ.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	148.76%
2000	-21.05%
2001	-11.33%
2002	-43.64%
2003	54.41%
2004	10.05%
2005	20.87%
2006	12.26%
2007	6.49%
2008	-48.04%
In the period shown in the chart, the highest quarterly return was 82.84% (the fourth quarter of 1999) and the lowest quarterly return was -34.64% (the third quarter of 2002).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP Micro Cap Growth		-48.04%	-3.74%	2.27%
Russell 2000® Growth Index1		-38.56%	-2.37%	-0.76%
Russell Micro Cap Growth Index1, 3		-44.65%	-7.95%	N/A
Lipper Variable Annuity Small-Cap
	Growth Funds Universe Average2	-41.12%	-3.06%	0.49%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

³The Russell Micro Cap Growth Index has been added as an additional comparative broad-based index for the Portfolio.

The indexes shown are broad-based, securities market indexes that are unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Micro Cap Growth. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.95%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.16%
Total Annual Portfolio Operating Expenses	1.36%

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$138	$431	$745	$1,635

____________________________________________________________________________________

IVY FUNDS VIP MID CAP GROWTH

(formerly, W&R Target Mid Cap Growth Portfolio)

OBJECTIVE

Ivy Funds VIP Mid Cap Growth seeks to provide growth of your investment.

PRINCIPAL STRATEGIES

Ivy Funds VIP Mid Cap Growth seeks to achieve its objective by investing primarily in common stocks of domestic and, to a lesser extent, foreign mid cap companies that WRIMCO, the Portfolio's investment manager, believes offer above-average growth potential. Under normal market conditions, the Portfolio invests at least 80% of its net assets in the securities of mid-cap companies, which typically are companies with market capitalizations that range between $1 billion and $18 billion.

In selecting securities for the Portfolio, WRIMCO emphasizes a bottom-up approach and may look at a number of factors in its consideration of a company, such as:

• new or innovative products or services
• adaptive or creative management
• strong financial and operational capabilities to sustain growth
• stable and consistent revenue, earnings and cash flow
• market potential
• profit potential

Generally, in determining whether to sell a security, WRIMCO considers many factors, including excessive valuation given company growth prospects, deterioration of fundamentals, weak cash flow to support shareholder returns, and unexpected and poorly explained management changes. WRIMCO also may sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Mid Cap Growth. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• the potential volatility of the equity securities of small to mid cap companies held by the Portfolio
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• WRIMCO's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Investing a majority of the Portfolio's holdings in a single asset class such as mid cap securities may cause the Portfolio to experience more volatility than a fund invested with greater diversification.

Market risk for small or medium-sized companies may be greater than that for large companies. For example, smaller companies may have less certain growth prospects, limited financial resources, limited product lines, volatile trading and price fluctuation or inexperienced management.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Mid Cap Growth may be appropriate for investors who are seeking growth through a mutual fund which is primarily invested in mid-cap companies. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Mid Cap Growth by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns for each full calendar year since these shares were first offered.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
2006	8.56%
2007	12.62%
2008	-36.23%
In the period shown in the chart, the highest quarterly return was 7.48% (the first quarter of 2006) and the lowest quarterly return was -22.11% (the fourth quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
			Life of
		1 Year	Portfolio*
Shares of Ivy Funds VIP Mid Cap
	Growth (began on 4-28-05)	-36.23%	-1.50%
Russell Mid-Cap Growth Index1		-44.32%	-5.42%
Lipper Variable Annuity Mid-Cap Growth
	Funds Universe Average2	-45.24%	-4.94%

*Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above index (including income) are not available, index performance is calculated from April 30, 2005.

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Mid Cap Growth. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees1	0.85%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.14%
Total Annual Portfolio Operating Expenses	1.24%

¹The expenses shown for Management Fees reflect the maximum annual fee payable; however, a reduction in the Portfolio's management fee rate pursuant to a management fee waiver became effective October 1, 2006, and will remain in effect through September 30, 2016. If this waiver were reflected in the above table, the Management Fees would have been 0.84% and the Total Annual Portfolio Operating Expenses would have been 1.23%.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$126	$393	$681	$1,500

____________________________________________________________________________________

IVY FUNDS VIP SMALL CAP GROWTH

(formerly, W&R Target Small Cap Growth Portfolio)

OBJECTIVE

Ivy Funds VIP Small Cap Growth seeks growth of capital.

PRINCIPAL STRATEGIES

Ivy Funds VIP Small Cap Growth seeks to achieve its objective by investing, under normal market conditions, at least 80% of its net assets in common stocks of small cap domestic and, to a lesser extent, foreign companies. Small cap companies typically are companies with market capitalizations below $3.5 billion. The Portfolio emphasizes relatively new or unseasoned companies in their early stages of development, or smaller companies positioned in new or emerging industries where there is opportunity for rapid growth.

In selecting securities for the Portfolio, WRIMCO, the Portfolio's investment manager, utilizes a bottom-up stock picking process that focuses on companies it believes have long-term growth potential with superior financial characteristics and, therefore, are believed by WRIMCO to be of a higher quality than many other small cap companies. WRIMCO may look at a number of factors regarding a company, such as:

• aggressive or creative, yet strong, management
• technological or specialized expertise
• new or unique products or services
• entry into new or emerging industries
• growth in earnings/growth in sales/positive cash flows
• security size and liquidity

Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities. For example, WRIMCO may sell a security if it determines that the stock no longer offers significant growth potential, which may be due to a change in the business or management of the company or a change in the industry of the company. WRIMCO also may sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Small Cap Growth. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• the potential volatility of the equity securities of small to mid cap companies held by the Portfolio
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors and industries
• WRIMCO's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Market risk for small or medium-sized companies may be greater than that for large companies. For example, smaller companies may have less certain growth prospects, limited financial resources, limited product lines, volatile trading and price fluctuation or inexperienced management.

Due to the nature of the Portfolio's permitted investments, primarily the small cap stocks of new and/or unseasoned companies, companies in their early stages of development or smaller companies in new or emerging industries, the Portfolio may be subject to the following additional risks:

• products offered may fail to sell as anticipated
• a period of unprofitability may be experienced before a company develops the expertise and clientele to succeed in an industry
• the company may never achieve profitability
• economic, market and technological factors may cause the new industry itself to lose favor with the public

Investing a majority of the Portfolio's holdings in a single asset class such as small cap equities may cause the Portfolio to experience more volatility than a fund invested with greater diversification among asset classes.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Small Cap Growth may be appropriate for investors willing to accept greater risks than are present with many other mutual funds. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Small Cap Growth by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	52.23%
2000	-12.35%
2001	-1.93%
2002	-21.79%
2003	35.77%
2004	14.29%
2005	12.88%
2006	5.05%
2007	13.52%
2008	-39.18%
In the period shown in the chart, the highest quarterly return was 38.46% (the fourth quarter of 1999) and the lowest quarterly return was -21.73% (the third quarter of 2001).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP Small Cap
	Growth	-39.18%	-1.32%	2.66%
Russell 2000® Growth Index1		-38.56%	-2.37%	-0.76%
Lipper Variable Annuity Small-Cap
	Growth Funds Universe Average2	-41.12%	-3.06%	0.49%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Small Cap Growth. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees1	0.85%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.06%
Total Annual Portfolio Operating Expenses	1.16%

¹The expenses shown for Management Fees reflect the maximum annual fee payable; however, a reduction in the Portfolio's management fee rate pursuant to a management fee waiver became effective October 1, 2006, and will remain in effect through September 30, 2016. If this waiver were reflected in the above table, the Management Fees would have been 0.83% and the Total Annual Portfolio Operating Expenses would have been 1.14%.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$118	$368	$638	$1,409

____________________________________________________________________________________

IVY FUNDS VIP SMALL CAP VALUE

(formerly, W&R Target Small Cap Value Portfolio)

OBJECTIVE

Ivy Funds VIP Small Cap Value seeks long-term accumulation of capital.

PRINCIPAL STRATEGIES

Ivy Funds VIP Small Cap Value seeks to achieve its objective by investing primarily in various types of equity securities of small cap companies. Under normal market conditions, at least 80% of the Portfolio's net assets will be invested, at the time of purchase, in common stocks of small cap domestic and, to a lesser extent, foreign companies. Small cap companies typically are companies with market capitalizations below $3.5 billion. These equity securities will consist primarily of common stocks, some of which may be offered in IPOs.

In selecting securities for the Portfolio, WRIMCO, the Portfolio's investment manager, emphasizes a bottom-up approach that focuses on securities that, in WRIMCO's opinion, have favorable prospects but low to moderate expectations implicit in the stock price. WRIMCO may look at a number of factors in its consideration of a security, such as:

• the "intrinsic value" of the company in comparison to its stock price
• historical and projected financial performance
• free cash flow generation
• industry characteristics and potential
• market conditions
• competitive strategy
• management history
• financial condition of the company

"Intrinsic value" is the perceived realizable market value, determined through WRIMCO's analysis of a company's financial statements and an estimate of the present value of future cash flows.

Generally, in determining whether to sell a security, WRIMCO considers many factors, including realized valuation, deterioration in fundamentals, change in management or strategy, macro factors, or loss-limit strategies. WRIMCO also may sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Small Cap Value. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• the potential volatility of the equity securities of small to mid cap companies held by the Portfolio
• the value of a security believed by WRIMCO to be undervalued may never reach what WRIMCO believes is its full value, or such security's value may decrease
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors and industries
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• WRIMCO's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Market risk for small or medium-sized companies may be greater than that for large companies. For example, smaller companies may have less certain growth prospects, limited financial resources, limited product lines, volatile trading and price fluctuation or inexperienced management.

Due to the nature of the Portfolio's permitted investments, primarily the small cap stocks of new and/or unseasoned companies, companies in their early stages of development or smaller companies in new or emerging industries, the Portfolio may be subject to the following additional risks:

• products offered may fail to sell as anticipated
• a period of unprofitability may be experienced before a company develops the expertise and clientele to succeed in an industry
• the company may never achieve profitability
• economic, market and technological factors may cause the new industry itself to lose favor with the public

Investing a majority of the Portfolio's holdings in a single asset class such as small cap equities may cause the Portfolio to experience more volatility than a fund invested with greater diversification among asset classes.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Small Cap Value may be appropriate for investors seeking long-term accumulation of capital who are willing to accept greater risks than are present with other mutual funds. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Small Cap Value by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns compare with those of a broad measure of market performance and a peer group average. For periods prior to September 22, 2003, the performance shown below is the performance of the Advantus Small Company Value Portfolio which was reorganized as the W&R Target Small Cap Value Portfolio on September 22, 2003. The Portfolio changed its name to Ivy Funds VIP Small Cap Value effective July 31, 2008. The Portfolio would have had substantially similar annual returns and would have differed from the Advantus Small Company Value Portfolio only to the extent that the Portfolio had different expenses. Performance prior to September 22, 2003 has not been restated to reflect the estimated annual operating expenses of the Portfolio. If those expenses were reflected, performance of the Portfolio would differ.

State Street Research & Management served as the investment subadvisor to Ivy Funds VIP Small Cap Value until January 31, 2005, when BlackRock Financial Management, Inc. became the Portfolio's investment subadvisor. From January 20, 2006 to March 24, 2008, BlackRock Capital Management, Inc., an affiliate of BlackRock Financial Management, Inc., served as the Portfolio's investment subadvisor. On March 24, 2008, WRIMCO, the Portfolio's investment manager, assumed direct investment management responsibilities for the Portfolio.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	-3.07%
2000	28.00%
2001	15.58%
2002	-19.98%
2003	49.48%
2004	15.02%
2005	4.15%
2006	16.84%
2007	-4.13%
2008	-26.13%
In the period shown in the chart, the highest quarterly return was 22.17% (the second quarter of 2003) and the lowest quarterly return was -27.13% (the third quarter of 2002).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP Small Cap Value		-26.13%	-0.18%	5.45%
Russell 2000® Value Index1		-28.94%	0.25%	6.12%
Lipper Variable Annuity Small-Cap
	Value Funds Universe Average2	-32.92%	-0.31%	5.43%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Small Cap Value. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.85%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.08%
Total Annual Portfolio Operating Expenses	1.18%

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$120	$375	$649	$1,432

____________________________________________________________________________________

IVY FUNDS VIP VALUE

(formerly, W&R Target Value Portfolio)

OBJECTIVE

Ivy Funds VIP Value seeks long-term capital appreciation.

PRINCIPAL STRATEGIES

Ivy Funds VIP Value seeks to achieve its objective by investing in the common stocks of primarily large-cap, under-valued domestic and, to a lesser extent, foreign companies. The Portfolio seeks to invest in stocks that are, in the opinion of WRIMCO, the Portfolio's investment manager, undervalued relative to the true value of the company, and/or are out of favor in the financial markets but have a favorable outlook for capital appreciation. Although the Portfolio generally invests in large-cap companies (typically, companies with market capitalizations of at least $8 billion), it may invest in securities of any size company. The Portfolio seeks to be diversified across economic sectors in an effort to manage risk.

WRIMCO utilizes both a top-down (assess the market environment) and a bottom-up (research individual issuers) analysis in its selection process. In general, in selecting securities for the Portfolio, WRIMCO evaluates market risk, interest rate trends and the economic climate. It then considers numerous factors in its analysis of individual issuers and their stocks, which may include the following:

• intrinsic value of the company not reflected in the stock price
• historical earnings growth
• future expected earnings growth
• company's position in its industry
• industry conditions
• competitive strategy
• management capabilities
• free cash flow potential
• internal or external catalysts for change

WRIMCO will typically sell a stock when it reaches an acceptable price, its fundamental factors have changed or it has performed below WRIMCO's expectations. WRIMCO also may sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Value. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• the value of a security believed by WRIMCO to be undervalued may never reach what WRIMCO believes is its full value, or such security's value may decrease
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• WRIMCO's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Value may be appropriate for investors who seek long-term capital appreciation. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Value by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns for each full calendar year since these shares were first offered.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
2002	-12.70%
2003	25.11%
2004	14.70%
2005	4.42%
2006	16.88%
2007	1.90%
2008	-33.81%
In the period shown in the chart, the highest quarterly return was 12.95% (the fourth quarter of 2003) and the lowest quarterly return was -18.24% (the fourth quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
				Life of
		1 Year	5 Years	Portfolio*
Shares of Ivy Funds VIP
	Value (began on 05-01-2001)	-33.81%	-1.14%	0.66%
Russell 1000® Value Index1		-36.85%	-2.18%	-1.64%
Lipper Variable Annuity Large-Cap
	Value Funds Universe Average2	-37.09%	-2.18%	-1.64%

*Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above index (including income) are not available, index performance is calculated from April 30, 2001.

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Value. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees1	0.70%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.07%
Total Annual Portfolio Operating Expenses	1.02%

¹The expenses shown for Management Fees reflect the maximum annual fee payable; however, a reduction in the Portfolio's management fee rate pursuant to a management fee waiver became effective October 1, 2006, and will remain in effect through September 30, 2016. If this waiver were reflected in the above table, the Management Fees would have been 0.69% and the Total Annual Portfolio Operating Expenses would have been 1.01%.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$104	$325	$563	$1,248

FIXED INCOME PORTFOLIOS

____________________________________________________________________________________

IVY FUNDS VIP BOND

(formerly, W&R Target Bond Portfolio)

OBJECTIVE

Ivy Funds VIP Bond seeks a reasonable return with emphasis on preservation of capital.

PRINCIPAL STRATEGIES

Ivy Funds VIP Bond seeks to achieve its objective by investing primarily in domestic and, to a lesser extent, foreign debt securities usually of investment grade, including bonds rated BBB or higher by Standard & Poor's, a division of The McGraw-Hill Companies, Inc. (S&P), or Baa or higher by Moody's Investors Service, Inc. (Moody's) or, if unrated, determined by WRIMCO, the Portfolio's investment manager, to be of comparable quality. During normal market conditions, the Portfolio invests at least 80% of its net assets in bonds, including corporate bonds, securities issued or guaranteed by the U.S. government or its agencies or instrumentalities (U.S. government securities), and mortgage-backed and other asset-backed securities. The Portfolio has no limitations regarding the maturity, duration or dollar-weighted average of its holdings. The Portfolio may invest in debt securities with varying maturities and can invest in securities of companies of any size.

In selecting debt securities for the Portfolio, WRIMCO utilizes a top-down viewpoint at the outset by looking at broad economic and financial trends in an effort to anticipate their impact on the bond market and then considers yield and relative safety of a security and, in the case of convertible securities, the possibility of capital growth. WRIMCO also may look at many other factors. These may include the issuer's past, present and estimated future:

• financial strength
• cash flow
• management
• borrowing requirements
• responsiveness to changes in interest rates and business conditions

As well, WRIMCO may consider the maturity of the obligation and the size or nature of the bond issue.

Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities. For example, WRIMCO may sell a holding if the issuer's financial strength weakens and/or the yield and relative safety of the security decline. WRIMCO also may sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Bond. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• an issuer of a debt security or other fixed-income obligation may not make payments on the security or obligation when due
• an increase in interest rates, which may cause the value of the Portfolio's securities, especially bonds with longer maturities, to decline
• rising interest rates could cause property owners to prepay their mortgages more slowly than expected, resulting in slower prepayments of mortgage-backed securities
• a decrease in interest rates, which may cause prepayment of higher-yielding bonds held by the Portfolio, resulting in the Portfolio reinvesting the proceeds in other securities with generally lower interest rates, which also may cause a decrease in the Portfolio's investment income
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• changes in the maturities of bonds owned by the Portfolio
• WRIMCO's skill in evaluating and managing the interest rate and credit risks of the Portfolio
• adverse bond and stock market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Certain U.S. government securities in which the Portfolio may invest, such as U.S. Treasury (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 Treasury or by the credit of the issuer.

On September 7, 2008, the Federal Housing Finance Agency (FHFA), an agency of the U.S. government, placed Fannie Mae and Freddie Mac into conservatorship, a statutory process with the objective of returning the entities to normal business operations. FHFA will act as the conservator to operate Fannie Mae and Freddie Mac until they are stabilized. It is unclear what effect this conservatorship will have on the securities issued or guaranteed by Fannie Mae or Freddie Mac.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Bond may be appropriate for investors who primarily seek current income while also seeking to preserve investment principal. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Bond by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	-1.44%
2000	9.83%
2001	7.47%
2002	8.98%
2003	4.18%
2004	3.88%
2005	1.61%
2006	4.24%
2007	5.67%
2008	0.31%
In the period shown in the chart, the highest quarterly return was 4.76% (the third quarter of 2001) and the lowest quarterly return was - 2.45% (the second quarter of 2004).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP Bond		0.31%	3.13%	4.42%
Citigroup Broad
	Investment Grade Index1	7.02%	5.11%	5.86%
Lipper Variable Annuity Corporate Debt
	Funds A-Rated Universe Average2	-5.23%	1.84%	3.86%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Bond. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.47%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.07%
Total Annual Portfolio Operating Expenses	0.79%

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$81	$252	$439	$978

____________________________________________________________________________________

IVY FUNDS VIP HIGH INCOME

(formerly, W&R Target High Income Portfolio)

OBJECTIVES

Ivy Funds VIP High Income seeks, as its primary objective, a high level of current income. As a secondary objective, the Portfolio seeks capital growth when consistent with its primary objective.

PRINCIPAL STRATEGIES

Ivy Funds VIP High Income seeks to achieve its objectives by investing primarily in a diversified portfolio of high-yield, high-risk, fixed-income securities of domestic and, to a lesser extent, foreign issuers, the risks of which are, in the judgment of WRIMCO, the Portfolio's investment manager, consistent with the Portfolio's objectives. The Portfolio may invest in fixed-income securities of any maturity and in companies of any size. The Portfolio invests primarily in lower quality bonds, which include bonds rated BBB or below by S&P or Baa or below by Moody's or, if unrated, determined by WRIMCO to be of comparable quality. The Portfolio may invest an unlimited amount of its total assets in junk bonds, which include bonds rated BB or below by S&P or Ba or below by Moody's or, if unrated, determined by WRIMCO to be of comparable quality; however, the Portfolio typically provides a cautious alternative within a more aggressive bond category.

WRIMCO may look at a number of factors in selecting securities for the Portfolio, beginning with the economic environment, interest rate trends and industry fundamentals, progressing to analysis of the company's fundamentals, including:

• financial strength
• growth of operating cash flows
• strength of management
• borrowing requirements
• improving debt-to-cash ratios
• potential to improve credit standing
• strong, defensible market position

Generally, in determining whether to sell a debt security, WRIMCO uses the same type of analysis that it uses in buying debt securities. For example, WRIMCO may sell a holding if the issuer's financial strength declines, or is anticipated to decline, to an unacceptable level, or if management of the company weakens. WRIMCO may sell a security if the competitive conditions of a particular industry have increased, and it believes the Portfolio should, therefore, reduce its exposure to such industry. WRIMCO also may sell a security if, in WRIMCO's opinion, the price of the security has risen to reflect the company's improved creditworthiness and other investments with greater potential exist. WRIMCO may sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP High Income. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to those of the Portfolio (management risk)
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• the susceptibility of junk bonds to greater risks of non-payment or default, price volatility, and lack of liquidity compared to higher-rated bonds
• a decrease in interest rates, which may cause prepayment of higher-yielding bonds held by the Portfolio, resulting in the Portfolio reinvesting the proceeds in other securities with generally lower interest rates, which also may cause a decrease in the Portfolio's investment income
• an increase in interest rates, which may cause the value of a bond held by the Portfolio, especially bonds with longer maturities, to decline
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors and industries
• changes in the maturities of bonds owned by the Portfolio
• WRIMCO's skill in evaluating and managing the interest rate and credit risks of the Portfolio
• adverse bond and stock market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Market risk for small or medium-sized companies may be greater than that for large companies. For example, smaller companies may have less certain growth prospects, limited financial resources, limited product lines, volatile trading and price fluctuation or inexperienced management.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP High Income may be appropriate for investors who primarily seek a level of current income that is higher than is normally available with securities in the higher-rated categories and, secondarily, seek capital growth when consistent with the objective of income. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP High Income by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	4.22%
2000	-9.73%
2001	9.18%
2002	-2.02%
2003	19.74%
2004	9.86%
2005	2.55%
2006	10.27%
2007	3.86%
2008	-21.82%
In the period shown in the chart, the highest quarterly return was 6.27% (the second quarter of 2003) and the lowest quarterly return was -16.50% (the fourth quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP High Income		-21.82%	0.17%	1.97%
Citigroup High Yield Market Index1		-25.91%	-0.93%	2.19%
Lipper Variable Annuity High Current
	Yield Funds Universe Average2	-26.93%	-1.41%	1.07%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to those of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP High Income. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees1	0.63%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.08%
Total Annual Portfolio Operating Expenses	0.96%

¹The expenses shown for Management Fees reflect the maximum annual fee payable; however, a reduction in the Portfolio's management fee rate pursuant to a management fee waiver became effective October 1, 2006, and will remain in effect through September 30, 2016. If this waiver were reflected in the above table, the Management Fees would have been 0.58% and the Total Annual Portfolio Operating Expenses would have been 0.91%.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$98	$306	$531	$1,179

____________________________________________________________________________________

IVY FUNDS VIP MORTGAGE SECURITIES

(formerly, W&R Target Mortgage Securities Portfolio)

OBJECTIVE

Ivy Funds VIP Mortgage Securities seeks a high level of current income consistent with prudent investment risk.

PRINCIPAL STRATEGIES

Ivy Funds VIP Mortgage Securities invests, under normal market conditions, at least 80% of its net assets in the mortgage and mortgage-related industry, including investment-grade securities representing interests in pools of mortgage loans, collateralized mortgage obligations (CMOs), commercial mortgage-backed securities (CMBSs), stripped mortgage-backed securities and asset-backed securities backed by home equity loans, auto loans, and other consumer loans. The Portfolio invests in the securities of domestic and, to a lesser extent, foreign issuers. The Portfolio also may invest in interest rate derivatives primarily for hedging purposes.

In selecting securities, the Portfolio's investment subadvisor, Advantus Capital Management, Inc. (Advantus Capital), follows a bottom-up, fundamental approach and considers factors that may include prepayment risk, liquidity, credit quality and the type of loan and collateral underlying the security, as well as trends in economic conditions, interest rates and the mortgage market. Advantus Capital also seeks undervalued or mispriced securities within the mortgage-related sectors. It does not place a primary focus on interest rate positions. The Portfolio expects that under normal circumstances the effective duration of its portfolio will range from one to seven years.

Generally, in determining whether to sell a security, Advantus Capital uses the same type of analysis that it uses in buying securities, including review of the security's valuation and the issuer's creditworthiness. Advantus Capital may also sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

The Portfolio may, but is not required to, use a range of derivative investment techniques in seeking to hedge various market risks (such as interest rates and broad or specific equity or fixed-income market movements).

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Mortgage Securities. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• the Portfolio may lose some or all of its investment, including both principal and interest, because an issuer of a mortgage-backed security or other fixed-income obligation may not make payments on the security or obligation when due, as well as the risk that the credit quality of a security may be lowered, resulting in greater volatility in the price or liquidity of such security
• rising interest rates could cause property owners to prepay their mortgages more slowly than expected, resulting in slower prepayments of mortgage-backed securities
• a decrease in interest rates, which may cause prepayment of higher-yielding bonds held by the Portfolio, resulting in the Portfolio reinvesting the proceeds in other securities with generally lower interest rates, which also may cause a decrease in the Portfolio's investment income
• the value of a mortgage-backed security or other fixed-income obligation may decline due to changes in market interest rates
• mortgage-related securities purchased by the Portfolio, including restricted securities determined by Advantus Capital to be liquid at the time of purchase, may prove to be illiquid or otherwise subject to reduced liquidity due to changes in market conditions or quality ratings, or to errors in judgment by Advantus Capital
• the value of investments in derivatives may not correlate perfectly with the overall securities markets or with the underlying asset from which the derivative's value is derived
• the credit quality of the counterparty to a derivative transaction
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• Advantus Capital's skill in evaluating and selecting securities for the Portfolio
• adverse bond and stock market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Because the Portfolio concentrates its investments in the mortgage and mortgage-related industry, the Portfolio's performance may be more susceptible to a single economic, regulatory or technological occurrence than an investment portfolio that does not concentrate its investments in a single industry.

Certain U.S. government securities in which the Portfolio may invest, such as securities issued by 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 Fannie Mae, Freddie Mac and the 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 Treasury or by the credit of the issuer. In addition the Portfolio purchases securities issued by non-government related entities which may be backed only by the pool of assets pledged as security for the transaction.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Mortgage Securities seeks to achieve its investment objective over longer rather than shorter periods of time, and may be appropriate for investors seeking long-term focus. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Mortgage Securities by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns for each full calendar year since these shares were first offered.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31
2005	2.00%
2006	4.77%
2007	3.40%
2008	-10.95%
In the period shown in the chart, the highest quarterly return was 3.48% (the third quarter of 2006) and the lowest quarterly return was -5.89% (the fourth quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
			Life of
		1 Year	Portfolio*
Shares of Ivy Funds VIP Mortgage
	Securities (began on 05-27-04)	-10.95%	0.71%
Barclays Capital Mortgage-Backed
	Securities Index1, 3	8.34%	6.08%
Lipper Variable Annuity U.S. Mortgage
	Funds Universe Average2	-0.52%	3.21%

*Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above index (including income) are not available, index performance is calculated from May 31, 2004.

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

³During the fiscal year, Barclays Capital acquired the index operations of Lehman Brothers and renamed Lehman's products, including the Portfolio's benchmark.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Mortgage Securities. The table and the example below do not reflect any fees and expenses imposed under the Policies through which the Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.50%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.24%
Total Annual Portfolio Operating Expenses	0.99%

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$101	$315	$547	$1,213

GLOBAL/INTERNATIONAL PORTFOLIOS

____________________________________________________________________________________

IVY FUNDS VIP INTERNATIONAL GROWTH

(formerly, W&R Target International Growth Portfolio)

OBJECTIVES

Ivy Funds VIP International Growth seeks, as a primary objective, long-term appreciation of capital. As a secondary objective, the Portfolio seeks current income.

PRINCIPAL STRATEGIES

Ivy Funds VIP International Growth seeks to achieve its objectives by investing primarily in common stocks of foreign companies that WRIMCO, the Portfolio's investment manager, believes have the potential for long-term growth represented by economic expansion within a country or region, and represented by the restructuring and/or privatization of particular industries. The Portfolio emphasizes growth stocks, which are securities of companies whose earnings WRIMCO believes are likely to grow faster than the economy. The Portfolio primarily invests in issuers of developed countries, with an emphasis on issuers or companies located in Continental Europe, the United Kingdom and Japan. The Portfolio may invest in companies of any size.

WRIMCO utilizes a research-based investment process that blends top-down global economic analysis with bottom-up stock selection. After identifying promising opportunities around the world, WRIMCO seeks strong companies in industries which it believes are growing faster than their underlying economies. WRIMCO may look at a number of factors in selecting securities for the Portfolio, including:

• a company's competitive position and its sustainability
• a company's growth and earnings potential and valuation
• a company's financials, including cash flow and balance sheet
• management of the company
• strength of the industry
• applicable economic, market and political conditions of the country in which the company is located

Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities. For example, WRIMCO may sell a security if it believes the security no longer offers significant growth potential, if it believes the management of the company has weakened, and/or there exists political or economic instability in the issuer's country. WRIMCO may also sell a security to take advantage of more attractive investment opportunities or to raise cash.

The Portfolio may, but is not required to, use a range of derivative investment techniques in seeking to hedge various market risks (such as interest rates, currency exchange rates, and broad or specific equity or fixed-income market movements).

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP International Growth. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to those of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• changes in foreign currency exchange rates, which may affect the value of the securities the Portfolio holds
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• the value of investments in derivatives may not correlate perfectly with the overall securities markets or with the underlying asset from which the derivative's value is derived
• the credit quality of the counterparty to a derivative transaction
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• WRIMCO's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Investing in foreign securities involves a number of economic, financial, and political risks that may not be associated with the domestic markets and that could affect the Portfolio's performance unfavorably, depending on the prevailing conditions at any given time. Among these potential risks are: greater price volatility; comparatively weak supervision and regulation of securities exchanges, brokers and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversion costs; adverse tax consequences; and settlement delays. Accounting and disclosure standards also differ from country to country, which makes obtaining reliable research more difficult. There is the possibility that, under unusual international monetary or political conditions, the Portfolio's assets might be more volatile than would be the case with other investments. The risks of investing in foreign securities are more acute in emerging markets. Emerging markets historically have been more volatile than the markets of developed countries with more mature economies, since emerging market countries tend to have economic structures that are less diverse and mature and political systems that are less stable than those of developed countries.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP International Growth may be appropriate for investors seeking long-term appreciation of capital by investing primarily in securities issued by foreign companies. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP International Growth by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	65.58%
2000	-23.66%
2001	-22.23%
2002	-18.15%
2003	24.90%
2004	14.00%
2005	16.47%
2006	20.99%
2007	21.29%
2008	-42.15%
In the period shown in the chart, the highest quarterly return was 48.41% (the fourth quarter of 1999) and the lowest quarterly return was -21.32% (the fourth quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP
	International Growth	-42.15%	2.43%	1.26%
MSCI EAFE Growth Index1		-42.70%	1.43%	-1.30%
Lipper Variable Annuity International
	Growth Funds Universe Average2	-46.61%	1.74%	1.18%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to those of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP International Growth. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees1	0.85%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.11%
Total Annual Portfolio Operating Expenses	1.21%

¹The expenses shown for Management Fees reflect the maximum annual fee payable; however, a reduction in the Portfolio's management fee rate pursuant to a management fee waiver became effective October 1, 2006, and will remain in effect through September 30, 2016. If this waiver were reflected in the above table, the Management Fees would have been 0.82% and the Total Annual Portfolio Operating Expenses would have been 1.18%.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$123	$384	$665	$1,466

____________________________________________________________________________________

IVY FUNDS VIP INTERNATIONAL VALUE

(formerly, W&R Target International Value Portfolio)

OBJECTIVE

Ivy Funds VIP International Value seeks long-term capital growth.

PRINCIPAL STRATEGIES

Ivy Funds VIP International Value seeks to achieve its objective by investing primarily in equity securities of small, medium and large-sized foreign companies and governmental agencies. The Portfolio primarily invests in common stock but may also invest in foreign investment-grade debt securities. Under normal market conditions, the Portfolio invests at least 80% of its net assets in foreign equity securities and at least 65% of its total assets in issuers of at least three foreign countries.

In selecting equity securities for the Portfolio, Templeton Investment Counsel LLC (Templeton), the Portfolio's investment subadvisor, performs a bottom-up, value-oriented company-by-company analysis, rather than focusing on a specific industry or economic sector. Templeton employs a long-term approach and concentrates on the market price of a company relative to its view regarding the company's long-term earnings, asset value and cash flow potential. Templeton also considers a company's historical value measures, including price/earnings ratios, profit margins and asset value.

Generally, in determining whether to sell a security, Templeton uses the same type of analysis that it uses in buying securities. For example, Templeton may sell a security if it determines that the issuer's growth and/or profitability characteristics are deteriorating or the issuer no longer maintains a competitive advantage, more attractive investment opportunities arise, to reduce the Portfolio's holding in that security, or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP International Value. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• changes in foreign currency exchange rates, which may affect the value of securities the Portfolio holds
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• Templeton's skill in evaluating and selecting securities for the Portfolio
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Investing in foreign securities involves a number of economic, financial, and political considerations that may not be associated with the domestic markets and that could affect the Portfolio's performance unfavorably, depending on the prevailing conditions at any given time. Among these potential risks are: greater price volatility; comparatively weak supervision and regulations of security exchanges, brokers and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversion costs; adverse tax consequences; and settlement delays. Accounting and disclosure standards also differ from country to country, which makes obtaining reliable research more difficult. There is the possibility that, under unusual international monetary or political conditions, the Portfolio's assets might be more volatile than would be the case with other investments. The risks of investing in foreign securities are more acute in emerging markets. Emerging markets historically have been more volatile than the markets of developed countries with more mature economies, since emerging market countries tend to have economic structures that are less diverse and mature and political systems that are less stable than those of developed countries.

Market risk for small or medium-sized companies may be greater than that for large companies. For example, smaller companies may have less certain growth prospects, limited financial resources, limited product lines, volatile trading and price fluctuations or inexperienced management.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP International Value may be appropriate for investors seeking long-term capital growth by investing primarily in securities issued by foreign companies. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP International Value by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns compare with those of a broad measure of market performance and a peer group average. For periods prior to September 22, 2003, the performance shown below is the performance of the Advantus International Stock Portfolio which was reorganized as the W&R Target International II Portfolio on September 22, 2003. Effective December 1, 2004, the name of the Portfolio changed to International Value Portfolio. Effective July 31, 2008, the name of the Portfolio changed to Ivy Funds VIP International Value. The Portfolio would have had substantially similar annual returns and would have differed from the Advantus International Stock Portfolio only to the extent that the Portfolio had different expenses. Performance prior to September 22, 2003 has not been restated to reflect the estimated annual operating expenses of the Portfolio. If those expenses were reflected, performance of the Portfolio would differ.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	21.43%
2000	0.81%
2001	-11.21%
2002	-17.82%
2003	46.85%
2004	22.68%
2005	11.16%
2006	29.61%
2007	9.88%
2008	-42.26%
In the period shown in the chart, the highest quarterly return was 25.19% (the second quarter of 2003) and the lowest quarterly return was -23.85% (the third quarter of 2002).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP
	International Value	-42.26%	2.32%	3.93%
MSCI AC World ex U.S.A. Index1		-45.24%	3.00%	2.27%
Lipper Variable Annuity International
	Value Funds Universe Average2	-43.63%	0.87%	1.82%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP International Value. The table and the example below do not reflect any fees and expenses imposed under the Policies through which the Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.85%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.08%
Total Annual Portfolio Operating Expenses	1.18%

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$120	$375	$649	$1,432

SPECIALTY PORTFOLIOS

____________________________________________________________________________________

IVY FUNDS VIP ASSET STRATEGY

(formerly, W&R Target Asset Strategy Portfolio)

OBJECTIVE

Ivy Funds VIP Asset Strategy seeks high total return over the long term.

PRINCIPAL STRATEGIES

Ivy Funds VIP Asset Strategy seeks to achieve its objective by allocating its assets among primarily stocks, bonds and short-term instruments of issuers located around the world.

• "Stocks" include equity securities of all types, although WRIMCO, the Portfolio's investment manager, typically emphasizes a blend of value and growth potential in selecting stocks. Value stocks are those that WRIMCO believes are currently selling below their true worth, while growth stocks are those whose earnings WRIMCO believes are likely to grow faster than the economy. The Portfolio may invest in the securities of any size company.

• "Bonds" include all varieties of fixed-income instruments, such as corporate debt securities or U.S. government securities, with remaining maturities of more than one year. This investment type may include a significant amount, up to 35% of the Portfolio's total assets, of high-yield/high-risk bonds, or junk bonds, which include bonds rated BB or below by S&P, or Ba or below by Moody's, or unrated bonds determined by WRIMCO to be of comparable quality.

• "Short-term instruments" include all types of short-term securities with remaining maturities of one year or less, including higher-quality money market instruments.

• Within each of these investment types, the Portfolio may invest in domestic and foreign securities; the Portfolio may invest up to 100% of its total assets in foreign securities.

WRIMCO may allocate the Portfolio's investments among these different types of securities in different proportions at different times, including up to 100% in stocks, bonds, or short-term instruments, respectively. WRIMCO may exercise a flexible strategy in the selection of securities, and the Portfolio is not required to allocate its investments among stocks and bonds in any fixed proportion, nor is it limited by investment style or by the issuer's location, size, market capitalization or industry sector. The Portfolio may have none, some or all of its assets invested in each asset class in relative proportions that change over time based upon market and economic conditions.

The Portfolio may invest in any market that WRIMCO believes can offer a high probability of return or, alternatively, can provide a high degree of safety in uncertain times. Dependent on the outlook for the U.S. and global economies, WRIMCO makes top-down allocations among stocks, bonds, cash, precious metals (for defensive purposes) and currency markets around the globe. After determining allocations, WRIMCO seeks attractive opportunities within each market.

Generally, in determining whether to sell a security, WRIMCO considers many factors, including a deterioration in a company's fundamentals caused by global-specific factors such as geo-political landscape changes, regulatory or currency changes, or increased competition, and company-specific factors, such as reduced pricing power, diminished market opportunity, or increased competition. WRIMCO may also sell a security if the price of the security reaches what WRIMCO believes is fair value, to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

WRIMCO may, when consistent with the Portfolio's investment objective, buy or sell options or futures contracts on a security, on an index of securities or on a foreign currency, or enter into swaps, including credit default swaps and interest rate swaps (collectively, commonly known as derivatives). WRIMCO may use derivatives to seek to hedge various investments, for risk management purposes or to seek to increase investment income or gain in the Portfolio.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Asset Strategy. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• changes in foreign currency exchange rates, which may affect the value of the foreign securities the Portfolio holds
• an increase in interest rates, which may cause the value of the Portfolio's securities, especially bonds with longer maturities, to decline
• prepayment of higher-yielding bonds held by the Portfolio
• the value of investments in derivatives may not correlate perfectly with the overall securities markets or with the underlying asset from which the derivative's value is derived
• the credit quality of the counterparty to a derivative transaction
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• WRIMCO's skill in evaluating and selecting securities for the Portfolio and in allocating the Portfolio's assets among different types of investments
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

As noted, the Portfolio may invest up to 100% of its total assets in foreign securities. Investing in foreign securities involves a number of economic, financial, and political considerations that may not be associated with the domestic markets and that could affect the Portfolio's performance unfavorably, depending on the prevailing conditions at any given time. Among these potential risks are: greater price volatility; comparatively weak supervision and regulation of securities exchanges, brokers and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversion costs; adverse tax consequences; and settlement delays. Accounting and disclosure standards also differ from country to country, which makes obtaining reliable research more difficult. There is the possibility that, under unusual international monetary or political conditions, the Portfolio's assets might be more volatile than would be the case with other investments. The risks of investing in foreign securities are more acute in emerging markets. Emerging markets historically have been more volatile than the markets of developed countries with more mature economies, since emerging market countries tend to have economic structures that are less diverse and mature and political systems that are less stable than those of developed countries.

Investments by the Portfolio in high-yield/high-risk bonds are more susceptible to the risk of non-payment or default, and their prices may be more volatile than higher-rated bonds.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Asset allocation funds may be appropriate for investors who want to diversify among stocks, bonds and short-term instruments of domestic and foreign issuers, in one fund. If you are looking for an investment that uses this technique in pursuit of high total return, Ivy Funds VIP Asset Strategy may be appropriate for you. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Asset Strategy by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	22.96%
2000	22.53%
2001	-9.96%
2002	3.28%
2003	11.47%
2004	13.30%
2005	24.27%
2006	20.15%
2007	44.11%
2008	-25.79%
In the period shown in the chart, the highest quarterly return was 16.01% (the fourth quarter of 1999) and the lowest quarterly return was -18.60% (the third quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP Asset Strategy		-25.79%	12.59%	10.95%
S&P 500 Index1		-37.00%	-2.19%	-1.39%
Citigroup Broad
	Investment Grade Index1	7.02%	5.11%	5.86%
Citigroup Short-Term
	Index for 1 Month Certificates
	of Deposit1	3.05%	3.66%	3.72%
Lipper Variable Annuity
	Flexible Portfolio Funds
	Universe Average2	-21.53%	0.79%	4.04%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The indexes shown are broad-based, securities market indexes that are unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

FEES AND EXPENSES

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Asset Strategy. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees1	0.70%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.10%
Total Annual Portfolio Operating Expenses	1.05%

¹The expenses shown for Management Fees reflect the maximum annual fee payable; however, a reduction in the Portfolio's management fee rate pursuant to a management fee waiver became effective October 1, 2006, and will remain in effect through September 30, 2016. If this waiver were reflected in the above table, the Management Fees would have been 0.69% and the Total Annual Portfolio Operating Expenses would have been 1.04%.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$107	$334	$579	$1,283

____________________________________________________________________________________

IVY FUNDS VIP BALANCED

(formerly, W&R Target Balanced Portfolio)

OBJECTIVES

Ivy Funds VIP Balanced seeks, as a primary objective, to provide current income to the extent that, in the opinion of WRIMCO, the Portfolio's investment manager, market and economic conditions permit. As a secondary objective, the Portfolio seeks long-term appreciation of capital.

PRINCIPAL STRATEGIES

Ivy Funds VIP Balanced invests primarily in a mix of stocks, debt securities and short-term instruments, depending on market conditions. Regarding its equity investments, the Portfolio invests primarily in medium to large, well-established companies that usually issue dividend-paying securities. The Portfolio owns common stocks in order to provide possible appreciation of capital and some dividend income. In general, the Portfolio invests a portion of its total assets in either debt securities or preferred stocks, or both, in order to provide income and relative stability of capital. The Portfolio ordinarily invests at least 25% of its total assets in fixed-income securities. The majority of the Portfolio's debt securities are either U.S. government securities or investment-grade corporate bonds, including bonds rated BBB or higher by S&P or Baa or higher by Moody's or, if unrated, determined by WRIMCO to be of comparable quality. The Portfolio has no limitations on the range of maturities of the debt securities in which it may invest, nor on the size of companies in which it may invest. The Portfolio may invest in both domestic and, to a lesser extent, foreign securities.

WRIMCO may look at a number of factors in selecting securities for the Portfolio. For equity investments, WRIMCO typically uses a bottom-up approach and looks for undervalued companies whose asset value or earnings power, WRIMCO believes, is not reflected in the price of the stock. WRIMCO also considers a company's potential for dividend growth, its relative strength in earnings, its management and improving fundamentals, and the condition of the respective industry. In selecting debt securities for the Portfolio, WRIMCO seeks high-quality securities with minimal credit risk.

Generally, in determining whether to sell an equity security or a debt security, WRIMCO uses the same analysis as identified above in order to determine if the equity security is still undervalued. In determining whether to sell a debt security, WRIMCO will consider whether the security continues to maintain its minimal credit risk. WRIMCO may also sell a security if the security ceases to produce income, to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Balanced. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to those of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• WRIMCO's skill in evaluating and selecting securities for the Portfolio and in allocating the Portfolio's assets among different types of investments
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• an issuer of a debt security or other fixed-income obligation may not make payments on the security when due
• an increase in interest rates, which may cause the value of the Portfolio's securities, especially bonds with longer maturities, to decline
• a decrease in interest rates, which may cause prepayment of higher-yielding bonds held by the Portfolio, resulting in the Portfolio reinvesting the proceeds in other securities with generally lower interest rates, which also may cause a decrease in the Portfolio's investment income
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Balanced may be appropriate for investors seeking current income and the potential for long-term appreciation of capital. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Balanced by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	10.14%
2000	7.14%
2001	-5.94%
2002	-8.41%
2003	19.09%
2004	8.93%
2005	5.01%
2006	11.21%
2007	13.67%
2008	-21.00%
In the period shown in the chart, the highest quarterly return was 8.80% (the second quarter of 2003) and the lowest quarterly return was -10.91% (the fourth quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP Balanced		-21.00%	2.70%	3.30%
S&P 500 Index1		-37.00%	-2.19%	-1.39%
Citigroup Treasury/Govt
	Sponsored/Credit Index1	6.08%	4.81%	5.74%
Lipper Variable Annuity Mixed-Asset
	Target Allocation Growth
	Funds Universe Average2	-29.60%	-0.56%	0.87%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The indexes shown are broad-based, securities market indexes that are unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to those of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Balanced. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.70%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.06%
Total Annual Portfolio Operating Expenses	1.01%

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$103	$322	$558	$1,236

____________________________________________________________________________________

IVY FUNDS VIP ENERGY

(formerly, W&R Target Energy Portfolio)

OBJECTIVE

Ivy Funds VIP Energy seeks to provide long-term capital appreciation.

PRINCIPAL STRATEGIES

Ivy Funds VIP Energy seeks to achieve its objective of long-term capital appreciation by investing, under normal market conditions, at least 80% of its net assets in securities of companies within the energy sector, which includes all aspects of the energy industry, including exploration, discovery, production, distribution or infrastructure of energy and/or alternative energy sources. These companies may include, but are not limited to, oil companies, oil and gas exploration companies, natural gas pipeline companies, refinery companies, energy conservation companies, coal, transporters, utilities, alternative energy companies and innovative energy technology companies. The Portfolio invests in securities of companies across the capitalization spectrum and in companies domiciled throughout the world, including, potentially, companies domiciled or traded in emerging markets. The Portfolio may invest up to 100% of its total assets in foreign securities.

WRIMCO, the Portfolio's investment manager, uses an investment style that focuses on both growth and value characteristics of companies where energy is believed to be a factor in the investment outlook and success of that company. WRIMCO focuses on traditional companies that are producing and distributing energy for today, as well as those companies that are discovering sources of energy that will carry the world into the future. WRIMCO considers many factors in selecting companies for the Portfolio, which may include the valuation, operating history, capital, financials, business model and management of a company.

Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities to determine whether the security has ceased to offer significant growth potential, has become undervalued and/or whether the prospects of the issuer have deteriorated. WRIMCO may also sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

Energy Sector Risk-since the Portfolio invests a significant portion of its assets in securities of companies principally engaged in the energy sector, the Portfolio could experience wider fluctuations in value than funds with more diversified, less concentrated portfolios. Specifically, the securities that the Portfolio purchases may underperform the market as a whole. To the extent that the Portfolio's investments are concentrated in issuers conducting business in the same economic sector, the Portfolio's holdings are subject to legislative or regulatory changes, adverse market conditions and/or increased competition affecting that economic sector. The prices of the securities of energy companies also may fluctuate widely due to changes in value and dividend yield, which depend largely on the price and supply of energy fuels, international political events relating to oil-producing countries, energy conservation, the success of exploration projects and tax and other governmental regulatory policies.

A variety of additional factors can affect the investment performance of Ivy Funds VIP Energy. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• some of the companies in which the Portfolio may invest have relatively small market capitalizations. Securities of smaller companies may be subject to more abrupt or erratic market movements than the securities of larger, more established companies, since smaller companies tend to be more thinly traded and because they are subject to greater business risk. Transaction costs of smaller-company stocks may also be higher than those of larger companies
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• WRIMCO's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Investing in foreign securities presents additional risks such as foreign currency fluctuations and political or economic conditions affecting foreign countries. Accounting and disclosure standards also differ from country to country, which makes obtaining reliable research more difficult. There is the possibility that, under unusual international monetary or political conditions, the Portfolio's assets might be more volatile than would be the case with other investments. The risks of investing in foreign securities are more acute in emerging markets. Emerging markets historically have been more volatile than the markets of developed countries with more mature economies, since emerging market countries tend to have economic structures that are less diverse and mature and political systems that are less stable than those of developed countries.

Although individual security selection, in general, drives the performance of the Portfolio, short-term fluctuations in commodity prices may influence returns and increase price fluctuations in the Portfolio's shares. The companies in which the Portfolio invests may be adversely affected by foreign government, Federal, or state regulations on energy production, distribution and sale.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Energy may be appropriate for investors seeking long-term growth potential, but who can accept potentially dramatic fluctuations in capital value in the short term. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Energy by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns for each full calendar year since these shares were first offered.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
2007	51.30%
2008	-46.15%
In the period shown in the chart, the highest quarterly return was 23.73% (the second quarter of 2008) and the lowest quarterly return was -33.43% (the third quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
			Life of
		1 Year	Portfolio*
Shares of Ivy Funds VIP Energy (began on 5/1/06)		-46.15%	-9.80%
S&P 1500 Energy Sector Index1		-35.79%	-3.12%
Lipper Variable Annuity Natural Resources
	Funds Universe Average2	-47.18%	-12.09%

*Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above index (including income) are not available, index performance is calculated from April 30, 2006.

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Energy. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees1	0.85%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.21%
Total Annual Portfolio Operating Expenses	1.31%

¹ WRIMCO has voluntarily agreed to waive its management fee for any day that the Portfolio's net assets are less than $25 million, subject to WRIMCO's right to change or modify this waiver.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$134	$416	$719	$1,581

____________________________________________________________________________________

IVY FUNDS VIP GLOBAL NATURAL RESOURCES

(formerly, W&R Target Global Natural Resources Portfolio)

OBJECTIVE

Ivy Funds VIP Global Natural Resources seeks to provide long-term growth. Any income realized will be incidental.

PRINCIPAL STRATEGIES

Ivy Funds VIP Global Natural Resources invests, under normal market conditions, at least 80% of its net assets in equity securities of companies of any size throughout the world that own, explore or develop natural resources and other basic commodities or supply goods and services to such companies.

For these purposes, "natural resources" generally include:

• energy (such as utilities, producers/developers, refiners, service/drilling)
• alternative energy (such as uranium, coal, hydrogen, wind, solar, fuel cells)
• industrial products (such as building materials, cement, packaging, chemicals, supporting transport and machinery)
• forest products (such as lumber, plywood, pulp, paper, newsprint, tissue)
• base metals (such as aluminum, copper, nickel, zinc, iron ore and steel)
• precious metals and minerals (such as gold, silver, platinum, diamonds)
• agricultural products (grains and other foods, seeds, fertilizers, water)

The Portfolio's investment subadvisor, Mackenzie Financial Corporation (Mackenzie), uses an equity style that focuses on both growth and value, as well as utilizing both a top-down (the creation of macro-economic models to prepare an outlook for economic and market conditions) and a bottom-up (fundamental, company by company) approach. Mackenzie targets companies for investment that, in its opinion, have strong management and financial positions, adding balance with established low-cost, low-debt producers or positions that are based on anticipated commodity price trends. The Portfolio seeks to be diversified internationally, and therefore, Mackenzie invests in foreign companies and domestic companies that have principal operations in foreign jurisdictions. While Mackenzie seeks to anchor the Portfolio's assets in North America, international exposure may exceed 50% of the Portfolio's total assets. Exposure to companies in individual foreign countries other than Canada is typically less than 20% of the Portfolio's total assets. The Portfolio also may have exposure to companies located in, and/or doing business in, emerging markets.

Generally, in determining to sell a security, Mackenzie considers various factors, including whether the holding has sufficiently exceeded its target price, whether a growth-oriented company has failed to deliver growth and the effect of commodity price trends on certain holdings. Mackenzie may also sell a security to take advantage of more attractive investment opportunities, to reduce the Fund's holding in that security, or to raise cash.

The Portfolio may, but is not required to, use a range of derivative investment techniques to hedge various market risks (such as interest rates, currency exchange rates, and broad or specific equity or fixed-income market movements).

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Global Natural Resources. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• many of the companies in which the Portfolio may invest have relatively small market capitalizations. Securities of smaller companies may be subject to more abrupt or erratic market movements than the securities of larger, more established companies, since smaller companies tend to be more thinly traded and because they are subject to greater business risk. Transaction costs of smaller-company stocks may also be higher than those of larger companies
• since the Portfolio can invest a significant portion of its assets in securities of companies principally engaged in natural resources activities, the Portfolio could experience wider fluctuations in value than funds with more diversified portfolios
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the economy
• the value of investments in derivatives may not correlate perfectly with the overall securities markets or with the underlying asset from which the derivative's value is derived
• the credit quality of the counterparty to a derivative transaction
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• the level of the Portfolio's cash position may rise in the event acceptable investment opportunities cannot be found
• Mackenzie's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

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. Investing in physical commodities, such as gold or silver, exposes the Portfolio to other risk considerations such as potentially severe price fluctuations over short periods of time and storage costs that exceed the custodial and/or brokerage costs associated with the Portfolio's other holdings.

Investing in foreign securities involves a number of economic, financial, and political considerations that may not be associated with the domestic markets and that could affect the Portfolio's performance unfavorably, depending on the prevailing conditions at any given time. Among these potential risks are: greater price volatility; comparatively weak supervision and regulation of securities exchanges, brokers and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversion costs; adverse tax consequences; and settlement delays. Accounting and disclosure standards also differ from country to country, which makes obtaining reliable research more difficult. There is the possibility that, under unusual international monetary or political conditions, the Portfolio's assets might be more volatile than would be the case with other investments. The risks of investing in foreign securities are more acute in emerging markets. Emerging markets historically have been more volatile than the markets of developed countries with more mature economies, since emerging market countries tend to have economic structures that are less diverse and mature and political systems that are less stable than those of developed countries.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Global Natural Resources may be appropriate for investors seeking long-term growth potential, but who can accept potentially dramatic fluctuations in capital value in the short term. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Global Natural Resources by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns for each full calendar year since these shares were first offered.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
2006	25.49%
2007	43.50%
2008	-61.46%
In the period shown in the chart, the highest quarterly return was 15.35% (the first quarter of 2006) and the lowest quarterly return was -41.06% (the fourth quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
		Life of
		1 Year	Portfolio*
Shares of Ivy Funds VIP Global
	Natural Resources (began on 4-28-05)	-61.46%	-3.57%
MSCI Commodity-Related Index1		-42.20%	6.67%
Lipper Variable Annuity Natural Resources
	Funds Universe Average2	-47.18%	4.05%

*Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above index (including income) are not available, index performance is calculated from April 30, 2005.

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Global Natural Resources. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	1.00%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.18%
Total Annual Portfolio Operating Expenses	1.43%

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$146	$452	$782	$1,713

____________________________________________________________________________________

IVY FUNDS VIP REAL ESTATE SECURITIES

(formerly, W&R Target Real Estate Securities Portfolio)

OBJECTIVE

Ivy Funds VIP Real Estate Securities seeks total return through a combination of capital appreciation and current income.

PRINCIPAL STRATEGIES

Ivy Funds VIP Real Estate Securities invests, under normal market conditions, at least 80% of its net assets in the real estate or real estate-related industries. "Real estate" securities include securities of issuers that receive at least 50% of their gross revenue from the construction, ownership, management, financing or sale of residential, commercial or industrial real estate. "Real estate-related" securities include securities issued by companies primarily engaged in businesses that sell or offer products or services that are closely related to the real estate industry. The Portfolio invests in the securities of domestic and, to a lesser extent, foreign issuers. The Portfolio may invest in securities of issuers of any size, including issuers with small, medium or large market capitalizations.

Most of the Portfolio's real estate securities portfolio consists of securities issued by real estate investment trusts (REITs) and real estate operating companies (REOCs) that are listed on a securities exchange or traded over-the-counter. A REIT is a corporation or trust that invests in real estate, mortgages or shares issued by other REITs. A REOC is a corporation or partnership (or an entity treated as such) that invests in real estate, mortgages or shares issued by REITs, but may also engage in related or unrelated businesses.

The Portfolio focuses on growth-oriented companies with value characteristics. The Portfolio's investment subadvisor, Advantus Capital, utilizes a bottom-up fundamental stockpicking approach in selecting securities for investment by the Portfolio, which may include consideration of factors such as an issuer's financial condition, financial performance, quality of management, policies and strategies, real estate properties and competitive market condition. The Portfolio then invests in those issuers that Advantus Capital determines have potential for long-term sustainable growth in earnings, or those trading at discounts to the underlying value of assets owned.

Advantus Capital considers various indicators in determining to sell a security, which may include the following:

• target valuation is reached and operating performance is not sustainable
• company fundamentals have deteriorated or do not meet expectations
• economics, financial market or sector of the real estate industry has weakened

Advantus Capital may also sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Real Estate Securities. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• the value of the Portfolio's investments or their cash flow may decrease due to a variety of factors related to the construction, development, ownership, financing, repair or servicing, or other events affecting the value of real estate, buildings or other real estate fixtures
• the value of the Portfolio's securities issued by real estate-related companies (as discussed in "Additional Information about Principal Investment Strategies, Other Investments and Risks") may be adversely affected by changes in the value of the underlying property or the property's cash flow
• the value of the Portfolio's securities issued by REITs may be affected if one or more of those REITs were to lose their favorable tax status
• the value of the Portfolio's securities issued by REOCs may be affected by income streams derived from businesses other than real estate ownership
• the value of the Portfolio's securities may be adversely affected due to the lesser availability of credit for real estate or other disruptions in the capital markets for real estate
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• individual securities may perform differently from the overall market as a result of change in specific factors such as profitability or investor perceptions, or as a result of increased volatility in a company's income or share price because of the amount of leverage on the company's balance sheet
• Advantus Capital's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Because the Portfolio concentrates its investments in the real estate and real estate-related industries, the Portfolio's performance may be more susceptible to a single economic, regulatory or technological occurrence than an investment portfolio that does not concentrate its investments in a single industry.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Real Estate Securities seeks to achieve its investment objective over longer rather than shorter periods of time, and may be appropriate for investors seeking long-term focus. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Real Estate Securities by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns for each full calendar year since these shares were first offered.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31
2005	10.83%
2006	30.08%
2007	-16.07%
2008	-36.04%
In the period shown in the chart, the highest quarterly return was 12.97% (the first quarter of 2006) and the lowest quarterly return was -36.77% (the fourth quarter of 2008).

Average Annual Total Returns
as of December 31, 2008
			Life of
		1 Year	Portfolio*
Shares of Ivy Funds VIP Real Estate
	Securities (began on 05-27-04)	-36.04%	0.58%
Dow Jones Wilshire Real Estate
	Securities Index1	-39.83%	-0.14%
Lipper Variable Annuity Real Estate
	Funds Universe Average2	-40.08%	0.21%

*Because the Portfolio commenced operations on a date other than at the end of a month, and partial month calculations of the performance of the above index (including income) are not available, index performance is calculated from May 31, 2004.

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Real Estate Securities. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.90%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.16%
Total Annual Portfolio Operating Expenses	1.31%

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$133	$415	$718	$1,579

____________________________________________________________________________________

IVY FUNDS VIP SCIENCE AND TECHNOLOGY

(formerly, W&R Target Science and Technology Portfolio)

OBJECTIVE

Ivy Funds VIP Science and Technology seeks long-term capital growth.

PRINCIPAL STRATEGIES

Ivy Funds VIP Science and Technology seeks to achieve its objective of growth by concentrating its investments primarily in the equity securities of domestic and foreign science and technology companies. Under normal market conditions, the Portfolio invests at least 80% of its net assets in securities of science or technology companies or companies benefited by the application of scientific or technological discoveries. Science and technology companies are companies whose products, processes or services, in the opinion of WRIMCO, the Portfolio's investment manager, are being or are expected to be significantly benefited by the use or commercial application of scientific or technological developments or discoveries. The Portfolio may also invest in companies that utilize science and/or technology to improve their existing business even though the business is not within the science and technology industries. The Portfolio may invest in companies of any size, and may invest without limitation in foreign securities.

WRIMCO typically emphasizes growth potential in selecting stocks; that is, WRIMCO seeks companies in which earnings are likely to grow faster than the economy. WRIMCO aims to identify strong secular trends within industries and then applies a bottom-up stock selection process by considering a number of factors in selecting securities for the Portfolio. These may include but are not limited to the following regarding a company:

• growth potential
• earnings potential
• quality of management
• industry position/market size potential
• applicable economic and market conditions

Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses in buying securities in order to determine whether the security has ceased to offer significant growth potential, has become overvalued and/or whether the company prospects of the issuer have deteriorated due to a change in management, change in strategy and/or a change in its financial characteristics. WRIMCO may also sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Science and Technology. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• equity securities typically represent a proportionate ownership interest in a company. The market value of equity securities can fluctuate significantly even where management risk is not a factor. You could lose money if you redeem your Portfolio shares at a time when the Portfolio is not performing as well as expected
• the mix of securities held by the Portfolio, particularly the relative weightings in, and exposure to, different sectors of the science and technology industry
• changes in foreign currency exchange rates, which may affect the value of the securities the Portfolio holds
• the volatility of securities of science and technology companies due, in part, to the competitiveness of the industry
• rapid obsolescence of products or processes of companies in which the Portfolio invests
• government regulation in the science and technology industry
• the earnings performance, credit quality and other conditions of the issuers whose securities the Portfolio holds
• WRIMCO's skill in evaluating and selecting securities for the Portfolio
• adverse stock and bond market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds, including to some extent the Portfolio. These events have also decreased liquidity in some markets and may continue to do so

Because the Portfolio concentrates its investments in science and technology companies, the Portfolio's performance may be more susceptible to a single economic, regulatory or technological occurrence than an investment portfolio that does not concentrate its investments in a single industry.

Market risk for small or medium-sized companies may be greater than that for large companies. For example, smaller companies may have less certain growth prospects, limited financial resources, limited product lines, volatile trading and price fluctuation or inexperienced management.

Investing in foreign securities involves a number of economic, financial, and political considerations that may not be associated with the U.S. markets and that could affect the Portfolio's performance unfavorably, depending on the prevailing conditions at any given time. Among these potential risks are: greater price volatility; comparatively weak supervision and regulation of securities exchanges, brokers and issuers; higher brokerage costs; fluctuations in foreign currency exchange rates and related conversion costs; adverse tax consequences; and settlement delays. Accounting and disclosure standards also differ from country to country, which makes obtaining reliable research more difficult. There is the possibility that, under unusual international monetary or political conditions, the Portfolio's assets might be more volatile than would be the case with other investments. The risks of investing in foreign securities are more acute in emerging markets. Emerging markets historically have been more volatile than the markets of developed countries with more mature economies, since emerging market countries tend to have economic structures that are less diverse and mature and political systems that are less stable than those of developed countries.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Science and Technology may be appropriate for investors who seek long-term capital growth by investing in a portfolio that concentrates in securities of science and technology companies or in securities of companies that utilize science and/or technology to improve their existing business even though the business is not within the science and technology industries. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Science and Technology by showing changes in the Portfolio's performance from year to year and by showing how the Portfolio's average annual total returns for the periods shown compare with those of a broad measure of market performance and a peer group average.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns and compares them to the market indicators listed.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	174.66%*
2000	-21.15%
2001	-11.91%
2002	-23.99%
2003	30.46%
2004	16.25%
2005	17.25%
2006	7.87%
2007	24.37%
2008	-33.89%
In the period shown in the chart, the highest quarterly return was 83.08% (the fourth quarter of 1999) and the lowest quarterly return was -19.39% (the second quarter of 2000).
*A substantial portion of the Portfolio's returns during the period is attributable to investments in IPOs. No assurance can be given that future IPOs in which the Portfolio invests will have as equally beneficial an impact on performance.

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP Science
	and Technology	-33.89%	3.87%	8.62%
S&P North American Technology
	Sector Index1	-43.32%	-5.38%	-5.21%
Lipper Variable Annuity Science &
	Technology Funds Universe Average2	-45.44%	-4.92%	-1.57%

¹Reflects no deduction for fees, expenses or taxes.

²Net of fees and expenses.

The index shown is a broad-based, securities market index that is unmanaged. The Lipper average is a composite of mutual funds with investment objectives similar to that of the Portfolio.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Science and Technology. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees1	0.85%
Distribution and Service (12b-1) Fees	0.25%
Other Expenses	0.08%
Total Annual Portfolio Operating Expenses	1.18%

¹The expenses shown for Management Fees reflect the maximum annual fee payable; however, a reduction in the Portfolio's management fee rate pursuant to a management fee waiver became effective October 1, 2006, and will remain in effect through September 30, 2016. If this waiver were reflected in the above table, the Management Fees would have been 0.83% and the Total Annual Portfolio Operating Expenses would have been 1.16%.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$120	$375	$649	$1,432

MONEY MARKET PORTFOLIO

____________________________________________________________________________________

IVY FUNDS VIP MONEY MARKET

(formerly, W&R Target Money Market Portfolio)

OBJECTIVE

Ivy Funds VIP Money Market seeks maximum current income consistent with stability of principal.

PRINCIPAL STRATEGIES

Ivy Funds VIP Money Market seeks to achieve its objective by investing in U.S. dollar-denominated, high-quality money market obligations and instruments. High quality indicates that the securities are rated in one of the two highest categories by a requisite nationally recognized statistical rating organization (NRSRO), as defined in Rule 2a-7 (Rule 2a-7) under the Investment Company Act of 1940, as amended (1940 Act), or, if unrated, are of comparable quality as determined by WRIMCO, the Portfolio's investment manager. The Portfolio seeks, as well, to maintain a net asset value (NAV) of $1.00 per share. The Portfolio maintains a dollar-weighted average maturity of 90 days or less, and the Portfolio invests only in securities with a remaining maturity of not more than 397 calendar days.

WRIMCO may look at a number of factors in selecting securities for the Portfolio. These may include:

• the credit quality of the particular issuer or guarantor of the security
• the maturity of the security
• the relative value of the security
• the industry sector of the issuer of the security

Generally, in determining whether to sell a security, WRIMCO uses the same type of analysis that it uses when buying securities to determine whether the security no longer offers adequate return or complies with Rule 2a-7. WRIMCO also may sell a security to reduce the Portfolio's holding in that security, to take advantage of more attractive investment opportunities or to raise cash.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

A variety of factors can affect the investment performance of Ivy Funds VIP Money Market. These include:

• securities selected for the Portfolio may not perform as well as the securities held by other mutual funds with investment objectives that are similar to that of the Portfolio (management risk)
• a decrease in interest rates, which may cause prepayment of higher-yielding instruments held by the Portfolio, resulting in the Portfolio reinvesting the proceeds in other securities with generally lower interest rates, which also may cause a decrease in the Portfolio's investment income
• an increase in interest rates, which can cause the value of the Portfolio's holdings, especially securities with longer maturities, to decline
• the credit quality and other conditions of the issuers whose securities the Portfolio holds
• WRIMCO's skill in evaluating and managing the interest rate and credit risks of the Portfolio
• adverse market conditions, sometimes in response to general economic or industry news, that may cause the prices of the Portfolio's holdings to fall as part of a broad market decline
• recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign, and in the NAVs of many mutual funds. These events have also decreased liquidity in some markets and may continue to do so

An investment in the Portfolio is not insured or guaranteed by the FDIC or any other government agency. Although the Portfolio seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Portfolio.

On October 3, 2008, the Board of Directors of the Trust's predecessor, Ivy Funds Variable Insurance Portfolios, Inc. (Board), approved the participation by Ivy Funds VIP Money Market (Portfolio) in the initial three-month term of the U.S. Department of the Treasury's (Treasury) Temporary Guarantee Program for Money Market Funds (Program). At its regular meeting held on November 19, 2008, the Board unanimously approved the continued participation of the Portfolio in the Program, if the Treasury extended the Program beyond the initial three-month period ending December 19, 2008. On November 24, 2008, the Treasury announced its decision to extend the Program for the period from December 19, 2008 through April 30, 2009. Similarly, at its regular meeting held on February 4, 2009, the Board unanimously approved the continued participation of the Portfolio in the Program, if the Treasury further extended the Program. On March 31, 2009, the Treasury announced its decision to extend the Program for the period from April 30, 2009 through September 18, 2009 (Extended Program). Other than extending the Program's expiration date and charging an additional fee, the Extended Program does not change any of the terms of the Program which are described below.

Subject to certain conditions and limitations, in the event that the market-based net asset value per share of the Portfolio falls below $0.995 and the Portfolio liquidates its holdings, the Program and the Extended Program will provide coverage to shareholders in the Portfolio for up to $1.00 per share for the lesser of either the number of shares the investor held in the Portfolio at the close of business on September 19, 2008 or the number of shares the investor held on the date the market-based net asset value per share fell below $0.995. The Program and the Extended Program each applies only to shareholders of record who maintain a positive balance in the Portfolio from the close of business on September 19, 2008 through the date on which the Portfolio's market-based net asset value per share falls below $0.995.

The Program and the Extended Program are each funded from assets in the Exchange Stabilization Fund (ESF). Payments to investors under the Program and the Extended Program will depend on the availability of assets in the ESF, which currently total approximately $50 billion. The Treasury and the Secretary of the Treasury have the authority to use assets from the ESF for purposes other than those of the Program.

The Portfolio's participation in the initial three months of the Program (that is, until December 18, 2008) required a payment to the U.S. Department of the Treasury in the amount of 0.01% based on the net asset value of the Portfolio as of September 19, 2008. The Portfolio's participation in each Program extension (that is, until April 30, 2009, and thereafter until September 18, 2009) required a payment to the U.S. Department of the Treasury in the amount of 0.015% based on the net asset value of the Portfolio as of September 19, 2008. This expense is borne by the Portfolio without regard to any expense limitation currently in effect for the Portfolio.

For more information about the Portfolio's principal investment strategies and risks, please see "Additional Information about Principal Investment Strategies, Other Investments and Risks."

WHO MAY WANT TO INVEST

Ivy Funds VIP Money Market may be appropriate for investors who are risk-averse and seek to preserve principal while earning current income and saving for short-term needs. This Portfolio may not be suitable for all investors. You should consider whether the Portfolio fits your particular investment objectives.

PERFORMANCE

The bar chart and performance table below provide some indication of the risks of investing in Ivy Funds VIP Money Market by showing changes in the Portfolio's performance from year to year and by showing the Portfolio's average annual total returns for the periods shown.

• The bar chart presents the annual total returns and shows how performance has varied from year to year over the past ten calendar years.
• The performance table shows average annual total returns.
• The bar chart and the performance table assume payment of dividends and other distributions in shares. As with all mutual funds, the Portfolio's past performance does not necessarily indicate how it will perform in the future.

The Portfolio's shares are sold only to one or more Ivy Funds VIP Pathfinder Portfolios and to Variable Accounts that fund Policies. If the sales charges and expenses charged by these Policies were included, the total returns shown would be lower.

Investment return shown 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 call 1.888.WADDELL for the Portfolio's most recent month-end performance.

Chart of Year-by-Year Returns
as of December 31 each year
1999	4.62%
2000	5.87%
2001	3.62%
2002	1.12%
2003	0.52%
2004	0.70%
2005	2.50%
2006	4.32%
2007	4.60%
2008	2.18%
In the period shown in the chart, the highest quarterly return was 1.48% (the third quarter of 2000) and the lowest quarterly return was 0.09% (the third quarter of 2003).

Average Annual Total Returns
as of December 31, 2008
		1 Year	5 Years	10 Years
Shares of Ivy Funds VIP Money
	Market	2.18%	2.85%	2.99%

As of December 31, 2008 the 7-day yield was equal to 1.61%. Yields are computed by annualizing the average daily dividend per share during the time period for which the yield is presented.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Money Market. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.40%
Distribution and Service (12b-1) Fees1	0.00%
Other Expenses	0.10%
Total Annual Portfolio Operating Expenses1	0.50%

¹Expense information has been restated to reflect the termination of the Portfolio's Service (12b-1) Plan, effective January 1, 2009.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$51	$160	$280	$628

IVY FUNDS VIP PATHFINDER PORTFOLIOS

Purpose of the Ivy Funds VIP Pathfinder Portfolios

The Ivy Funds VIP Pathfinder Portfolios (Pathfinder Portfolios) are intended to provide various levels of potential capital appreciation at various levels of risk. Each of the five Pathfinder Portfolios is designed to provide a different asset allocation option corresponding to different investment goals ranging from the highest potential for growth with the highest amount of tolerance for risk, to the lowest potential for growth with the lowest amount of tolerance for risk, and the highest potential for income. Each Pathfinder Portfolio is a "fund of funds," which means that each Pathfinder Portfolio will seek to achieve its particular level of risk/return by investing substantially all of its assets in other Portfolios (Underlying Funds) and short-term investments in varying combinations and percentage amounts to achieve each Pathfinder Portfolio's particular investment objective.

The Pathfinder Portfolios are primarily designed:

• To help achieve an investor's financial objectives through a professionally developed asset allocation program.
• To maximize long-term total returns at a given level of risk through broad diversification among several traditional asset classes.

In selecting a Pathfinder Portfolio, investors should consider their personal objectives, investment time horizons, risk tolerances, and financial circumstances.

An asset class is a specific category of assets or investments. Examples of asset classes are stocks, bonds, foreign securities and cash. Within each asset class there may be several different types of assets. For example, a stock asset class may contain: common stock and/or preferred stocks; large cap, mid cap, and/or small cap stocks; domestic or international stocks; and growth or value stocks. Each asset class, and each type of asset within that asset class, offers a different type of potential benefit and risk level. For example, stock assets may generally be expected to provide a higher potential growth rate, but may require a longer time horizon and more risk than you would expect from most bond assets. By combining the various asset classes described below, in different percentage combinations, each Pathfinder Portfolio seeks to provide a different level of potential risk and reward.

WRIMCO, each Pathfinder Portfolio's investment manager, establishes for each Pathfinder Portfolio a target allocation range among different classes based on each Pathfinder Portfolio's risk profile and investment strategies. Within each target asset class allocation range, WRIMCO selects the Underlying Funds, and the percentage of the Pathfinder Portfolio's assets that will be allocated to each such Underlying Fund. WRIMCO is also the investment manager of each of the Underlying Funds. WRIMCO reviews the allocations among both asset classes and Underlying Funds on a routine basis. WRIMCO may make changes to the allocation range for any Pathfinder Portfolio from time to time as appropriate given the risk profile and investment strategies of each Pathfinder Portfolio and in order to achieve each Pathfinder Portfolio's investment objective.

Listed in the table below are the asset classes and Underlying Funds in which the Pathfinder Portfolios currently may invest and the target allocation ranges for each Pathfinder Portfolio that have been established by WRIMCO as of the date of this Prospectus. While this table is intended to depict the kinds of securities and the general proportions in which each Pathfinder Portfolio invests, over time the target asset class and Underlying Fund allocations may change as, in WRIMCO's judgment, economic and/or market conditions warrant in order for each Pathfinder Portfolio to continue to meet its objective. Even where the target allocation ranges themselves do not change, actual allocations may vary from an established target over the short term. Until a target allocation range is itself changed, day-to-day market activity may cause a Pathfinder Portfolio's asset allocations to drift from the target. Under ordinary circumstances, WRIMCO will rebalance the assets of each Pathfinder Portfolio each quarter to conform its actual allocations to the target allocations applicable at that time. The Pathfinder Portfolios do not necessarily invest in every asset class or all of the Underlying Funds.

Each Pathfinder Portfolio reserves the right to change its target allocation ranges at any time and without notice. For information about asset class and Underlying Fund allocations, please review the Pathfinder Portfolios' annual and semiannual reports.

__________________________________________________________________________

Target Allocations

for Each Asset Class and Underlying Fund by Portfolio

	Ivy Funds VIP Pathfinder Aggressive	Ivy Funds VIP Pathfinder Moderately Aggressive	Ivy Funds VIP Pathfinder Moderate	Ivy Funds VIP Pathfinder Moderately Conservative	Ivy Funds VIP Pathfinder Conservative
U.S. STOCKS:	50-60%	45-55%	40-50%	35-45%	30-40%
Ivy Funds VIP Dividend Opportunities	15-25%	15-25%	15-25%	10-20%	10-20%
Ivy Funds VIP Growth	10-20%	10-20%	10-20%	5-15%	5-15%
Ivy Funds VIP Mid Cap Growth	0-10%	0-10%	0-10%	0-10%	0-10%
Ivy Funds VIP Real Estate Securities	0-10%	0-10%	0-10%	0-10%	0-10%
Ivy Funds VIP Small Cap Growth	0-10%	0-10%	0-10%	0-10%	0-10%
Ivy Funds VIP Small Cap Value	0-10%	0-10%	0-10%	0-10%	0-10%
Ivy Funds VIP Value	0-10%	0-10%	0-10%	0-10%	0-10%
INTERNATIONAL STOCKS:	25-35%	20-30%	15-25%	10-20%	5-15%
Ivy Funds VIP International Growth	10-20%	10-20%	5-15%	5-15%	0-10%
Ivy Funds VIP International Value	10-20%	10-20%	5-15%	5-15%	0-10%
BONDS:	10-20%	15-25%	20-30%	25-35%	30-40%
Ivy Funds VIP Bond	10-20%	15-25%	20-30%	25-35%	30-40%
Ivy Funds VIP Mortgage Securities	0-10%	0-10%	0-10%	0-10%	0-10%
SHORT-TERM INVESTMENTS:	0-10%	5-15%	10-20%	15-25%	20-30%
Ivy Funds VIP Money Market	0-10%	5-15%	10-20%	15-25%	20-30%

Set forth below are the asset classes in which the Pathfinder Portfolios may invest and the Underlying Funds which WRIMCO currently has chosen to comprise each of these asset classes. The Pathfinder Portfolios may also invest in other Underlying Funds within each asset class in an effort to meet their respective investment objectives.

Asset Class		Underlying Investments
U.S. Stocks
	Large Cap Stocks	Ivy Funds VIP Dividend Opportunities seeks to provide total return.
		Ivy Funds VIP Growth seeks capital growth, with current income as a secondary objective.
		Ivy Funds VIP Value seeks long-term capital appreciation.
	Mid Cap Stocks	Ivy Funds VIP Mid Cap Growth seeks to provide growth of your investment.
	Small Cap Stocks	Ivy Funds VIP Small Cap Growth seeks growth of capital.
		Ivy Funds VIP Small Cap Value seeks long-term accumulation of capital.
	Specialty Stocks	Ivy Funds VIP Real Estate Securities seeks total return through a combination of capital appreciation and current income.
International Stocks		Ivy Funds VIP International Growth seeks, as a primary objective, long-term appreciation of capital and, as a secondary objective, current income.
		Ivy Funds VIP International Value seeks long-term capital growth.
Bonds		Ivy Funds VIP Bond seeks a reasonable return with emphasis on preservation of capital.
		Ivy Funds VIP Mortgage Securities seeks a high level of current income consistent with prudent investment risk.
Short-Term Investments		Ivy Funds VIP Money Market seeks maximum current income consistent with stability of principal.

____________________________________________________________________________________

IVY FUNDS VIP PATHFINDER AGGRESSIVE

(formerly, W&R Target Pathfinder Aggressive Portfolio)

OBJECTIVE

Ivy Funds VIP Pathfinder Aggressive seeks maximum growth of capital consistent with a more aggressive level of risk as compared to the other Ivy Funds VIP Pathfinder Portfolios.

PRINCIPAL STRATEGIES

To achieve its objective, Ivy Funds VIP Pathfinder Aggressive allocates its assets among the asset classes below so that approximately 50-60% of the value of the Portfolio's assets is in the U.S. stocks class, approximately 25-35% of the Portfolio's assets is in the international stocks class, and approximately 10-20% of the Portfolio's assets is in the bonds class. Ivy Funds VIP Pathfinder Aggressive implements this allocation by investing primarily in the Underlying Funds shown below. The Portfolio's currently anticipated allocation ranges for each asset class, as well as the Portfolio's target allocation of investments among some or all of the Underlying Funds, are summarized in the table below. Shorter term allocations may vary from the target allocation.

Asset Class		Target Allocations
U.S. Stocks			50-60%
	Ivy Funds VIP Dividend Opportunities	15-25%
	Ivy Funds VIP Growth	10-20%
	Ivy Funds VIP Value	0-10%
	Ivy Funds VIP Mid Cap Growth	0-10%
	Ivy Funds VIP Small Cap Growth	0-10%
	Ivy Funds VIP Small Cap Value	0-10%
	Ivy Funds VIP Real Estate Securities	0-10%
International Stocks			25-35%
	Ivy Funds VIP International Growth	10-20%
	Ivy Funds VIP International Value	10-20%
Bonds			10-20%
	Ivy Funds VIP Bond	10-20%
	Ivy Funds VIP Mortgage Securities	0-10%
Short-Term Investments			0-10%
	Ivy Funds VIP Money Market	0-10%
TOTAL ALLOCATION			100%

These allocations are projections only and may be changed by WRIMCO from time to time. Actual allocations are not limited to the ranges shown, and ranges may vary from those shown above. WRIMCO monitors Ivy Funds VIP Pathfinder Aggressive's holdings and cash flow and will periodically adjust the Portfolio's asset allocation to realign it with the Portfolio's risk profile and investment strategies. WRIMCO evaluates Ivy Funds VIP Pathfinder Aggressive's asset allocation on an ongoing basis in view of its risk profile and strategies. This means that allocation changes will be made as needed in the view of WRIMCO. WRIMCO applies a long-term investment horizon with respect to Ivy Funds VIP Pathfinder Aggressive; therefore, allocation changes may not be made in response to short-term market conditions. The Portfolio does not intend to actively trade among the Underlying Funds, nor does it intend to attempt to capture short-term market opportunities.

By owning shares of the Underlying Funds, the Portfolio indirectly holds a well-diversified mixture of both growth-oriented and value-oriented domestic and international stocks and, to a lesser extent, a mixture of investment grade and non-investment grade corporate bonds and U.S. government securities, and money market instruments. Although the majority of the Portfolio's indirect stock holdings are of domestic and foreign large cap companies, the Portfolio is likely to have potentially significant exposure to mid cap companies and small cap companies. Large cap companies typically are companies with market capitalizations of at least $8 billion. Mid cap companies typically are companies with market capitalizations that range between $1 billion and $18 billion. Small cap companies typically are companies with market capitalizations below $3.5 billion.

Ivy Funds VIP Pathfinder Aggressive is intended for aggressive investors comfortable with incurring the risk associated with growth investing in a high percentage of stocks, including international stocks, investors with long-term time horizons or investors who want to maximize long-term returns and who have a higher tolerance for possible short-term losses.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

Risks Applicable to Ivy Funds VIP Pathfinder Aggressive

Investment Risk. The Portfolio is subject to the general risks associated with price fluctuations of its underlying investments. As a result, the value of your investment in Ivy Funds VIP Pathfinder Aggressive will fluctuate, and there is the risk that you will lose money. Your investment will decline in value if the value of Ivy Funds VIP Pathfinder Aggressive's investments decreases.

Management Risk. WRIMCO will apply its investment techniques and risk analysis in making investment decisions for Ivy Funds VIP Pathfinder Aggressive, but there is no guarantee that its decisions will produce the intended result. Ivy Funds VIP Pathfinder Aggressive's ability to achieve its investment goal is subject to WRIMCO's skill and ability to select asset allocations and Underlying Funds that provide growth of capital and those that also provide income. Furthermore, WRIMCO may alter the asset allocation of Ivy Funds VIP Pathfinder Aggressive at its discretion. A material change in the asset allocation could affect both the level of risk and the potential for gain or loss.

Strategy Risk. There is the risk that WRIMCO's evaluations and allocation among asset classes and Underlying Funds may be incorrect. There is no guarantee that the Underlying Funds will achieve their respective investment objectives. Because Ivy Funds VIP Pathfinder Aggressive is weighted towards Underlying Funds that invest in stocks, both domestic and international, including mid cap and small cap stocks, Ivy Funds VIP Pathfinder Aggressive is more subject to the risks associated with those investments.

Risks Applicable to a Fund of Funds Structure. There are certain risks associated with a structure whereby Ivy Funds VIP Pathfinder Aggressive invests primarily in other mutual funds. In managing Ivy Funds VIP Pathfinder Aggressive, WRIMCO has the authority to select and replace Underlying Funds. WRIMCO could be subject to a potential conflict of interest in doing so because WRIMCO serves as the investment manager to the Underlying Funds and the advisory fees paid to WRIMCO by some of the Underlying Funds are higher than fees paid to WRIMCO by other Underlying Funds. Therefore, the selection of Underlying Funds by WRIMCO could have a positive or negative impact on WRIMCO's revenues or profits. It is important to note, however, that WRIMCO has a fiduciary duty to Ivy Funds VIP Pathfinder Aggressive and must act in the Portfolio's best interests.

For additional information about Ivy Funds VIP Pathfinder Aggressive's investments and risks, see "More about the Portfolios."

Risks Applicable to the Underlying Funds and Their Investments

Ivy Funds VIP Pathfinder Aggressive's ability to meet its investment objective depends on the ability of the Underlying Funds to achieve their respective investment objectives. Consequently, Ivy Funds VIP Pathfinder Aggressive is subject to the particular risks of the Underlying Funds in the proportions in which the Portfolio invests in them. Additional information about the risks of the Underlying Funds is provided above in their respective sections and below in the section entitled "Additional Information about Principal Investment Strategies, Other Investments and Risks."

Performance

The Portfolio has not been in operation for a full calendar year; therefore, it does not have performance information to include in a bar chart or performance table.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Pathfinder Aggressive. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.00%
Distribution and Service (12b-1) Fees	0.00%
Other Expenses	0.10%
Acquired Fund (Underlying Fund) Fees and Expenses1	0.91%
Total Annual Portfolio Operating Expenses2	1.01%

¹In addition to its own direct expenses, the Portfolio indirectly bears a pro rata share of the fees and expenses of each Underlying Fund in which it invests.

²The Total Annual Portfolio Operating Expenses ratio shown in this table does not correlate to the expense ratio shown in the Financial Highlights table because that ratio does not include the Acquired Fund (Underlying Fund) Fees and Expenses.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$103	$321	$556	$1,233

____________________________________________________________________________________

IVY FUNDS VIP PATHFINDER MODERATELY AGGRESSIVE

(formerly, W&R Target Pathfinder Moderately Aggressive Portfolio)

OBJECTIVES

Ivy Funds VIP Pathfinder Moderately Aggressive seeks growth of capital, but also seeks income consistent with a moderately aggressive level of risk as compared to the other Ivy Funds VIP Pathfinder Portfolios.

PRINCIPAL STRATEGIES

To achieve its objectives, Ivy Funds VIP Pathfinder Moderately Aggressive allocates its assets among the asset classes below so that approximately 45-55% of the value of the Portfolio's assets is in the U.S. stocks class; approximately 20-30% of the Portfolio's assets is in the international stocks class; 15-25% is in the bonds class and 5-15% in the short- term investments class to reduce volatility. Ivy Funds VIP Pathfinder Moderately Aggressive implements this allocation by investing primarily in the Underlying Funds shown below. The Portfolio's currently anticipated allocation ranges for each asset class, as well as the Portfolio's target allocation of investments among some or all of the Underlying Funds, are summarized in the table below. Shorter-term allocations may vary from the target allocation.

Asset Class		Target Allocations
U.S. Stocks			45-55%
	Ivy Funds VIP Dividend Opportunities	15-25%
	Ivy Funds VIP Growth	10-20%
	Ivy Funds VIP Value	0-10%
	Ivy Funds VIP Mid Cap Growth	0-10%
	Ivy Funds VIP Small Cap Growth	0-10%
	Ivy Funds VIP Small Cap Value	0-10%
	Ivy Funds VIP Real Estate Securities	0-10%
International Stocks			20-30%
	Ivy Funds VIP International Growth	10-20%
	Ivy Funds VIP International Value	10-20%
Bonds			15-25%
	Ivy Funds VIP Bond	15-25%
	Ivy Funds VIP Mortgage Securities	0-10%
Short-Term Investments			5-15%
	Ivy Funds VIP Money Market	5-15%
TOTAL ALLOCATION			100%

These allocations are projections only and may be changed by WRIMCO from time to time. Actual allocations are not limited to the ranges shown, and ranges may vary from those shown above. WRIMCO monitors Ivy Funds VIP Pathfinder Moderately Aggressive's holdings and cash flow and will periodically adjust the Portfolio's asset allocation to realign it with the Portfolio's risk profile and investment strategies. WRIMCO evaluates Ivy Funds VIP Pathfinder Moderately Aggressive's asset allocation on an ongoing basis in view of its risk profile and strategies. This means that allocation changes will be made as needed in the view of WRIMCO. WRIMCO applies a long-term investment horizon with respect to Ivy Funds VIP Pathfinder Moderately Aggressive; therefore, allocation changes may not be made in response to short-term market conditions. The Portfolio does not intend to actively trade among the Underlying Funds, nor does it intend to attempt to capture short-term market opportunities.

By owning shares of the Underlying Funds, the Portfolio indirectly holds a well-diversified mixture of both growth-oriented and value-oriented domestic and international stocks and, to a lesser extent, a mixture of investment grade and non-investment grade corporate bonds and U.S. government securities and money market instruments. Although the majority of the Portfolio's indirect stock holdings are of domestic and foreign large cap companies, the Portfolio is likely to have some exposure to mid cap and small cap companies.

Ivy Funds VIP Pathfinder Moderately Aggressive is intended for investors who want to maximize returns over the long term but who have a tolerance for possible short-term losses or who are looking for some additional diversification.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

Risks Applicable to Ivy Funds VIP Pathfinder Moderately Aggressive

Investment Risk. The Portfolio is subject to the general risks associated with price fluctuations of its underlying investments. As a result, the value of your investment in Ivy Funds VIP Pathfinder Moderately Aggressive will fluctuate and there is the risk that you will lose money. Your investment will decline in value if the value of Ivy Funds VIP Pathfinder Moderately Aggressive's investments decreases.

Management Risk. WRIMCO will apply its investment techniques and risk analysis in making investment decisions for the Portfolio, but there is no guarantee that its decisions will produce the intended result. Ivy Funds VIP Pathfinder Moderately Aggressive's ability to achieve its investment goal is subject to WRIMCO's skill and ability to select asset allocations and Underlying Funds that provide growth of capital and those that also provide income. Furthermore, WRIMCO may alter the asset allocation of Ivy Funds VIP Pathfinder Moderately Aggressive at its discretion. A material change in the asset allocation could affect both the level of risk and the potential for gain or loss.

Strategy Risk. There is the risk that WRIMCO's evaluations and allocation among asset classes and Underlying Funds may be incorrect. There is no guarantee that the Underlying Funds will achieve their respective investment objectives. Because Ivy Funds VIP Pathfinder Moderately Aggressive is weighted towards Underlying Funds that invest in stocks, both U.S. and international, including mid cap stocks, as well as bonds, Ivy Funds VIP Pathfinder Moderately Aggressive is more subject to the risks associated with those investments.

Risks Applicable to a Fund of Funds Structure. There are certain risks associated with a structure whereby Ivy Funds VIP Pathfinder Moderately Aggressive invests primarily in other mutual funds. In managing Ivy Funds VIP Pathfinder Moderately Aggressive, WRIMCO has the authority to select and replace Underlying Funds. WRIMCO could be subject to a potential conflict of interest in doing so, because WRIMCO serves as the investment manager to the Underlying Funds and the advisory fees paid to WRIMCO by some of the Underlying Funds are higher than fees paid to WRIMCO by other Underlying Funds. Therefore, the selection of Underlying Funds by WRIMCO could have a positive or negative impact on WRIMCO's revenues or profits. It is important to note, however, that WRIMCO has a fiduciary duty to Ivy Funds VIP Pathfinder Moderately Aggressive and must act in the Portfolio's best interests.

For additional information about Ivy Funds VIP Pathfinder Moderately Aggressive's investments and risks, see "More about the Portfolios."

Risks Applicable to the Underlying Funds and Their Investments

Ivy Funds VIP Pathfinder Moderately Aggressive's ability to meet its investment objectives depends on the ability of the Underlying Funds to achieve their respective investment objectives. Consequently, Ivy Funds VIP Pathfinder Moderately Aggressive is subject to the particular risks of the Underlying Funds in the proportions in which the Portfolio invests in them. Additional information about the risks of the Underlying Funds is provided above in their respective sections and below in the section entitled "Additional Information about Principal Investment Strategies, Other Investments and Risks."

Performance

The Portfolio has not been in operation for a full calendar year; therefore, it does not have performance information to include in a bar chart or performance table.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Pathfinder Moderately Aggressive. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.00%
Distribution and Service (12b-1) Fees	0.00%
Other Expenses	0.07%
Acquired Fund (Underlying Fund) Fees and Expenses1	0.90%
Total Annual Portfolio Operating Expenses2	0.97%

¹In addition to its own direct expenses, the Portfolio indirectly bears a pro rata share of the fees and expenses of each Underlying Fund in which it invests.

²The Total Annual Portfolio Operating Expenses ration shown in this table does not correlate to the expense ratio shown in the Financial Highlights table because that ratio does not include the Acquired Fund (Underlying Fund) Fees and Expenses.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$99	$308	$534	$1,186

____________________________________________________________________________________

IVY FUNDS VIP PATHFINDER MODERATE

(formerly, W&R Target Pathfinder Moderate Portfolio)

OBJECTIVE

Ivy Funds VIP Pathfinder Moderate seeks a high level of total return consistent with a moderate level of risk as compared to the other Ivy Funds VIP Pathfinder Portfolios.

PRINCIPAL STRATEGIES

To achieve its objective, Ivy Funds VIP Pathfinder Moderate allocates its assets among the asset classes below so that approximately 40-50% of the value of the Portfolio's assets is in the U.S. stocks class; 15-25% of its assets is in the international stocks class; 20-30% of the value of its assets is in the bonds class and 10-20% of the value of its assets is in the short-term investments class to add income and reduce volatility. Ivy Funds VIP Pathfinder Moderate implements this allocation by investing primarily in the Underlying Funds shown below. Ivy Funds VIP Pathfinder Moderate's currently anticipated allocation ranges for each asset class, as well as the Portfolio's target allocation of investments among some or all of the Underlying Funds, are summarized in the table below. Shorter-term allocations may vary from the target allocation.

Asset Class		Target Allocations
U.S. Stocks			40-50%
	Ivy Funds VIP Dividend Opportunities	15-25%
	Ivy Funds VIP Growth	10-20%
	Ivy Funds VIP Value	0-10%
	Ivy Funds VIP Mid Cap Growth	0-10%
	Ivy Funds VIP Small Cap Growth	0-10%
	Ivy Funds VIP Small Cap Value	0-10%
	Ivy Funds VIP Real Estate Securities	0-10%
International Stocks			15-25%
	Ivy Funds VIP International Growth	5-15%
	Ivy Funds VIP International Value	5-15%
Bonds			20-30%
	Ivy Funds VIP Bond	20-30%
	Ivy Funds VIP Mortgage Securities	0-10%
Short-Term Investments			10-20%
	Ivy Funds VIP Money Market	10-20%
TOTAL ALLOCATION			100%

These allocations are projections only and may be changed by WRIMCO from time to time. Actual allocations are not limited to the ranges shown and ranges may vary from those shown above. WRIMCO monitors Ivy Funds VIP Pathfinder Moderate's holdings and cash flow and will periodically adjust the Portfolio's asset allocation to realign it with the Portfolio's risk profile and investment strategies. WRIMCO evaluates Ivy Funds VIP Pathfinder Moderate's asset allocation on an ongoing basis in view of its risk profile and strategies. This means that allocation changes will be made as needed in the view of WRIMCO. WRIMCO applies a long-term investment horizon with respect to Ivy Funds VIP Pathfinder Moderate; therefore, allocation changes may not be made in response to short-term market conditions. The Portfolio does not intend to actively trade among the Underlying Funds, nor does it intend to attempt to capture short-term market opportunities.

By owning shares of the Underlying Funds, the Portfolio indirectly holds a well-diversified mixture of both growth-oriented and value-oriented, primarily large cap, domestic and, to a lesser extent, international stocks, as well as a mixture of investment grade and non-investment grade corporate bonds, U.S. government securities and money market instruments.

Ivy Funds VIP Pathfinder Moderate is intended for investors who have a lower tolerance for risk than more aggressive investors and who are seeking both growth and income, who have a longer time horizon, or who are willing to accept moderate short-term price fluctuations in exchange for potential longer-term returns.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

Risks Applicable to Ivy Funds VIP Pathfinder Moderate

Investment Risk. The Portfolio is subject to the general risks associated with price fluctuations of its underlying investments. As a result, the value of your investment in Ivy Funds VIP Pathfinder Moderate will fluctuate, and there is the risk that you will lose money. Your investment will decline in value if the value of Ivy Funds VIP Pathfinder Moderate's investments decreases.

Management Risk. WRIMCO will apply its investment techniques and risk analysis in making investment decisions for the Portfolio, but there is no guarantee that its decisions will produce the intended result. Ivy Funds VIP Pathfinder Moderate's ability to achieve its investment goal is subject to WRIMCO's skill and ability to select asset allocations and Underlying Funds that provide growth of capital and those that also provide income. Furthermore, WRIMCO may alter the asset allocation of Ivy Funds VIP Pathfinder Moderate at its discretion. A material change in the asset allocation could affect both the level of risk and the potential for gain or loss.

Strategy Risk. There is the risk that WRIMCO's evaluations and allocation among asset classes and Underlying Funds may be incorrect. There is no guarantee that the Underlying Funds will achieve their respective investment objectives. Because Ivy Funds VIP Pathfinder Moderate is weighted towards Underlying Funds that invest in stocks, both U.S. and international, including mid cap stocks, as well as bonds and short term investments, Ivy Funds VIP Pathfinder Moderate is more subject to the risks associated with those investments.

Risks Applicable to a Fund of Funds Structure. There are certain risks associated with a structure whereby Ivy Funds VIP Pathfinder Moderate invests primarily in other mutual funds. In managing Ivy Funds VIP Pathfinder Moderate, WRIMCO could be subject to a potential conflict of interest in doing so, because WRIMCO serves as the investment manager to the Underlying Funds and the advisory fees paid to WRIMCO by some of the Underlying Funds are higher than fees paid to WRIMCO by other Underlying Funds. Therefore, the selection of Underlying Funds by WRIMCO could have a positive or negative impact on WRIMCO's revenues or profits. It is important to note, however, that WRIMCO has a fiduciary duty to Ivy Funds VIP Pathfinder Moderate and must act in the Portfolio's best interests.

For additional information about Ivy Funds VIP Pathfinder Moderate's investments and risks, see "More about the Portfolios."

Risks Applicable to the Underlying Funds and Their Investments

Ivy Funds VIP Pathfinder Moderate's ability to meet its investment objective depends on the ability of the Underlying Funds to achieve their respective investment objectives. Consequently, Ivy Funds VIP Pathfinder Moderate is subject to the particular risks of the Underlying Funds in the proportions in which the Portfolio invests in them. Additional information about the risks of the Underlying Funds is provided above in their respective sections and below in the section entitled "Additional Information about Principal Investment Strategies, Other Investments and Risks."

Performance

The Portfolio has not been in operation for a full calendar year; therefore, it does not have performance information to include in a bar chart or performance table.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Pathfinder Moderate. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.00%
Distribution and Service (12b-1) Fees	0.00%
Other Expenses	0.09%
Acquired Fund (Underlying Fund) Fees and Expenses1	1.05%
Total Annual Portfolio Operating Expenses2	1.14%

¹In addition to its own direct expenses, the Portfolio indirectly bears a pro rata share of the fees and expenses of each Underlying Fund in which it invests.

²The Total Annual Portfolio Operating Expenses ratio shown in this table does not correlate to the expense ratio shown in the Financial Highlights table because that ratio does not include the Acquired Fund (Underlying Fund) Fees and Expenses.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$116	$362	$628	$1,386

____________________________________________________________________________________

IVY FUNDS VIP PATHFINDER MODERATELY CONSERVATIVE

(formerly, W&R Target Pathfinder Moderately Conservative Portfolio)

OBJECTIVE

Ivy Funds VIP Pathfinder Moderately Conservative seeks a high level of total return consistent with a moderately conservative level of risk as compared to the other Ivy Funds VIP Pathfinder Portfolios.

PRINCIPAL STRATEGIES

Ivy Funds VIP Pathfinder Moderately Conservative allocates its assets among the asset classes below so that approximately 25-35% of the value of the Portfolio's assets is in the bonds class, 35-45% in the U.S. stocks class, 15-25% in the short term investments class, and 10-20% in the international stocks class. The Portfolio's allocation is principally weighted towards bond investments and short-term investments while including stock investments for long-term growth. Ivy Funds VIP Pathfinder Moderately Conservative implements this allocation by investing primarily in the Underlying Funds shown below. Ivy Funds VIP Pathfinder Moderately Conservative's currently anticipated allocation ranges for each asset class, as well as the Portfolio's target allocation of investments among some or all of the Underlying Funds, are summarized in the table below. Shorter-term allocations may vary from the target allocation.

Asset Class		Target Allocations
U.S. Stocks			35-45%
	Ivy Funds VIP Dividend Opportunities	10-20%
	Ivy Funds VIP Growth	5-15%
	Ivy Funds VIP Value	0-10%
	Ivy Funds VIP Mid Cap Growth	0-10%
	Ivy Funds VIP Small Cap Growth	0-10%
	Ivy Funds VIP Small Cap Value	0-10%
	Ivy Funds VIP Real Estate Securities	0-10%
International Stocks			10-20%
	Ivy Funds VIP International Growth	5-15%
	Ivy Funds VIP International Value	5-15%
Bonds			25-35%
	Ivy Funds VIP Bond	25-35%
	Ivy Funds VIP Mortgage Securities	0-10%
Short-Term Investments			15-25%
	Ivy Funds VIP Money Market	15-25%
TOTAL ALLOCATION			100%

These allocations are projections only and may be changed by WRIMCO from time to time. Actual allocations are not limited to the ranges shown and ranges may vary from those shown above. WRIMCO monitors Ivy Funds VIP Pathfinder Moderately Conservative's holdings and cash flow and will periodically adjust the Portfolio's asset allocation to realign it with the Portfolio's risk profile and investment strategies. WRIMCO evaluates Ivy Funds VIP Pathfinder Moderately Conservative's asset allocation on an ongoing basis in view of its risk profile and strategies. This means that allocation changes will be made as needed in the view of WRIMCO. WRIMCO applies a long-term investment horizon with respect to Ivy Funds VIP Pathfinder Moderately Conservative; therefore, allocation changes may not be made in response to short-term market conditions. The Portfolio does not intend to actively trade among the Underlying Funds, nor does it intend to attempt to capture short-term market opportunities.

By owning shares of the Underlying Funds, the Portfolio indirectly holds a diversified mixture of stocks of domestic and, to a lesser extent, foreign companies that typically are large cap; the Portfolio also indirectly holds a mixture of investment grade corporate bonds, U.S. government securities and, to a lesser extent, a mixture of non-investment grade corporate bonds and money market instruments.

Ivy Funds VIP Pathfinder Moderately Conservative is intended for investors who have a lower tolerance for risk and whose primary goal is income, who have a shorter time horizon or who are willing to accept some amount of market volatility in exchange for greater potential income and growth.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

Risks Applicable to Ivy Funds VIP Pathfinder Moderately Conservative

Investment Risk. The Portfolio is subject to the general risks associated with price fluctuations of its underlying investments. As a result, the value of your investment in Ivy Funds VIP Pathfinder Moderately Conservative will fluctuate, and there is the risk that you will lose money. Your investment will decline in value if the value of Ivy Funds VIP Pathfinder Moderately Conservative's investments decreases.

Management Risk. WRIMCO will apply its investment techniques and risk analysis in making investment decisions for the Portfolio, but there is no guarantee that its decisions will produce the intended result. Ivy Funds VIP Pathfinder Moderately Conservative's ability to achieve its investment goal is subject to WRIMCO's skill and ability to select asset allocations and Underlying Funds that provide growth of capital and those that also provide income. Furthermore, WRIMCO may alter the asset allocation of Ivy Funds VIP Pathfinder Moderately Conservative at its discretion. A material change in the asset allocation could affect both the level of risk and the potential for gain or loss.

Strategy Risk. There is the risk that WRIMCO's evaluations and allocation among asset classes and Underlying Funds may be incorrect. There is no guarantee that the Underlying Funds will achieve their respective investment objectives. Because Ivy Funds VIP Pathfinder Moderately Conservative is weighted towards Underlying Funds that invest in stocks, both U.S. and international, including mid cap stocks, as well as bonds and short term investments, Ivy Funds VIP Pathfinder Moderately Conservative is more subject to the risks associated with those investments.

Risks Applicable to a Fund of Funds Structure. There are certain risks associated with a structure whereby Ivy Funds VIP Pathfinder Moderately Conservative invests primarily in other mutual funds. In managing Ivy Funds VIP Pathfinder Moderately Conservative, WRIMCO could be subject to a potential conflict of interest in doing so, because WRIMCO serves as the investment manager to the Underlying Funds and the advisory fees paid to WRIMCO by some of the Underlying Funds are higher than fees paid to WRIMCO by other Underlying Funds. Therefore, the selection of Underlying Funds by WRIMCO could have a positive or negative impact on WRIMCO's revenues or profits. It is important to note, however, that WRIMCO has a fiduciary duty to Ivy Funds VIP Pathfinder Moderately Conservative and must act in the Portfolio's best interests.

For additional information about Ivy Funds VIP Pathfinder Moderately Conservative's investments and risks, see "More about the Portfolios."

Risks Applicable to the Underlying Funds and Their Investments

Ivy Funds VIP Pathfinder Moderately Conservative's ability to meet its investment objective depends on the ability of the Underlying Funds to achieve their respective investment objectives. Consequently, Ivy Funds VIP Pathfinder Moderately Conservative is subject to the particular risks associated with the Underlying Funds in the proportions in which the Portfolio invests in them. Additional information about the risks of the Underlying Funds is provided above in their respective sections and below in the section entitled "Additional Information about Principal Investment Strategies, Other Investments and Risks."

Performance

The Portfolio has not been in operation for a full calendar year; therefore, it does not have performance information to include in a bar chart or performance table.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Pathfinder Moderately Conservative. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.00%
Distribution and Service (12b-1) Fees	0.00%
Other Expenses	0.18%
Acquired Fund (Underlying Fund) Fees and Expenses1	0.81%
Total Annual Portfolio Operating Expenses2	0.99%

¹In addition to its own direct expenses, the Portfolio indirectly bears a pro rata share of the fees and expenses of each Underlying Fund in which it invests.

²The Total Annual Portfolio Operating Expenses ratio shown in this table does not correlate to the expense ratio shown in the Financial Highlights table because that ratio does not include the Acquired Fund (Underlying Fund) Fees and Expenses.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$101	$314	$545	$1,208

____________________________________________________________________________________

IVY FUNDS VIP PATHFINDER CONSERVATIVE

(formerly, W&R Target Pathfinder Conservative Portfolio)

Objective

Ivy Funds VIP Pathfinder Conservative seeks a high level of total return consistent with a conservative level of risk as compared to the other Ivy Funds VIP Pathfinder Portfolios.

Principal Strategies

Ivy Funds VIP Pathfinder Conservative allocates its assets among the asset classes below so that approximately 20-30% of the value of the Portfolio's assets is in the short term investments class; 30-40% is in the bonds class; 30-40% of the value of the Portfolio's assets is in the U.S. stocks class (with stocks of various capitalization levels, but primarily large cap stocks); and 5-15% is in the international stocks class. The Portfolio's allocation primarily focuses on bonds and short-term investments while including stock investments for long-term growth. Ivy Funds VIP Pathfinder Conservative implements this allocation by investing primarily in the Underlying Funds shown below. Ivy Funds VIP Pathfinder Conservative's currently anticipated allocation ranges for each asset class, as well as the Portfolio's target allocation of investments among some or all of the Underlying Funds, are summarized in the table below. Shorter-term allocations may vary from the target allocation.

Asset Class		Target Allocations
U.S. Stocks			30-40%
	Ivy Funds VIP Dividend Opportunities	10-20%
	Ivy Funds VIP Growth	5-15%
	Ivy Funds VIP Value	0-10%
	Ivy Funds VIP Mid Cap Growth	0-10%
	Ivy Funds VIP Small Cap Growth	0-10%
	Ivy Funds VIP Small Cap Value	0-10%
	Ivy Funds VIP Real Estate Securities	0-10%
International Stocks			5-15%
	Ivy Funds VIP International Growth	0-10%
	Ivy Funds VIP International Value	0-10%
Bonds			30-40%
	Ivy Funds VIP Bond	30-40%
	Ivy Funds VIP Mortgage Securities	0-10%
Short-Term Investments			20-30%
	Ivy Funds VIP Money Market	20-30%
TOTAL ALLOCATION			100%

These allocations are projections only and may be changed by WRIMCO from time to time. Actual allocations are not limited to the ranges shown and ranges may vary from those shown above. WRIMCO monitors Ivy Funds VIP Pathfinder Conservative's holdings and cash flow and will periodically adjust the Portfolio's asset allocation to realign it with the Portfolio's risk profile and investment strategies. WRIMCO evaluates Ivy Funds VIP Pathfinder Conservative's asset allocation on an ongoing basis in view of its risk profile and strategies. This means that allocation changes will be made as needed in the view of WRIMCO. WRIMCO applies a long-term investment horizon with respect to Ivy Funds VIP Pathfinder Conservative; therefore, allocation changes may not be made in response to short-term market conditions. The Portfolio does not intend to actively trade among the Underlying Funds, nor does it intend to attempt to capture short-term market opportunities.

By owning shares of the Underlying Funds, the Portfolio indirectly holds a diversified mixture of money market instruments, investment-grade corporate bonds, U.S. government securities, and, to a lesser extent, stocks of primarily large cap companies.

Ivy Funds VIP Pathfinder Conservative is intended for investors who have a low tolerance for risk and whose primary goal is income, or who have a short time horizon.

PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIO

Risks Applicable to Ivy Funds VIP Pathfinder Conservative

Investment Risk. The Portfolio is subject to the general risks associated with price fluctuations of its underlying investments. As a result, the value of your investment in Ivy Funds VIP Pathfinder Conservative will fluctuate, and there is the risk that you will lose money. Your investment will decline in value if the value of Ivy Funds VIP Pathfinder Conservative's investments decreases.

Management Risk. WRIMCO will apply its investment techniques and risk analysis in making investment decisions for the Portfolio, but there is no guarantee that its decisions will produce the intended result. Ivy Funds VIP Pathfinder Conservative's ability to achieve its investment goal is subject to WRIMCO's skill and ability to select asset allocations and Underlying Funds that provide growth of capital and those that also provide income. Furthermore, WRIMCO may alter the asset allocation of Ivy Funds VIP Pathfinder Conservative at its discretion. A material change in the asset allocation could affect both the level of risk and the potential for gain or loss.

Strategy Risk. There is the risk that WRIMCO's evaluations and allocation among asset classes and Underlying Funds may be incorrect. There is no guarantee that the Underlying Funds will achieve their respective investment objectives. Because Ivy Funds VIP Pathfinder Conservative is weighted towards Underlying Funds that invest in stocks, both U.S. and international, including mid cap and small cap stocks, as well as bonds and short term investments, Ivy Funds VIP Pathfinder Conservative is more subject to the risks associated with those investments.

Risks Applicable to a Fund of Funds Structure. There are certain risks associated with a structure whereby Ivy Funds VIP Pathfinder Conservative invests primarily in other mutual funds. In managing Ivy Funds VIP Pathfinder Conservative, WRIMCO could be subject to a potential conflict of interest in doing so, because WRIMCO serves as the investment manager to the Underlying Funds and the advisory fees paid to WRIMCO by some the Underlying Funds are higher than fees paid to WRIMCO by other Underlying Funds. Therefore, the selection of Underlying Funds by WRIMCO could have a positive or negative impact on WRIMCO's revenues or profits. It is important to note, however, that WRIMCO has a fiduciary duty to Ivy Funds VIP Pathfinder Conservative and must act in the Portfolio's best interests.

For additional information about Ivy Funds VIP Pathfinder Conservative's investments and risks, see "More about the Portfolios."

Risks Applicable to the Underlying Funds and Their Investments

Ivy Funds VIP Pathfinder Conservative's ability to meet its investment objective depends on the ability of the Underlying Funds to achieve their respective investment objectives. Consequently, Ivy Funds VIP Pathfinder Conservative is subject to the particular risks associated with the Underlying Funds in the proportions in which the Portfolio invests in them. Additional information about the risks of the Underlying Funds is provided above in their respective sections and below in the section entitled "Additional Information about Principal Investment Strategies, Other Investments and Risks."

Performance

The Portfolio has not been in operation for a full calendar year; therefore, it does not have performance information to include in a bar chart or performance table.

Fees and Expenses

The following table describes the fees and expenses that you may pay if you buy and hold shares of Ivy Funds VIP Pathfinder Conservative. The table and the example below do not reflect any fees and expenses imposed under the Policies through which this Portfolio is offered. See the Prospectus for the particular Policy for a description of those fees and expenses.

Shareholder Fees
(fees paid directly from your investment)	N/A

Annual Portfolio Operating Expenses
(expenses that are deducted from Portfolio assets)
Management Fees	0.00%
Distribution and Service (12b-1) Fees	0.00%
Other Expenses	0.39%
Acquired Fund (Underlying Fund) Fees and Expenses1	0.76%
Total Annual Portfolio Operating Expenses2	1.15%

¹In addition to its own direct expenses, the Portfolio indirectly bears a pro rata share of the fees and expenses of each Underlying Fund in which it invests.

²The Total Annual Portfolio Operating Expenses ratio shown in this table does not correlate to the expense ratio shown in the Financial Highlights table because that ratio does not include the Acquired Fund (Underlying Fund) Fees and Expenses.

Example
This example is intended to help you compare the cost of investing in the shares of the Portfolio with the cost of investing in other portfolios. The example assumes that (a) you invest $10,000 in the shares of the Portfolio for each time period specified, (b) your investment has a 5% return each year, and (c) the expenses remain the same. The costs in this example would be the same whether or not you redeemed all of your shares at the end of these periods. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
1 Year	3 Years	5 Years	10 Years
$117	$365	$632	$1,395

More about the Portfolios

____________________________________________________________________________________

ADDITIONAL INFORMATION ABOUT PRINCIPAL INVESTMENT STRATEGIES, OTHER INVESTMENTS AND RISKS

Ivy Funds VIP Core Equity: The Portfolio seeks to achieve its objectives of capital growth and income by investing, during normal market conditions, in common stocks of large, high-quality domestic and foreign companies that WRIMCO believes are globally dominant, have sustainable competitive advantages accompanied by financial strength and earnings stability, and have dominant positions in their industries. There is no guarantee, however, that the Portfolio will achieve its objectives.

WRIMCO believes that long-term earnings power relative to market expectations is an important component for stock performance. From a top-down perspective, WRIMCO seeks to identify trends which indicate specific industries that have the potential to experience multi-year growth. Once identified, WRIMCO seeks to invest in what it believes to be dominant companies that will benefit from these trends; including companies that WRIMCO believes have long-term earnings potential greater than the market expectations. Through its bottom-up stock selection, WRIMCO searches for companies for which it believes market expectations are too low with regard to the company's ability to grow its business and thereby generate sufficient equity.

When WRIMCO views stocks with high yields as less attractive than other common stocks, the Portfolio may hold lower-yielding common stocks because of their prospects for appreciation. When WRIMCO believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in debt securities (typically, investment grade, that is, bonds rated BBB or higher by S&P or Baa or higher by Moody's or, if unrated, determined by WRIMCO to be of comparable quality), including commercial paper and short-term U.S. government securities, and/or preferred stocks. The Portfolio may also invest in derivative instruments to hedge its current holdings. However, by taking a temporary defensive position, the Portfolio may not achieve its investment objectives.

Risks. An investment in Ivy Funds VIP Core Equity is subject to various risks, including the following:

• Company Risk
• Derivatives Risk
• Diversification Risk
• Emerging Market Risk
• Foreign Currency Risk
• Foreign Securities Risk
• Growth Stock Risk
• Income Risk
• Large Company Risk
• Market Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the Statement of Additional Information (SAI).

Ivy Funds VIP Dividend Opportunities: The Portfolio seeks to achieve its objective of total return by investing primarily in large cap, high-quality companies with established operating records that WRIMCO believes may accelerate or grow their dividend payout ratio. There is no guarantee, however, that the Portfolio will achieve its objective.

WRIMCO attempts to select securities by considering a company's ability to sustain, and potentially increase, its dividend payments, thereby returning value to its shareholders. It also typically considers other factors, which may include the company's:

• established operating history
• competitive dividend yields
• profitability record
• history of improving sales and profits
• management
• leadership position in its industry
• stock price value

The Portfolio's emphasis on a steady return through investments in dividend-paying securities may temper its ability to achieve considerable appreciation in value of its holdings.

Common stocks are shares of a corporation or other entity that entitle the holder to a pro rata share of the profits of the corporation, if any, without preference over any other class of securities, including such entity's debt securities, preferred stock and other senior equity securities. Common stock usually carries with it the right to vote and frequently an exclusive right to do so. Preferred stock generally has a preference as to dividends and liquidation over an issuer's common stock but ranks junior to debt securities in an issuer's capital structure. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer's board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions. The ability of common stocks and preferred stocks to generate income is dependent on the earnings and continuing declaration of dividends by the issuers of such securities.

For Federal income tax purposes, net capital gain (the excess of net long-term capital gain over net short-term capital loss) generally is taxed at a maximum rate of 15% for noncorporate shareholders, and "qualified dividend income" received by those shareholders is taxed as net capital gain as well, provided that certain holding period and other requirements are met. Although the only shareholders of the Portfolio are the Participating Insurance Companies and their separate accounts, and the Policyowners, thus, are not directly affected by the tax consequences to the Portfolio, WRIMCO believes that the tax treatment of qualified dividend income may benefit companies that regularly issue dividends.

Although the Portfolio invests primarily in domestic securities, it may invest up to 25% of its total assets in foreign securities. An investment in foreign securities presents additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

While the Portfolio invests primarily in dividend-paying equity securities, it may also invest up to 20% of its net assets in debt securities in seeking to achieve its objective. To the extent the Portfolio invests in debt securities, the Portfolio intends to primarily invest in investment-grade debt securities, that is, bonds rated BBB or higher by S&P or Baa or higher by Moody's or, if unrated, determined by WRIMCO to be of comparable quality.

At times, when WRIMCO believes that a temporary defensive position is desirable or to achieve income, the Portfolio may invest up to all of its assets in debt securities including short-term cash equivalent securities. By taking a temporary defensive position, however, the Portfolio may not achieve its objective.

Risks. An investment in Ivy Funds VIP Dividend Opportunities is subject to various risks, including the following:

• Company Risk
• Credit Risk
• Diversification Risk
• Foreign Securities Risk
• Growth Stock Risk
• Income Risk
• Interest Rate Risk
• Large Company Risk
• Market Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Growth: The Portfolio seeks to achieve its primary objective of capital growth and its secondary objective of current income by investing primarily in a diversified portfolio of common stocks issued by higher-quality, growth-oriented domestic and, to a lesser extent, foreign companies that WRIMCO believes have appreciation possibilities. There is no guarantee, however, that the Portfolio will achieve its objectives.

In selecting securities for the Portfolio, WRIMCO looks for companies which serve large markets with a demonstrated ability to sustain unit growth and high profitability, often driven by brand loyalty, cost structure, scale, proprietary technology or distribution advantages. WRIMCO's process to select stocks is primarily a blend of quantitative and fundamental research. From a quantitative standpoint, WRIMCO typically concentrates on profitability, capital intensity, cash flow and calculation measures, as well as earnings growth rates. WRIMCO's fundamental research effort seeks to identify those companies that it believes possess a sustainable competitive advantage, an important characteristic which enables a company to generate superior levels of profitability and growth for an extended period of time. Additional focus is given to those companies that appear well positioned to benefit from secular trends embedded in the marketplace (that is, demographics, deregulation, capital spending trends, etc.).

The Portfolio invests primarily in common stocks but may also own, to a lesser extent, preferred stocks, convertible securities and debt securities, typically of investment grade and of any maturity. As well, the Portfolio may invest up to 20% of its total assets in foreign securities. An investment in foreign securities presents additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

At times, as a temporary defensive measure, the Portfolio may invest up to all of its assets in debt securities, including commercial paper and short-term U.S. government securities, and/or preferred stocks. The Portfolio may also use options and futures contracts for temporary defensive purposes. By taking a temporary defensive position, the Portfolio may not achieve its investment objectives.

Risks. An investment in Ivy Funds VIP Growth is subject to various risks, including the following:

• Company Risk
• Diversification Risk
• Foreign Securities Risk
• Growth Stock Risk
• Large Company Risk
• Market Risk
• Mid Size Company Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Micro Cap Growth: The Portfolio seeks to achieve its objective of long-term capital appreciation by investing primarily in various types of equity securities of primarily domestic and, to a lesser extent, foreign micro cap companies. Micro cap companies typically are companies with market capitalizations below $1 billion. The Portfolio may occasionally invest in equity securities of larger companies. There is no guarantee, however, that the Portfolio will achieve its objective.

The Portfolio considers a company's capitalization at the time the Portfolio acquires the company's equity securities. Equity securities of a company whose capitalization exceeds the micro cap range after purchase will not be sold solely because of its increased capitalization.

In selecting equity securities for the Portfolio, WSA primarily looks to a company's improving profitability and potential for sustainable earnings growth. In selecting securities with earnings growth potential, WSA may consider such factors as a company's competitive market position, quality of management, growth strategy, internal operating trends (such as profit margins, cash flows and earnings and revenue growth), overall financial condition, and ability to sustain its current rate of growth. In seeking to achieve its investment objective, the Portfolio may also invest in equity securities of companies that WSA believes are temporarily undervalued or show promise of improved results due to new management, products, markets or other factors.

Investing in foreign securities presents additional risks, such as currency fluctuations and political or economic conditions affecting the foreign country.

The Portfolio's investment in equity securities may include common stocks that are part of IPOs. In addition to common stocks, the Portfolio may invest, to a lesser extent, in preferred stocks and securities convertible into equity securities.

For temporary defensive purposes, the Portfolio may invest up to all of its assets in various short-term cash and cash equivalent items. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Micro Cap Growth is subject to various risks, including the following:

• Company Risk
• Diversification Risk
• Growth Stock Risk
• Initial Public Offering Risk
• Liquidity Risk
• Market Risk
• Small Company Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Mid Cap Growth: The Portfolio seeks to achieve its objective of growth of your investment by investing primarily in a diversified portfolio of domestic and, to a lesser extent, foreign mid cap companies that WRIMCO believes offer above-average growth potential. The Portfolio primarily focuses on mid cap growth companies that WRIMCO believes have the potential to become a large cap company. Mid cap companies typically are companies with market capitalizations that range between $1 billion and $18 billion. For this purpose, WRIMCO considers a company's capitalization at the time the Portfolio acquires the company's securities. Companies whose capitalization falls outside the mid cap range after purchase continue to be considered mid cap companies for purpose of the Portfolio's investment policy. There is no guarantee, however, that the Portfolio will achieve its objective.

As noted, WRIMCO utilizes a bottom-up approach in its selection of securities for the Portfolio, and focuses on companies with strong growth models, profitability and sound capital structures. Other desired characteristics may include a leading market position, the active involvement of the founder or entrepreneur, management that is strong and demonstrates commitment to stakeholders, and a high gross margin and return on equity with low debt. WRIMCO also may consider a company's dividend yield.

In addition to common stocks, the Portfolio may invest in convertible securities, preferred stocks and debt securities of any maturity and mostly of investment grade, that is, rated BBB or higher by S&P or Baa or higher by Moody's or, if unrated, determined by WRIMCO to be of comparable quality. The Portfolio may also use options and futures contracts for both temporary defensive purposes and to enhance performance. The Portfolio may also invest up to 25% of its total assets in foreign securities. An investment in foreign securities presents additional risks, such as currency fluctuations and political or economic conditions affecting the foreign country.

When WRIMCO believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in debt securities (including commercial paper, cash and cash equivalents, and short-term U.S. government securities), preferred stocks or both. The Portfolio may also invest in derivative instruments to hedge its current holdings. As well, the Portfolio may invest in companies whose sales and earnings growth are generally stable through a variety of economic conditions. By taking a temporary defensive position the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Mid Cap Growth is subject to various risks, including the following:

• Company Risk
• Derivatives Risk
• Diversification Risk
• Foreign Securities Risk
• Growth Stock Risk
• Market Risk
• Mid Size Company Risk
• Small Company Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Small Cap Growth: The Portfolio seeks to achieve its objective of growth of capital by investing primarily in common stocks of small cap companies that are relatively new or unseasoned, companies in their early stages of development, or smaller companies positioned in new or emerging industries where there is an opportunity for rapid growth. The emphasis on portfolio risk diversification is an important contributor to the ability to effectively manage risk, as a desired goal is to have a portfolio of securities that tend not to react in high correlation to one another under any economic or market condition. This emphasis is intended to result in a higher degree of diversification, reduced portfolio volatility, and a smoother more consistent pattern of portfolio returns over the long term. There is no guarantee, however, that the Portfolio will achieve its objective.

WRIMCO considers quality of management and superior financial characteristics (for example, return on assets, return on equity, operating margin) in its search for companies, thereby focusing on higher-quality companies. WRIMCO seeks companies that it believes exhibit defensible market positions by having one or more of the following characteristics: a company that is a strong niche player, that features the involvement of the founder, or that demonstrates a strong commitment to shareholders. WRIMCO believes that such companies generally have a replicable business model that allows for sustained growth. The focus on holding an investment is intermediate to long-term. WRIMCO considers selling a holding if its analysis reveals evidence of a meaningful deterioration in operating trends, it anticipates a decrease in the company's ability to grow and gain market shares and/or the company's founder departs.

Small cap companies typically are companies with market capitalizations below $3.5 billion. Some companies may outgrow the definition of small cap after the Portfolio has purchased their securities. These companies continue to be considered small cap for purposes of the Portfolio's investment policy. From time to time, the Portfolio also will invest a lesser portion of its assets in securities of mid and large cap companies (that is, companies with market capitalizations larger than that defined above) that, in WRIMCO's opinion, are being fundamentally changed or revitalized, have a position that is considered strong relative to the market as a whole or otherwise offer unusual opportunities for above-average growth.

In addition to common stocks, the Portfolio may invest in securities convertible into common stocks, in preferred stocks and debt securities, that are mostly of investment grade. The Portfolio may invest up to 20% of its total assets in foreign securities. Investing in foreign securities may present additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

When WRIMCO believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in debt securities, including commercial paper short-term U.S. government securities, and/or preferred stocks. The Portfolio also may invest in more established companies, such as those with longer operating histories than many small cap companies. As well, it may increase the number of issuers in which it invests and thereby limit the Portfolio's position size in any particular security. By taking a temporary defensive position, however, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Small Cap Growth is subject to various risks, including the following:

• Company Risk
• Diversification Risk
• Foreign Securities Risk
• Growth Stock Risk
• Initial Public Offering Risk
• Liquidity Risk
• Market Risk
• Mid Size Company Risk
• Small Company Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Small Cap Value: The Portfolio seeks to achieve its objective of long-term accumulation of capital by investing primarily in various types of equity securities of small cap, value-oriented domestic and, to a lesser extent, foreign companies. There is no guarantee, however, that the Portfolio will achieve its objective.

Small cap companies typically are companies with market capitalizations below $3.5 billion. Some companies may outgrow the definition of small cap after the Portfolio has purchased their securities. These companies continue to be considered small cap for purposes of the Portfolio's investment policy. From time to time, the Portfolio also may invest a lesser portion of its assets in securities of mid and large cap companies (that is, companies with market capitalizations larger than that defined above), as well as securities of growth-oriented companies.

In selecting value stocks and other equity securities, WRIMCO makes an assessment of the current state of the economy, examines various industry sectors, and analyzes individual companies in the small cap universe. WRIMCO primarily focuses on equity securities it believes are undervalued or trading below their true worth, but that appear likely to come back into favor with investors. Undervalued securities are securities that WRIMCO believes: (a) are undervalued relative to other securities in the market or currently earn low returns with a potential for higher returns, (b) are undervalued relative to the potential for improved operating performance and financial strength, or (c) are issued by companies that have recently undergone a change in management or control, or developed new products or services that may improve their business prospects or competitive position. In assessing relative value, WRIMCO typically considers factors such as a company's ratio of market price to earnings, ratio of enterprise value to operating cash flow, ratio of market price to book value, ratio of market price to cash flow, estimated earnings growth rate, cash flow, yield, liquidation value, quality of management and competitive market position. In seeking to achieve its investment objectives, the Portfolio may also invest in equity securities of companies that WRIMCO believes show potential for sustainable earnings growth above the average market growth rate.

The Portfolio primarily invests in common stocks; however, it may invest, to a lesser extent, in preferred stocks and other securities convertible into equity securities. The Portfolio may invest up to 10% of its total assets in foreign securities. Investing in foreign securities may present additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

In an attempt to respond to adverse market, economic, political or other conditions, the Portfolio may invest for temporary defensive purposes in various short-term cash and cash equivalent items. Other defensive tactics that may be used by WRIMCO include holding smaller position sizes in individual holdings and / or being more broadly diversified across sectors and industries. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Small Cap Value is subject to various risks, including the following:

• Company Risk
• Diversification Risk
• Foreign Securities Risk
• Initial Public Offering Risk
• Liquidity Risk
• Market Risk
• Mid Size Company Risk
• Small Company Risk
• Value Stock Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Value: The Portfolio seeks to achieve its objective of long-term capital appreciation by primarily investing, for the long term, in the common stocks of large cap undervalued domestic and, to a lesser extent, foreign companies. Large cap companies typically are companies with market capitalizations of at least $8 billion. The Portfolio seeks to invest in stocks that are, in the opinion of WRIMCO, undervalued relative to the true value of the company, and/or are out of favor in the financial markets but have a favorable outlook for capital appreciation. There is no guarantee, however, that the Portfolio will achieve its objective.

WRIMCO utilizes both fundamental research and quantitative analysis to identify securities for the Portfolio. The Portfolio typically invests in core value stocks: stocks of companies in industries that have relatively lower price-to-earnings ratios than growth stocks. WRIMCO searches for companies with leading positions in their respective industries, solid management teams, strong balance sheets with a high free cash flow and strong barriers to competition. The Portfolio may also invest in growth stocks that are, in WRIMCO's opinion, temporarily undervalued. As well, WRIMCO attempts to diversify the Portfolio's holdings among sectors in an effort to minimize risk.

The Portfolio may invest in foreign securities; however, it does not intend to invest more than 25% of its total assets in foreign securities. An investment in foreign securities presents additional risks such as currency fluctuations and political or economic conditions affecting the foreign country. The Portfolio may also invest in derivative instruments, both to generate income and for the purpose of hedging its current stock positions.

When WRIMCO believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in debt securities, including commercial paper and short-term U.S. government securities, and/or preferred stocks. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Value is subject to various risks, including the following:

• Company Risk
• Derivatives Risk
• Diversification Risk
• Foreign Securities Risk
• Large Company Risk
• Market Risk
• Mid Size Company Risk
• Value Stock Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Bond: The Portfolio seeks to achieve its objective of a reasonable return with emphasis on preservation of capital by investing primarily in a diversified portfolio of debt securities of higher quality, and, to a lesser extent, in non-investment grade securities, convertible securities and debt securities with warrants attached. WRIMCO may use various techniques, such as investing in put bonds, to manage the duration of the Portfolio's holdings. As a result, as interest rates rise, the duration (price sensitivity to rising interest rates) of the Portfolio's holdings will typically decline. WRIMCO typically determines sector allocation by fundamental analysis and a comparison of relative value between sectors. There is no guarantee, however, that the Portfolio will achieve its objective.

The Portfolio may invest a significant amount of its assets in mortgage-backed securities, including U.S. government or U.S. government-related mortgage loan pools or private mortgage loan pools. In U.S. government or U.S. government-related mortgage loan pools, the U.S. government or certain agencies guarantee to mortgage pool security holders the payment of principal and interest. The principal U.S. government-related guarantors of mortgage-related securities are Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac generally guarantee payment of principal and interest on mortgage loan pool securities issued by certain pre-approved institutions (such as savings and loan institutions, commercial banks and mortgage bankers). However, securities issued by Fannie Mae, Freddie Mac and 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 Treasury or by the credit of the issuer. In addition the Portfolio purchases securities issued by non-government related entities which may be backed only by the pool of assets pledged as security for the transaction.

The Portfolio may invest, to a limited extent, in junk bonds, which are more susceptible to the risk of non-payment or default, and their prices may be more volatile than higher-rated bonds. The Portfolio also may invest up to 20% of its total assets in foreign securities, which may present additional risks, including accounting and disclosure standards which may differ from country to country, and may make obtaining reliable research information more difficult. There is also the possibility that, under unusual international monetary or political conditions, the Portfolio's assets might be more volatile than would be the case with other investments.

When WRIMCO believes that a defensive position is desirable, due to present or anticipated market or economic conditions, it may take a number of actions. For example, the Portfolio may sell longer-term bonds and buy shorter-term bonds or invest in money market instruments. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Bond is subject to various risks, including the following:

• Company Risk
• Credit Risk
• Diversification Risk
• Extension Risk
• Foreign Securities Risk
• Income Risk
• Interest Rate Risk
• Low-rated Securities Risk
• Market Risk
• Mortgage-Backed and Asset-Backed Securities Risk
• Prepayment Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP High Income: The Portfolio seeks to achieve its primary objective of a high level of current income, and its secondary objective of capital growth, when consistent with its primary objective, by investing primarily in a diversified portfolio of high-yield, high-risk, fixed-income securities of domestic and, to a lesser extent, foreign issuers, the risks of which are, in the judgment of WRIMCO, consistent with the Portfolio's objectives. There is no guarantee, however, that the Portfolio will achieve its objectives.

In general, the high level of income that the Portfolio seeks is paid by debt securities rated in the lower rating categories of the NRSROs or unrated securities that are determined by WRIMCO to be of comparable quality; these include bonds rated BBB or lower by S&P, or Baa or lower by Moody's. Lower-quality debt securities (which include junk bonds) are considered to be speculative and involve greater risk of default or price changes due to changes in the issuer's creditworthiness. The market prices of these securities may fluctuate more than higher-quality securities and may decline significantly in periods of general economic difficulty. The Portfolio is generally more conservatively structured and invested in higher quality securities than its peers. WRIMCO seeks to protect the downside of investing in lower-quality securities and therefore searches for higher-quality securities within the individual rating categories. WRIMCO focuses on credit quality and seeks companies that appear to be able to improve their ratings.

The Portfolio primarily owns debt securities, which may include loan participations and other loan instruments, and may own fixed-income securities of varying maturities; however, it also may own, to a lesser degree, preferred stocks, common stocks and convertible securities. The Portfolio limits its acquisition of common stocks so that no more than 20% of its total assets will consist of common stocks and no more than 10% of its total assets will consist of non-dividend-paying common stocks.

The Portfolio may enter into credit default swap contracts for hedging and/or speculative purposes. The Portfolio may either sell or buy credit protection under these contracts.

The Portfolio may invest an unlimited amount of its assets in foreign securities. At this time, however, the Portfolio does not intend to invest a significant amount of its assets in foreign securities. Investments in foreign securities also present additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

When WRIMCO believes that a full or partial temporary defensive position is desirable, due to present or anticipated market or economic conditions and to attempt to reduce the price volatility of the Portfolio, WRIMCO may take any one or more of the following steps with respect to the Portfolio's assets:

• shorten the average maturity of the Portfolio's debt holdings
• hold cash or cash equivalents (short-term investments, such as commercial paper and certificates of deposit)
• emphasize investment-grade debt securities

By taking a temporary defensive position in any one or more of these manners, the Portfolio may not achieve its investment objectives.

Risks. An investment in Ivy Funds VIP High Income is subject to various risks, including the following:

• Company Risk
• Credit Risk
• Derivatives Risk
• Diversification Risk
• Extension Risk
• Income Risk
• Interest Rate Risk
• Liquidity Risk
• Low-rated Securities Risk
• Market Risk
• Mortgage-Backed and Asset-Backed Securities Risk
• Prepayment Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Mortgage Securities: The Portfolio seeks to achieve its objective of a high level of current income consistent with prudent investment risk by investing primarily in higher-quality mortgage-related securities. The Portfolio invests a significant portion of its assets in investment-grade securities representing interests in pools of mortgage loans, and in a variety of other mortgage-related securities including CMOs, CMBSs, stripped mortgage-backed securities and asset-backed securities. The Portfolio seeks to provide investors with exposure to quality and higher yield potential through broad ownership in pools of mortgage loans across all sectors of the market. The Portfolio expects that under normal circumstances the effective duration of its portfolio will range from one to seven years. The Portfolio may invest lesser portions of its assets in non-investment grade mortgage-related securities. The Portfolio also may invest up to 10% of its total assets in foreign securities. There is no guarantee, however, that the Portfolio will achieve its objective.

In selecting mortgage-related securities Advantus Capital focuses on relative value trading among individual securities in the mortgage-backed securities, asset-backed securities and CMBS markets and typically considers a variety of factors, including prepayment risk, credit quality, liquidity, the collateral securing the underlying loan (for example, residential versus commercial real estate) and the type of underlying mortgage loan (for example, a 30-year fully-amortized loan versus a 15-year fully-amortized loan). Advantus Capital also takes into consideration current and expected trends in economic conditions, interest rates and the mortgage market and selects securities which, in its judgment, are likely to perform well in those circumstances. As well, Advantus Capital attempts to diversify the Portfolio's holdings among all sectors of the mortgage-related market in an effort to minimize risk.

Interests in pools of mortgage loans provide the security holder the right to receive out of the underlying mortgage loans periodic interest payments at a fixed rate and a full principal payment at a designated maturity or call date. Scheduled principal, interest and other payments on the underlying mortgage loans received by the sponsoring or guarantor entity are then distributed or "passed through" to security holders net of any service fees retained by the sponsor or guarantor. Additional payments passed through to security holders could arise from the prepayment of principal resulting from the sale of residential property, the refinancing of underlying mortgages, or the foreclosure of residential property. In "pass through" mortgage loan pools, payments to security holders will depend on whether mortgagors make payments to the pooling entity on the underlying mortgage loans. To avoid this non-payment risk, the Portfolio also may invest in "modified pass through" mortgage loan pools which provide that the security holder will receive interest and principal payments regardless of whether mortgagors make payments on the underlying mortgage loans.

The Portfolio may invest in government or government-related mortgage loan pools or private mortgage loan pools. In government or government-related mortgage loan pools, the U.S. government or certain agencies guarantee to mortgage pool security holders the payment of principal and interest. The principal government-related guarantors of mortgage-related securities are Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac generally guarantee payment of principal and interest on mortgage loan pool securities issued by certain pre-approved institutions (that is, savings and loan institutions, commercial banks and mortgage bankers). However, securities issued by Fannie Mae, Freddie Mac and the 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 Treasury or by the credit of the issuer. In addition, the Portfolio purchases securities issued by non-government related entities which may be backed only by the pool of assets pledged as security for the transaction.

The Portfolio also may invest in private mortgage loan pools sponsored by commercial banks, insurance companies, mortgage bankers and other private financial institutions. Mortgage pools created by these non-governmental entities offer a higher rate of interest than government or government-related securities. Unlike certain U.S. government agency-sponsored mortgage loan pools, payment of interest and payment to investors is not guaranteed.

The Portfolio also may invest a major portion of its assets in CMOs and stripped mortgage-backed securities. CMOs are debt obligations issued by both government agencies and private special-purpose entities that are collateralized by residential or commercial mortgage loans. Unlike traditional mortgage loan pools, CMOs allocate the priority of the distribution of principal and level of interest from the underlying mortgage loans among various series. Each series differs from another in terms of the priority right to receive cash payments from the underlying mortgage loans. Each series may be further divided into classes in which the principal and interest payments payable to classes in the same series may be allocated. For instance, a certain class in a series may have right of priority over another class to receive principal and interest payments. Moreover, a certain class in a series may be entitled to receive only interest payments while another class in the same series may be only entitled to receive principal payments. As a result, the timing and the type of payments received by a CMO security holder may differ from the payments received by a security holder in a traditional mortgage loan pool.

Stripped mortgage-backed securities also represent ownership interests in a pool of mortgages. However, the stripped mortgage-backed securities are separated into interest and principal components. The interest-only component allows the security holder to receive the interest portion of cash payments, while the principal-only component allows the security holder to receive the principal portion of cash payments.

To help manage the average duration of its portfolio of fixed income securities, or to attempt to hedge against the effects of interest rate changes on current or intended investments in fixed rate securities, the Portfolio may invest to a limited extent in futures contracts or other derivatives. Generally speaking, a derivative is a financial contract whose value is based on the value of a financial asset (such as a stock or bond) or a market index. The Portfolio will not use derivatives for speculation or for the purpose of leveraging (magnifying) investment returns.

The market for mortgage-related securities is generally liquid, but individual mortgage-related securities purchased by the Portfolio may be subject to the risk of reduced liquidity due to changes in quality ratings or changes in general market conditions which adversely affect particular mortgage-related securities or the broader mortgage securities market as a whole. Investments in illiquid and restricted securities present greater risks inasmuch as such securities may only be resold subject to statutory or regulatory restrictions, or, if the securities are registered, the Portfolio may bear the costs of registering such securities. The Portfolio may, therefore, be unable to dispose of such securities as quickly as, or at prices as favorable as those for, comparable but liquid or unrestricted securities. Advantus Capital continuously monitors the liquidity of portfolio securities and may determine that, because of a reduction in liquidity subsequent to purchase, securities which originally were determined to be liquid have become illiquid.

Investing in foreign securities presents additional risks, such as currency fluctuations and political or economic conditions affecting the foreign country.

In an attempt to respond to adverse market, economic, political or other conditions, the Portfolio may invest for temporary defensive purposes, and without limit, in various short-term cash and cash equivalent items. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Mortgage Securities is subject to various risks, including the following:

• Company Risk
• Concentration Risk
• Credit Risk
• Derivatives Risk
• Diversification Risk
• Extension Risk
• Income Risk
• Interest Rate Risk
• Liquidity Risk
• Market Risk
• Mortgage-Backed and Asset-Backed Securities Risk
• Prepayment Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP International Growth: The Portfolio seeks to achieve its primary objective of long-term appreciation of capital and its secondary objective of current income by investing primarily in a diversified portfolio of common stocks of growth-oriented foreign issuers. Growth securities are those whose earnings, WRIMCO believes, are likely to have strong growth over several years. WRIMCO seeks profitable companies with a competitive advantage in their industry as well as the ability to sustain their growth rates. The Portfolio may invest in any geographic area and within various sectors. There is no guarantee, however, that the Portfolio will achieve its objectives.

Under normal economic conditions, the Portfolio invests at least 80% of its total assets in foreign securities and at least 65% of its total assets in issuers of at least three foreign countries. The Portfolio generally limits its holdings so that no more than 75% of its total assets are invested in issuers of a single foreign country.

The Portfolio may, but is not required to, use a range of derivative investment techniques to hedge various market risks (such as interest rates, currency exchange rates, and broad or specific equity or fixed income market movements).

The Portfolio may from time to time take a temporary defensive position, and may invest up to all of the Portfolio's assets in U.S. government securities, investment-grade debt securities and cash and cash equivalents such as commercial paper, short-term notes and other money market securities; it may avoid investment in volatile emerging markets and increase investments in more stable, developed countries and industries; it may use forward currency contracts to hedge specific foreign currencies; and it also may invest all of the Portfolio's assets in domestic securities. By taking a temporary defensive position, the Portfolio may not achieve its investment objectives.

Risks. An investment in Ivy Funds VIP International Growth is subject to various risks, including the following:

• Company Risk
• Credit Risk
• Derivatives Risk
• Diversification Risk
• Emerging Market Risk
• Foreign Currency Risk
• Foreign Currency Exchange Transactions and Forward Foreign Currency Contracts Risk
• Foreign Securities Risk
• Growth Stock Risk
• Income Risk
• Investment Company Securities Risk
• Large Company Risk
• Liquidity Risk
• Market Risk
• Mid Size Company Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP International Value: The Portfolio seeks to achieve its objective of long-term capital growth by investing primarily in equity securities of small, medium and large-sized foreign companies and governmental agencies which are, in Templeton's opinion, trading at a discount to what Templeton believes the security may be worth. The Portfolio may invest in securities of companies or governments in developed foreign markets or in developing or emerging markets. There is no guarantee, however, that the Portfolio will achieve its objective.

Equity securities generally entitle the holder to participate in a company's general operating results and include common stock, preferred stock, warrants or rights to purchase such securities. In selecting equity securities for the Portfolio, Templeton performs a bottom-up, company-by-company analysis, rather than focusing on a specific industry or economic sector. As noted, Templeton concentrates primarily on the market price of a company's securities and seeks companies whose securities Templeton believes are undervalued. Templeton also typically considers a company's historical value measures, including price/earnings ratios, future earnings, cash flow or asset value potential.

In an attempt to respond to adverse market, economic, political or other conditions, Templeton may invest up to 100% of the Portfolio's assets in a temporary defensive manner by holding all or a substantial portion of its assets in cash, cash equivalents or other high quality short-term investments. Temporary defensive investments generally may include U.S. dollar and non-U.S. dollar-denominated securities such as government securities (obligations up to five years to maturity issued or guaranteed by the U.S. government or the governments of foreign countries, their agencies or instrumentalities), commercial paper and repurchase agreements. Templeton also may invest in these types of securities or hold cash while looking for suitable investment opportunities or to maintain liquidity. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP International Value is subject to various risks, including the following:

• Company Risk
• Credit Risk
• Diversification Risk
• Emerging Market Risk
• Foreign Currency Risk
• Foreign Currency Exchange Transactions and Forward Foreign Currency Contracts Risk
• Foreign Securities Risk
• Growth Stock Risk
• Interest Rate Risk
• Large Company Risk
• Liquidity Risk
• Market Risk
• Mid Size Company Risk
• Small Company Risk
• Value Stock Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Asset Strategy: The Portfolio seeks to achieve its objective of high total return over the long term by allocating its assets primarily among a diversified portfolio of stocks, bonds and short-term instruments of both foreign and domestic issuers. The Portfolio may invest up to 100% of its total assets in foreign securities. The Portfolio may invest in almost any market that WRIMCO believes offers the greatest probability of return or, alternatively, that provides the highest degree of safety in uncertain times.

Generally, the mix of assets in the Portfolio will change from time to time depending on WRIMCO's assessment of the market for each investment type. Allocating assets among different types of investments allows the Portfolio to take advantage of opportunities wherever they may occur, but also subjects the Portfolio to the risks of a given investment type. Stock values generally fluctuate in response to the activities of individual companies and general market and economic conditions. The values of bonds and short-term instruments generally fluctuate due to changes in interest rates and due to the credit quality of the issuer.

WRIMCO regularly reviews the global economic environment to determine asset allocation and security selection, and makes changes to favor investments that it believes provide the best opportunity to achieve the Portfolio's objective. Although WRIMCO uses its expertise and resources in choosing investments and in allocating assets, WRIMCO's decisions may not always be beneficial to the Portfolio, and there is no guarantee that the Portfolio will achieve its objective.

WRIMCO tries to balance the Portfolio's investment risks against potentially higher total returns by reducing the stock allocation during stock market down cycles and typically increasing the stock allocation during periods of strongly positive market performance. Generally, WRIMCO makes asset shifts gradually over time. WRIMCO considers various factors when it decides to sell a security, such as an individual security's performance and/or if it is an appropriate time to vary the Portfolio's mix.

The Portfolio may purchase shares of another investment company subject to the restrictions and limitations of the 1940 Act. The Portfolio also may invest in exchange-traded funds (ETFs) as a means of tracking the performance of a designated stock index while also maintaining liquidity, or to gain exposure to precious metals and other commodities without purchasing them directly.

The Portfolio also may seek to reduce or hedge the risks of investing in certain gold-related securities by investing in options on gold or in futures contracts on gold.

As noted, the Portfolio may enter into credit default swap contracts for hedging or investment purposes. The Portfolio may either sell or buy credit protection under these contracts. The seller in a credit default swap contract is required to pay the par (or other agreed-upon) value of a referenced debt obligation to the buyer if there is an event of a default or other credit event by the issuer of that debt obligation. In return, the seller receives from the buyer a periodic stream of payments over the term of the contract or, if earlier, until the occurrence of a credit event. If the contract is terminated prior to its stated maturity, either the seller or the buyer would make a termination payment to the other in an amount approximately equal to the amount by which the value of the contract has increased in value to the recipient of the settlement payment. For example, if the contract is more valuable to the buyer (as would normally occur if the creditworthiness of the issuer of the referenced debt obligation has gone down), the seller would make a termination payment to the buyer. As the seller of credit protection, the Portfolio would effectively add leverage because, in addition to its total net assets, the Portfolio would be subject to the investment exposure of the notional amount of the swap. As the buyer, the Portfolio normally would be hedging its exposure on debt obligations that it holds.

As described above, the Portfolio has the flexibility to invest up to all of its assets in money market and other short-term investments, although it does not typically invest a substantial portion of its assets in these investments under normal market conditions. WRIMCO will typically increase the Portfolio's investment in high-quality, short-term investments in order to increase the defensive positioning of the Portfolio. The Portfolio also may invest in derivative instruments for both defensive and speculative purposes. WRIMCO may, as a temporary defensive measure, invest up to 25% of the Portfolio's total assets in precious metals.

Although WRIMCO may seek to preserve appreciation in the Portfolio by taking a temporary defensive position, doing so may prevent the Portfolio from achieving its investment objective.

Risks. An investment in Ivy Funds VIP Asset Strategy is subject to various risks, including the following:

• Commodities Risk
• Company Risk
• Credit Risk
• Derivatives Risk
• Diversification Risk
• Emerging Market Risk
• Foreign Currency Risk
• Foreign Currency Exchange Transactions and Forward Foreign Currency Contracts Risk
• Foreign Securities Risk
• Growth Stock Risk
• Income Risk
• Interest Rate Risk
• Investment Company Securities Risk
• Large Company Risk
• Liquidity Risk
• Low-rated Securities Risk
• Market Risk
• Mid Size Company Risk
• Prepayment Risk
• Small Company Risk
• Value Stock Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Balanced: The Portfolio seeks to achieve its primary objective of providing current income to the extent that, in the opinion of WRIMCO, market and economic conditions permit, and its secondary objective of long-term appreciation of capital, by investing primarily in a diversified mix of stocks, debt securities and short-term instruments, depending on market conditions. There is no guarantee, however, that the Portfolio will achieve its objectives.

The Portfolio owns common stocks in order to provide possible appreciation of capital and/or dividend income and the Portfolio invests a portion of its total assets in either debt securities or preferred stocks, or both, in order to provide income and relative stability of capital. The Portfolio also may invest in convertible securities. The Portfolio ordinarily invests at least 25% of its total assets in fixed-income securities.

In its equity investments, the Portfolio invests primarily in medium to large, well-established companies, that typically issue dividend-paying securities. The majority of the Portfolio's debt holdings are either U.S. government securities or investment-grade corporate bonds, including bonds rated BBB or higher by S&P or Baa or higher by Moody's or, if unrated, determined by WRIMCO to be of comparable quality. The Portfolio has no limitations on the range of maturities of debt securities in which it may invest nor on the size of companies in which it may invest. The Portfolio also may purchase an unlimited amount of foreign securities; however, the Portfolio intends to have less than 10% of its total assets invested in foreign securities. An investment in foreign securities presents additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

When WRIMCO believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in debt securities that may be considered equivalent to owning cash because of their safety and liquidity. By taking a temporary defensive position, however, the Portfolio may not achieve its investment objectives.

Risks. An investment in Ivy Funds VIP Balanced is subject to various risks, including the following:

• Company Risk
• Credit Risk
• Diversification Risk
• Foreign Securities Risk
• Income Risk
• Interest Rate Risk
• Large Company Risk
• Market Risk
• Mid Size Company Risk
• Prepayment Risk
• Value Stock Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Energy: The Portfolio seeks to achieve its objective of long-term capital appreciation by investing primarily in the equity securities of companies engaged in various aspects of the energy industry, including the production, exploration, distribution of energy or relating to the infrastructure of energy, as well as the research and development or production of alternative energy sources, including but not limited to, oil companies, oil and gas exploration companies, natural gas pipeline companies, refinery companies, energy conservation companies, coal companies, alternative energy companies, and companies using newer energy technologies such as nuclear, geothermal, oil shale, wind power, and solar power.

After reviewing the market outlook for the energy industry and then identifying trends and sectors, WRIMCO uses a research-oriented, bottom-up investment approach when selecting securities for the Portfolio, focusing on company fundamentals and growth prospects. In general, the Portfolio emphasizes companies that WRIMCO believes are strongly managed and will generate above-average, long-term capital appreciation.

There is no guarantee, however, that the Portfolio will achieve its objective.

Primarily 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 or perceived inflationary trends and political developments, and the cost assumed by energy companies in complying with environmental and safety regulations.

The Portfolio is also subject to the risk that the earnings, dividends and securities prices of energy companies will be greatly affected by changes in the prices and supplies of oil and other energy fuels. Prices and supplies of energy may fluctuate significantly over any time period due to many factors, including:

• international political developments
• production and distribution policies of the Organization of Petroleum Exporting Countries (OPEC) and other oil-producing countries
• relationships among OPEC members and other oil-producing countries and between those countries and oil-importing nations
• energy conservation
• the regulatory environment
• tax policies
• the economic growth and political stability of the key energy-consuming countries

The Portfolio may, but is not required to, use a range of other investment techniques, including investing in physical commodities within the energy sector (primarily crude oil, natural gas and coal), income trusts, publicly traded partnerships (often referred to as master limited partnerships (MLPs)) and derivatives (primarily for the purpose of hedging various market risks (such as interest rates, currency exchange rates, and broad or specific equity or fixed-income market movements)), and selling securities short. A MLP is an investment that combines the tax benefits of a limited partnership with the liquidity of publicly traded securities. The MLPs in which the Portfolio may invest are primarily engaged in investing in oil and gas-related businesses, including energy processing and distribution. Net income from an interest in a qualified publicly traded partnership (QPTP) is qualifying income for a mutual fund. The Portfolio intends that all the MLPs in which it invests will be QPTPs. Please see the SAI regarding the tax and potential regulatory consequences if the Portfolio invests in a MLP that is not a QPTP. The value of these instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, embargoes, tariffs and international economic, political or regulatory developments.

Investing in commodities may expose the Portfolio to other risk considerations such as potentially severe price fluctuations over short periods of time and storage costs that exceed the custodial and/or brokerage costs associated with the Portfolio's other holdings. The Portfolio's investments in income trusts, MLPs, and commodities (and derivatives related thereto) will be limited by tax considerations.

As a temporary defensive measure, when securities markets or economic conditions are unfavorable or unsettled, the Portfolio may try to protect its assets by investing up to 100% of its total assets in securities that are highly liquid, including high-quality money market instruments such as short-term U.S. government securities, commercial paper, or repurchase agreements, even though that is not the normal investment strategy of the Portfolio. Even though the securities purchased for defensive purposes often are considered the equivalent of cash, and typically are highly liquid or comparatively safe, they tend to offer lower returns. Therefore, the Portfolio's performance could be comparatively lower if it concentrates its assets in defensive holdings. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Energy is subject to various risks, including the following:

• Commodities Risk
• Company Risk
• Concentration Risk
• Derivatives Risk
• Diversification Risk
• Emerging Market Risk
• Foreign Currency Risk
• Foreign Currency Exchange Transactions and Forward Foreign Currency Contracts Risk
• Foreign Securities Risk
• Growth Stock Risk
• Initial Public Offering Risk
• Large Company Risk
• Liquidity Risk
• Market Risk
• Mid Size Company Risk
• Short Sales Risk
• Small Company Risk
• Value Stock Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Global Natural Resources: The Portfolio seeks to achieve its objective of long-term growth by investing at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in the equity securities of companies throughout the world that own, explore or develop natural resources and other basic commodities or that supply goods and services to such companies. There is no guarantee, however, that the Portfolio will achieve its objective.

Mackenzie systematically reviews its investment decisions and may allow cash reserves to build up when valuations seem unattractive. Mackenzie attempts to minimize risk through diversifying the Portfolio's holdings by commodity, country, issuer, and market capitalization of companies; however, such diversification may not necessarily reduce portfolio volatility. Mackenzie searches for well-managed companies with strong balance sheets and the technological capability and expertise to grow independently of commodity prices. In addition, Mackenzie seeks to anchor the Portfolio's holdings with established larger companies that have historically strong-producing assets and attractive long-term reinvestment opportunities. From a macro perspective, Mackenzie monitors demand expectations for various commodities and utilizes this information to adjust the level of sector exposure and individual security holdings in the Portfolio.

The Portfolio may, but is not required to, use a range of derivative investment techniques to hedge various market risks (such as interest rates, currency exchange rates, and broad or specific equity or fixed-income market movements) or to enhance potential gain.

The Portfolio also may invest in precious metals and other physical commodities.

As a temporary defensive measure, when Mackenzie believes that securities markets or economic conditions are unfavorable or unsettled, the Portfolio may try to protect its assets by investing up to 100% of its total assets in securities that are highly liquid, including high-quality money market instruments, such as short-term U.S. government securities, commercial paper, or repurchase agreements, even though that is not the normal investment strategy of the Portfolio. Even though the securities purchased for defensive purposes often are considered the equivalent of cash, and typically are highly liquid or comparatively safe, they tend to offer lower returns. Therefore, the Portfolio's performance could be comparatively lower if it concentrates its assets in defensive holdings. The additional temporary defensive measures that Mackenzie may employ include altering the mix of company and sector holdings or using derivative strategies. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Global Natural Resources is subject to various risks, including the following:

• Commodities Risk
• Company Risk
• Concentration Risk
• Derivatives Risk
• Diversification Risk
• Emerging Market Risk
• Foreign Currency Risk
• Foreign Currency Exchange Transactions and Forward Foreign Currency Contracts Risk
• Foreign Securities Risk
• Growth Stock Risk
• Liquidity Risk
• Market Risk
• Mid Size Company Risk
• Small Company Risk
• Value Stock Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Real Estate Securities: The Portfolio seeks to achieve its objective of total return through a combination of capital appreciation and current income by investing primarily in real estate securities and real estate-related securities. The Portfolio does not invest directly in real estate. There is no guarantee, however, that the Portfolio will achieve its objective.

"Real estate" securities include securities offered by issuers that receive at least 50% of their gross revenue from the construction, ownership, management, financing or sale of residential, commercial or industrial real estate. Real estate securities issuers typically include REITs, REOCs, real estate brokers and developers, real estate managers, hotel franchisers, real estate holding companies and publicly-traded limited partnerships.

"Real estate-related" securities include securities issued by companies primarily engaged in businesses that sell or offer products or services that are closely related to the real estate industry. Real estate-related securities issuers typically include construction and related building companies, manufacturers and distributors of building supplies, brokers, financial institutions that issue or service mortgages and resort companies.

In its analysis of issuers, Advantus Capital has built a network of industry contacts that is designed to enhance its knowledge of a company's underlying assets. Advantus Capital utilizes this knowledge and its diligent focus on company fundamentals in selecting securities for the Portfolio. Advantus Capital believes that the core operating performance of an issuer is a key determinant in its stock performance.

Most of the Portfolio's real estate securities portfolio consists of securities issued by REITs and REOCs that are listed on a securities exchange or traded over-the-counter. A REIT is a corporation or trust that invests in real estate, mortgages or shares issued by other REITs. REITs may be characterized as equity REITs (that is, REITs that primarily invest in land and improvements thereon), mortgage REITs (that is, REITs that primarily invest in mortgages on real estate and other real estate debt) or hybrid REITs, which invest in both land and improvements thereon and mortgages. The Portfolio primarily invests in shares of equity REITs but also invests lesser portions of its assets in shares of mortgage REITs and hybrid REITs. A REIT that meets the applicable requirements of the Internal Revenue Code of 1986, as amended (Code), may deduct dividends paid to shareholders, effectively eliminating any entity-level Federal income tax. As a result, REITs distribute a larger portion of their earnings to investors than other entities subject to Federal income tax. A REOC is a corporation or partnership (or an entity treated as such) that invests in real estate, mortgages or shares issued by REITs, but also may engage in related or unrelated businesses. A REOC is typically structured as a "C" corporation under the Code and does not have the favorable tax treatment that is accorded a REIT.

The Portfolio may invest up to 10% of its total assets in foreign securities and may invest up to 20% of its net assets in securities issued by companies outside of the real estate industry. An investment in foreign securities presents additional risks such as currency fluctuations and political or economic conditions affecting the foreign country.

The Portfolio also may invest in exchange-traded funds (ETFs) that replicate a REIT or real estate stock index or a basket of REITs or real estate stocks, as well as in ETFs that attempt to provide enhanced returns, or inverse returns, on such indices or baskets. Enhanced or inverse return ETFs present greater opportunities for investment gains but also present correspondingly greater risk of loss.

An investment in the Portfolio may encounter the risk of greater volatility, due to the limited number of issuers of real estate and real estate-related securities, than an investment in a portfolio of securities selected from a greater number of issuers. As well, the value of the Portfolio's investments may decrease due to fluctuations in rental income, overbuilding and increased competition, casualty and condemnation losses, environmental costs and liabilities, changes in the Code or failure to meet Code requirements, extended vacancies of property, lack of available mortgage funds, government regulation and limitations, increases in property taxes, cash flow dependency, declines in real estate value, physical depreciation of buildings, inability to obtain project financing, increased operating costs and changes in general or local economic conditions.

In an attempt to respond to adverse market, economic, political or other conditions, the Portfolio may invest for temporary defensive purposes in various short-term cash and cash equivalent items. By taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Real Estate Securities is subject to various risks, including the following:

• Company Risk
• Concentration Risk
• Credit Risk
• Diversification Risk
• Extension Risk
• Foreign Securities Risk
• Income Risk
• Interest Rate Risk
• Investment Company Securities Risk
• Large Company Risk
• Liquidity Risk
• Market Risk
• Mid Size Company Risk
• Prepayment Risk
• REIT-Related Risk
• REOC-Related Risk
• Small Company Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Science and Technology: The Portfolio seeks to achieve its objective of long-term capital growth by investing primarily in the equity securities of domestic and foreign science and technology companies. Science and technology companies are companies whose products, processes or services, in WRIMCO's opinion, are being, or are expected to be, significantly benefited by the use or commercial application of scientific or technological developments or discoveries. As well, the Portfolio may invest in companies that utilize science and/or technology to improve their existing business even though the business is not within the science and technology industries. There is no guarantee, however, that the Portfolio will achieve its objective.

In its selection of securities for investment by the Portfolio, WRIMCO aims to identify stocks that it believes to be benefiting from the world's strongest secular economic trends, and then applies its bottom-up research to identify what it believes are the best holdings for the Portfolio.

The Portfolio may invest in, but is not limited to, areas such as:

• aerospace and defense electronics
• biotechnology
• business machines
• cable and broadband access
• communications equipment and software
• computer software and services
• computer systems
• electronics and energy
• electronic media
• genomics
• internet and internet-related services
• medical devices and drugs
• medical and hospital supplies and services
• office equipment, supplies and services (including transaction processing services)

The Portfolio primarily owns common stocks; however, it may invest, to a lesser extent, in preferred stocks, debt securities and convertible securities.

The Portfolio may, but is not required to, use a range of derivative investment techniques, typically options on common stocks, to hedge various market risks as well as a supplement in pursuit of its investment objective.

When WRIMCO believes that a temporary defensive position is desirable, the Portfolio may invest up to all of its assets in U.S. government securities or other debt securities, mostly of investment grade. However, by taking a temporary defensive position, the Portfolio may not achieve its investment objective.

Risks. An investment in Ivy Funds VIP Science and Technology is subject to various risks, including the following:

• Company Risk
• Concentration Risk
• Derivatives Risk
• Diversification Risk
• Emerging Market Risk
• Foreign Currency Risk
• Foreign Securities Risk
• Growth Stock Risk
• Initial Public Offering Risk
• Investment Company Securities Risk
• Liquidity Risk
• Market Risk
• Mid Size Company Risk
• Small Company Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Ivy Funds VIP Money Market: The Portfolio seeks to achieve its objective of maximum current income consistent with stability of principal by investing in a diversified portfolio of high-quality money market instruments in accordance with the requirements of Rule 2a-7. There is no guarantee, however, that the Portfolio will achieve its objective.

The Portfolio invests only in the following U.S. dollar-denominated money market obligations and instruments:

• U.S. government securities (including obligations of U.S. government agencies and instrumentalities)
• bank obligations and instruments secured by bank obligations, such as letters of credit
• commercial paper (domestic and foreign issuers), including asset-backed commercial paper programs
• corporate debt obligations, including variable rate master demand notes
• Canadian government obligations
• certain other obligations (including municipal obligations) guaranteed as to principal and interest by a bank in whose obligations the Portfolio may invest or a corporation in whose commercial paper the Portfolio may invest

The Portfolio may only invest in bank obligations if they are obligations of a bank subject to regulation by the U.S. government, including foreign branches of these banks, or obligations of a foreign bank having total assets of at least $500 million, and instruments secured by any such obligation.

Certain U.S. government securities in which the Portfolio may invest, such as Treasury securities and securities issued by 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 Fannie Mae, Freddie Mac and the 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 Treasury or by the credit of the issuer.

Risks. An investment in Ivy Funds VIP Money Market is subject to various risks, including the following:

• Company Risk
• Credit Risk
• Income Risk
• Interest Rate Risk
• Market Risk
• Prepayment Risk

A description of these risks is set forth in Defining Risks below. Additional risk information, as well as additional information on securities and other instruments in which the Portfolio may invest, is provided in the SAI.

Fund of Funds Risks

Each of the Pathfinder Portfolios is a "fund of funds," which means that it invests substantially all of its assets in a number of other Portfolios rather than investing directly in stocks, bonds and other instruments. As a fund of funds, each Pathfinder Portfolio is subject to the following risks.

Your investment in a Pathfinder Portfolio is subject to all the risks of an investment directly in the Underlying Funds the Pathfinder Portfolio holds. These risks are disclosed for each Underlying Fund earlier in this Prospectus in their respective sections and above in the section entitled "Additional Information about Principal Investment Strategies, Other Investments and Risks."

A Pathfinder Portfolio's performance reflects the investment performance of the Underlying Funds it holds. A Pathfinder Portfolio's performance thus depends both on the allocation of its assets among the various Underlying Funds and the ability of those Underlying Funds to meet their respective investment objectives. WRIMCO may not accurately assess the attractiveness or risk potential of particular Underlying Funds, asset classes, or investment styles.

Each Pathfinder Portfolio invests in a limited number of Underlying Funds and may invest a significant portion of its assets in a single Underlying Fund. Therefore, the performance of a single Underlying Fund can have a significant effect on the performance of a Pathfinder Portfolio and the price of its shares. As with any mutual fund, there is no assurance that any Underlying Fund will achieve its investment objective(s).

One Underlying Fund may purchase the same securities that another Underlying Fund sells. A Pathfinder Portfolio that invests in both Underlying Funds would indirectly bear the costs of these trades.

While an investor may invest in the Underlying Funds (which are also available to Policyowners through their Policies), you should not expect to achieve the same results by investing directly in the Underlying Funds and short-term investments as you would receive by investing in the Pathfinder Portfolios, because the Portfolios offer professional asset allocation and an added measure of diversification. WRIMCO monitors each Pathfinder Portfolio's holdings and cash flow and periodically adjusts each Pathfinder Portfolio's mix to keep the Pathfinder Portfolio closely aligned to its investment strategies in changing market conditions. Underlying Funds may be added or removed from a Pathfinder Portfolio's allocation mix by WRIMCO without notice to investors.

Because you are investing indirectly through the Pathfinder Portfolios, you will bear a proportionate share of the applicable expenses of the Underlying Funds (including applicable management, administration, service and accounting fees), as well as the expenses of the particular Pathfinder Portfolio. No front-end sales load or contingent deferred sales charge is charged, either by the Underlying Funds or by the Pathfinder Portfolios. Although the Underlying Funds (other than Ivy Funds VIP Money Market) will charge a Rule 12b-1 fee, the Pathfinder Portfolios do not charge a Rule 12b-1 fee, so there is no duplication of these fees.

Additional Investment Considerations

The objective(s) and investment policies of each Portfolio may be changed by the Board of Trustees of the Trust without a vote of the Portfolio's shareholders, unless a policy or restriction is otherwise described.

Because each Portfolio owns different types of investments, its performance will be affected by a variety of factors. The value of each Portfolio's investments and the income it generates will vary from day to day, generally reflecting changes in market conditions, interest rates and other company and economic news. Performance will also depend on the skill of WRIMCO or the investment subadvisor, as applicable, in selecting investments.

Each Portfolio also may invest in and use certain other types of securities and instruments in seeking to achieve its objective(s). For example, each Portfolio (other than Ivy Funds VIP Money Market) may invest in options, futures contracts and other derivative instruments if it is permitted to invest in the type of asset by which the return on, or value of, the derivative is measured. Certain types of each Portfolio's authorized investments and strategies, such as derivative instruments, foreign securities, junk bonds and precious metals, involve special risks. Depending on how much a Portfolio invests or uses these strategies, these special risks may become significant.

Certain types of mortgage-backed and asset-backed securities may experience significant valuation uncertainties, greater volatility, and significantly less liquidity due to the sharp rise in 2006 and 2007 of foreclosures on home loans secured by subprime mortgages. Subprime mortgages have a higher credit risk than prime mortgages, as the credit criteria for obtaining a subprime mortgage is more flexible than that used with prime borrowers. To the extent that a Portfolio invests in securities that are backed by pools of mortgage loans, the risk to the Portfolio may be significant.

Each Portfolio may actively trade securities in seeking to achieve its objective(s). Factors that can lead to active trading include market volatility, a significant positive or negative development concerning a security, an attempt to maintain a Portfolio's market capitalization target, and the need to sell a security to meet redemption activity. Actively trading securities may increase transaction costs (which may reduce performance) and increase distributions paid by a Portfolio.

Each of the Portfolios generally seeks to be fully invested, except to the extent that it takes a temporary defensive position. In addition, at times, WRIMCO or the investment subadvisor, as applicable, may invest a portion of the Portfolio's assets in cash or cash equivalents if WRIMCO or the investment subadvisor, as applicable, is unable to identify and acquire a sufficient number of securities that meet WRIMCO's or the investment subadvisor's, as applicable, selection criteria for implementing the Portfolio's investment objective(s), strategies and policies.

You will find more information in the SAI about each Portfolio's permitted investments and strategies, as well as the restrictions that apply to them.

A description of the Portfolios' policies and procedures with respect to the disclosure of the Portfolios' securities holdings is available in the SAI.

A complete schedule of portfolio holdings for the first and third quarters of each fiscal year is filed with the Securities and Exchange Commission (SEC) on the Trust's Form N-Q. This form may be obtained in the following ways:

• On the SEC's website at http://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.
• On Waddell & Reed's website at www.waddell.com

Defining Risks

Commodities Risk -- Commodity trading is generally considered speculative because of the significant potential for investment loss. Among the factors that could affect the value of a Portfolio's investments in commodities are cyclical economic conditions, sudden political events and adverse international monetary policies. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Also, a Portfolio may pay more to store and accurately value its commodity holdings than it does with its other portfolio investments.

Company Risk -- An individual security may perform differently than the overall market. This may be a result of specific factors such as changes in corporate profitability due to the success or failure of specific products or management strategies, or it may be due to changes in investor perceptions regarding a company.

Concentration Risk -- If a Portfolio invests more than 25% of its total assets in a particular 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 a single industry. Securities of companies within specific industries or sectors of the economy may periodically perform differently than the overall market. This may be due to changes in such things as the regulatory or competitive environment or to changes in investor perceptions regarding a sector or company.

Credit Risk -- An issuer of a debt security (including mortgage-backed securities) or a REIT may not make payments on the security when due, or the other party to a contract may default on its obligation. There is also the risk that an issuer could suffer adverse changes in its financial condition that could lower the credit quality of a security. This could lead to greater volatility in the price of the security and, therefore, in the NAV of a Portfolio. Also, a change in the quality rating of a debt security or a REIT security can affect the security's liquidity and make it more difficult to sell. If a Portfolio purchases unrated securities and obligations, it will depend on the analysis of WRIMCO or the investment subadvisor, as applicable, of credit risk more heavily than usual.

Derivatives Risk -- A derivative is a financial instrument whose value is "derived," in some manner, from the price of another security, index, asset or rate. Derivatives include options, futures contracts and swaps, among a wide range of other instruments. The principal risk of investments in derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets or with the underlying asset from which the derivative's value is derived. Some derivatives are more sensitive to interest rate changes and market price fluctuations than others. To the extent the judgment of WRIMCO or the investment subadvisor, as applicable, as to certain movements is incorrect, the risk of loss is greater than if the derivative technique(s) had not been used.

Options, futures contracts and swaps are common types of derivatives that a Portfolio may occasionally use. An option is the right to buy and sell a security or other instrument, index, or commodity at a specific price on or before a specific date. A futures contract is an agreement to buy or sell a security or other instrument, index or commodity at a specific price on a specific date. A swap is an agreement involving the exchange by a Portfolio with another party of their respective commitments to pay or receive payments at specified dates on the basis of a specified amount. Other types of derivatives include caps, floors and collars.

Derivatives are subject to counterparty risk. Counterparty risk is the risk that a loss may be sustained by a Portfolio as a result of the insolvency or bankruptcy of the other party to the transaction or the failure of the other party to make required payments or otherwise comply with the terms of the transaction. Changing conditions in a particular market area, such as those experienced in the subprime mortgage market over recent months, whether or not directly related to the referenced assets that underlie the transaction, may have an adverse impact on the creditworthiness of the counterparty.

Diversification Risk -- A Portfolio is subject to diversification risk if it may invest more than 5% of its total assets in the securities of a single issuer with respect to up to 25% of its total investment portfolio; a Portfolio is considered diversified, as defined in the 1940 Act, if it does not invest more than 5% of its total assets in the securities of a single issuer with respect to 75% of its total investment portfolio. A Portfolio's performance may be more susceptible to a single economic, regulatory or technological occurrence than if it had a more diversified investment portfolio.

Emerging Market Risk -- 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 characteristic of more developed countries. Certain of those countries may have failed in the past to recognize private property rights and have nationalized or expropriated the assets of private companies. As a result, the risks described above, including the risks of nationalization or expropriation of assets, may be heightened. In addition, unanticipated political or social developments may affect the value of a Portfolio's investments in those countries and the availability of additional investments in those countries. The small size and inexperience of the securities markets in such countries and the limited volume of trading in securities in those countries may make a Portfolio's investments in such countries illiquid and more volatile than investments in more developed countries, and a Portfolio may be required to establish special custodial or other arrangements before making certain investments in those countries. There may be little financial or accounting information available with respect to issuers located in certain countries, and it may be difficult as a result to assess the value or prospects of an investment in such issuers.

Extension Risk -- Rising interest rates could cause property owners to prepay their mortgages more slowly than expected, resulting in slower prepayments of mortgage-backed securities and real estate debt securities. This would, in effect, convert a short or medium-duration security into a longer-duration security, increasing its sensitivity to interest rate changes and causing its price to decline. Duration measures the expected price sensitivity of a fixed income security or portfolio for a given change in interest rates. For example, if interest rates rise by one percent, the value of a security or portfolio having a duration of two years generally will fall by approximately two percent.

Foreign Currency Risk -- Foreign securities may be denominated in foreign currencies. The value of a Portfolio's investments, as measured in U.S. dollars, may be unfavorably affected by changes in foreign currency exchange rates and exchange control regulations. Currency conversion also can be costly.

Foreign Currency Exchange Transactions and Forward Foreign Currency Contracts Risk -- The Portfolios (other than Ivy Funds VIP Money Market) may, but are not required to, use foreign currency exchange transactions and forward foreign currency contracts to hedge certain market risks (such as interest rates, currency exchange rates and broad or specific market movement). These investment techniques involve a number of risks, including the possibility of default by the counterparty to the transaction and, to the extent WRIMCO's or the investment subadvisor's, as applicable, judgment as to certain market movements is incorrect, the risk of losses that are greater than if the investment technique had not been used. For example, there may be an imperfect correlation between a Portfolio's portfolio holdings of securities denominated in a particular currency and the forward contracts entered into by the Portfolio. An imperfect correlation of this type may prevent the Portfolios from achieving the intended hedge or expose the Portfolio to the risk of currency exchange loss. These investment techniques also tend to limit any potential gain that might result from an increase in the value of the hedged position.

Foreign Securities Risk -- Investing in foreign securities involves a number of economic, financial and political considerations that are not associated with the domestic markets and that could affect a Portfolio's performance unfavorably, depending upon prevailing conditions at any given time. For example, the securities markets of many foreign countries may be smaller, less liquid and subject to greater price volatility than those in the United States. Foreign investing also may involve brokerage costs and tax considerations that are not usually present in the domestic markets.

Other factors that can affect the value of a Portfolio's foreign investments include the comparatively weak supervision and regulation by some foreign governments of securities exchanges, brokers and issuers, and the fact that many foreign companies may not be subject to uniform accounting, auditing and financial reporting standards. It also may be difficult to obtain reliable information about the securities and business operations of certain foreign issuers. Settlement of portfolio transactions also may be delayed due to local restrictions or communication problems, which can cause a Portfolio to miss attractive investment opportunities or impair its ability to dispose of securities in a timely fashion (resulting in a loss if the value of the securities subsequently declines).

Growth Stock Risk -- Growth stocks are stocks of companies believed to have above-average potential for growth in revenue and earnings. 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.

Income Risk -- A Portfolio may experience a decline in its income due to falling interest rates.

Initial Public Offering Risk - Investments in IPOs can have a significant positive impact on a Portfolio's performance; however, the positive effect of investments in IPOs may not be sustainable because of a number of factors. A Portfolio may not be able to buy shares in some IPOs, or may be able to buy only a small number of shares. Also, a Portfolio may not be able to buy the shares at the commencement of the offering, and the general availability and performance of IPOs are dependent on market psychology and economic conditions. The relative performance impact of IPOs is also likely to decline as a Portfolio grows.

Interest Rate Risk -- The value of a debt security, mortgage-backed security or fixed income obligation (including shares of mortgage REITs) may decline due to changes in market interest rates. Generally, when interest rates rise, the value of such a security or obligation decreases. Conversely, when interest rates decline, the value of a debt security, mortgage-backed security or fixed income obligation (including shares of mortgage REITs) generally increases. Long-term debt securities, mortgage-backed securities and fixed income obligations are generally more sensitive to interest rate changes.

In general, a portfolio of debt, mortgage-related and asset-backed securities experiences a decrease in principal value with an increase in interest rates. The extent of the decrease in principal value may be affected by a Portfolio's duration of its portfolio of debt, mortgage-related and asset-backed securities. Duration measures the relative price sensitivity of a security to changes in interest rates. "Effective" duration takes into consideration the likelihood that a security will be called, or prepaid, prior to maturity given current market interest rates. Typically, a security with a longer duration is more price sensitive than a security with a shorter duration. In general, a portfolio of debt, mortgage-related and asset-backed securities experiences a percentage decrease in principal value equal to its effective duration for each 1% increase in interest rates. For example, if a Portfolio holds a portfolio of securities with an effective duration of five years and interest rates rise 1%, the principal value of such securities could be expected to decrease by approximately 5%.

Investment Company Securities Risk -- As a shareholder in an investment company, a Portfolio would bear its pro rata share of that investment company's expenses, which could result in duplication of certain fees, including management and administrative fees.

Certain Portfolios may invest in ETFs as a means of tracking the performance of a designated stock index while maintaining liquidity or to gain exposure to precious metals and other commodities without purchasing them directly. Since many ETFs are a type of investment company, a Portfolio's purchases of shares of such ETFs are subject to the Portfolio's investment restrictions regarding investments in other investment companies.

ETFs have a market price which reflects a specified fraction of the value of the designated index or underlying basket of commodities or commodities futures and are exchange-traded. As with other equity securities transactions, brokers charge a commission in connection with the purchase and sale of shares of ETFs. In addition, an asset management fee is charged in connection with the management of the ETF's portfolio (which is in addition to the investment management fee paid by a Portfolio).

Investments in an ETF generally present the same primary risks as investments in conventional funds, which are not exchange-traded. The price of an ETF can fluctuate, and a Portfolio could lose money investing in an ETF. In addition, ETFs are subject to the following risks that do not apply to conventional funds: (i) the market price of an ETF's shares may trade at a premium or discount to its NAV; (ii) an active trading market for an ETF's shares may not develop or be maintained; or (iii) trading of an ETF's shares may be halted if the listing exchange officials determine such action appropriate, the shares are delisted from the exchange, or the activation of market-wide "circuit breakers" (which are tied to large decreases in stock prices) halts stock trading generally.

Large Company Risk -- A Portfolio with holdings of large capitalization company securities may underperform the market as a whole.

Liquidity Risk -- Generally, a security is liquid if a Portfolio is able to sell the security at a fair price within a reasonable time. Liquidity is generally related to the market trading volume for a particular security. Investments in smaller companies, foreign companies, companies in emerging markets or certain instruments such as derivatives are subject to a variety of risks, including potential lack of liquidity.

Low-rated Securities Risk -- In general, low-rated debt securities (commonly referred to as "high-yield" or "junk" bonds) offer higher yields due to the increased risk that the issuer will be unable to meet its obligations on interest or principal payments at the time called for by the debt instrument. For this reason, these bonds are considered speculative and could significantly weaken a Portfolio's returns. In adverse economic or other circumstances, issuers of these lower-rated securities and obligations are more likely to have difficulty making principal and interest payments than issuers of higher-rated securities and obligations.

Market Risk -- All securities may be subject to adverse trends in equity markets. Securities are subject to price movements due to changes in general economic conditions, the level of prevailing interest rates or investor perceptions of the market. In addition, prices are affected by the outlook for overall corporate profitability. Market prices of equity securities are generally more volatile than debt securities. This may cause a security to be worth less than the price originally paid for it, or less than it was worth at an earlier time. Market risk may affect a single issuer or the market as a whole. As a result, a portfolio of such securities may underperform the market as a whole.

Mid Size Company Risk -- Securities of mid capitalization companies may be more vulnerable to adverse developments than those of large companies due to such companies' limited product lines, limited markets and financial resources and dependence upon a relatively small management group.

Mortgage-Backed and Asset-Backed Securities Risk -- Mortgage-backed and asset-backed securities are subject to prepayment risk. When interest rates decline, unscheduled prepayments can be expected to accelerate, and a Portfolio may be required to reinvest the proceeds of the prepayments at the lower interest rates then available. Unscheduled prepayments also may limit the potential for capital appreciation on mortgage-backed and asset-backed securities. Conversely, when interest rates rise, the values of mortgage-backed and asset-backed securities generally fall. Since rising interest rates typically result in decreased prepayments, this could lengthen the average lives of such securities, and cause their value to decline more than traditional fixed-income securities. If a Portfolio purchases mortgage-backed or asset-backed securities that are "subordinated" to other interests in the same mortgage pool, the Portfolio, as a holder of those securities, may only receive payments after the pool's obligations to other investors have been satisfied. For example, an unexpectedly high rate of defaults on the mortgages held by a mortgage pool may limit substantially the pool's ability to make payments of principal or interest to the Portfolio as a holder of such subordinated securities, reducing the values of those securities or in some cases rendering them worthless; the risk of such defaults is generally higher in the case of mortgage pools that include so-called "subprime" mortgages.

Prepayment Risk -- Debt securities with high relative interest rates may be prepaid by the issuer prior to maturity, particularly during periods of falling interest rates. During periods of falling interest rates, there is the possibility that an issuer will call its securities if they can be refinanced by issuing new securities with a lower interest rate (commonly referred to as optional call risk). As well, falling interest rates could cause prepayments of mortgage loans to occur more quickly than expected. This may occur because, as interest rates fall, more property owners refinance the mortgages underlying mortgage-backed securities (including shares of mortgage REITs). As a result, a Portfolio may have to reinvest the proceeds in other securities with generally lower interest rates, resulting in a decline in the Portfolio's investment income.

REIT-Related Risk -- The value of a Portfolio's REIT securities may be adversely affected by changes in the value of the REIT's underlying property or the property secured by mortgages the REIT holds. In addition, the value of a REIT could be adversely affected if the REIT fails to qualify for tax-free pass-through treatment under the Code, or maintain its exemption from registration under the 1940 Act.

REOC-Related Risk -- A REOC is similar to an equity REIT in that it is a company that owns and operates commercial real estate, but unlike a REIT it has the freedom to reinvest all its funds from operations back into the company and, in general, faces fewer restrictions than a REIT. REOCs do not pay any specific level of income as dividends, and there is no minimum restriction on the number of owners nor limits on ownership concentration. The value of a Portfolio's REOC securities may be adversely affected by the same factors that adversely affect REITs. In addition, a corporate REOC does not have the favorable tax treatment that is accorded a REIT.

Short Sales Risk -- Short sales are transactions in which a Portfolio sells a security it does not own. To complete the transaction, the Portfolio must borrow the security to make delivery to the buyer. The Portfolio is then obligated to replace the security borrowed by purchasing the security at the market price at the time of the replacement. The price at such time may be higher or lower than the price at which the security was sold by the Portfolio. If the underlying security goes down in price between the time a Portfolio sells the security and buys it back, the Portfolio will realize a gain on the transaction. Conversely, if the underlying security goes up in price during the period, the Portfolio will realize a loss on the transaction. Any such loss is increased by the amount of the premium or interest the Portfolio must pay to the lender of the security. A Portfolio is also required to segregate assets on its books to cover its obligation to return the security to the lender which means that those other assets may not be available to meet the Portfolio's needs for immediate cash or other liquidity. A Portfolio's investment performance also may suffer if the Portfolio is required to close out a short position earlier than it intended. In addition, the Portfolio may be subject to expenses related to short sales that are not typically associated with investing in securities directly, such as costs of borrowing and margin account maintenance.

Small Company Risk -- Equity securities of small capitalization companies (including small capitalization REITs) are subject to greater price volatility, lower trading volume and less liquidity due to, among other things, such companies' small size, limited product lines, limited access to financing sources and limited management depth. In addition, the frequency and volume of trading of such securities may be less than is typical of larger companies, making them subject to wider price fluctuations. In some cases, there could be difficulties in selling securities of small capitalization companies at the desired time.

Value Stock Risk -- 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 WRIMCO or the investment subadvisor, as applicable, undervalued. The value of a security believed by WRIMCO or the investment subadvisor, as applicable, to be undervalued may never reach what is believed to be its full value, or such security's value may decrease.

The Management of the Portfolios

Portfolio Management

The Portfolios are managed by WRIMCO, subject to the authority of the Trust's Board of Trustees. WRIMCO provides investment advice to each of the Portfolios and supervises each Portfolio's investments. WRIMCO and/or its predecessor have served as investment manager to the Portfolios since their inception and to each of the registered investment companies in Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios since their inception. WRIMCO is located at 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217. Prior to June 30, 2003, each of the funds in Ivy Funds, Inc. (formerly, W&R Funds, Inc.) was also managed by WRIMCO. On June 30, 2003, WRIMCO assigned the Investment Management Agreement with Ivy Funds, Inc. to Ivy Investment Management Company (IICO), an affiliate of WRIMCO. IICO is also the investment manager for Ivy Funds, which together with Ivy Funds, Inc. comprise the Ivy Family of Funds. WRIMCO had approximately $27.3 billion in assets under management as of December 31, 2008.

Advantus Capital Management, Inc. (Advantus Capital), an investment advisor located at 400 Robert Street North, St. Paul, Minnesota 55101, serves as investment subadvisor to, and as such provides investment advice to, and generally conducts the investment management program for, Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities pursuant to an agreement with WRIMCO. Since its inception in 1985, Advantus Capital and its predecessor provided investment advisory services for mutual funds and have managed investment portfolios for various private accounts, including its affiliate, Minnesota Life Insurance Company (Minnesota Life). Both Advantus Capital and Minnesota Life are wholly owned subsidiaries of Securian Financial Group, Inc., which is a second-tier subsidiary of Minnesota Mutual Companies, Inc., a mutual insurance holding company. Personnel of Advantus Capital also manage Minnesota Life's investment portfolios. Advantus Capital had approximately $14.65 billion in assets under management as of December 31, 2008.

Mackenzie Financial Corporation (Mackenzie), 180 Queen Street West, Toronto, Ontario, Canada M5V 3K1, serves as the investment subadvisor to, and as such provides investment advice to, and generally conducts the investment management program for, Ivy Funds VIP Global Natural Resources pursuant to an agreement with WRIMCO. Mackenzie has been an investment counsel and mutual fund manager in Toronto for more than 35 years, and as of December 31, 2008 had over $54.7 billion Canadian in assets under management.

Templeton Investment Counsel, LLC (Templeton), an investment advisor located at 500 East Broward Boulevard, Fort Lauderdale, Florida 33394, serves as investment subadvisor to, and as such provides investment advice to, and generally conducts the investment management program for, Ivy Funds VIP International Value pursuant to an agreement with WRIMCO. Templeton has an agreement with its affiliate, Templeton Global Advisors Limited (TGAL), under which the portfolio manager provides his services to International Value Portfolio. Templeton and the direct and indirect subsidiaries of Templeton Worldwide, Inc. had approximately $114 billion in assets under management as of December 31, 2008.

Wall Street Associates, LLC (WSA), located at La Jolla Financial Building, Suite 100, 1200 Prospect Street, La Jolla, California 92037, serves as the investment subadvisor to, and as such provides investment advice to, and generally conducts the investment management program for, Ivy Funds VIP Micro Cap Growth pursuant to an agreement with WRIMCO. WSA had approximately $1.1 billion in assets under management as of December 31, 2008.

Ivy Funds VIP Asset Strategy: Michael L. Avery and Ryan F. Caldwell are primarily responsible for the day-to-day management of the Ivy Funds VIP Asset Strategy. Mr. Avery has held his responsibilities for Ivy Funds VIP Asset Strategy since January 1997. He is Senior Vice President of WRIMCO and IICO, Vice President of the Trust and Vice President of other investment companies for which WRIMCO or IICO serve as investment manager. Mr. Avery has served as Chief Investment Officer of Waddell & Reed Financial, Inc., WRIMCO and IICO since June 2005. Mr. Avery has served as portfolio manager for investment companies managed by WRIMCO since February 1994, and has been an employee of such since June 1981. He held the position of Director of Equity Research for WRIMCO and its predecessor from August 1987 through June 2005. Mr. Avery earned a BS degree in Business Administration from the University of Missouri, and an MA with emphasis on finance from St. Louis University.

Mr. Caldwell has held his responsibilities for Ivy Funds VIP Asset Strategy since January 2007. His investment research responsibilities are concentrated in asset managers and brokers, and transaction processors. Mr. Caldwell joined WRIMCO in July 2000 as an economic analyst. In January 2003 he was appointed an investment analyst, and in June 2005 was named assistant portfolio manager for the Portfolio, as well as two other funds managed by WRIMCO or IICO. Mr. Caldwell is Vice President of IICO and WRIMCO, Vice President of the Trust and Vice President of other investment companies for which WRIMCO serves as investment manager. Mr. Caldwell earned a BBA in finance from Southwest Texas State University. He is currently pursuing the Chartered Financial Analyst designation.

Ivy Funds VIP Balanced: Cynthia P. Prince-Fox is primarily responsible for the day-to-day management of Ivy Funds VIP Balanced. Ms. Prince-Fox has held her responsibilities for Ivy Funds VIP Balanced since the Portfolio's inception in July 1994. She is Senior Vice President of WRIMCO and IICO, Vice President of the Trust and Vice President of other investment companies for which WRIMCO serves as investment manager. Ms. Prince-Fox has served as a portfolio manager for investment companies managed by WRIMCO since January 1993. Ms. Prince-Fox earned a BBA degree in finance from St. Mary's University in San Antonio, Texas, and has earned an MBA with an emphasis in finance from Rockhurst College.

Ivy Funds VIP Bond: Mark Otterstrom is primarily responsible for the day-to-day management of Ivy Funds VIP Bond. Mr. Otterstrom has held his responsibilities for Ivy Funds VIP Bond since August 2008. He is Senior Vice President of WRIMCO and IICO. He has served as portfolio manager for investment companies managed by WRIMCO since June 2000, and has been an employee of such since May 1987. Mr. Otterstrom earned a BS in finance from the University of Tulsa, and an MBA in finance from the University of Missouri at Kansas City. He is a Chartered Financial Analyst.

Ivy Funds VIP Core Equity: Erik R. Becker and Gustaf C. Zinn are primarily responsible for the day-to-day management of Ivy Funds VIP Core Equity, and both have held their Portfolio responsibilities since July 2006. Mr. Becker joined WRIMCO in 1999 as an investment analyst and had served as an assistant portfolio manager for Ivy Funds VIP Core Equity since 2003. He has served as a portfolio manager since February 2006, in addition to his duties as a research analyst. He is Vice President of IICO and WRIMCO and Vice President of the Trust, and Vice President of other investment companies for which WRIMCO or IICO serves as investment manager. Mr. Becker earned a BBA degree in finance, investment and banking and an MS in finance from the University of Wisconsin-Madison. He is a Chartered Financial Analyst.

Mr. Zinn has been an employee of WRIMCO since 1998. He had served as assistant portfolio manager for funds managed by IICO and WRIMCO since July 2003, in addition to his duties as a research analyst, and has served as a portfolio manager since February 2006. He is Vice President of IICO and WRIMCO and Vice President of the Trust, and Vice President of other investment companies for which WRIMCO or IICO serves as investment manager. He earned a BBA degree and a Masters of Finance from the University of Wisconsin-Madison. He is a Chartered Financial Analyst.

Ivy Funds VIP Dividend Opportunities and Ivy Funds VIP Energy: David P. Ginther is primarily responsible for the day-to-day management of Ivy Funds VIP Dividend Opportunities and Ivy Funds VIP Energy. He has held his responsibilities since the inception of Ivy Funds VIP Dividend Opportunities in December 2003 and since the inception of Ivy Funds VIP Energy in May 2006. Mr. Ginther is Senior Vice President of WRIMCO and IICO, Vice President of the Trust and Vice President of other investment companies for which WRIMCO or IICO serves as investment manager. He has been an employee of WRIMCO since 1995. Mr. Ginther earned a BS degree in accounting from Kansas State University, and has earned the designation of Certified Public Accountant.

Ivy Funds VIP Global Natural Resources: Frederick Sturm, a Senior Vice President of Mackenzie, is primarily responsible for the day-to-day management of Ivy Funds VIP Global Natural Resources. He has managed the Portfolio since its inception in April 2005. Mr. Sturm is also primarily responsible for the management of Ivy Global Natural Resources Fund, whose investment manager is IICO. Mr. Sturm joined Mackenzie in 1983. He is a Chartered Financial Analyst and holds a graduate degree in commerce and finance from the University of Toronto.

Ivy Funds VIP Growth: Daniel P. Becker and Philip J. Sanders are primarily responsible for the day-to-day management of Ivy Funds VIP Growth. Mr. Becker has held his responsibilities for Ivy Funds VIP Growth since June 2006. He is Senior Vice President of WRIMCO and IICO, Vice President of the Trust, and Vice President of other investment companies for which WRIMCO or IICO serves as investment manager. Mr. Becker has been an employee of WRIMCO and its predecessor since October 1989, initially serving as an investment analyst, and has served as a portfolio manager since January 1997. He earned a BS degree in Mathematical Economics from the University of Wisconsin, and holds an MS degree with an emphasis in Finance, Investments and Banking from the University of Wisconsin Graduate School of Business. Mr. Becker is a Chartered Financial Analyst.

Mr. Sanders has held his responsibilities for Ivy Funds VIP Growth since August 1998. He is Senior Vice President of WRIMCO and IICO, Vice President of the Trust, and Vice President of other investment companies for which WRIMCO or IICO serves as investment manager. Mr. Sanders has been an employee of WRIMCO since August 1998. He earned a BA in economics from the University of Michigan and an MBA from the University of North Carolina at Charlotte. Mr. Sanders is a Chartered Financial Analyst.

Ivy Funds VIP High Income: William M. Nelson is primarily responsible for the day-to-day management of Ivy Funds VIP High Income. Mr. Nelson has held his responsibilities for Ivy Funds VIP High Income since January 1999. He is Senior Vice President of WRIMCO and IICO, Vice President of the Trust and portfolio manager of another investment company for which WRIMCO serves as investment manager. Mr. Nelson has been an employee of WRIMCO since January 1995. He earned a BS in business administration from Bucknell University in Lewisburg, Pennsylvania, and an MBA in finance and marketing from the University of Connecticut.

Ivy Funds VIP International Growth: F. Chace Brundige is primarily responsible for the day-to-day management of Ivy Funds VIP International Growth. Mr. Brundige has held his responsibilities for Ivy Funds VIP International Growth since January 2009. In 2003, he joined WRIMCO as an assistant portfolio manager for the Large Cap Growth equity team, and became a portfolio manager in February 2006. He is Vice President of WRIMCO and IICO, Vice President of the Trust, and portfolio manager for other investment companies for which WRIMCO or IICO serves as investment manager. Mr. Brundige holds a BS degree in finance from Kansas State University, and has earned an MBA with an emphasis in finance and accounting from the University of Chicago Graduate School of Business. Mr. Brundige is a Chartered Financial Analyst.

Ivy Funds VIP International Value: Edgerton Tucker Scott III is primarily responsible for the day-to-day management of Ivy Funds VIP International Value and has held his responsibilities for Ivy Funds VIP International Value since its inception in September 2003. Mr. Scott is an Executive Vice President and Research Analyst of Templeton and of TGAL. He served as the portfolio manager for International Stock Portfolio of Advantus Series Fund, Inc., the predecessor of Ivy Funds VIP International Value, since February 2000. Mr. Scott has been with Templeton and its affiliates since September 1996. He earned a BA from the University of Virginia and a MBA from Amos Tuck School of Business at Dartmouth College. Mr. Scott is a Chartered Financial Analyst.

Ivy Funds VIP Micro Cap Growth: The WSA Investment Team is primarily responsible for the day-to-day management of Ivy Funds VIP Micro Cap Growth. The WSA Investment Team consists of William Jeffery III, Kenneth F. McCain, Paul J. Ariano, Paul K. LeCoq and Carl Wiese. Messrs. Jeffery and McCain are the Founding Principals of WSA and have held their responsibilities for the Portfolio since the inception of the predecessor fund in October 1997. They have worked together managing smaller capitalization growth equities for 33 years. Mr. Jeffery earned both a BA in Finance and an MBA from the University of Michigan. Mr. McCain earned a BA in Political Science and an MBA in Finance from the San Diego State University. Messrs. Ariano, Wiese and LeCoq each assumed their management responsibilities for the Portfolio in January 2005. Mr. Ariano joined the firm in 1995 as an analyst and has been co-managing portfolios with Mr. Jeffery for the last several years. Mr. Ariano earned a BBA, Business Administration from the University of San Diego, and an MS in Finance from San Diego State University. Mr. Ariano is a CFA Charter holder. Mr. Wiese joined the firm in 2000. He earned a BA in Business Administration from the University of San Diego, and an MS in Finance from San Diego State University. Mr. Wiese is a CFA Charter holder. Mr. LeCoq joined the firm in 1999. He earned a BA in Economics from Pacific Lutheran University and an MBA in Finance from the University of Chicago.

Ivy Funds VIP Mid Cap Growth: Kimberly A. Scott is primarily responsible for the day-to-day management of Ivy Funds VIP Mid Cap Growth. She has managed Ivy Funds VIP Mid Cap Growth since its inception in April 2005. Ms. Scott is Senior Vice President of WRIMCO and IICO, Vice President of the Trust and Vice President of other investment companies for which WRIMCO or IICO serves as investment manager. Ms. Scott has served as a portfolio manager for investment companies managed by WRIMCO since February 2001. She served as an investment analyst with WRIMCO from April 1999 to February 2001. She earned a BS degree in microbiology from the University of Kansas, and holds an MBA from the University of Cincinnati. Ms. Scott is a Chartered Financial Analyst.

Ivy Funds VIP Money Market: Mira Stevovich is primarily responsible for the day-to-day management of Ivy Funds VIP Money Market. Ms. Stevovich has held her responsibilities for Ivy Funds VIP Money Market since May 1998. She is Vice President of WRIMCO and IICO, Vice President and Assistant Treasurer of the Trust and Vice President and Assistant Treasurer of other investment companies for which WRIMCO or IICO serves as investment manager. Ms. Stevovich has been an employee of WRIMCO and its predecessor since March 1987. She earned a BA degree from Colorado Womens College. Ms. Stevovich holds an MA degree in Soviet and East European Studies and an MBA degree from the University of Kansas. She is a Chartered Financial Analyst.

Ivy Funds VIP Mortgage Securities: Christopher R. Sebald and David Land are primarily responsible for the day-to-day management of Ivy Funds VIP Mortgage Securities. Mr. Sebald has held his responsibilities for Ivy Funds VIP Mortgage Securities since the inception of the Portfolio in May 2004. He has been the Executive Vice President and Chief Investment Officer of Advantus since July, 2007. Mr. Sebald had served as Senior Vice President and Lead Portfolio Manager, Total Return Fixed Income, Advantus Capital, since August 2003. Mr. Sebald had served as Senior Vice President and Portfolio Manager for AEGON USA Investment Management from July 2000 through July 2003.

David Land has held his responsibilities for Ivy Funds VIP Mortgage Securities since the inception of the Portfolio in May 2004. As a member of the Advantus Capital Management Fixed Income Total Return Group, Mr. Land is responsible for the mortgage-backed and asset-backed security portfolios and also contributes to the performance of the aggregate bond portfolios. Mr. Land was Senior Analyst at AXA Investment Managers North America, Inc. from August 2003 to April 2004. He served as Senior Investment Officer of Advantus Capital from July 2000 to July 2003. He is a Chartered Financial Analyst.

Ivy Funds VIP Real Estate Securities: Joseph R. Betlej and Lowell R. Bolken are primarily responsible for the day-to-day management of Ivy Funds VIP Real Estate Securities. Mr. Betlej has held his responsibilities for Ivy Funds VIP Real Estate Securities since the inception of the Portfolio in May 2004. He is Vice President and Investment Officer of Advantus Capital, and has been with Advantus Capital since 1987. Mr. Betlej earned a BA in Architecture from the University of Minnesota and a MS in Real Estate Appraisal and Investment Analysis from the University of Wisconsin at Madison. He is a Chartered Financial Analyst.

Mr. Bolken has held his responsibilities for Ivy Funds VIP Real Estate Securities since April 2006. He has been an Associate Portfolio Manager with Advantus Capital since September 2005. From April 2001 to September 2005, he was Managing Director and Manager, Corporate Bond Research, Dain Rauscher, Inc.

Ivy Funds VIP Science and Technology: Zachary H. Shafran is primarily responsible for the day-to-day management of Ivy Funds VIP Science and Technology. Mr. Shafran has held his responsibilities for Ivy Funds VIP Science and Technology since February 2001. He is Senior Vice President of WRIMCO and IICO, Vice President of the Trust and Vice President of other investment companies for which WRIMCO or IICO serves as investment manager. Mr. Shafran has served as the portfolio manager for investment companies managed by WRIMCO or IICO since January 1996. He served as an investment analyst with WRIMCO and its predecessor from June 1990 to January 1996. Mr. Shafran earned a BSBA degree in Business and an MBA in Business from the University of Missouri at Kansas City.

Ivy Funds VIP Small Cap Growth: Kenneth G. McQuade is primarily responsible for the day-to-day management of Ivy Funds VIP Small Cap Growth. Mr. McQuade has held his responsibilities for Ivy Funds VIP Small Cap Growth since March 2006. Mr. McQuade joined Waddell & Reed in 1997 as an investment analyst. He has been an assistant portfolio manager of separately managed small cap accounts since August 2003, and continues with these responsibilities in addition to his day-to-day management of the Ivy Funds VIP Small Cap Growth. Mr. McQuade is Vice President of WRIMCO and IICO, and Vice President of the Trust. He earned a BS degree in finance from Bradley University.

Ivy Funds VIP Small Cap Value: Timothy J. Miller is primarily responsible for the day-to-day management of Ivy Funds VIP Small Cap Value. Mr. Miller has held his responsibilities since March 24, 2008, when WRIMCO assumed direct investment management responsibilities for the Portfolio from BlackRock Capital Management, Inc., the Portfolio's former investment subadvisor. Mr. Miller joined WRIMCO and IICO in February 2008. Previous employment included serving as the primary portfolio manager of the Invesco Dynamics Fund from December 1993 through mid-2004, as the Chief Investment Officer of Invesco Funds Group, Inc. from July 2000 until July 2003, and as the Chief Investment Officer of the Denver Investment Center of Invesco North America from July 2003 until May 2004. Since May 2004, Mr. Miller has served on the Board of Trustees and the Finance Committee of Escuela de Guadalupe, a dual-language, kindergarten through fifth grade school serving children from low-income communities in Denver, Colorado, and has served on the Investment Committee of Regis Jesuit High School in Denver, Colorado, helping the school manage its endowment funds. Mr. Miller holds an M.B.A. from the University of Missouri-St. Louis and a B.S.B.A. from St. Louis University. He is a CFA Charter holder.

Ivy Funds VIP Value: Matthew T. Norris is primarily responsible for the day-to-day management of Ivy Funds VIP Value. He has held his responsibilities for Ivy Funds VIP Value since July 2003. Mr. Norris is the Director of Research and a Senior Vice President of WRIMCO and IICO, Vice President of the Trust, and Vice President of other investment companies for which WRIMCO or IICO serves as investment manager. From January 2000 to June 2003, Mr. Norris was a Portfolio Manager for Advantus Capital. He joined Advantus Capital in December 1997, first serving as an Analyst and later as a Senior Analyst. He earned a BS degree from the University of Kansas, and an MBA from the University of Nebraska-Omaha. Mr. Norris is a Chartered Financial Analyst.

Ivy Funds VIP Pathfinder Aggressive, Ivy Funds VIP Pathfinder Moderately Aggressive, Ivy Funds VIP Pathfinder Moderate, Ivy Funds VIP Pathfinder Moderately Conservative and Ivy Funds VIP Pathfinder Conservative: Michael L. Avery is primarily responsible for the day-to-day management of each of the Pathfinder Portfolios and has held his responsibilities since the inception of each Pathfinder Portfolio. Mr. Avery is also a portfolio manager for Ivy Funds VIP Asset Strategy, and his biographical information is listed in the disclosure for Ivy Funds VIP Asset Strategy.

Additional information regarding the portfolio managers, including information about the portfolio managers' compensation, other accounts managed by the portfolio mangers and the portfolio managers' ownership of securities, is included in the SAI.

Other members of WRIMCO's investment management department provide input on market outlook, economic conditions, investment research and other considerations relating to the investments of the Portfolios.

Management and Other Fees

Like all mutual funds, the Portfolios pay fees related to their daily operations. Expenses paid out of each Portfolio's assets are reflected in its share price or dividends; they are neither billed directly to shareholders nor deducted from shareholder accounts.

Each Portfolio (except for the Pathfinder Portfolios) pays a management fee to WRIMCO for providing investment advice and supervising its investments. No management fees are charged by WRIMCO for managing the investments of the Pathfinder Portfolios. Each Portfolio also pays other expenses, which are explained in the SAI.

The management fee is payable at the annual rates of:

Ivy Funds VIP Money Market: 0.40% of net assets.

Ivy Funds VIP Mortgage Securities: 0.50% of net assets up to $500 million, 0.45% of net assets over $500 million and up to $1 billion, 0.40% of net assets over $1 billion and up to $1.5 billion, and 0.35% of net assets over $1.5 billion.

Ivy Funds VIP Bond: Effective August 6, 2007: 0.475% of net assets up to $1 billion, 0.45% of net assets over $1 billion and up to $1.5 billion, and 0.40% of net assets over $1.5 billion.

Ivy Funds VIP High Income: 0.625% of net assets up to $500 million, 0.60% of net assets over $500 million and up to $1 billion, 0.55% of net assets over $1 billion and up to $1.5 billion, and 0.50% of net assets over $1.5 billion.

Ivy Funds VIP Asset Strategy, Ivy Funds VIP Balanced, Ivy Funds VIP Core Equity, Ivy Funds VIP Dividend Opportunities, Ivy Funds VIP Growth and Ivy Funds VIP Value: 0.70% of net assets up to $1 billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3 billion.

Ivy Funds VIP Energy, Ivy Funds VIP International Growth, Ivy Funds VIP International Value, Ivy Funds VIP Mid Cap Growth, Ivy Funds VIP Science and Technology, Ivy Funds VIP Small Cap Growth and Ivy Funds VIP Small Cap Value: 0.85% of net assets up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion.

Ivy Funds VIP Real Estate Securities: 0.90% of net assets up to $1 billion, 0.87% of net assets over $1 billion and up to $2 billion, 0.84% of net assets over $2 billion and up to $3 billion, and 0.80% of net assets over $3 billion.

Ivy Funds VIP Micro Cap Growth: 0.95% of net assets up to $1 billion, 0.93% of net assets over $1 billion and up to $2 billion, 0.90% of net assets over $2 billion and up to $3 billion, and 0.86% of net assets over $3 billion.

Ivy Funds VIP Global Natural Resources: 1.00% of net assets up to $500 million, 0.85% of net assets over $500 million and up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion.

Effective October 1, 2006, and at least through September 30, 2016, the investment management fee rates for certain Portfolios are reduced pursuant to a management fee waiver as follows:

Ivy Funds VIP Bond (prior to August 6, 2007): 0.485% of net assets up to $500 million, 0.50% of net assets over $500 million and up to $1 billion, 0.45% of net assets over $1 billion and up to $1.5 billion, and 0.40% of net assets over $1.5 billion.

Ivy Funds VIP High Income: 0.575% of net assets up to $500 million, 0.60% of net assets over $500 million and up to $1 billion, 0.55% of net assets over $1 billion and up to $1.5 billion, and 0.50% of net assets over $1.5 billion.

Ivy Funds VIP Asset Strategy and Ivy Funds VIP Value: 0.69% of net assets up to $1 billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3 billion.

Ivy Funds VIP Core Equity: 0.65% of net assets up to $1 billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3 billion.

Ivy Funds VIP Growth: 0.67% of net assets up to $1 billion, 0.65% of net assets over $1 billion and up to $2 billion, 0.60% of net assets over $2 billion and up to $3 billion, and 0.55% of net assets over $3 billion.

Ivy Funds VIP International Growth: 0.82% of net assets up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion.

Ivy Funds VIP Mid Cap Growth, Ivy Funds VIP Science and Technology and Ivy Funds VIP Small Cap Growth: 0.83% of net assets up to $1 billion, 0.83% of net assets over $1 billion and up to $2 billion, 0.80% of net assets over $2 billion and up to $3 billion, and 0.76% of net assets over $3 billion.

WRIMCO uses a portion of the management fees it receives from a Portfolio to pay that Portfolio's investment subadvisor, as applicable.

For the fiscal year ended December 31, 2008, management fees for each Portfolio as a percent of each such Portfolio's average net assets are as follows:

	Management Fees Paid
Ivy Funds VIP Asset Strategy	0.69%
Ivy Funds VIP Balanced	0.70%
Ivy Funds VIP Bond	0.47%
Ivy Funds VIP Core Equity	0.65%
Ivy Funds VIP Dividend Opportunities	0.70%
Ivy Funds VIP Energy	0.68%*
Ivy Funds VIP Global Natural Resources	1.00%
Ivy Funds VIP Growth	0.67%
Ivy Funds VIP High Income	0.58%
Ivy Funds VIP International Growth	0.82%
Ivy Funds VIP International Value	0.85%
Ivy Funds VIP Micro Cap Growth	0.95%
Ivy Funds VIP Mid Cap Growth	0.85%
Ivy Funds VIP Money Market	0.40%
Ivy Funds VIP Mortgage Securities	0.50%
Ivy Funds VIP Real Estate Securities	0.90%
Ivy Funds VIP Science and Technology	0.83%
Ivy Funds VIP Small Cap Growth	0.83%
Ivy Funds VIP Small Cap Value	0.85%
Ivy Funds VIP Value	0.69%

*For Portfolios managed solely by WRIMCO, WRIMCO has voluntarily agreed to waive its management fee for any day that a portfolio's net assets are less than $25 million, subject to WRIMCO's right to change or modify this waiver.

A discussion regarding the basis of the approval by the Board of Trustees of the advisory contract of each of the Portfolios is available in the Trust's Annual Report to Shareholders for the period ended December 31, 2008.

The Trust has adopted a Service Plan (Plan) pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, each Portfolio (except for Ivy Funds VIP Money Market and the Pathfinder Portfolios) may pay daily a fee to Waddell & Reed, Inc. (Waddell & Reed), an affiliate of WRIMCO and the Trust's principal underwriter, in an amount not to exceed 0.25% of the Portfolio's average annual net assets. The fee is to be paid to compensate Waddell & Reed and unaffiliated third parties for amounts expended in connection with the provision of personal services to Policyowners. These fees are paid out of the Portfolio's assets on an on-going basis, and over time, these fees will increase the cost of the investment and may cost you more than paying other types of sales charges.

In addition to commissions, Nationwide Life Insurance Company and Minnesota Life Insurance Company each pay Waddell & Reed a marketing allowance in an amount equal to 0.25% annually of the average daily account value of all variable annuity assets for products distributed by Waddell & Reed. The marketing allowance is paid to Waddell & Reed by Nationwide on a monthly basis and by Minnesota Life on a quarterly basis.

Regulatory Matters

On July 24, 2006, WRIMCO, Waddell & Reed, Inc. and Waddell & Reed Services Company (WRSCO) (collectively, W&R) reached a settlement with each of the SEC, the New York Attorney General (NYAG) and the Securities Commissioner of the State of Kansas to resolve proceedings brought by each regulator in connection with its investigation of frequent trading and market timing in certain funds within Waddell & Reed Advisors Funds.^*

Under the terms of the SEC's cease-and desist order (SEC Order), pursuant to which W&R neither admitted nor denied any of the findings contained therein, among other provisions W&R has agreed to: pay $40 million in disgorgement and $10 million in civil money penalties; cease and desist from violations of the antifraud provisions and certain other provisions of the Federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to periodically review W&R's supervisory, compliance, control and other policies and procedures; and retain an independent distribution consultant (described below). According to the SEC Order, the SEC found that some market timers made profits in some of the funds within Waddell & Reed Advisors Funds, and that this may have caused some dilution in those funds. Also, the SEC found that W&R failed to make certain disclosures to Waddell & Reed Advisors Funds' Board of Trustees and shareholders regarding the market timing activity and W&R's acceptance of service fees from some market timers.

The Assurance of Discontinuance with the NYAG (NYAG Settlement), pursuant to which W&R neither admitted nor denied any of the findings contained therein, among its conditions requires that W&R: reduce the aggregate investment management fees paid by the funds within Waddell & Reed Advisors Funds and by the Trust (the Affected Funds) by $5 million per year for five years, for a projected total of $25 million in investment management fee reductions (please see footnote 1 to the applicable Portfolios' Fees and Expenses tables); bear the costs of an independent fee consultant to be retained by the Affected Funds' Disinterested Trustees to review and consult regarding the Affected Funds' investment management fee arrangements; and make additional investment management fee-related disclosures to Affected Fund shareholders. The NYAG Settlement also effectively requires that the Affected Funds implement certain governance measures designed to maintain the independence of the Affected Funds' Boards of Trustees and appoint an independent compliance consultant responsible for monitoring the Affected Funds' and WRIMCO's compliance with applicable laws.

The consent order issued by the Securities Commissioner of the State of Kansas (Kansas Order), pursuant to which W&R neither admitted nor denied any of the findings contained therein, requires W&R to pay a fine of $2 million to the Office of the Commissioner.

The SEC Order further requires that the $50 million in settlement amounts described above will be distributed in accordance with a distribution plan developed by an independent distribution consultant, in consultation with W&R, and that is agreed to by the SEC staff and the Affected Funds' Disinterested Trustees. The SEC Order requires that the independent distribution consultant develop a methodology and distribution plan pursuant to which Affected Fund shareholders shall receive their proportionate share of losses, if any, suffered by the Affected Funds due to market timing. Therefore, it is not currently possible to specify which particular Affected Fund shareholders or groups of Affected Fund shareholders will receive distributions of those settlement monies or in what proportion and amounts. However, as noted above, the SEC Order makes certain findings with respect to market timing activities in some of the funds within Waddell & Reed Advisors Funds only. Accordingly, it is not expected that shareholders of the Trust will receive distributions of settlement monies.

The foregoing is only a summary of the SEC Order, NYAG Settlement and Kansas Order. A copy of the SEC Order is available on the SEC's website at http://www.sec.gov. A copy of the SEC Order, NYAG Settlement and Kansas Order is available as part of the Waddell & Reed Financial, Inc. Form 8-K as filed on July 24, 2006.

^*In the "Regulatory Matters" section: any reference to the funds within Waddell & Reed Advisors Funds means the corporate entities (or series thereof) to which such funds are the successors; any reference to the Trust means W&R Target Funds, Inc., which changed its name to Ivy Funds Variable Insurance Portfolios, Inc., to which the Trust is the successor; and any reference to a Board of Trustees or the Trustees means the Board of Directors or the Directors, as applicable, of the respective predecessor entities of Waddell & Reed Advisors Funds and the Trust.

BUYING AND SELLING PORTFOLIO SHARES

__________________________________________________________________________________

WHO CAN BUY SHARES OF THE PORTFOLIOS

Shares of the Portfolios are currently sold to Variable Accounts of Participating Insurance Companies to fund benefits payable under the Policies under the Trust's "Mixed and Shared" Exemptive Order (Order). Permitting both variable life insurance separate accounts and variable annuity separate accounts to invest in the same Portfolios is known as "mixed funding." Shares of the Portfolios are not sold to individual investors.

The Variable Accounts purchase shares of a Portfolio in accordance with Variable Account allocation instructions received from Policyowners. A Portfolio then uses the proceeds to buy securities for its portfolio.

Because Policies may have different provisions with respect to the timing and method of purchases and exchanges, Policyowners should contact their Participating Insurance Company directly for details concerning these transactions.

Please check with the Participating Insurance Company to determine if a Portfolio is available under your Policy. This Prospectus should be read in conjunction with the prospectus of the separate account of your specific Policy.

The Portfolios currently do not foresee any disadvantages to Policyowners arising out of the fact that the Portfolios may offer their shares to the Variable Accounts of various Participating Insurance Companies to fund benefits of their Policies. Nevertheless, as a condition of the Trust's Order, the Trust's Board of Trustees will monitor events in order to identify any material irreconcilable conflicts which may arise (such as those arising from tax or other differences), and to determine what action, if any, should be taken in response to such conflicts. If such a conflict were to occur, one or more Participating Insurance Companies' Variable Accounts might be required to withdraw their investments in one or more of the Portfolios and shares of another fund may be substituted. This might force a Portfolio to sell its securities at disadvantageous prices.

The principal underwriter of the Portfolios is Waddell & Reed.

Purchase Price

The purchase price of each share of a Portfolio is its NAV next determined after the order is received in good order by the Portfolio or its agent. No sales charge is imposed on the purchase of a Portfolio's shares; however, your Policy may impose a sales charge. The NAV for a share of a Portfolio is determined by dividing the total market value of the securities and other assets of a Portfolio, less the liabilities of the Portfolio, by the total number of outstanding shares of the Portfolio. In general, NAV is determined at the close of regular trading on the New York Stock Exchange (NYSE), normally 4 p.m. Eastern Time, on each day the NYSE is open for trading. Each Portfolio may reject any order to buy shares and may suspend the sale of shares at any time.

Net Asset Value

In the calculation of a Portfolio's NAV:

• The securities held by the Portfolio that are traded on an exchange are ordinarily valued at the last sale price prior to the time of valuation.
• Stocks that are traded over-the-counter are valued using the National Association of Securities Dealers Automated Quotations (NASDAQ) Official Closing Price (NOCP), as determined by NASDAQ, or, lacking an NOCP, the last current reported sales prices as of the time of valuation on NASDAQ or, lacking any current reported sales on NASDAQ, at the time of valuation at the average of the last bid and asked prices.
• Bonds (other than convertible bonds), municipal bonds, U.S. government securities, mortgage-backed securities and swap agreements are ordinarily valued according to prices quoted by an independent pricing service.
• Convertible bonds are ordinarily valued at the last sale price prior to the time of valuation or, if none is reported, by an independent pricing service.
• Short-term debt securities are valued at amortized cost, which approximates market value.
• Other investment assets for which market prices are unavailable or not reflective of current market value are valued at their fair value by or at the direction of the Trust's Board of Trustees, as discussed below.

In the calculation of the NAV of a Pathfinder Portfolio, the shares of the Underlying Funds held by the Pathfinder Portfolio are valued at their respective NAVs per share.

The NAV per share of each Portfolio is normally computed daily as of the close of business of the NYSE, normally 4 p.m. Eastern time, except that an option or futures contract held by a Portfolio may be priced at the close of the regular session of any other securities or commodities exchange on which that instrument is traded. Ivy Funds VIP Money Market uses the amortized cost method for valuing its portfolio securities. You will find more information in the SAI about this method.

As noted in this Prospectus, certain Portfolios may invest in securities listed on foreign exchanges, or otherwise traded in a foreign market, which may trade on Saturdays or on U.S. national business holidays when the NYSE is closed. Consequently, the NAV of a Portfolio's shares may be significantly affected on days when the Portfolio does not price its shares and when you are not able to purchase or redeem the Portfolio's shares.

When a Portfolio believes a reported market price for a security does not reflect the amount the Portfolio would receive on a current sale of that security, the Portfolio may substitute for the market price a fair-value estimate made according to procedures approved by the Trust's Board of Trustees. A Portfolio also may use these procedures to value certain types of illiquid securities. In addition, fair value pricing generally will be used by a Portfolio if the exchange on which a security is traded closes early or if trading in a particular security is halted during the day and does not resume prior to the time the Portfolio's NAV is calculated.

A Portfolio also may use these methods to value securities that trade in a foreign market if a significant event that appears likely to materially affect the value of foreign investments or foreign currency exchange rates occurs between the time that foreign market closes and the time the NYSE closes. Some Portfolios, such as Ivy Funds VIP Global Natural Resources, Ivy Funds VIP International Growth and Ivy Funds VIP International Value, which may invest a significant portion of their assets in foreign securities, also may be susceptible to a time zone arbitrage strategy in which shareholders attempt to take advantage of Portfolio share prices that may not reflect developments in foreign securities markets that occurred after the close of such market but prior to the pricing of Portfolio shares. In that case, such investments or exchange rates may be valued at their fair values as determined according to the procedures approved by the Trust's Board of Trustees. Significant events include, but are not limited to, (1) those impacting a single issuer, (2) governmental actions that affect securities in one sector, country or region, (3) natural disasters or armed conflicts affecting a country or region, and (4) significant domestic or foreign market fluctuation. WRIMCO has retained a third-party pricing service (the Service) to assist in valuing foreign securities, if any, held by the Portfolios. The Service conducts a screening process to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. For foreign securities where WRSCO, each Portfolio's transfer agent, in accordance with guidelines adopted by the Trust's Board of Trustees, believes, at the approved degree of certainty, that the price is not reflective of current market price, WRSCO may use the indication of fair value from the Service to determine the fair value of the security. The Service, the methodology or the degree of certainty may change from time to time. The Trust's Board of Trustees regularly reviews, and WRSCO regularly monitors and reports to the board, the Service's pricing of the Portfolio's foreign securities, as applicable.

Fair valuation has the effect of updating security prices to reflect market value based on, among other things, the recognition of a significant event -- thus potentially alleviating arbitrage opportunities with respect to Portfolio shares. Another effect of fair valuation on a Portfolio is that the Portfolio's NAV will be subject, in part, to the judgment of the Trust's Board of Trustees or its designee instead of being determined directly by market prices. When fair value pricing is applied, the prices of securities used by a Portfolio to calculate its NAV may differ from quoted or published prices for the same securities, and therefore, a Portfolio purchasing or redeeming shares on a particular day might pay or receive more or less than would be the case if a security were valued differently. It also may affect all shareholders in that if Portfolio assets were paid out differently due to fair value pricing, all shareholders will be impacted incrementally. There is no assurance, however, that fair value pricing will more accurately reflect the value of a security on a particular day than the market price of such security on that day or that it will prevent or alleviate the impact of market timing activities. For a description of market timing activities, please see "Market Timing Policy."

Selling Shares

Shares of the Portfolios may be sold (redeemed) at any time, subject to certain restrictions described below. The redemption price is the NAV per share next determined after the order is received in good order by the Portfolio or its agent. Of course, the value of the shares redeemed may be more or less that their original purchase price depending upon the market value of a Portfolio's investments at the time of the redemption.

Because Policies may have different provisions with respect to the timing and method of redemptions, Policyowners should contact their Participating Insurance Company directly for details concerning these transactions.

Redemptions are made at the NAV per share of the Portfolio next determined after receipt of the request to redeem from the Participating Insurance Company. Payment is generally made within seven days after receipt of a proper request to redeem. No fee is charged to shareholders upon redemption of Portfolio shares. The Trust may suspend the right of redemption of shares of any Portfolio and may postpone payment for any period if any of the following conditions exist:

• the NYSE is closed other than customary weekend and holiday closings or trading on the NYSE is restricted
• the SEC has determined that a state of emergency exists which may make payment or transfer not reasonably practicable
• the SEC has permitted suspension of the right of redemption of shares for the protection of the security holders of the Trust
• applicable laws and regulations otherwise permit the Trust to suspend payment on the redemption of shares

Redemptions are ordinarily made in cash.

Except as otherwise noted, and via the Participating Insurance Company, a Policyowner may indirectly sell shares and buy shares of another Portfolio within the Trust, also known as a transfer or an exchange privilege.

Market Timing Policy

The Portfolios are intended for long-term investment purposes. The Trust and/or the Participating Insurance Companies will take steps to seek to deter frequent purchases and redemptions in Portfolio shares (market timing activities). Market timing activities, especially those involving large dollar amounts, may disrupt portfolio investment strategies and may increase expenses and negatively impact investment returns for all Portfolio shareholders, including long-term shareholders. Market timing activities also may increase the expenses of WRSCO and/or Waddell & Reed, thereby indirectly affecting the Portfolio's shareholders.

Certain Portfolios may be more attractive to investors seeking to engage in market timing activities. For example, to the extent that a Portfolio, such as Ivy Funds VIP Global Natural Resources, Ivy Funds VIP International Growth or Ivy Funds VIP International Value, invests a significant portion of its assets in foreign securities, the Portfolio may be susceptible to a time zone arbitrage strategy in which investors seek to take advantage of Portfolio share prices that may not reflect developments in foreign securities markets that occurred after the close of such market but prior to the pricing of Portfolio shares. A Portfolio that invests in securities that are, among other things, thinly traded or traded infrequently is susceptible to the risk that the current market price for such securities may not accurately reflect current market values. An investor may seek to engage in short-term trading to take advantage of these pricing differences (commonly referred to as price arbitrage). Price arbitrage is more likely to occur in a Portfolio that invests a significant portion of its assets in small cap companies, such as Ivy Funds VIP Micro Cap Growth, Ivy Funds VIP Small Cap Growth or Ivy Funds VIP Small Cap Value, or in a Portfolio that invests a significant portion of its assets in high-yield fixed income securities, such as Ivy Funds VIP High Income.

To discourage market timing activities by investors, the Trust's Board of Trustees has adopted a market timing policy and has approved the procedures of WRSCO, the Portfolios' transfer agent, for implementing this policy. WRSCO's procedures reflect the criteria that it has developed for purposes of identifying trading activity in Portfolio shares that may be indicative of market timing activities and outline how WRSCO will monitor transactions in Portfolio shares. In its monitoring of trading activity in Portfolio shares, on a periodic basis, WRSCO typically reviews Portfolio share transactions that exceed certain monetary thresholds and/or numerical transaction limits within a particular time period. In its attempt to identify market timing activities, WRSCO considers many factors, including (but not limited to) the frequency, size and/or timing of the investor's transactions in Portfolio shares. If WRSCO identifies what it believes to be market timing activities, WRSCO and/or Waddell & Reed will coordinate with the applicable Participating Insurance Company so that it may notify the investors involved, reject or restrict a purchase or exchange order and/or prohibit those investors from making further purchases of Portfolio shares. The Portfolios also may restrict their exchange privileges in order to protect Portfolio shareholders. Transactions placed in violation of a Portfolio's market timing policy are not deemed accepted by the Portfolio and may be cancelled or revoked by the Portfolio on the next business day following receipt by the Portfolio.

Due to the complexity and subjectivity involved in identifying market timing activities and the volume of shareholder transactions that WRSCO processes, there can be no assurance that the Portfolios' and WRSCO's policies and procedures will identify all trades or trading practices that may be considered market timing activity. WRSCO may modify its procedures for implementing the Portfolios' market timing policy and/or its monitoring criteria at any time without prior notice. The Portfolios, WRSCO and/or Waddell & Reed shall not be liable for any loss resulting from rejected purchase orders or exchanges.

A Portfolio seeks to apply its market timing policy uniformly to all shareholders and prospective investors. Although the Portfolios, Waddell & Reed and WRSCO make efforts to monitor for market timing activities and will seek the assistance of the Participating Insurance Companies through which Portfolio shares are purchased or held, the Portfolios cannot always identify or detect excessive trading that may be facilitated by a Participating Insurance Company or made difficult to identify by the use of omnibus accounts by the Participating Insurance Companies, mainly due to the fact that the Participating Insurance Companies maintain the underlying Policyowner account, and the Portfolio must analyze omnibus account level activity and then request additional shareholder level activity on the underlying investors where omnibus account level activity warrants further review. Accordingly, there can be no assurance that the Portfolios will be able to eliminate all market timing activities.

Apart from actions taken by a Portfolio, Policyowners also may be subject to restrictions imposed under their Policies with respect to short-term trading and the trading restrictions imposed by the Participating Insurance Companies that maintain the underlying account(s).

A Portfolio's market timing policy, in conjunction with the use of fair value pricing, is intended to reduce a Policyowner's ability to engage in market timing activities, although there can be no assurance that a Portfolio will eliminate market timing activities.

Additional Compensation to Intermediaries

Waddell & Reed and/or its affiliates (collectively, W&R) may make payments for marketing, promotional or related services by:

• Participating Insurance Companies for whose Policies the Portfolios are underlying investment options or
• broker-dealers and other financial intermediaries that sell Policies that include the Portfolios as underlying investment options.

These payments are often referred to as "revenue sharing payments." The level of such payments may be based on factors that include, without limitation, differing levels or types of services provided by the insurance company, broker-dealer or other financial intermediary, the expected level of assets or sales of shares, the placing of some or all of the Portfolios on a recommended or preferred list, access to an intermediary's personnel and other factors. Revenue sharing payments are paid from W&R's own legitimate profits and may be in addition to any Rule 12b-1 payments, if applicable, that are paid by the Portfolios. Because revenue sharing payments are paid by W&R, and not from the Portfolios' assets, the amount of any revenue sharing payments is determined by W&R.

In addition to the revenue sharing payments described above, W&R may offer other incentives to sell Policies for which the Portfolios are investment options in the form of sponsorship of educational or other client seminars relating to current products and issues, assistance in training or educating an intermediary's personnel, and/or entertainment or meals.

The recipients of such incentives may include:

• financial advisors affiliated with W&R;
• broker-dealers and other financial intermediaries that sell such Policies and
• insurance companies that include shares of the Portfolios as underlying investment options.

Payments may be based on current or past sales of Policies investing in shares of the Portfolios, current or historical assets, or a flat fee for specific services provided. In some circumstances, such payments may create an incentive for a Participating Insurance Company or intermediary or their employees or associated persons to recommend a particular Policy for which the Portfolios are underlying investment options instead of recommending options offered by competing insurance companies.

In addition, W&R may compensate Participating Insurance Companies for administrative and shareholder services provided to Policyowners.

Notwithstanding the additional compensation described above, WRIMCO and all subadvisers to the Portfolios are prohibited from considering a broker-dealer's sale of any of the Portfolios' shares, or the inclusion of the Portfolios in a Policy provided by an insurance affiliate of the broker-dealer, in selecting such broker-dealer for execution of Portfolio transactions.

Portfolio transactions nevertheless may be executed with broker-dealers who coincidentally may have assisted customers in the purchase of Policies for which the Portfolios are underlying investment options, issued by Participating Insurance Companies, although neither such assistance nor the volume of shares sold of the Portfolios or any affiliated investment company is a qualifying or disqualifying factor in WRIMCO's or a subadvisor's selection of such broker-dealer for portfolio transaction execution.

The Participating Insurance Company that provides your Policy also may provide similar compensation to broker-dealers and other financial intermediaries in order to promote the sale of such Policies. Contact your insurance provider and/or financial intermediary for details about revenue sharing payments it may pay or receive.

DISTRIBUTIONS AND TAXES

__________________________________________________________________________________

DISTRIBUTIONS

Each Portfolio distributes substantially all of its net investment income and net capital gains each year.

Declared daily and paid monthly: Net investment income from Ivy Funds VIP Money Market

Declared and paid annually in May: Net investment income from all other Portfolios and net realized long-term and/or short-term capital gains from all Portfolios

Dividends declared for a particular day are paid to shareholders of record at the close of business on the prior business day. However, dividends declared for Saturday and Sunday are paid to shareholders of record at the close of business on the preceding Thursday (or Wednesday if that Thursday is not a business day). Dividends are paid in additional full and fractional shares of the distributing Portfolio. Ordinarily, dividends are paid on shares starting on the day after they are issued and through the day they are redeemed.

All distributions from net realized long-term and/or short-term capital gains, if any, of each Portfolio, other than Ivy Funds VIP Money Market, are declared and paid annually in May in additional full and fractional shares of the distributing Portfolio. Distributions of net realized short-term capital gains of Ivy Funds VIP Money Market (which does not anticipate realizing any long-term capital gains) are declared daily and paid monthly in additional full and fractional shares of that Portfolio.

Federal tax laws require a Portfolio to make distributions to its shareholders in order to qualify as a regulated investment company. Qualification as a regulated investment company means a Portfolio should not be subject to state or federal income tax on amounts distributed. The distributions generally consist of dividends and interest received by a Portfolio, as well as capital gains realized by a Portfolio on the sale of its investment securities.

TAXES

Each Portfolio is treated as a separate corporation, and intends to continue to qualify to be treated as a regulated investment company (RIC), for Federal tax purposes. A Portfolio will be so treated if it meets specified Federal income tax rules, including requirements regarding types of investments, limits on investments, types of income and distributions. A Portfolio that satisfies those requirements is not taxed at the entity level on the net income and gains it distributes to its shareholders.

It is important for each Portfolio to maintain its RIC status (and to satisfy certain other requirements), because the Portfolio shareholders, which are the Variable Accounts of the Participating Insurance Companies, will then be able to use a "look-through" rule in determining whether the Policies indirectly funded by the Portfolio meet the investment diversification rules that apply to those Accounts. If a Portfolio failed to meet those diversification rules, owners of Policies funded through the Portfolio would be taxed immediately on the accumulated investment earnings under their Policies and would lose any benefit of tax deferral. Accordingly, WRSCO monitors each Portfolio's compliance with the applicable RIC qualification and Variable Account diversification rules.

You will find additional information in the SAI about Federal income tax considerations generally affecting the Portfolios.

Because the only shareholders of the Portfolios are the Variable Accounts, no further discussion is included here as to the Federal income tax consequences to the Portfolios' shareholders. For information concerning the Federal tax consequences to Policyowners, see the applicable prospectus for your Policy. Prospective investors are urged to consult with their tax advisors.

Ivy Funds Variable Insurance Portfolios, Inc.^*
Financial Highlights

The following information is to help you understand the financial performance of each Portfolio's shares for the fiscal periods shown. Certain information reflects financial results for a single Portfolio share. Total return shows how much your investment would have increased (or decreased) during each period, assuming reinvestment of all dividends and other distributions. This information has been audited by Deloitte & Touche LLP, whose Report of Independent Registered Public Accounting Firm, along with each Portfolio's financial statements and financial highlights for the fiscal period ended December 31, 2008, is included in the Trust's Annual Report to Shareholders, which is available upon request.

^*Effective April 30, 2009, Ivy Funds Variable Insurance Portfolios, Inc. was reorganized into the Trust.

IVY FUNDS VIP ASSET STRATEGY
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			------------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$12.3237	$9.0016	$8.8625	$7.6926	$6.9237
			------------	----------	----------	----------	----------
Income (loss) from investment operations:
	Net investment income		0.1062	0.0932	0.0958	0.0836	0.0699
	Net realized and unrealized gain (loss)
		on investments	(3.2919)	3.8531	1.7042	1.7847	0.8508
			------------	----------	----------	----------	----------
Total from investment operations			(3.1857)	3.9463	1.8000	1.8683	0.9207
			------------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0495)	(0.0709)	(0.0354)	(0.0762)	(0.0990)
	Net realized gains		(0.8136)	(0.5533)	(1.6255)	(0.6222)	(0.0528)
			------------	----------	----------	----------	----------
Total distributions			(0.8631)	(0.6242)	(1.6609)	(0.6984)	(0.1518)
			----------	----------	----------	----------	----------
Net asset value,
	end of period		$ 8.2749	$12.3237	$9.0016	$8.8625	$7.6926
			======	======	======	======	======
Ratios/Supplemental Data
Total return			-25.79%	44.11%	20.15%	24.27%	13.30%
Net assets, end of period
	(in millions)		$678	$913	$602	$416	$282
Ratio of expenses to
	average net assets
	including expense waiver		1.04%	1.03%	1.02%	1.03%	1.06%
Ratio of net investment
	income to average net assets
	including expense waiver		1.02%	0.96%	1.16%	1.10%	1.02%
Ratio of expenses to
	average net assets
	excluding expense waiver		1.05%	1.04%	1.03%	1.03%1	1.06%1
Ratio of net investment
	income to average net assets
	excluding expense waiver		1.01%	0.95%	1.15%	1.10%1	1.02%1
Portfolio turnover rate			190%	98%	148%	79%	118%

¹There was no waiver of expenses during the period.

IVY FUNDS VIP BALANCED
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			------------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$9.7624	$8.7056	$7.9631	$7.6783	$7.1491
			-----------	----------	----------	----------	----------
Income (loss) from investment operations:
	Net investment income		0.1496	0.1388	0.1224	0.0999	0.1096
	Net realized and unrealized gain
		(loss) on investments	(2.1997)	1.0508	0.7704	0.2851	0.5292
			-----------	----------	----------	----------	----------
Total from investment operations			(2.0501)	1.1896	0.8928	0.3850	0.6388
			-----------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0096)	(0.1326)	(0.1207)	(0.1002)	(0.1096)
	Net realized gains		(0.0067)	(0.0002)	(0.0296)	(0.0000)	(0.0000)
			-----------	----------	----------	----------	----------
Total distributions			(0.0163)	(0.1328)	(0.1503)	(0.1002)	(0.1096)
			-----------	----------	----------	----------	----------
Net asset value,
	end of period		$7.6960	$9.7624	$8.7056	$7.9631	$7.6783
			======	======	======	======	======
Ratios/Supplemental Data
Total return			-21.00%	13.67%	11.21%	5.01%	8.93%
Net assets, end of period
	(in millions)		$378	$559	$565	$582	$628
Ratio of expenses to
	average net assets		1.01%	1.01%	1.01%	1.01%	1.02%
Ratio of net investment
	income to average
	net assets		1.53%	1.40%	1.37%	1.20%	1.45%
Portfolio turnover rate			19%	8%	28%	52%	39%

IVY FUNDS VIP BOND
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			------------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$5.3255	$5.2752	$5.2928	$5.4762	$5.5710
			-----------	----------	----------	----------	----------
Income (loss) from investment operations:
	Net investment income		0.2183	0.2428	0.2434	0.2356	0.2463
	Net realized and unrealized gain
		(loss) on investments	(0.2017)	0.0489	(0.0182)	(0.1464)	(0.0302)
			-----------	----------	----------	----------	----------
Total from investment operations			0.0166	0.2917	0.2252	0.0892	0.2161
			-----------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0049)	(0.2414)	(0.2411)	(0.2464)	(0.2463)
	Net realized gains		(0.0000)	(0.0000)	(0.0017)	(0.0262)	(0.0646)
			-----------	----------	----------	----------	----------
Total distributions			(0.0049)	(0.2414)	(0.2428)	(0.2726)	(0.3109)
			-----------	----------	----------	----------	----------
Net asset value,
	end of period		$5.3372	$5.3255	$5.2752	$5.2928	$5.4762
			======	======	======	======	======
Ratios/Supplemental Data
Total return			0.31%	5.67%	4.24%	1.61%	3.88%
Net assets, end of period
	(in millions)		$334	$296	$213	$212	$218
Ratio of expenses to
	average net assets
	including expense waiver		0.79%	0.82%	0.84%	0.86%	0.85%
Ratio of net investment
	income to average net assets
	including expense waiver		4.38%	4.57%	4.49%	4.17%	4.16%
Ratio of expenses to
	average net assets
	excluding expense waiver		0.79%1	0.85%	0.85%	0.86%1	0.85%1
Ratio of net investment
	income to average net assets
	excluding expense waiver		4.38%1	4.54%	4.48%	4.17%1	4.16%1
Portfolio turnover rate			29%	42%	54%	43%	47%

¹There was no waiver of expenses during the period.

IVY FUNDS VIP CORE EQUITY
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			-----------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$12.9583	$12.5485	$11.1221	$10.2369	$ 9.3996
			----------	----------	----------	----------	----------
Income (loss) from investment operations:
	Net investment income		0.0832	0.0977	0.0805	0.0358	0.0622
	Net realized and unrealized gain
		(loss) on investments	(4.6008)	1.6632	1.8084	0.8859	0.8373
			----------	----------	----------	----------	----------
Total from investment operations			(4.5176)	1.7609	1.8889	0.9217	0.8995
			----------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0203)	(0.0862)	(0.1093)	(0.0365)	(0.0622)
	Net realized gains		(0.3095)	(1.2649)	(0.3532)	(0.0000)	(0.0000)
			----------	----------	----------	----------	----------
Total distributions			(0.3298)	(1.3511)	(0.4625)	(0.0365)	(0.0622)
			----------	----------	----------	----------	----------
Net asset value,
	end of period		$ 8.1109	$12.9583	$12.5485	$11.1221	$10.2369
			=======	======	======	=======	=======
Ratios/Supplemental Data
Total return			-34.77%	14.03%	16.99%	9.01%	9.57%
Net assets, end of period
	(in millions)		$402	$746	$762	$723	$737
Ratio of expenses to
	average net assets
	including expense waiver		0.96%	0.96%	0.99%	1.01%	1.01%
Ratio of net investment
	income to average net assets
	including expense waiver		0.68%	0.68%	0.62%	0.32%	0.62%
Ratio of expenses to
	average net assets
	excluding expense waiver		1.01%	1.01%	1.00%	1.01%1	1.01%1
Ratio of net investment
	income to average net assets
	excluding expense waiver		0.63%	0.63%	0.61%	0.32%1	0.62%1
Portfolio turnover rate			105%	83%	103%	62%	54%

¹There was no waiver of expenses during the period.

IVY FUNDS VIP DIVIDEND OPPORTUNITIES
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			-----------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$8.0015	$6.9651	$6.1121	$5.4645	$5.0000
			----------	----------	---------	---------	----------
Income (loss) from investment operations:
	Net investment income		0.0391	0.0881	0.0857	0.0643	0.0337
	Net realized and unrealized gain (loss)
		on investments	(2.9133)	1.0765	0.8867	0.6476	0.4645
			----------	----------	---------	---------	---------
Total from investment operations			(2.8742)	1.1646	0.9724	0.7119	0.4982
			---------	----------	--------	---------	---------
Less distributions from:
	Net investment income		(0.0056)	(0.0675)	(0.0849)	(0.0643)	(0.0337)
	Net realized gains		(0.0103)	(0.0607)	(0.0345)	(0.0000)	(0.0000)
			----------	--------	---------	----------	----------
Total distributions			(0.0159)	(0.1282)	(0.1194)	(0.0643)	(0.0337)
			----------	----------	--------	---------	----------
Net asset value,
	end of period		$5.1114	$8.0015	$6.9651	$6.1121	$5.4645
			======	=======	=======	=======	======
Ratios/Supplemental Data
Total return			-35.91%	16.72%	15.91%	13.03%	9.96%
Net assets, end of period (in millions)			$123	$121	$81	$43	$17
Ratio of expenses to average net assets
	including expense waiver		1.07%	1.04%	1.07%	0.93%	0.76%
Ratio of net investment income to
	average net assets including
	expense waiver		0.92%	1.29%	1.63%	1.53%	2.08%
Ratio of expenses to average net assets
	excluding expense waiver		1.07%1	1.04%1	1.07%1	1.12%	1.46%
Ratio of net investment income to
	average net assets excluding
	expense waiver		0.92%1	1.29%1	1.63%1	1.34%	1.38%
Portfolio turnover rate			35%	17%	17%	22%	22%

¹There was no waiver of expenses during the period.

IVY FUNDS VIP ENERGY
(For a share outstanding throughout each period)
			For the		For the
			fiscal year		period from
			ended		5-1-061
			December 31,		through
			2008	2007	12-31-06
			--------------------------		--------------
Per-Share Data
Net asset value,
	beginning of period		$6.9732	$4.6351	$5.0000
			-----------	----------	----------
Income (loss) from investment operations:
	Net investment income (loss)		(0.0103)	0.0280	0.0248
	Net realized and unrealized gain (loss)
		on investments	(3.2080)	2.3497	(0.3654)
			---------	----------	----------
Total from investment operations			(3.2183)	2.3777	(0.3406)
			---------	----------	----------
Less distributions from:
	Net investment income		(0.0055)	(0.0209)	(0.0243)
	Net realized gains		(0.0060)	(0.0187)	(0.0000)
			---------	----------	----------
Total distributions			(0.0115)	(0.0396)	(0.0243)
			---------	----------	----------
Net asset value,
	end of period		$3.7434	$6.9732	$4.6351
			=======	======	======
Ratios/Supplemental Data
Total return			-46.15%	51.30%	-6.81%
Net assets, end of period (in millions)			$20	$26	$7
Ratio of expenses to average net assets
	including expense waiver		1.14%	0.52%	0.64%2
Ratio of net investment income to
	average net assets including
	expense waiver		-0.15%	0.78%	1.05%2
Ratio of expenses to average net assets
	excluding expense waiver		1.31%	1.32%	1.49%2
Ratio of net investment income to
	average net assets excluding
	expense waiver		-0.32%	-0.02%	0.20%2
Portfolio turnover rate			10%	13%	12%

¹Commencement of operations.

²Annualized.

IVY FUNDS VIP GLOBAL NATURAL RESOURCES
(For a share outstanding throughout each period)
						For the
						period from
			For the fiscal year			4-28-051
			ended December 31,			through
			2008	2007	2006	12-31-05
			---------------------------------------------			------------
Per-Share Data
Net asset value,
	beginning of period		$10.0838	$7.5711	$6.2719	$5.0000
			------------	-----------	-----------	-----------
Income (loss) from investment operations:
	Net investment income (loss)		0.0088	0.0148	0.0295	(0.0112)
	Net realized and unrealized gain (loss)
		on investments	(6.2310)	3.2797	1.5690	1.3132
			-----------	-----------	----------	-----------
Total from investment operations			(6.2222)	3.2945	1.5985	1.3020
			-----------	-----------	----------	-----------
Less distributions from:
	Net investment income		(0.1089)	(0.0022)	(0.0235)	(0.0000)
	Net realized gains		(0.4425)	(0.7796)	(0.2758)	(0.0301)
			-----------	-----------	-----------	------------
Total distributions			(0.5514)	(0.7818)	(0.2993)	(0.0301)
			-----------	-----------	-----------	-----------
Net asset value,
	end of period		$ 3.3102	$10.0838	$7.5711	$6.2719
			=======	=======	======	======
Ratios/Supplemental Data
Total return			-61.46%	43.50%	25.49%	26.04%
Net assets, end of period (in millions)			$69	$165	$90	$32
Ratio of expenses to average net assets			1.43%	1.38%	1.51%	2.17%2
Ratio of net investment income (loss) to
	average net assets		-0.08%	0.20%	0.53%	-0.60%2
Portfolio turnover rate			206%	122%	111%	66%

¹Commencement of operations.

²Annualized.

IVY FUNDS VIP GROWTH
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			-----------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$12.0237	$9.7813	$9.3125	$8.3728	$8.1267
			----------	----------	----------	----------	----------
Income (loss) from investment operations:
	Net investment income (loss)		0.0297	(0.0008)	(0.0001)	(0.0029)	0.0228
	Net realized and unrealized gain
		(loss) on investments	(4.3944)	2.5262	0.4689	0.9429	0.2460
			----------	----------	----------	----------	----------
Total from investment operations			(4.3647)	2.5254	0.4688	0.9400	0.2688
			----------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0000)	(0.0001)	(0.0000)	(0.0003)	(0.0227)
	Net realized gains		(0.1061)	(0.2829)	(0.0000)	(0.0000)	(0.0000)
			----------	----------	----------	----------	----------
Total distributions			(0.1061)	(0.2830)	(0.0000)	(0.0003)	(0.0227)
			----------	----------	----------	----------	----------
Net asset value,
	end of period		$ 7.5529	$12.0237	$9.7813	$9.3125	$8.3728
			======	======	======	======	======
Ratios/Supplemental Data
Total return			-36.27%	25.81%	5.04%	11.23%	3.31%
Net assets, end of period
	(in millions)		$757	$1,305	$1,177	$1,252	$1,252
Ratio of expenses to
	average net assets
	including expense waiver		0.97%	0.97%	0.99%	1.00%	1.00%
Ratio of net investment
	income (loss) to average net assets
	including expense waiver		0.29%	-0.01%	0.00%	-0.03%	0.27%
Ratio of expenses to
	average net assets
	excluding expense waiver		1.00%	0.99%	1.00%	1.00%1	1.00%1
Ratio of net investment
	income (loss) to average net assets
	excluding expense waiver		0.26%	-0.03%	-0.01%	-0.03%1	0.27%1
Portfolio turnover rate			53%	42%	67%	59%	81%

¹There was no waiver of expenses during the period.

IVY FUNDS VIP HIGH INCOME
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			-----------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$3.2031	$3.3398	$3.2521	$3.4276	$3.3375
			----------	----------	----------	----------	----------
Income (loss) from investment operations:
	Net investment income		0.2834	0.2717	0.2518	0.2626	0.2391
	Net realized and unrealized gain
		(loss) on investments	(0.9826)	(0.1440)	0.0827	(0.1749)	0.0901
			----------	----------	----------	----------	----------
Total from investment operations			(0.6992)	0.1277	0.3345	0.0877	0.3292
			----------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0198)	(0.2644)	(0.2468)	(0.2632)	(0.2391)
	Net realized gains		(0.0000)	(0.0000)	(0.0000)	(0.0000)	(0.0000)
			----------	----------	----------	----------	----------
Total distributions			(0.0198)	(0.2644)	(0.2468)	(0.2632)	(0.2391)
			----------	----------	----------	----------	----------
Net asset value,
	end of period		$2.4841	$3.2031	$3.3398	$3.2521	$3.4276
			======	======	======	======	======
Ratios/Supplemental Data
Total return			-21.82%	3.86%	10.27%	2.55%	9.86%
Net assets, end of period
	(in millions)		$147	$214	$204	$186	$190
Ratio of expenses to
	average net assets
	including expense waiver		0.91%	0.90%	0.94%	0.95%	0.96%
Ratio of net investment
	income to average net assets
	including expense waiver		8.72%	7.90%	7.48%	7.35%	7.13%
Ratio of expenses to
	average net assets
	excluding expense waiver		0.96%	0.95%	0.95%	0.95%1	0.96%1
Ratio of net investment
	income to average net assets
	excluding expense waiver		8.67%	7.85%	7.47%	7.35%1	7.13%1
Portfolio turnover rate			37%	74%	71%	54%	83%

¹There was no waiver of expenses during the period.

IVY FUNDS VIP INTERNATIONAL GROWTH
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			-----------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$10.7486	$9.1353	$7.5943	$6.6534	$5.8722
			------------	----------	----------	----------	----------
Income (loss) from investment operations:
	Net investment income		0.1075	0.0630	0.0672	0.0493	0.0367
	Net realized and unrealized gain
		(loss) on investments	(4.6438)	1.8829	1.5263	1.0465	0.7853
			------------	----------	----------	----------	----------
Total from investment operations			(4.5363)	1.9459	1.5935	1.0958	0.8220
			------------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0222)	(0.0587)	(0.0525)	(0.1549)	(0.0408)
	Net realized gains		(0.1851)	(0.2739)	(0.0000)	(0.0000)	(0.0000)
			----------	----------	----------	----------	----------
Total distributions			(0.2073)	(0.3326)	(0.0525)	(0.1549)	(0.0408)
			----------	----------	----------	----------	----------
Net asset value,
	end of period		$ 6.0050	$10.7486	$9.1353	$7.5943	$6.6534
			======	======	======	======	======
Ratios/Supplemental Data
Total return			-42.15%	21.29%	20.99%	16.47%	14.00%
Net assets, end of period
	(in millions)		$159	$283	$245	$206	$187
Ratio of expenses to
	average net assets
	including expense waiver		1.18%	1.17%	1.20%	1.21%	1.20%
Ratio of net investment
	income to average net assets
	including expense waiver		1.27%	0.63%	0.81%	0.67%	0.59%
Ratio of expenses to
	average net assets
	excluding expense waiver		1.21%	1.20%	1.21%	1.21%1	1.20%1
Ratio of net investment
	income to average net assets
	excluding expense waiver		1.24%	0.60%	0.80%	0.67%1	0.59%1
Portfolio turnover rate			96%	95%	96%	86%	81%

¹There was no waiver of expenses during the period.

IVY FUNDS VIP INTERNATIONAL VALUE
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			-----------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$22.3935	$22.7794	$19.1711	$19.1681	$15.8947
			------------	------------	------------	------------	------------
Income (loss) from investment operations:
	Net investment income		0.5116	0.4391	0.4593	0.3199	0.2759
	Net realized and unrealized gain
		(loss) on investments	(9.9918)	1.8126	5.2176	1.8192	3.3285
			------------	------------	------------	------------	------------
Total from investment operations			(9.4802)	2.2517	5.6769	2.1391	3.6044
			------------	------------	------------	------------	------------
Less distributions from:
	Net investment income		(0.0909)	(0.3937)	(0.4097)	(0.4226)	(0.1850)
	Net realized gains		(0.3611)	(2.2439)	(1.6589)	(1.7135)	(0.1460)
			------------	------------	------------	------------	------------
Total distributions			(0.4520)	(2.6376)	(2.0686)	(2.1361)	(0.3310)
			----------	----------	----------	----------	----------
Net asset value,
	end of period		$12.4613	$22.3935	$22.7794	$19.1711	$19.1681
			=======	=======	=======	=======	=======
Ratios/Supplemental Data
Total return			-42.26%	9.88%	29.61%	11.16%	22.68%
Net assets, end of period
	(in millions)		$379	$636	$589	$463	$401
Ratio of expenses to
	average net assets		1.18%	1.18%	1.18%	1.19%	1.19%
Ratio of net investment
	income to average
	net assets		3.07%	1.81%	2.13%	1.63%	1.65%
Portfolio turnover rate			20%	23%	29%	23%	31%

IVY FUNDS VIP MICRO CAP GROWTH
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			-----------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$21.3838	$20.0796	$17.8866	$14.7992	$13.4476
			----------	----------	----------	----------	----------
Income (loss) from investment operations:
	Net investment loss		(0.2089)	(0.2565)	(0.2064)	(0.1737)	(0.1794)
	Net realized and unrealized gain
		(loss) on investments	(10.0627)	1.5607	2.3994	3.2611	1.5310
			----------	----------	----------	----------	----------
Total from investment operations			(10.2716)	1.3042	2.1930	3.0874	1.3516
			----------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0000)	(0.0000)	(0.0000)	(0.0000)	(0.0000)
	Net realized gains		(0.0000)	(0.0000)	(0.0000)	(0.0000)	(0.0000)
			----------	----------	----------	----------	----------
Total distributions			(0.0000)	(0.0000)	(0.0000)	(0.0000)	(0.0000)
			----------	----------	----------	----------	----------
Net asset value,
	end of period		$11.1122	$21.3838	$20.0796	$17.8866	$14.7992
			=======	=======	=======	=======	=======
Ratios/Supplemental Data
Total return			-48.04%	6.49%	12.26%	20.87%	10.05%
Net assets, end of period
	(in millions)		$28	$60	$60	$53	$41
Ratio of expenses to
	average net assets		1.36%	1.32%	1.32%	1.35%	1.35%
Ratio of net investment
	loss to average
	net assets		-1.23%	-1.18%	-1.06%	-1.15%	-1.26%
Portfolio turnover rate			60%	57%	60%	54%	65%

IVY FUNDS VIP MID CAP GROWTH
(For a share outstanding throughout each period)
			For the			For the
			fiscal year			period from
			ended			4-28-051
			December 31,			through
			2008	2007	2006	12-31-05
			-------------------------------------------			------------
Per-Share Data
Net asset value,
	beginning of period		$7.2091	$6.5601	$6.0653	$5.0000
			-----------	----------	-----------	---------
Income (loss) from investment operations:
	Net investment income (loss)		(0.0036)	0.0034	0.0164	0.0064
	Net realized and unrealized gain (loss)
		on investments	(2.6128)	0.8245	0.5025	1.0589
			-----------	----------	-----------	---------
Total from investment operations			(2.6164)	0.8279	0.5189	1.0653
			-----------	----------	-----------	---------
Less distributions from:
	Net investment income		(0.0020)	(0.0013)	(0.0223)	(0.0000)
	Net realized gains		(0.0851)	(0.1776)	(0.0018)	(0.0000)
			-----------	----------	-----------	----------
Total distributions			(0.0871)	(0.1789)	(0.0241)	(0.0000)
			-----------	----------	-----------	----------
Net asset value,
	end of period		$4.5056	$7.2091	$6.5601	$6.0653
			======	======	======	======
Ratios/Supplemental Data
Total return			-36.23%	12.62%	8.56%	21.31%
Net assets, end of period (in millions)			$49	$57	$37	$13
Ratio of expenses to average net assets
	including expense waiver		1.23%	1.21%	0.97%	0.69%2
Ratio of net investment income to
	average net assets including
	expense waiver		-0.06%	0.06%	0.45%	0.33%2
Ratio of expenses to average net assets
	excluding expense waiver		1.24%	1.24%	1.31%	1.54%2
Ratio of net investment income (loss) to
	average net assets excluding
	expense waiver		-0.07%	0.03%	0.11%	-0.51%2
Portfolio turnover rate			46%	31%	23%	11%

¹Commencement of operations.

²Annualized.

IVY FUNDS VIP MONEY MARKET
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			-----------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$1.0000	$1.0000	$1.0000	$1.0000	$1.0000
			----------	----------	----------	----------	----------
Income from investment operations:
	Net investment income		0.0215	0.0451	0.0424	0.0247	0.0070
	Net realized and unrealized gain
		on investments	0.0001	0.0000	0.0000	0.0000	0.0000
			----------	----------	----------	----------	----------
Total from investment operations			0.0216	0.0451	0.0424	0.0247	0.0070
			----------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0215)	(0.0451)	(0.0424)	(0.0247)	(0.0070)
	Net realized gains		(0.0001)	(0.0000)	(0.0000)	(0.0000)	(0.0000)
			----------	----------	----------	----------	----------
Total distributions			(0.0216)	(0.0451)	(0.0424)	(0.0247)	(0.0070)
			----------	----------	----------	----------	----------
Net asset value,
	end of period		$1.0000	$1.0000	$1.0000	$1.0000	$1.0000
			======	======	======	======	======
Ratios/Supplemental Data
Total return			2.18%	4.60%	4.32%	2.50%	0.70%
Net assets, end of period
	(in millions)		$201	$89	$70	$52	$55
Ratio of expenses to
	average net assets		0.75%	0.76%	0.77%	0.79%	0.76%
Ratio of net investment
	income to average
	net assets		2.01%	4.51%	4.29%	2.46%	0.69%

IVY FUNDS VIP MORTGAGE SECURITIES
(For a share outstanding throughout each period)
							For the
							period from
			For the fiscal				5-27-041
			year ended December 31,				through
			2008	2007	2006	2005	12-31-04
--------			-----------------------------------------------------------				------------
Per-Share Data
Net asset value,
	beginning of period		$4.9813	$4.9818	$4.9801	$5.0791	$5.0000
			----------	----------	----------	----------	----------
Income (loss) from investment operations:
	Net investment income		0.2287	0.2127	0.2373	0.2010	0.1009
	Net realized and unrealized gain
		(loss) on investments	(0.7740)	(0.0444)	0.0010	(0.0990)	0.1476
			----------	----------	----------	----------	----------
Total from investment operations			(0.5453)	0.1683	0.2383	0.1020	0.2485
			----------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0489)	(0.1688)	(0.2366)	(0.2010)	(0.1009)
	Net realized gains		(0.0000)	(0.0000)	(0.0000)	(0.0000)	(0.0685)
			----------	----------	----------	----------	----------
Total distributions			(0.0489)	(0.1688)	(0.2366)	(0.2010)	(0.1694)
			----------	----------	----------	----------	----------
Net asset value,
	end of period		$4.3871	$4.9813	$4.9818	$4.9801	$5.0791
			=======	======	======	======	======
Ratios/Supplemental Data
Total return			-10.95%	3.40%	4.77%	2.00%	4.97%
Net assets, end of period (in millions)			$27	$34	$30	$28	$21
Ratio of expenses to average net assets
	including expense waiver		0.99%	0.96%	0.97%	1.00%	0.71%2
Ratio of net investment income to
	average net assets including
	expense waiver		4.21%	4.73%	4.76%	4.21%	4.02%2
Ratio of expenses to average net assets
	excluding expense waiver		0.99%3	0.96%3	0.97%3	1.00%3	0.97%2
Ratio of net investment income to
	average net assets excluding
	expense waiver		4.21%3	4.73%3	4.76%3	4.21%3	3.76%2
Portfolio turnover rate			288%	138%	158%	202%	184%

¹Commencement of operations.

²Annualized.

³There was no waiver of expenses during the period.

IVY FUNDS VIP PATHFINDER AGGRESSIVE
(For a share outstanding throughout the period)
			For the
			period from
			3-4-081
			through
			12-31-08
			------------
Per-Share Data
Net asset value,
	beginning of period		$5.0000
			-----------
Income (loss) from investment operations:
	Net investment income		0.0096
	Net realized and unrealized loss
		on investments	(1.2003)
			-----------
Total from investment operations			(1.1907)
			-----------
Less distributions from:
	Net investment income		(0.0000)
	Net realized gains		(0.0000)
			-----------
Total distributions			(0.0000)
			-----------
Net asset value,
	end of period		$3.8093
			=======
Ratios/Supplemental Data
Total return			-23.82%
Net assets, end of period (in millions)			$43
Ratio of expenses to average net assets			0.10%2
Ratio of net investment income to
	average net assets		0.442
Portfolio turnover rate			3%

¹Commencement of operations.

²Annualized.

IVY FUNDS VIP PATHFINDER MODERATELY AGGRESSIVE
(For a share outstanding throughout the period)
			For the
			period from
			3-4-081
			through
			12-31-08
			------------
Per-Share Data
Net asset value,
	beginning of period		$5.0000
			-----------
Income (loss) from investment operations:
	Net investment income		0.0103
	Net realized and unrealized loss
		on investments	(0.9963)
			-----------
Total from investment operations			(0.9860)
			-----------
Less distributions from:
	Net investment income		(0.0000)
	Net realized gains		(0.0000)
			-----------
Total distributions			(0.0000)
			-----------
Net asset value,
	end of period		$4.0140
			=======
Ratios/Supplemental Data
Total return			-19.72%
Net assets, end of period (in millions)			$116
Ratio of expenses to average net assets			0.07%2
Ratio of net investment income to
	average net assets		0.61%2
Portfolio turnover rate			---%

¹Commencement of operations.

²Annualized.

IVY FUNDS VIP PATHFINDER MODERATE
(For a share outstanding throughout the period)
			For the
			period from
			3-4-081
			through
			12-31-08
			------------
Per-Share Data
Net asset value,
	beginning of period		$5.0000
			-----------
Income (loss) from investment operations:
	Net investment income		0.0097
	Net realized and unrealized loss
		on investments	(0.9467)
			-----------
Total from investment operations			(0.9370)
			-----------
Less distributions from:
	Net investment income		(0.0000)
	Net realized gains		(0.0000)
			-----------
Total distributions			(0.0000)
			-----------
Net asset value,
	end of period		$4.0630
			=======
Ratios/Supplemental Data
Total return			-18.74%
Net assets, end of period (in millions)			$78
Ratio of expenses to average net assets			0.09%2
Ratio of net investment income to
	average net assets		0.642
Portfolio turnover rate			---%

¹Commencement of operations.

²Annualized.

IVY FUNDS VIP PATHFINDER MODERATELY CONSERVATIVE
(For a share outstanding throughout the period)
			For the
			period from
			3-12-081
			through
			12-31-08
			------------
Per-Share Data
Net asset value,
	beginning of period		$5.0000
			-----------
Income (loss) from investment operations:
	Net investment income		0.0080
	Net realized and unrealized loss
		on investments	(0.6982)
			-----------
Total from investment operations			(0.6902)
			-----------
Less distributions from:
	Net investment income		(0.0000)
	Net realized gains		(0.0000)
			-----------
Total distributions			(0.0000)
			-----------
Net asset value,
	end of period		$4.3098
			=======
Ratios/Supplemental Data
Total return			-13.80%
Net assets, end of period (in millions)			$32
Ratio of expenses to average net assets			0.18%2
Ratio of net investment income to
	average net assets		0.632
Portfolio turnover rate			---%

¹Commencement of operations.

²Annualized.

IVY FUNDS VIP PATHFINDER CONSERVATIVE
(For a share outstanding throughout the period)
			For the
			period from
			3-13-081
			through
			12-31-08
			------------
Per-Share Data
Net asset value,
	beginning of period		$5.0000
			-----------
Income (loss) from investment operations:
	Net investment income		0.0058
	Net realized and unrealized loss
		on investments	(0.5528)
			-----------
Total from investment operations			(0.5470)
			-----------
Less distributions from:
	Net investment income		(0.0000)
	Net realized gains		(0.0000)
			-----------
Total distributions			(0.0000)
			-----------
Net asset value,
	end of period		$4.4530
			=======
Ratios/Supplemental Data
Total return			-10.94%
Net assets, end of period (in millions)			$12
Ratio of expenses to average net assets			0.39%2
Ratio of net investment income to
	average net assets		0.452
Portfolio turnover rate			2%

¹Commencement of operations.

²Annualized.

IVY FUNDS VIP REAL ESTATE SECURITIES
(For a share outstanding throughout each period)
							For the
							period from
			For the fiscal				5-27-041
			year ended December 31,				through
			2008	2007	2006	2005	12-31-04
--------			-----------------------------------------------------------				------------
Per-Share Data
Net asset value,
	beginning of period		$6.9867	$8.7770	$6.9610	$6.5176	$5.0000
			-----------	-----------	-----------	-----------	----------
Income (loss) from investment operations:
	Net investment income		0.1143	0.0938	0.0367	0.0779	0.0396
	Net realized and unrealized gain (loss)
		on investments	(2.6453)	(1.5033)	2.0572	0.6278	1.5935
			-----------	-----------	-----------	-----------	----------
Total from investment operations			(2.5310)	(1.4095)	2.0939	0.7057	1.6331
			-----------	-----------	-----------	-----------	----------
Less distributions from:
	Net investment income		(0.0390)	(0.0473)	(0.0607)	(0.0954)	(0.0349)
	Net realized gains		(0.1127)	(0.3335)	(0.2172)	(0.1669)	(0.0806)
			-----------	-----------	-----------	-----------	----------
Total distributions			(0.1517)	(0.3808)	(0.2779)	(0.2623)	(0.1155)
			-----------	-----------	-----------	-----------	----------
Net asset value,
	end of period		$4.3040	$6.9867	$8.7770	$6.9610	$6.5176
			======	======	======	======	======
Ratios/Supplemental Data
Total return			-36.04%	-16.07%	30.08%	10.83%	32.66%
Net assets, end of period (in millions)			$29	$48	$60	$33	$19
Ratio of expenses to average net assets
	including expense waiver		1.31%	1.30%	1.31%	1.38%	1.21%2
Ratio of net investment income to
	average net assets including
	expense waiver		1.73%	1.08%	1.03%	1.26%	2.14%2
Ratio of expenses to average net assets
	excluding expense waiver		1.31%3	1.30%3	1.31%3	1.38%3	1.55%2
Ratio of net investment income to
	average net assets excluding
	expense waiver		1.73%3	1.08%3	1.03%3	1.26%3	1.80%2
Portfolio turnover rate			45%	50%	32%	48%	53%

¹Commencement of operations.

²Annualized.

³There was no waiver of expenses during the period.

IVY FUNDS VIP SCIENCE AND TECHNOLOGY
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			-----------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$17.9777	$17.7170	$16.8844	$14.4014	$12.3883
			------------	------------	------------	------------	------------
Income (loss) from investment operations:
	Net investment loss		(0.0336)	(0.0712)	(0.1178)	(0.1145)	(0.0751)
	Net realized and unrealized gain
		(loss) on investments	(6.0778)	4.3892	1.4468	2.5975	2.0882
			------------	------------	------------	------------	------------
Total from investment operations			(6.1114)	4.3180	1.3290	2.4830	2.0131
			------------	------------	------------	------------	------------
Less distributions from:
	Net investment income		(0.0000)	(0.0000)	(0.0000)	(0.0000)	(0.0000)
	Net realized gains		(0.4412)	(4.0573)	(0.4964)	(0.0000)	(0.0000)
			------------	------------	------------	------------	------------
Total distributions			(0.4412)	(4.0573)	(0.4964)	(0.0000)	(0.0000)
			------------	------------	------------	------------	------------
Net asset value,
	end of period		$11.4251	$17.9777	$17.7170	$16.8844	$14.4014
			=======	=======	=======	=======	=======
Ratios/Supplemental Data
Total return			-33.89%	24.37%	7.87%	17.25%	16.25%
Net assets, end of period
	(in millions)		$226	$396	$352	$361	$322
Ratio of expenses to
	average net assets
	including expense waiver		1.16%	1.15%	1.17%	1.17%	1.17%
Ratio of net investment
	loss to average net assets
	including expense waiver		-0.21%	-0.42%	-0.65%	-0.74%	-0.59%
Ratio of expenses to
	average net assets
	excluding expense waiver		1.18%	1.17%	1.18%	1.17%1	1.17%1
Ratio of net investment
	loss to average net assets
	excluding expense waiver		-0.23%	-0.44%	-0.66%	-0.74%1	-0.59%1
Portfolio turnover rate			62%	73%	71%	104%	107%

¹There was no waiver of expenses during the period.

IVY FUNDS VIP SMALL CAP GROWTH
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			-----------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$10.2422	$9.9749	$10.4866	$9.6810	$8.4703
			------------	----------	------------	----------	----------
Income (loss) from investment operations:
	Net investment income (loss)		0.0270	(0.0641)	(0.0584)	(0.0647)	(0.0741)
	Net realized and unrealized gain
		(loss) on investments	(4.0469)	1.4127	0.5883	1.3116	1.2848
			------------	----------	-----------	----------	----------
Total from investment operations			(4.0199)	1.3486	0.5299	1.2469	1.2107
			------------	----------	-----------	----------	----------
Less distributions from:
	Net investment income		(0.0000)	(0.0000)	(0.0000)	(0.0000)	(0.0000)
	Net realized gains		(0.1290)	(1.0813)	(1.0416)	(0.4413)	(0.0000)
			------------	----------	-----------	----------	----------
Total distributions			(0.1290)	(1.0813)	(1.0416)	(0.4413)	(0.0000)
			------------	----------	-----------	----------	----------
Net asset value,
	end of period		$ 6.0933	$10.2422	$9.9749	$10.4866	$9.6810
			======	======	======	======	======
Ratios/Supplemental Data
Total return			-39.18%	13.52%	5.05%	12.88%	14.29%
Net assets, end of period
	(in millions)		$290	$544	$555	$606	$589
Ratio of expenses to
	average net assets
	including expense waiver		1.14%	1.14%	1.15%	1.16%	1.17%
Ratio of net investment
	income (loss) to average net assets
	including expense waiver		0.32%	-0.61%	-0.55%	-0.63%	-0.82%
Ratio of expenses to
	average net assets
	excluding expense waiver		1.16%	1.16%	1.16%	1.16%1	1.17%1
Ratio of net investment income
	(loss) to average net assets
	excluding expense waiver		0.30%	-0.63%	-0.56%	-0.63%1	-0.82%1
Portfolio turnover rate			82%	101%	94%	71%	96%

¹There was no waiver of expenses during the period.

IVY FUNDS VIP SMALL CAP VALUE
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			---------------------------------------------------------------------
			2008	2007	2006	2005	2004
			-------	-------	-------	-------	-------
Per-Share Data
Net asset value,
	beginning of period		$14.3219	$15.6884	$14.5826	$16.6329	$15.2013
			------------	------------	------------	------------	------------
Income (loss) from investment operations:
	Net investment income (loss)		(0.0168)	0.0251	0.0226	0.0012	(0.0569)
	Net realized and unrealized gain
		(loss) on investments	(3.7428)	(0.6721)	2.4333	0.6886	2.3402
			------------	------------	------------	------------	------------
Total from investment operations			(3.7596)	(0.6470)	2.4559	0.6898	2.2833
			------------	------------	------------	------------	------------
Less distributions from:
	Net investment income		(0.0257)	(0.0008)	(0.0232)	(0.0000)	(0.0000)
	Net realized gains		(0.2499)	(0.7187)	(1.3269)	(2.7401)	(0.8517)
			------------	------------	------------	------------	------------
Total distributions			(0.2756)	(0.7195)	(1.3501)	(2.7401)	(0.8517)
			------------	------------	------------	------------	------------
Net asset value,
	end of period		$10.2867	$14.3219	$15.6884	$14.5826	$16.6329
			=======	=======	=======	=======	=======
Ratios/Supplemental Data
Total return			-26.13%	-4.13%	16.84%	4.15%	15.02%
Net assets, end of period
	(in millions)		$150	$205	$199	$160	$132
Ratio of expenses to
	average net assets		1.18%	1.18%	1.18%	1.20%	1.23%
Ratio of net investment
	income (loss) to average
	net assets		-0.14%	0.17%	0.15%	0.01%	-0.43%
Portfolio turnover rate			110%	122%	131%	166%	32%

IVY FUNDS VIP VALUE
(For a share outstanding throughout each period)
			For the fiscal year ended December 31,
			2008	2007	2006	2005	2004
			-----	------	------	--------	---------
Per-Share Data
Net asset value,
	beginning of period		$6.3640	$6.7426	$6.0701	$6.2226	$5.4790
			----------	----------	----------	----------	----------
Income (loss) from investment operations:
	Net investment income		0.0826	0.0802	0.0747	0.0918	0.0619
	Net realized and unrealized gain
		(loss) on investments	(2.2367)	0.0480	0.9499	0.1831	0.7437
			----------	----------	----------	----------	----------
Total from investment operations			(2.1541)	0.1282	1.0246	0.2749	0.8056
			----------	----------	----------	----------	----------
Less distributions from:
	Net investment income		(0.0136)	(0.0680)	(0.0740)	(0.0916)	(0.0620)
	Net realized gains		(0.0426)	(0.4388)	(0.2781)	(0.3358)	(0.0000)
			----------	----------	----------	----------	----------
Total distributions			(0.0562)	(0.5068)	(0.3521)	(0.4274)	(0.0620)
Net asset value,
	end of period		$4.1537	$6.3640	$6.7426	$6.0701	$6.2226
			======	======	======	======	======
Ratios/Supplemental Data
Total return			-33.81%	1.90%	16.88%	4.42%	14.70%
Net assets, end of period
	(in millions)		$231	$364	$374	$353	$340
Ratio of expenses to
	average net assets
	including expense waiver		1.01%	1.01%	1.01%	1.02%	1.03%
Ratio of net investment
	income to average net assets
	including expense waiver		1.52%	1.12%	1.12%	1.42%	1.13%
Ratio of expenses to
	average net assets
	excluding expense waiver		1.02%	1.02%	1.02%	1.02%1	1.03%1
Ratio of net investment
	income to average net assets
	excluding expense waiver		1.51%	1.11%	1.11%	1.42%1	1.13%1
Portfolio turnover rate			48%	51%	73%	40%	78%

¹There was no waiver of expenses during the period.

Appendix A: Hypothetical Investment and Expense Information

The following charts provide additional hypothetical information about the effect of each Portfolio's expenses, including investment advisory fees and other Portfolio costs, on the Portfolio's assumed returns over a ten-year period. These charts are provided pursuant to the NYAG Settlement, which is described in this Prospectus under "Regulatory Matters."

Each chart shows the estimated cumulative expenses that would be incurred in respect of a hypothetical investment of $10,000, assuming a 5% return each year, and no redemption of shares. Each chart also assumes that the Portfolio's annual expense ratio stays the same throughout the ten-year period and that all dividends and other distributions are reinvested. The annual expense ratio used in each chart is the same as stated in the "Fees and Expenses" table of this Prospectus (and thus may not reflect any fee waiver or expense reimbursement currently in effect). Mutual fund returns, as well as fees and expenses, may fluctuate over time, and your actual investment returns and total expenses may be higher or lower than those shown below. The charts do not reflect any fees and expenses imposed under the variable annuity contracts or variable life insurance policies through which the Portfolios are offered. If these fees and expenses were reflected, the hypothetical investment returns shown would be lower.

Ivy Funds VIP Asset Strategy

Annual expense ratio 1.05%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$107.08	$10,396.00
2	10,396.00	519.80	10,915.80	111.31	10,806.64
3	10,806.64	540.33	11,346.97	115.71	11,233.50
4	11,233.50	561.68	11,795.18	120.28	11,677.23
5	11,677.23	583.86	12,261.09	125.03	12,138.48
6	12,138.48	606.92	12,745.40	129.97	12,617.95
7	12,617.95	630.90	13,248.85	135.11	13,116.36
8	13,116.36	655.82	13,772.17	140.44	13,634.45
9	13,634.45	681.72	14,316.18	145.99	14,173.01
10	14,173.01	708.65	14,881.66	151.76	14,732.85

Cumulative Total $1,282.68

Ivy Funds VIP Balanced

Annual expense ratio 1.01%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$103.01	$10,399.00
2	10,399.00	519.95	10,918.95	107.13	10,813.92
3	10,813.92	540.70	11,354.62	111.40	11,245.40
4	11,245.40	562.27	11,807.67	115.84	11,694.09
5	11,694.09	584.70	12,278.79	120.47	12,160.68
6	12,160.68	608.03	12,768.71	125.27	12,645.89
7	12,645.89	632.29	13,278.19	130.27	13,150.46
8	13,150.46	657.52	13,807.99	135.47	13,675.17
9	13,675.17	683.76	14,358.92	140.87	14,220.81
10	14,220.81	711.04	14,931.85	146.50	14,788.22

Cumulative Total $1,236.24

Ivy Funds VIP Bond

Annual expense ratio 0.79%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$80.66	$10,421.00
2	10,421.00	521.05	10,942.05	84.06	10,859.72
3	10,859.72	542.99	11,402.71	87.60	11,316.92
4	11,316.92	565.85	11,882.76	91.29	11,793.36
5	11,793.36	589.67	12,383.03	95.13	12,289.86
6	12,289.86	614.49	12,904.35	99.13	12,807.26
7	12,807.26	640.36	13,447.63	103.31	13,346.45
8	13,346.45	667.32	14,013.77	107.66	13,908.34
9	13,908.34	695.42	14,603.75	112.19	14,493.88
10	14,493.88	724.69	15,218.57	116.91	15,104.07

Cumulative Total $977.93

Ivy Funds VIP Core Equity

Annual expense ratio 1.01%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$103.04	$10,404.00
2	10,404.00	520.20	10,924.20	107.18	10,819.12
3	10,819.12	540.96	11,360.08	111.45	11,250.80
4	11,250.80	562.54	11,813.34	115.90	11,699.71
5	11,699.71	584.99	12,284.69	120.52	12,166.53
6	12,166.53	608.33	12,774.85	125.33	12,651.97
7	12,651.97	632.60	13,284.57	130.33	13,156.79
8	13,156.79	657.84	13,814.63	135.53	13,681.74
9	13,681.74	684.09	14,365.83	140.94	14,227.64
10	14,227.64	711.38	14,939.03	146.57	14,795.33

Cumulative Total $1,236.81

Ivy Funds VIP Dividend Opportunities

Annual expense ratio 1.07%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$109.10	$10,393.00
2	10,393.00	519.65	10,912.65	113.39	10,801.44
3	10,801.44	540.07	11,341.52	117.85	11,225.94
4	11,225.94	561.30	11,787.24	122.48	11,667.12
5	11,667.12	583.36	12,250.48	127.29	12,125.64
6	12,125.64	606.28	12,731.92	132.29	12,602.18
7	12,602.18	630.11	13,232.29	137.49	13,097.44
8	13,097.44	654.87	13,752.31	142.90	13,612.17
9	13,612.17	680.61	14,292.78	148.51	14,147.13
10	14,147.13	707.36	14,854.49	154.35	14,703.11

Cumulative Total $1,305.65

Ivy Funds VIP Energy

Annual expense ratio 1.31%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$133.53	$10,386.00
2	10,386.00	519.30	10,905.30	138.57	10,769.24
3	10,769.24	538.46	11,307.71	143.68	11,166.63
4	11,166.63	558.33	11,724.96	148.98	11,578.68
5	11,578.68	578.93	12,157.61	154.48	12,005.93
6	12,005.93	600.30	12,606.23	160.18	12,448.95
7	12,448.95	622.45	13,071.40	166.09	12,908.32
8	12,908.32	645.42	13,553.73	172.22	13,384.63
9	13,384.63	669.23	14,053.86	178.57	13,878.53
10	13,878.53	693.93	14,572.45	185.16	14,390.64

Cumulative Total $1,581.46

Ivy Funds VIP Global Natural Resources

Annual expense ratio 1.43%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$145.55	$10,357.00
2	10,357.00	517.85	10,874.85	150.75	10,726.74
3	10,726.74	536.34	11,263.08	156.13	11,109.69
4	11,109.69	555.48	11,665.17	161.70	11,506.31
5	11,506.31	575.32	12,081.62	167.48	11,917.08
6	11,917.08	595.85	12,512.93	173.46	12,342.52
7	12,342.52	617.13	12,959.65	179.65	12,783.15
8	12,783.15	639.16	13,422.31	186.06	13,239.51
9	13,239.51	661.98	13,901.48	192.70	13,712.16
10	13,712.16	685.61	14,397.77	199.58	14,201.68

Cumulative Total $1,713.07

Ivy Funds VIP Growth

Annual expense ratio 1.00%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$102.02	$10,403.00
2	10,403.00	520.15	10,923.15	106.11	10,819.12
3	10,819.12	540.96	11,360.08	110.36	11,251.88
4	11,251.88	562.59	11,814.48	114.77	11,701.96
5	11,701.96	585.10	12,287.06	119.36	12,170.04
6	12,170.04	608.50	12,778.54	124.13	12,656.84
7	12,656.84	632.84	13,289.68	129.10	13,163.11
8	13,163.11	658.16	13,821.27	134.26	13,689.64
9	13,689.64	684.48	14,374.12	139.63	14,237.22
10	14,237.22	711.86	14,949.09	145.22	14,806.71

Cumulative Total $1,224.96

Ivy Funds VIP High Income

Annual expense ratio 0.96%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$97.96	$10,409.00
2	10,409.00	520.45	10,929.45	101.94	10,829.52
3	10,829.52	541.48	11,371.00	106.06	11,267.04
4	11,267.04	563.35	11,830.39	110.35	11,722.22
5	11,722.22	586.11	12,308.34	114.81	12,195.80
6	12,195.80	609.79	12,805.59	119.44	12,688.51
7	12,688.51	634.43	13,322.94	124.27	13,201.13
8	13,201.13	660.06	13,861.19	129.29	13,734.45
9	13,734.45	686.72	14,421.18	134.51	14,289.33
10	14,289.33	714.47	15,003.79	139.95	14,866.62

Cumulative Total $1,178.60

Ivy Funds VIP International Growth

Annual expense ratio 1.21%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$123.31	$10,382.00
2	10,382.00	519.10	10,901.10	128.00	10,775.48
3	10,775.48	538.77	11,314.25	132.85	11,183.87
4	11,183.87	559.19	11,743.06	137.89	11,607.74
5	11,607.74	580.39	12,188.12	143.12	12,047.67
6	12,047.67	602.38	12,650.05	148.54	12,504.28
7	12,504.28	625.21	13,129.49	154.17	12,978.19
8	12,978.19	648.91	13,627.10	160.01	13,470.06
9	13,470.06	673.50	14,143.57	166.08	13,980.58
10	13,980.58	699.03	14,679.61	172.37	14,510.44

Cumulative Total $1,466.34

Ivy Funds VIP International Value

Annual expense ratio 1.18%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$120.25	$10,382.00
2	10,382.00	519.10	10,901.10	124.85	10,778.59
3	10,778.59	538.93	11,317.52	129.62	11,190.33
4	11,190.33	559.52	11,749.85	134.57	11,617.81
5	11,617.81	580.89	12,198.70	139.71	12,061.61
6	12,061.61	603.08	12,664.69	145.05	12,522.36
7	12,522.36	626.12	13,148.48	150.59	13,000.71
8	13,000.71	650.04	13,650.75	156.34	13,497.34
9	13,497.34	674.87	14,172.21	162.31	14,012.94
10	14,012.94	700.65	14,713.59	168.51	14,548.23

Cumulative Total $1,431.79

Ivy Funds VIP Micro Cap Growth

Annual expense ratio 1.36%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$138.48	$10,364.00
2	10,364.00	518.20	10,882.20	143.52	10,741.25
3	10,741.25	537.06	11,278.31	148.74	11,132.23
4	11,132.23	556.61	11,688.84	154.15	11,537.44
5	11,537.44	576.87	12,114.32	159.76	11,957.41
6	11,957.41	597.87	12,555.28	165.58	12,392.66
7	12,392.66	619.63	13,012.29	171.61	12,843.75
8	12,843.75	642.19	13,485.94	177.85	13,311.26
9	13,311.26	665.56	13,976.83	184.33	13,795.79
10	13,795.79	689.79	14,485.58	191.04	14,297.96

Cumulative Total $1,635.06

Ivy Funds VIP Mid Cap Growth

Annual expense ratio 1.24%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$126.34	$10,377.00
2	10,377.00	518.85	10,895.85	131.09	10,767.18
3	10,767.18	538.36	11,305.53	136.02	11,172.02
4	11,172.02	558.60	11,730.62	141.14	11,592.09
5	11,592.09	579.60	12,171.69	146.44	12,027.95
6	12,027.95	601.40	12,629.35	151.95	12,480.20
7	12,480.20	624.01	13,104.21	157.66	12,949.46
8	12,949.46	647.47	13,596.93	163.59	13,436.36
9	13,436.36	671.82	14,108.18	169.74	13,941.56
10	13,941.56	697.08	14,638.64	176.13	14,465.77

Cumulative Total $1,500.11

Ivy Funds VIP Money Market

Annual expense ratio 0.50%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$51.13	$10,450.00
2	10,450.00	522.50	10,972.50	53.43	10,920.25
3	10,920.25	546.01	11,466.26	55.83	11,411.66
4	11,411.66	570.58	11,982.24	58.34	11,925.19
5	11,925.19	596.26	12,521.45	60.97	12,461.82
6	12,461.82	623.09	13,084.91	63.71	13,022.60
7	13,022.60	651.13	13,673.73	66.58	13,608.62
8	13,608.62	680.43	14,289.05	69.57	14,221.01
9	14,221.01	711.05	14,932.06	72.70	14,860.95
10	14,860.95	743.05	15,604.00	75.98	15,529.69

Cumulative Total $628.23

Ivy Funds VIP Mortgage Securities

Annual expense ratio 0.99%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$100.98	$10,401.00
2	10,401.00	520.05	10,921.05	105.03	10,818.08
3	10,818.08	540.90	11,358.98	109.25	11,251.89
4	11,251.89	562.59	11,814.48	113.63	11,703.09
5	11,703.09	585.15	12,288.24	118.18	12,172.38
6	12,172.38	608.62	12,781.00	122.92	12,660.49
7	12,660.49	633.02	13,293.52	127.85	13,168.18
8	13,168.18	658.41	13,826.59	132.98	13,696.22
9	13,696.22	684.81	14,381.03	138.31	14,245.44
10	14,245.44	712.27	14,957.71	143.86	14,816.68

Cumulative Total $1,213.00

Ivy Funds VIP Real Estate Securities

Annual expense ratio 1.31%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$133.42	$10,369.00
2	10,369.00	518.45	10,887.45	138.34	10,751.62
3	10,751.62	537.58	11,289.20	143.44	11,148.35
4	11,148.35	557.42	11,705.77	148.74	11,559.72
5	11,559.72	577.99	12,137.71	154.23	11,986.28
6	11,986.28	599.31	12,585.59	159.92	12,428.57
7	12,428.57	621.43	13,050.00	165.82	12,887.19
8	12,887.19	644.36	13,531.55	171.94	13,362.72
9	13,362.72	668.14	14,030.86	178.28	13,855.81
10	13,855.81	692.79	14,548.60	184.86	14,367.09

Cumulative Total $1,578.98

Ivy Funds VIP Science and Technology

Annual expense ratio 1.18%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$120.27	$10,384.00
2	10,384.00	519.20	10,903.20	124.87	10,780.67
3	10,780.67	539.03	11,319.70	129.64	11,192.49
4	11,192.49	559.62	11,752.11	134.59	11,620.04
5	11,620.04	581.00	12,201.05	139.74	12,063.93
6	12,063.93	603.20	12,667.13	145.07	12,524.77
7	12,524.77	626.24	13,151.01	150.62	13,003.22
8	13,003.22	650.16	13,653.38	156.37	13,499.94
9	13,499.94	675.00	14,174.94	162.34	14,015.64
10	14,015.64	700.78	14,716.42	168.54	14,551.04

Cumulative Total $1,432.05

Ivy Funds VIP Small Cap Growth

Annual expense ratio 1.16%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$118.24	$10,386.00
2	10,386.00	519.30	10,905.30	122.79	10,784.82
3	10,784.82	539.24	11,324.06	127.51	11,198.96
4	11,198.96	559.95	11,758.91	132.40	11,629.00
5	11,629.00	581.45	12,210.45	137.49	12,075.55
6	12,075.55	603.78	12,679.33	142.77	12,539.25
7	12,539.25	626.96	13,166.22	148.25	13,020.76
8	13,020.76	651.04	13,671.80	153.94	13,520.76
9	13,520.76	676.04	14,196.80	159.85	14,039.96
10	14,039.96	702.00	14,741.95	165.99	14,579.09

Cumulative Total $1,409.22

Ivy Funds VIP Small Cap Value

Annual expense ratio 1.18%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$120.25	$10,382.00
2	10,382.00	519.10	10,901.10	124.85	10,778.59
3	10,778.59	538.93	11,317.52	129.62	11,190.33
4	11,190.33	559.52	11,749.85	134.57	11,617.81
5	11,617.81	580.89	12,198.70	139.71	12,061.61
6	12,061.61	603.08	12,664.69	145.05	12,522.36
7	12,522.36	626.12	13,148.48	150.59	13,000.71
8	13,000.71	650.04	13,650.75	156.34	13,497.34
9	13,497.34	674.87	14,172.21	162.31	14,012.94
10	14,012.94	700.65	14,713.59	168.51	14,548.23

Cumulative Total $1,431.79

Ivy Funds VIP Value

Annual expense ratio 1.02%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$104.03	$10,399.00
2	10,399.00	519.95	10,918.95	108.18	10,812.88
3	10,812.88	540.64	11,353.52	112.49	11,243.23
4	11,243.23	562.16	11,805.39	116.96	11,690.71
5	11,690.71	584.54	12,275.25	121.62	12,156.00
6	12,156.00	607.80	12,763.80	126.46	12,639.81
7	12,639.81	631.99	13,271.80	131.49	13,142.88
8	13,142.88	657.14	13,800.02	136.73	13,665.96
9	13,665.96	683.30	14,349.26	142.17	14,209.87
10	14,209.87	710.49	14,920.36	147.82	14,775.42

Cumulative Total $1,247.95

Ivy Funds VIP Pathfinder Aggressive

Annual expense ratio 1.01%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$102.75	$10,399.00
2	10,399.00	519.95	10,918.95	106.85	10,814.19
3	10,814.19	540.71	11,354.90	111.12	11,245.96
4	11,245.96	562.30	11,808.26	115.55	11,694.96
5	11,694.96	584.75	12,279.71	120.17	12,161.90
6	12,161.90	608.09	12,769.99	124.96	12,647.47
7	12,647.47	632.37	13,279.85	129.95	13,152.44
8	13,152.44	657.62	13,810.06	135.14	13,677.56
9	13,677.56	683.88	14,361.44	140.54	14,223.65
10	14,223.65	711.18	14,934.83	146.15	14,791.54

Cumulative Total $1,233.19

Ivy Funds VIP Pathfinder Moderately Aggressive

Annual expense ratio 0.97%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$98.62	$10,403.00
2	10,403.00	520.15	10,923.15	102.59	10,822.58
3	10,822.58	541.13	11,363.71	106.73	11,259.09
4	11,259.09	562.95	11,822.05	111.04	11,713.20
5	11,713.20	585.66	12,298.86	115.52	12,185.63
6	12,185.63	609.28	12,794.91	120.17	12,677.12
7	12,677.12	633.86	13,310.97	125.02	13,188.42
8	13,188.42	659.42	13,847.84	130.06	13,720.35
9	13,720.35	686.02	14,406.37	135.31	14,273.73
10	14,273.73	713.69	14,987.42	140.77	14,849.44

Cumulative Total $1,185.83

Ivy Funds VIP Pathfinder Moderate

Annual expense ratio 1.14%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$116.23	$10,386.00
2	10,386.00	519.30	10,905.30	120.72	10,786.87
3	10,786.87	539.34	11,326.21	125.38	11,203.21
4	11,203.21	560.16	11,763.37	130.22	11,635.62
5	11,635.62	581.78	12,217.40	135.24	12,084.72
6	12,084.72	604.24	12,688.96	140.46	12,551.15
7	12,551.15	627.56	13,178.71	145.88	13,035.59
8	13,035.59	651.78	13,687.37	151.51	13,538.72
9	13,538.72	676.94	14,215.66	157.36	14,061.28
10	14,061.28	703.06	14,764.34	163.44	14,604.00

Cumulative Total $1,386.44

Ivy Funds VIP Pathfinder Moderately Conservative

Annual expense ratio 0.99%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$100.58	$10,401.00
2	10,401.00	520.05	10,921.05	104.61	10,818.50
3	10,818.50	540.92	11,359.42	108.81	11,252.75
4	11,252.75	562.64	11,815.39	113.18	11,704.44
5	11,704.44	585.22	12,289.66	117.72	12,174.25
6	12,174.25	608.71	12,782.96	122.45	12,662.93
7	12,662.93	633.15	13,296.07	127.36	13,171.22
8	13,171.22	658.56	13,829.78	132.47	13,699.91
9	13,699.91	685.00	14,384.90	137.79	14,249.82
10	14,249.82	712.49	14,962.31	143.32	14,821.81

Cumulative Total $1,208.30

Ivy Funds VIP Pathfinder Conservative

Annual expense ratio 1.15%

Year	Hypothetical Investment	Hypothetical Performance Earnings	Investment After Returns	Hypothetical Expenses	Hypothetical Ending Investment
1	$10,000.00	$500.00	$10,500.00	$117.00	$10,385.00
2	10,385.00	519.25	10,904.25	121.51	10,785.04
3	10,785.04	539.25	11,324.29	126.19	11,200.49
4	11,200.49	560.02	11,760.52	131.05	11,631.95
5	11,631.95	581.60	12,213.54	136.09	12,080.02
6	12,080.02	604.00	12,684.02	141.34	12,545.35
7	12,545.35	627.27	13,172.62	146.78	13,028.61
8	13,028.61	651.43	13,680.04	152.44	13,530.49
9	13,530.49	676.52	14,207.01	158.31	14,051.70
10	14,051.70	702.58	14,754.28	164.41	14,592.98

Cumulative Total $1,395.10

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS

______________________________________________________________________________

6300 Lamar Avenue

P. O. Box 29217

Shawnee Mission, Kansas 66201-9217

PROSPECTUS
Custodian
	UMB Bank, n. a.
	928 Grand Boulevard
	Kansas City, Missouri 64106
Legal Counsel
	K&L Gates LLP
	1601 K Street, N.W.
	Washington, D.C. 20006
Independent Registered Public Accounting Firm
	Deloitte & Touche LLP
	1100 Walnut, Suite 3300
	Kansas City, Missouri 64106
Investment Manager
	Waddell & Reed Investment Management Company
	6300 Lamar Avenue
	P. O. Box 29217
	Shawnee Mission, Kansas 66201-9217
	913.236.2000
	888.WADDELL
Underwriter
	Waddell & Reed, Inc.
	6300 Lamar Avenue
	P.O. Box 29217
	Shawnee Mission, Kansas 66201-9217
	913.236.2000
	888.WADDELL
Transfer Agent
	Waddell & Reed Services Company
	6300 Lamar Avenue
	P. O. Box 29217
	Shawnee Mission, Kansas 66201-9217
	913.236.2000
	888.WADDELL
Accounting Services Agent
	Waddell & Reed Services Company
	6300 Lamar Avenue
	P. O. Box 29217
	Shawnee Mission, Kansas 66201-9217
	913.236.2000
	888.WADDELL
Our INTERNET address is:
	http://www.waddell.com

Ivy Funds Variable Insurance Portfolios

PROSPECTUS

You can get more information about the Portfolios in--

• the Statement of Additional Information (SAI), which contains detailed information about each Portfolio, particularly its investment policies and practices. You may not be aware of important information about a Portfolio unless you read both the Prospectus and the SAI. The current SAI is on file with the Securities and Exchange Commission (SEC) and it is incorporated into this Prospectus by reference (that is, the SAI is legally part of the Prospectus).
• the Annual and Semiannual Reports to Shareholders, which detail each Portfolio's actual investments and include financial statements as of the close of the particular annual or semiannual period. The annual report also contains a discussion of the market conditions and investment strategies that significantly affected the Portfolios' performance during the year covered by the report.

To request a copy of the current SAI or copies of the Portfolios' most recent Annual and Semiannual reports, without charge, or for other inquiries, contact the Trust or Waddell & Reed, Inc. at the address and telephone number below. Copies of the SAI, Annual and/or Semiannual Report also may be requested at request@waddell.com. Additionally, the Prospectus, SAI and Annual and Semiannual Reports for the Portfolios are available on the Waddell & Reed website at www.waddell.com.

Information about the Trust (including its current SAI and most recent Annual and Semiannual Reports) is available from the SEC's web site at http://www.sec.gov and also may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov or from the SEC's Public Reference Room, Room 1580, 100 F Street, N.E., Washington, D.C., 20549. You can find out about the operation of the Public Reference Room and applicable copying charges by calling 202.551.5850.

WADDELL & REED, INC.

6300 Lamar Avenue

P. O. Box 29217

Shawnee Mission, Kansas 66201-9217

913.236.2000

888.WADDELL

The Trust's SEC file number is: 811-5017.

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS

Ivy Funds VIP Asset Strategy

Ivy Funds VIP Balanced

Ivy Funds VIP Bond

Ivy Funds VIP Core Equity

Ivy Funds VIP Dividend Opportunities

Ivy Funds VIP Energy

Ivy Funds VIP Global Natural Resources

Ivy Funds VIP Growth

Ivy Funds VIP High Income

Ivy Funds VIP International Growth

Ivy Funds VIP International Value

Ivy Funds VIP Micro Cap Growth

Ivy Funds VIP Mid Cap Growth

Ivy Funds VIP Money Market

Ivy Funds VIP Mortgage Securities

Ivy Funds VIP Real Estate Securities

Ivy Funds VIP Science and Technology

Ivy Funds VIP Small Cap Growth

Ivy Funds VIP Small Cap Value

Ivy Funds VIP Value

Ivy Funds VIP Pathfinder Aggressive

Ivy Funds VIP Pathfinder Moderately Aggressive

Ivy Funds VIP Pathfinder Moderate

Ivy Funds VIP Pathfinder Moderately Conservative

Ivy Funds VIP Pathfinder Conservative

6300 Lamar Avenue

P. O. Box 29217

Shawnee Mission, Kansas 66201-9217

913-236-2000

888-WADDELL

April 30, 2009

STATEMENT OF ADDITIONAL INFORMATION

Ivy Funds Variable Insurance Portfolios (Trust) is an open-end management investment company that currently consists of 25 separate series (each, a Portfolio, and, collectively, the Portfolios), which are listed above. This Statement of Additional Information (SAI) is not a prospectus. Investors should read this SAI in conjunction with the prospectus for the Trust dated April 30, 2009 (Prospectus), which may be obtained, without charge, upon request, from the Trust or its underwriter, Waddell & Reed, Inc. (Waddell & Reed), at the address or telephone number shown above.

TABLE OF CONTENTS

         Trust History                  

         The Portfolios, Their Investments, Related Risks and Restrictions                  

         Management of the Trust                  

         Control Persons and Principal Holders of Securities                  

         Investment Advisory and Other Services                  

         Portfolio Managers                  

         Brokerage Allocation and Other Practices                  

         Proxy Voting Policy                  

         Trust Shares                  

         Purchase, Redemption and Pricing of Shares                  

         Taxation of the Portfolios                  

         Financial Statements                  

         Appendix A                  

         Appendix B                  

TRUST HISTORY

Ivy Funds Variable Insurance Portfolios was organized as a Delaware statutory trust on January 15, 2009, and is the successor to Ivy Funds Variable Insurance Portfolios, Inc., a Maryland corporation organized on December 2, 1986 (Corporation), pursuant to a reorganization on April 30, 2009. Each Portfolio is a series of the Trust and the successor to the corresponding series of the Corporation. On July 31, 2008, the Corporation changed its name from W&R Target Funds, Inc. The name of each Portfolio begins with "Ivy Funds VIP," for example, Ivy Funds VIP Asset Strategy. Prior to July 31, 2008, the name of each Portfolio ended with "Portfolio," for example, Asset Strategy Portfolio. Prior to July 31, 2008, Ivy Funds VIP International Growth was known as International Growth Portfolio, and prior to December 1, 2004, it was known as International II Portfolio. Prior to July 31, 2008, Ivy Funds VIP Dividend Opportunities was known as Dividend Income Portfolio.

THE PORTFOLIOS, THEIR INVESTMENTS, RELATED RISKS AND RESTRICTIONS

Each Portfolio is a mutual fund, an investment that pools shareholders' money and invests it toward a specified objective. Each Portfolio has its own objective(s) and investment policies. The Trust sells its shares only to the separate accounts of certain select insurance companies (Participating Insurance Companies) to fund certain variable life insurance policies and variable annuity contracts (Policies).

This SAI supplements the information contained in the Prospectus and contains more detailed information about the investment strategies and policies the Trust's investment manager, Waddell & Reed Investment Management Company (WRIMCO) or a Portfolio's subadvisor, if applicable (as applicable, Investment Manager) may employ and the types of instruments in which a Portfolio may invest, in pursuit of the Portfolio's objective(s). A summary of the risks associated with instrument types and investment practices is included as well.

The Investment Manager might not buy all of these instruments or use all of these techniques, or use them to the full extent permitted by a Portfolio's investment policies and restrictions. The Investment Manager buys an instrument or uses a technique only if it believes that doing so will help a Portfolio achieve its objective(s). See Investment Restrictions for a listing of the fundamental and non-fundamental, or operating, policies.

Recent Market Events

Recent events in the financial sector have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign. These events have included, but are not limited to, the U.S. government's placement of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) under conservatorship (see Specific Securities and Investment Practices - U.S. Government Securities), the bankruptcy filing of Lehman Brothers Holdings Inc., the sale of Merrill Lynch & Co., Inc. to Bank of America, N.A., the U.S. government support of American International Group, Inc., the sale of Wachovia Corporation to Wells Fargo & Company, reports of credit and liquidity issues involving certain money market mutual funds, and emergency measures by the U.S. and foreign governments banning short-selling for specified periods. Both domestic and foreign equity markets have been experiencing increased volatility and turmoil, with issuers that have exposure to the real estate, mortgage and credit markets particularly affected, and it is uncertain whether or for how long these conditions will continue.

In addition to the recent unprecedented turbulence in financial markets, the reduced liquidity in credit and fixed-income markets may adversely affect many issuers worldwide. This reduced liquidity may result in less money being available to purchase raw materials, goods and services from emerging markets, which may, in turn, bring down the prices of these economic staples. It may also result in emerging market issuers having more difficulty obtaining financing, which may, in turn, cause a decline in their stock prices. These events and possible continuing market turbulence may have an adverse effect on the Portfolio.

Ivy Funds VIP Pathfinder Portfolios

Each of Ivy Funds VIP Pathfinder Aggressive, Ivy Funds VIP Pathfinder Moderately Aggressive, Ivy Funds VIP Pathfinder Moderate, Ivy Funds VIP Pathfinder Moderately Conservative, and Ivy Funds VIP Pathfinder Conservative (each, a Pathfinder Portfolio) is a fund of funds. Each invests primarily in a combination of other Portfolios that are not Pathfinder Portfolios (Underlying Funds), as described in the Prospectus.

         Other Direct Investments of the Pathfinder Portfolios

Each Pathfinder Portfolio may invest directly in securities issued or guaranteed by the U.S. government or its agencies or instrumentalities (U.S. government securities), commercial paper and other short-term corporate obligations and other money market instruments, including repurchase agreements. Under normal circumstances, each Pathfinder Portfolio anticipates investments in these securities and instruments to be minimal.

Ivy Funds VIP Asset Strategy

Ivy Funds VIP Asset Strategy allocates its assets among investments in one or more of the following classes: stocks, bonds, and short-term instruments of issuers located throughout the world. WRIMCO may allocate the Portfolio's investments among these types of securities in different proportions at different times, including up to 100% in stocks, bonds, or short-term instruments, respectively.

"Stocks" include domestic and foreign equity securities of all types (other than adjustable-rate preferred stocks, which are included in the bond class). WRIMCO seeks to maximize total return within this investment class by actively allocating assets to industry sectors expected to benefit from major trends, and to individual stocks that WRIMCO believes to have superior growth potential and/or value potential. Securities in the stock class may include common stocks, fixed-rate preferred stocks (including convertible preferred stocks), warrants, rights, depositary receipts, securities of investment companies, and other equity securities issued by companies of any size, located anywhere in the world.

"Bonds" include all varieties of domestic and foreign fixed-income securities with remaining maturities greater than one year. WRIMCO seeks to maximize total return within the bond class by adjusting the Portfolio's investments in securities with different credit qualities, maturities, and coupon or dividend rates, and by seeking to take advantage of yield differentials between securities. Securities in this class may include bonds, notes, adjustable-rate preferred stocks, convertible bonds, mortgage-related and asset-backed securities, domestic and foreign government and government agency securities, zero coupon securities, and other intermediate and long-term securities. WRIMCO intends to take advantage of yield differentials by considering the purchase or sale of instruments when differentials on spreads between various grades and maturities of such instruments approach extreme levels relative to long-term norms.

"Short-term instruments" include all types of domestic and foreign securities and money market instruments with remaining maturities of three years or less. WRIMCO seeks to maximize total return within the short-term asset class by taking advantage of yield differentials between different instruments, issuers, and currencies. Short-term instruments may include: corporate debt securities, such as commercial paper and notes; government securities issued by U.S. or foreign governments or their agencies or instrumentalities; bank deposits and other financial institution obligations; repurchase agreements involving any type of security in which the Portfolio may invest; and other similar short-term instruments.

Any of the securities in which the Portfolio invests may be denominated in U.S. dollars or in a foreign currency.

In making asset allocation decisions, WRIMCO typically evaluates projections of risk, market conditions, economic conditions, volatility, yields, and returns. As described above, the Portfolio has the flexibility to invest up to all of its assets in money market and other short-term investments, although it does not typically invest a substantial portion of its assets in these investments under normal circumstances. WRIMCO will typically increase the Portfolio's investment in high-quality, short-term investments in order to increase the defensive positioning of the Portfolio. The Portfolio may also invest in derivative instruments for both defensive and speculative purposes. WRIMCO may invest up to 25% of the Portfolio's total assets in precious metals, subject to the Portfolio's limit on illiquid investments.

Ivy Funds VIP High Income

Ivy Funds VIP High Income may invest in certain high-yield, high-risk, non-investment grade debt securities, or junk bonds, which include bonds rated BB or below by Standard & Poor's, a division of The McGraw-Hill Companies, Inc. (S&P), or Ba or below by Moody's Investors Service, Inc. (Moody's), or unrated bonds determined by WRIMCO to be of comparable quality. The market for such securities may differ from that for investment grade debt securities. See the discussion below for information about the risks associated with non-investment grade debt securities. See Appendix A to this SAI for a description of bond ratings.

Ivy Funds VIP Money Market

Ivy Funds VIP Money Market may invest in the money market obligations and instruments listed below. As a money market fund that uses the amortized cost method of valuing its portfolio securities, the Portfolio must comply with Rule 2a-7 (Rule 2a-7) under the Investment Company Act of 1940, as amended (1940 Act). Under Rule 2a-7, investments are limited to those that are U.S. dollar-denominated and that are rated in one of the two highest rating categories by the requisite nationally recognized statistical ratings organization (NRSRO) or are comparable unrated securities. See Appendix A to this SAI for a description of some of these ratings. In addition, Rule 2a-7 limits investments in securities of any one issuer (except U.S. government securities) to no more than 5% of the Portfolio's total assets. Investments in securities rated in the second highest rating category by the requisite NRSRO(s) or comparable unrated securities are limited to no more than 5% of the Portfolio's total assets, with investment in such securities of any one issuer (except U.S. government securities) being limited to the greater of one percent of the Portfolio's total assets or $1,000,000. In accordance with Rule 2a-7, the Portfolio may invest in securities with a remaining maturity of not more than 397 calendar days.

(1) U.S. Government Securities: See the section entitled U.S. Government Securities.

(2) Bank Obligations and Instruments Secured Thereby: Subject to the limitations described above, time deposits, certificates of deposit, bankers' acceptances and other bank obligations if they are obligations of a bank subject to regulation by the U.S. government (including obligations issued by foreign branches of these banks) or obligations issued by a foreign bank having total assets equal to at least U.S. $500,000,000, and instruments secured by any such obligation. A bank includes commercial banks and savings and loan associations. Time deposits are monies kept on deposit with U.S. banks or other U.S. financial institutions for a stated period of time at a fixed rate of interest. There may be penalties for the early withdrawal of such time deposits, in which case, the yield of these investments will be reduced.

(3) Commercial Paper Obligations Including Variable Rate Master Demand Notes: Commercial paper rated A-1 or A-2 by S&P, or Prime-1 or Prime-2 by Moody's or, if not rated, of comparable quality and issued by a corporation in whose debt obligations the Fund may invest (see 4 below). S&P and Moody's are among the NRSROs under Rule 2a-7. See Appendix A for a description of some of these ratings. A variable rate master demand note represents a purchasing/selling arrangement of short-term promissory notes under a letter agreement between a commercial paper issuer and an institutional investor.

(4) Corporate Debt Obligations: Corporate debt obligations if they are rated at least A by S&P or Moody's. See Appendix A for a description of some of these debt ratings.

(5) Canadian Government Obligations: Obligations of, or obligations guaranteed by, the Government of Canada, a Province of Canada or any agency, instrumentality or political subdivision of that Government or any Province. The Portfolio will not invest in Canadian government obligations if more than 10% of the value of its total assets would then be so invested, subject to the diversification requirements of Rule 2a-7 applicable to Ivy Funds VIP Money Market. The Portfolio may not invest in Canadian government obligations if they are denominated in Canadian dollars.

(6) Certain Other Obligations: Obligations other than those listed in (1) through (5) (such as municipal obligations) only if any such other obligation is guaranteed as to principal and interest by either a bank in whose obligations the Portfolio may invest (see (2) above) or a corporation in whose commercial paper the Portfolio may invest (see (3) above) and otherwise permissible under Rule 2a-7.

The value of the obligations and instruments in which the Portfolio invests will fluctuate depending in large part on changes in prevailing interest rates. If these rates go up after the Portfolio buys an obligation or instrument, its value may go down; if these rates go down, its value may go up. Changes in value and yield based on changes in prevailing interest rates may have different effects on short-term debt obligations than on long-term obligations. Long-term obligations (which often have higher yields) may fluctuate in value more than short-term ones. Changes in interest rates will be more quickly reflected in the yield of a portfolio of short-term obligations than in the yield of a portfolio of long-term obligations.

Securities - General

The main types of securities in which the Portfolios may invest, subject to their respective investment policies and restrictions, may include common stocks, preferred stocks, debt securities and convertible securities. Although common stocks and other equity securities have a history of long-term growth in value, their prices tend to fluctuate in the short term, particularly those of smaller companies. The equity securities in which a Portfolio invests may include preferred stock that converts into common stock. A Portfolio may invest in preferred stock rated in any rating category of the NRSROs or, if unrated, judged by the Investment Manager to be of comparable quality, subject to the Portfolio's investment policies and restrictions. In the case of a "split-rated" security, which results when NRSROs rate the security at different rating levels (for example, BBB by S&P and Ba by Moody's), it is each Portfolio's general policy to classify such security at the higher rating level where, in the judgment of the Investment Manager such classification reasonably reflects the security's quality and risk. Debt securities have varying levels of sensitivity to changes in interest rates and varying degrees of quality. As a general matter, however, when interest rates rise, the values of fixed-rate debt securities fall and, conversely, when interest rates fall, the values of fixed-rate debt securities rise. Similarly, long-term bonds are generally more sensitive to interest rate changes than short-term bonds.

Subject to its investment policies and restrictions, a Portfolio may invest in debt securities rated in any rating category of the established rating services, including securities rated in the lowest category (securities rated D by S&P or C by Moody's). Debt securities rated D by S&P or C by Moody's are in payment default or are regarded as having extremely poor prospects of ever attaining any real investment standing. Debt securities rated at least BBB by S&P or Baa by Moody's are considered to be investment grade debt securities; however, securities rated BBB or Baa may have speculative characteristics. In addition, a Portfolio will treat unrated securities judged by the Investment Manager to be of comparable quality to a rated security as having that rating.

Lower-quality debt securities (commonly called junk bonds) are considered to be speculative and involve greater risk of default or price changes due to changes in the issuer's creditworthiness. The market prices of these securities may fluctuate more than high-quality securities and may decline significantly in periods of general economic difficulty. The market for lower-rated debt securities may be thinner and less active than that for higher-rated debt securities, which can adversely affect the prices at which the former are sold. Adverse publicity and changing investor perceptions may decrease the values and liquidity of lower-rated debt securities, especially in a thinly traded market. Valuation becomes more difficult and judgment plays a greater role in valuing lower-rated debt securities than with respect to securities for which more external sources of quotations and last sale information are available. Since the risk of default is higher for lower-rated debt securities, the Investment Manager's research and credit analysis are an especially important part of managing securities of this type held by a Portfolio. The Investment Manager continuously monitors the issuers of lower-rated debt securities in the Portfolio in an attempt to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments. The Trust may choose, at its expense or in conjunction with others, to pursue litigation or otherwise exercise its rights as a security holder to seek to protect the interests of security holders if it determines this to be in the best interest of the shareholders of each affected Portfolio.

While credit ratings are only one factor the Investment Manager relies on in evaluating high-yield debt securities, certain risks are associated with credit ratings. Credit ratings evaluate the safety of principal and interest payments, not market value risk. Credit ratings for individual securities may change from time to time, and a Portfolio may retain a portfolio security whose rating has been changed.

Subject to its investment policies and restrictions, a Portfolio may purchase debt securities whose principal amount at maturity is dependent upon the performance of a specified equity security. The issuer of such debt securities, typically an investment banking firm, is unaffiliated with the issuer of the equity security to whose performance the debt security is linked. Equity-linked debt securities differ from ordinary debt securities in that the principal amount received at maturity is not fixed, but is based on the price of the linked equity security at the time the debt security matures. The performance of equity-linked debt securities depends primarily on the performance of the linked equity security and may also be influenced by interest rate changes. In addition, although the debt securities are typically adjusted for diluting events such as stock splits, stock dividends and certain other events affecting the market value of the linked equity security, the debt securities are not adjusted for subsequent issuances of the linked equity security for cash. Such an issuance could adversely affect the price of the debt security. In addition to the equity risk relating to the linked equity security, such debt securities are also subject to credit risk with regard to the issuer of the debt security. In general, however, such debt securities are less volatile than the equity securities to which they are linked.

Subject to its investment policies and restrictions, a Portfolio may invest in convertible securities. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock of the same or different issuer within a particular period of time at a specified price or formula. Convertible securities generally have higher yields than common stocks of the same or similar issuers, but lower yields than comparable nonconvertible securities, are less subject to fluctuation in value than the underlying stock because they have fixed income characteristics, and provide the potential for capital appreciation if the market price of the underlying common stock increases.

The value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also may have an effect on the convertible security's investment value. A convertible security may be subject to redemption at the option of the issuer at a price established in the security's offering document. If a convertible security held by a Portfolio is called for redemption, the Portfolio will be required to convert it into the underlying stock, sell it to a third party or permit the issuer to redeem the security. Convertible securities are typically issued by smaller capitalized companies whose stock prices may be volatile. Thus, any of these actions could have an adverse effect on a Portfolio's ability to achieve its investment objectives.

Subject to its investment policies and restrictions, a Portfolio may also invest in a type of convertible preferred stock that pays a cumulative, fixed dividend that is senior to, and expected to be in excess of, the dividends paid on the common stock of the issuer. At the mandatory conversion date, the preferred stock is converted into not more than one share of the issuer's common stock at the call price that was established at the time the preferred stock was issued. If the price per share of the related common stock on the mandatory conversion date is less than the call price, the holder of the preferred stock will nonetheless receive only one share of common stock for each share of preferred stock (plus cash in the amount of any accrued but unpaid dividends). At any time prior to the mandatory conversion date, the issuer may redeem the preferred stock upon issuing to the holder a number of shares of common stock equal to the call price of the preferred stock in effect on the date of redemption divided by the market value of the common stock, with such market value typically determined one or two trading days prior to the date notice of redemption is given. The issuer must also pay the holder of the preferred stock cash in an amount equal to any accrued but unpaid dividends on the preferred stock. This convertible preferred stock is subject to the same market risk as the common stock of the issuer, except to the extent that such risk is mitigated by the higher dividend paid on the preferred stock. The opportunity for equity appreciation afforded by an investment in such convertible preferred stock, however, is limited, because in the event the market value of the issuer's common stock increases to or above the call price of the preferred stock, the issuer may (and would be expected to) call the preferred stock for redemption at the call price. This convertible preferred stock is also subject to credit risk with regard to the ability of the issuer to pay the dividend established upon issuance of the preferred stock. Generally, however, the market value of the convertible preferred stock is less volatile than the related common stock of the issuer.

Specific Securities and Investment Practices--each Portfolio except the Pathfinder Portfolios

         Borrowing

Each Portfolio may borrow money only as permitted under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. Interest on money borrowed is an expense the Portfolio would not otherwise incur, so that it may have reduced net investment income during periods of outstanding borrowings. If a Portfolio does borrow money, its share price may be subject to greater fluctuation until the borrowing is paid off.

         Banking Industry and Savings and Loan Obligations

Certificates of deposit are certificates issued against funds deposited in a commercial bank for a definite period of time and earning a specified return. Bankers' acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are "accepted" by a bank (meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument at maturity). In addition to investing in certificates of deposit and bankers' acceptances, a Portfolio may invest in time deposits in banks or savings and loan associations. Time deposits are generally similar to certificates of deposit, but are uncertificated. A Portfolio's investments in certificates of deposit, time deposits, and bankers' acceptance are limited to obligations of (i) banks having total assets in excess of $1 billion (as of the date of their most recent financial statements at the time of investment), (ii) U.S. banks which do not meet the $1 billion asset requirement, if the principal amount of such obligation is fully insured by the Federal Deposit Insurance Corporation (FDIC), (iii) savings and loan associations which have total assets in excess of $1 billion and which are members of the FDIC, and (iv) foreign banks if the obligation is, in the opinion of WRIMCO or the Portfolio's investment subadvisor, as applicable, of an investment quality comparable to other debt securities which may be purchased by a Portfolio. Each Portfolio's investments in certificates of deposit of savings associations are limited to obligations of Federal and state-chartered institutions whose total assets exceed $1 billion and whose deposits are insured by the FDIC. Bank deposits are not marketable, and a Portfolio may invest in them subject to its investment restrictions regarding illiquid investments, unless such obligations are payable at principal amount plus accrued interest on demand or within seven days after demand.

         Foreign Securities and Currencies

Subject to its investment policies and restrictions, a Portfolio may invest in the securities of foreign issuers, including depositary receipts. In general, depositary receipts are securities convertible into and evidencing ownership of securities of foreign corporate issuers, although depositary receipts may not necessarily be denominated in the same currency as the securities into which they may be converted. American depositary receipts (ADRs), in registered form, are U. S. dollar-denominated receipts typically issued by a U.S. bank representing ownership of a specific number of shares in a non-U.S. corporation. ADRs are quoted and traded in U.S. dollars in the U.S. securities market. An ADR is sponsored if the original issuing company has selected a single U.S. bank to serve as its U.S. depositary and transfer agent. This relationship requires a deposit agreement which defines the rights and duties of both the issuer and depositary. Companies that sponsor ADRs must also provide their ADR investors with English translations of company information made public in their own country of domicile. Sponsored ADR investors also generally have the same voting rights as ordinary shareholders, barring any unusual circumstances. ADRs which meet these requirements can be listed on U.S. stock exchanges. Unsponsored ADRs are typically created at the initiative of a broker or bank reacting to demand for a specific foreign stock. The broker or bank purchases the underlying shares and deposits them in a depositary. Unsponsored shares issued after 1983 are not eligible for U.S. stock exchange listings, and they do not generally include voting rights. Global depositary receipts and European depositary receipts, in bearer form, are foreign receipts evidencing a similar arrangement and are designed for use by non-U.S. investors and traders in non-U.S. markets. Global depositary receipts are designed to facilitate the trading of securities of foreign issuers by U.S. and non-U.S. investors and traders.

The Investment Manager believes that there are investment opportunities as well as risks in investing in foreign securities. Individual foreign economies may differ favorably or unfavorably from the U.S. economy or each other in such matters as gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. Individual foreign companies may also differ favorably or unfavorably from domestic companies in the same industry. Foreign currencies may be stronger or weaker than the U.S. dollar or than each other. Thus, the value of securities denominated in or indexed to foreign currencies, and the value of dividends and interest from such securities, can change significantly when foreign currencies strengthen or weaken relative to the U.S. dollar. The Investment Manager believes that a Portfolio's ability to invest its assets abroad might enable it to take advantage of these differences and strengths where they are favorable.

However, foreign securities and foreign currencies involve additional significant risks, apart from the risks inherent in U.S. investments. Foreign securities markets generally have less trading volume and less liquidity than U.S. markets, and prices on some foreign markets can be highly volatile. Many foreign countries lack uniform accounting and disclosure standards comparable to those applicable to U.S. companies, and it may be more difficult to obtain reliable information regarding an issuer's financial conditions and operations. In addition, the costs of foreign investing, including withholding taxes, brokerage commissions and custodial costs, are generally higher than for U.S. investments.

Foreign markets may offer less protection to investors than U.S. markets. Foreign issuers, brokers and securities markets may be subject to less government supervision. Foreign security trading practices, including those involving the release of assets in advance of payment, may involve increased risks in the event of a failed trade or the insolvency of a broker-dealer, and may involve substantial delays. It may also be difficult to enforce legal rights in foreign countries.

Investing abroad also involves different political and economic risks. Foreign investments may be affected by actions of foreign governments adverse to the interests of U.S. investors, including the possibility of expropriation or nationalization of assets, confiscatory taxation, restrictions on U.S. investment or on the ability to repatriate assets or convert currency into U.S. dollars, or other government intervention. There may be greater possibility of default by foreign governments or government-sponsored enterprises. Investments in foreign countries also involve a risk of local political, economic, or social instability, military action or unrest, or adverse diplomatic developments. There is no assurance that the Investment Manager will be able to anticipate these potential events or counter their effects.

Certain foreign securities impose restrictions on transfer within the United States or to U.S. persons. Although securities subject to transfer restrictions may be marketable abroad, they may be less liquid than foreign securities of the same class that are not subject to such restrictions.

As a general rule, the country designation for a security for purposes of a Portfolio's investment policies and restrictions regarding foreign securities is the issuer's country of domicile, as indicated by a third-party source (for example, Bloomberg). However, pursuant to its procedures, the Investment Manager may request a different country designation due to certain identified circumstances. For example, an issuer's country designation could be changed to: (i) the country in which the security is principally traded (determined based on a percentage of the total volume traded); or (ii) the country from which the issuer, during the issuer's most recent fiscal year, derived at least 50% of its revenues or profits (from goods produced or sold, investments made, or services performed); or (iii) the country where the issuer has at least 50% of its assets in that country or region. The request to change a security's country designation must be delivered to the Portfolios' Treasurer and to the Portfolios' Chief Compliance Officer (CCO) for approval.

Investments in obligations of domestic branches of foreign banks will be considered domestic securities if the Investment Manager has determined that the nature and extent of Federal and state regulation and supervision of the branch in question are substantially equivalent to Federal or state-chartered domestic banks doing business in the same jurisdiction.

Subject to its investment policies and restrictions, a Portfolio may purchase and sell foreign currency and invest in foreign currency deposits and may enter into forward currency contracts. The Portfolios may incur a transaction charge in connection with the exchange of currency. Currency conversion involves dealer spreads and other costs, although commissions are not usually charged. See, Options, Futures and Other Strategies - Forward Currency Contracts.

Foreign Currencies. Investment in foreign securities usually will involve currencies of foreign countries. Moreover, subject to its investment policies and restrictions, a Portfolio (other than Ivy Funds VIP Money Market) may temporarily hold funds in bank deposits in foreign currencies during the completion of investment programs and may purchase forward foreign currency contracts. Because of these factors, the value of the assets of a Portfolio as measured in U.S. dollars may be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations, and a Portfolio may incur costs in connection with conversions between various currencies. Although each Portfolio's custodian values the Portfolio's assets daily in terms of U.S. dollars, the Portfolio does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. A Portfolio may do so from time to time, however, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (the "spread") between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to a Portfolio at one rate, while offering a lesser rate of exchange should the Portfolio desire to resell that currency to the dealer. Each Portfolio will conduct its foreign currency exchange transactions either on a spot (that is, cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward contracts to purchase or sell foreign currencies.

Because a Portfolio may be invested in both U.S. and foreign securities markets, changes in the Portfolio's share price may have a low correlation with movements in U.S. markets. Each Portfolio's share price will reflect the movements of the different stock and bond markets in which it is invested (both U.S. and foreign), and of the currencies in which the investments are denominated. Thus, the strength or weakness of the U.S. dollar against foreign currencies may account for part of each Portfolio's investment performance. U.S. and foreign securities markets do not always move in step with each other, and the total returns from different markets may vary significantly. Currencies in which a Portfolio's assets are denominated may be devalued against the U.S. dollar, resulting in a loss to the Portfolio.

A Portfolio usually effects currency exchange transactions on a spot (that is, cash) basis at the spot rate prevailing in the foreign exchange market. However, some price spread on currency exchange will be incurred when the Portfolio converts assets from one currency to another. Further, a Portfolio may be affected either unfavorably or favorably by fluctuations in the relative rates of exchange between the currencies of different nations. For example, in order to realize the value of a foreign investment, a Portfolio must convert that value, as denominated in its foreign currency, into U.S. dollars using the applicable currency exchange rate. The exchange rate represents the current price of a U.S. dollar relative to that foreign currency; that is, the amount of such foreign currency required to buy one U.S. dollar. If a Portfolio holds a foreign security which has appreciated in value as measured in the foreign currency, the level of appreciation actually realized by the Portfolio may be reduced or even eliminated if the foreign currency has decreased in value relative to the U.S. dollar subsequent to the date of purchase. In such a circumstance, the cost of a U.S. dollar purchased with that foreign currency has gone up and the same amount of foreign currency purchases fewer dollars than at an earlier date.

Emerging Market Securities. The risks of investing in foreign countries are intensified in developing countries, or emerging markets. A developing country is a nation that, in the Investment Manager's opinion, is likely to experience long-term gross domestic product growth above that expected to occur in the United States, the United Kingdom, France, Germany, Italy, Japan and Canada. Developing countries may have relatively unstable governments, economies based on only a few industries and securities markets that trade a small number of securities.

The Investment Manager considers countries having developing markets to be all countries that are generally considered to be developing or emerging countries by the International Bank for Reconstruction and Development (more commonly referred to as the World Bank) and the International Finance Corporation, as well as countries that are classified by the United Nations or otherwise regarded by their authorities as developing. Currently, it is generally agreed that the countries not included in this category are Ireland, Spain, New Zealand, Australia, the United Kingdom, Italy, the Netherlands, Belgium, Austria, France, Canada, Germany, Denmark, the United States, Sweden, Finland, Norway, Japan, Switzerland, Greece, Luxembourg, Portugal and South Korea. In addition, developing market securities means (i) securities of companies the principal securities trading market for which is a developing market country, as defined above, (ii) securities, traded in any market, of companies that derive 50% or more of their total revenue from either goods or services produced in such developing market countries or sales made in such developing market countries or (iii) securities of companies organized under the laws of, and with a principal office in, a developing market country. Ivy Funds VIP International Value will, under normal market conditions, invest at least 65% of its total assets in at least three different countries outside the U.S.

Some of the risks to which a Portfolio may be exposed by investing in securities of emerging markets are: restrictions placed by the government of a developing country related to investment, exchange controls, and repatriation of the proceeds of investment in that country; fluctuation of a developing country's currency against the U.S. dollar; unusual price volatility in a developing country's securities markets; government involvement in the private sector, including government ownership of companies in which the Portfolio may invest; limited information about a developing market; high levels of tax levied by developing countries on dividends, interest and capital gains; the greater likelihood that developing markets will experience more volatility in inflation rates than developed markets; the greater potential that securities purchased by the Portfolio in developing markets may be fraudulent or counterfeit due to differences in the level of regulation, disclosure requirements and recordkeeping practices in those markets; risks related to the liquidity and transferability of investments in certain instruments, such as loan participations, that may not be considered "securities" under local law; settlement risks, including potential requirements for the Portfolio to render payment prior to taking possession of portfolio securities in which it invests; the possibility of nationalization, expropriation or confiscatory taxation; favorable or unfavorable differences between individual foreign economies and the U.S. economy, such as growth of gross domestic product, rate of inflation, capital reinvestment, resources, self-sufficiency, and balance of payments position; additional costs associated with any investment in non-U.S. securities, including higher custodial fees than typical U.S. custodial arrangements, transaction costs of foreign currency conversions and generally higher commission rates on portfolio transactions than prevail in U.S. markets; greater social, economic and political instability, including the risk of war; lack of availability of currency hedging or other risk management techniques in certain developing countries; the fact that companies in developing countries may be newly organized and may be smaller and less seasoned; differences in accounting, auditing and financial reporting standards; the heightened risks associated specifically with establishing record ownership and custody of Russian and other Eastern European securities; and limitations on obtaining and enforcing judgments against non-U.S. residents.

Foreign Sovereign Debt Obligations. Investment in sovereign debt can involve a high degree of risk. The governmental entity that controls the repayment of sovereign debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of such debt. A governmental entity's willingness or ability to repay principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the governmental entity's policy towards the International Monetary Fund, and the political constraints to which a governmental entity may be subject. Governmental entities may also be dependent on expected disbursements from foreign governments, multilateral agencies and others abroad to reduce principal and interest arrearages on their debt. The commitment on the part of these governments, agencies and others to make such disbursements may be conditioned on a governmental entity's implementation of economic reforms and/or economic performance and the timely service of such debtor's obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third parties' commitments to lend funds to the governmental entity, which may further impair such debtor's ability or willingness to service its debts in a timely manner. Consequently, governmental entities may default on their sovereign debt. Holders of sovereign debt may be requested to participate in the rescheduling of such debt and to extend further loans to governmental entities. There is no bankruptcy proceeding by which sovereign debt on which governmental entities have defaulted may be collected in whole or in part.

         Illiquid Investments

Illiquid investments are investments that cannot be sold or otherwise disposed of in the ordinary course of business within seven days at approximately the price at which they are valued. Investments currently considered to be illiquid include:

(1)	repurchase agreements not terminable within seven days;
(2)	restricted securities not determined to be liquid pursuant to guidelines established by the Trusts' Board of Trustees;
(3)	non-government stripped fixed-rate mortgage-backed securities;
(4)	bank deposits, unless they are payable at principal amount plus accrued interest on demand or within seven days after demand;
(5)	over-the-counter (OTC) options (options not traded on an exchange) and their underlying collateral;
(6)	securities for which market quotations are not readily available;
(7)	securities involved in swap, cap, floor or collar transactions; and
(8)	direct debt instruments.

The assets used as cover for OTC options written by a Portfolio will be considered illiquid unless the OTC options are sold to qualified dealers who agree that the Portfolio may repurchase any OTC option it writes at a maximum price to be calculated by a formula set forth in the option agreement. The cover for an OTC option written subject to this procedure would be considered illiquid only to the extent that the maximum repurchase price under the formula exceeds the intrinsic value of the option.

WRIMCO believes that, in general, it is in the best interest of a Portfolio to be able to invest in illiquid securities up to the maximum allowable under the Portfolio's investment restriction on illiquid investments. WRIMCO believes that the risk of investing in illiquid securities is manageable considering the availability of certain securities that currently are considered illiquid but have widely established trading markets. For example, there has been significant growth in the types and availability of structured products, including: asset backed securities (which also include many mortgage-backed securities), collateralized bond obligations, collateralized mortgage obligations, collateralized debt obligations and commercial mortgage-backed securities. Since many of these securities are initially offered as individual issues, they are often deemed illiquid. See Mortgage-Backed and Asset-Backed Securities for more information on these types of securities.

Credit derivatives, such as credit default swaps, have also grown in both popularity and availability over the past few years. See "Swaps, Caps, Collars and Floors" in the section entitled Options, Futures and Other Strategies for more information about credit default swaps.

As well, it has become easier for institutional investors to structure their own investments. For example, if the Investment Manager desired Korean exposure for a Portfolio, instead of following difficult procedures for direct investment, the Investment Manager could, instead, invest in a specialized OTC bond or other instrument with an investment banker which would pay the same as the return on the Korean bond market without having to physically invest in the Korean market.

         Income Trusts

Ivy Funds VIP Energy may invest in income trusts, typically Canadian royalty trusts. An income trust generally is a Canadian investment trust that typically holds real estate or assets used in the oil or gas industry, that are income producing, the income from which is passed on to its security holders. The main attraction of an income trust is its ability to generate constant cash flows. Income trusts have the potential to deliver higher yields than bonds. During periods of low interest rates, income trusts may achieve higher yields compared with cash investments. During periods of increasing rates, the opposite may be true. Income trusts may experience losses during periods of both low and high interest rates.

Income trusts are structured to avoid taxes at the entity level. In a traditional corporate tax structure, net income is taxed at the corporate level and again as dividends in the hands of the investor. Under current law, an income trust generally pays no Canadian tax on earnings distributed directly to its security holders and, if properly structured, should not be subject to U.S. Federal income tax. This flow-through structure means that the distributions to income trust investors are generally higher than dividends from an equivalent corporate entity.

Despite the potential for attractive regular payments, income trusts are equity investments, not fixed income securities, and they share many of the risks inherent in stock ownership. In addition, an income trust may lack diversification, as such trusts are primarily invested in real estate, oil and gas, pipelines, and other infrastructure; potential growth may be sacrificed because revenue is passed on to security holders, rather than reinvested in the business. Income trusts do not guarantee minimum distributions or even return of capital; therefore, if the business starts to lose money, the trust can reduce or even eliminate distributions. The tax structure of income trusts described above, which would allow income to flow through to investors and be taxed only at the investor level, could be challenged under existing laws, or the tax laws could change. For example, on October 31, 2006, the Canadian Finance Minister announced plans to introduce a tax on Canadian income trusts, which plans were implemented in the Canadian federal budget for the 2007-2008 fiscal year introduced on March 19, 2007; that announcement resulted in a massive sell-off on Toronto markets of shares of income trusts (especially oil and gas trusts).

         Indexed Securities

Subject to its investment policies and restrictions, a Fund may purchase indexed securities. Indexed securities typically, but not always, are debt securities or deposits whose value at maturity or coupon rate is determined by reference to a specific index, instrument or statistic. The performance of indexed securities depends to a great extent on the performance of the security, currency or other instrument to which they are indexed and may also be influenced by interest rate changes in the United States and abroad. At the same time, indexed securities are subject to the credit risks associated with the issuer of the security and their values may decline substantially if the issuer's creditworthiness deteriorates. Indexed securities may be more volatile than the underlying investments. Gold-indexed securities, for example, typically provide for a maturity value that depends on the price of gold, resulting in a security whose price tends to rise and fall together with gold prices. Currency-indexed securities typically are short-term to intermediate-term debt securities whose maturity values or interest rates are determined by reference to the values of one or more specified foreign currencies, and may offer higher yields than U.S. dollar-denominated securities of equivalent issuers. Currency-indexed securities may be positively or negatively indexed; that is, their maturity value may increase when the specified currency value increases, resulting in a security that performs similarly to a foreign-denominated instrument, or their maturity value may decline when foreign currencies increase, resulting in a security whose price characteristics are similar to a put on the underlying currency. Currency-indexed securities may also have prices that depend on the values of a number of different foreign currencies relative to each other.

Recent issuers of indexed securities have included banks, corporations, and certain U.S. government agencies. Certain indexed securities that are not traded on an established market may be deemed illiquid.

         Initial Public Offerings

Securities issued through an initial public offering (IPO) can experience an immediate drop in value if the demand for the securities does not continue to support the offering price. Information about the issuers of IPO securities is also difficult to acquire since they are new to the market and may not have lengthy operating histories. A Portfolio may engage in short-term trading in connection with its IPO investments, which could produce higher trading costs. The number of securities issued in an IPO is limited, so it is likely that IPO securities will represent a smaller component of a Portfolio's holdings as the Portfolio's assets increase (and thus have a more limited effect on the Portfolio's performance).

         Investment Company Securities

Each Portfolio (other than Ivy Funds VIP Money Market) may purchase shares of another investment company subject to the restrictions and limitations of the 1940 Act, except that a Portfolio in which a Pathfinder Portfolio invests may not acquire any securities of registered open-end investment companies or unit investment trusts in reliance on Section 12(d)(1)(F) or (G) of the 1940 Act. As a shareholder in an investment company, a Portfolio would bear its pro rata share of that investment company's expenses, which could result in duplication of certain fees, including management and administrative fees.

Closed-End Investment Companies. Some countries, such as South Korea, Chile and India, have authorized the formation of closed-end investment companies to facilitate indirect foreign investment in their capital markets. The 1940 Act restrictions on investments in securities of closed-end investment companies may limit opportunities for certain of the Portfolios to invest indirectly in certain developing markets. Shares of certain closed-end investment companies may at times be acquired only at market prices representing premiums to their NAVs.

Exchange-Traded Funds. Subject to its investment policies and restrictions, a Portfolio (other than Ivy Funds VIP Money Market) may invest in exchange-traded funds (ETFs) as a means of tracking the performance of a designated stock index while maintaining liquidity or to gain exposure to precious metals and commodities without investing in them directly. For example, a Portfolio may invest in S&P 500 Depositary Receipts (SPDRs), which track the S&P 500 Index; S&P MidCap 400 Depositary Receipts (MidCap SPDRs), which track the S&P MidCap 400 Index; and "Dow Industrial Diamonds," which track the Dow Jones Industrial Average, or in other ETFs which track indexes;, provided that such investments are consistent with the Portfolio's investment objective(s) as determined by the Investment Manager. Each of these securities represents shares of ownership of a long-term unit investment trust that holds all of the stock included in the relevant underlying index. Since most ETFs are a type of investment company, a Portfolio's purchases of ETF shares may be subject to investment restrictions regarding investments in other investment companies.

An ETF's shares have a market price that approximates the NAV of the ETF's portfolio that tracks the designated index or the NAV of the underlying basket of commodities or commodities futures, as applicable, and are exchange-traded. As with other equity transactions, brokers charge a commission in connection with the purchase shares of ETFs. In addition, an asset management fee is charged in connection with the underlying unit investment trust (which is in addition to the investment management fee paid by the Portfolio).

Trading costs for ETFs are somewhat higher than those for stock index futures contracts, but, because ETFs trade like other exchange-listed equities, they represent a quick and convenient method of maximizing the use of a Portfolio's assets to track the return of a particular stock index.

Investments in an ETF generally present the same primary risks as investments in a conventional fund, which is not exchange-traded. The price of an ETF can fluctuate, and a Portfolio could lose money investing in an ETF. In addition, ETFs are subject to the following risks that do not apply to conventional funds: (i) the market price of an ETF's shares may trade at a premium or discount to their NAV; (ii) an active trading market for an ETF's shares may not develop or be maintained; or (iii) trading of an ETF's shares may be halted if the listing exchange's officials deem such action appropriate, the shares are delisted from the exchange, or the activation of market-wide "circuit breakers" (which are tied to large decreases in stock prices) halts stock trading generally.

         Lending Securities

For the purpose of realizing additional income, and subject to its investment policies and restrictions, a Portfolio may make secured loans of portfolio securities to the extent permitted under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief (currently, up to a maximum of one-third of the Portfolio's total assets which, for purposes of this limitation, include the value of collateral received in return for securities lent). If a Portfolio lends securities, the borrower pays the Portfolio an amount equal to the dividends or interest on the securities that the Portfolio would have received if it had not lent the securities. The Portfolio also receives additional compensation. Under a Portfolio's securities lending procedures, the Portfolio may lend securities only to broker-dealers and financial institutions deemed creditworthy by the Investment Manager. The creditworthiness of entities to which a Portfolio makes loans of portfolio securities is monitored by WRIMCO throughout the term of the loan.

Any securities loans that a Portfolio makes must be collateralized in accordance with applicable regulatory requirements (the Guidelines). At the time of each loan, the Portfolio must receive collateral equal to no less than 100% of the market value of the securities loaned. Under the present Guidelines, the collateral must consist of cash or U.S. government securities or bank letters of credit, at least equal in value to the market value of the securities lent on each day that the loan is outstanding. If the market value of the lent securities exceeds the value of the collateral, the borrower must add more collateral so that it at least equals the market value of the securities lent. If the market value of the securities decreases, the borrower is entitled to a return of the excess collateral.

There are two methods of receiving compensation for making loans. The first is to receive a negotiated loan fee from the borrower. This method is available for all three types of collateral. The second method, which is not available when letters of credit are used as collateral, is for a Portfolio to receive interest on the investment of the cash collateral or to receive interest on the U.S. government securities used as collateral. Part of the interest received in either case may be shared with the borrower.

The letters of credit that a Portfolio may accept as collateral are agreements by banks (other than the borrowers of the Portfolio's securities), entered into at the request of the borrower and for its account and risk, under which the banks are obligated to pay to the Portfolio, while the letter is in effect, amounts demanded by the Portfolio if the demand meets the terms of the letter. The Portfolio's right to make this demand secures the borrower's obligations to it. The terms of any such letters and the creditworthiness of the banks providing them (which might include the Portfolio's custodian bank) must be satisfactory to the Investment Manager.

The Portfolios will make loans only under rules of the New York Stock Exchange (NYSE), which presently require the borrower to give the securities back to the Portfolio within five business days after the Portfolio gives notice to do so. If the Portfolio loses its voting rights on securities loaned, it will have the securities returned to it in time to vote them if a material event affecting the investment is to be voted on. A Portfolio may pay reasonable finder's, administrative and custodian fees in connection with loans of securities.

Some, but not all, of these rules are necessary to meet regulatory requirements relating to securities loans. These rules will not be changed unless the change is permitted under these requirements. The requirements do not cover the rules which may be changed without shareholder vote, as to: (1) whom securities may be loaned; (2) the investment of cash collateral; or (3) voting rights.

There may be risks of delay in receiving additional collateral from the borrower if the market value of the securities loaned increases, as well as risks of delay in recovering the securities loaned or even loss of rights in the collateral should the borrower fail financially.

         Loans and Other Direct Debt Instruments

Direct debt instruments are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates (loans and loan participations), to suppliers of goods or services (trade claims or other receivables), or to other parties.

Loan Participations. Subject to their respective investment policies and restrictions, the Portfolios may purchase loan participations (sometimes called bank loans). Loan participations are interests in amounts owed by a corporate, governmental, or other borrower to a lender or consortium of lenders (typically banks, insurance companies, or investment banks). Purchasers of participation interests do not have any direct contractual relationship with the borrower. Most floating rate loans are acquired directly from the agent bank or from another holder of the loan by assignment. In an assignment, the Portfolio purchases an assignment of a portion of a lender's interest in a loan. In this case, the Portfolio may be required generally to rely upon the assigning bank to demand payment and enforce its rights against the borrower, but would otherwise be entitled to all of such bank's rights in the loan.

Purchasers of participation interests may be subject to delays, expenses, and risks that are greater than those that would be involved if the purchaser could enforce its rights directly against the borrower. In addition, under the terms of a participation interest, the purchaser may be regarded as a creditor of the intermediate participant (rather than of the borrower), so that the purchaser also may be subject to the risk that the intermediate participant could become insolvent. The agreement between the purchaser and lender who sold the participation interest may also limit the rights of the purchaser to vote on changes that may be made to the loan agreement, such as waiving a breach of a covenant.

Most loan participations are secured, and most impose restrictive covenants that must be met by the borrower. These loans typically are made by a syndicate of banks and institutional investors, represented by an agent bank that has negotiated and structured the loan and that is responsible generally for collecting interest, principal, and other amounts from the borrower on its own behalf and on behalf of the other lending institutions in the syndicate, and for enforcing its and their other rights against the borrower. Typically, under loan agreements, the agent is given broad discretion in monitoring the borrower's performance and is obligated to use the same care it would use in the management of its own property. Each of the lending institutions, including the agent bank, lends to the borrower a portion of the total amount of the loan, and retains the corresponding interest in the loan. Floating rate loans may include delayed draw term loans and pre-funded or synthetic letters of credit.

A Portfolio's ability to receive payments of principal and interest and other amounts in connection with loans held by it will depend primarily on the financial condition of the borrower. The failure by a Portfolio to receive scheduled interest or principal payments on a loan would adversely affect the income of the Portfolio and would likely reduce the value of its assets, which would be reflected in a reduction in the Portfolio's NAV. Banks and other lending institutions generally perform a credit analysis of the borrower before originating a loan or purchasing as assignment in a loan. In selecting the loans in which a Portfolio will invest, however, WRIMCO will not rely on that credit analysis of the agent bank but will perform its own investment analysis of the borrowers. WRIMCO's analysis may include consideration of the borrower's financial strength and managerial experience, debt coverage, additional borrowing requirements or debt maturity schedules, changing financial conditions, and responsiveness to changes in business conditions and interest rates. The majority of the loans the Portfolio will invest in will be rated by one or more of the NRSROs. Investments in loans may be of any quality, including "distressed" loans, and will be subject to the Portfolio's credit quality policy. Some floating rate loans and other debt securities are not rated by any NRSRO. Historically, floating rate loans have not been registered with the Securities and Exchange Commission (SEC) or any state securities commission or listed on any securities exchange. As a result, the amount of public information available about a specific floating rate loan historically has been less extensive than if the floating rate loan were registered or exchange-traded.

Floating rate loans and other debt securities that are fully secured provide more protections than unsecured securities in the event of failure to make scheduled interest or principal payments. Indebtedness of borrowers whose creditworthiness is poor involves substantially greater risks and may be highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or may pay only a small fraction of the amount owed. In connection with the restructuring of a floating rate loan or other debt security outside of bankruptcy court in a negotiated work-out or in the context of bankruptcy proceedings, equity securities or junior debt securities may be received in exchange for all or a portion of an interest in the security.

Corporate loans in which a Portfolio may purchase a loan assignment are made generally to provide bridge loans (temporary financing), finance internal growth, mergers, acquisitions (acquiring another company), recapitalizations (reorganizing the assets and liabilities of a borrower), stock purchases, leverage buy-outs (taking over control of a company), dividend payments to sponsors and other corporate activities. Under current market conditions, most of the corporate loans purchased by a Portfolio will represent loans made to highly leveraged corporate borrowers. The highly leveraged capital structure of the borrowers in such transactions may make such loans especially vulnerable to adverse changes in economic or market conditions. A Portfolio may hold investments in loans for a very short period of time when opportunities to resell the investments that WRIMCO believes are attractive arise.

Certain of the loans acquired by a Portfolio may involve revolving credit facilities under which a borrower may from time to time borrow and repay amounts up to the maximum amount of the facility. In such cases, the Portfolio would have an obligation to advance its portion of such additional borrowings upon the terms specified in the loan assignment. To the extent that the Portfolio is committed to make additional loans under such an assignment, it will at all times, designate cash or securities in an amount sufficient to meet such commitments. A revolving credit facility may require the Portfolio to increase its investment in a floating rate loan at a time when it would not otherwise have done so, even if the borrower's condition makes it unlikely that the amount will ever be repaid.

Notwithstanding its intention in certain situations to not receive material non-public information with respect to its management of investments in floating rate loans, WRIMCO may from time to time come into possession of material, non-public information about the issuers of loans that may be held by a Portfolio. Possession of such information may in some instances occur despite WRIMCO's efforts to avoid such possession, but in other instances, WRIMCO may choose to receive such information (for example, in connection with participation in a creditor's committee with respect to a financially distressed issuer). As, and to the extent, required by applicable law, WRIMCO's ability to trade in these loans for the account of a Portfolio could potentially be limited by its possession of such information. Such limitations on WRIMCO's ability to trade could have an adverse effect on a Portfolio by, for example, preventing the Portfolio from selling a loan that is experiencing a material decline in value. In some instances, these trading restrictions could continue in effect for a substantial period of time.

In some instances, other accounts managed by WRIMCO may hold other securities issued by borrowers whose floating rate loans may be held by a Portfolio. These other securities may include, for example, debt securities that are subordinate to the floating rate loans held by the Portfolio, convertible debt or common or preferred equity securities. In certain circumstances, such as if the credit quality of the issuer deteriorates, the interests of holders of these other securities may conflict with the interests of the holders of the issuer's floating rate loans. In such cases, WRIMCO may owe conflicting fiduciary duties to the Portfolio and other client accounts. WRIMCO will endeavor to carry out its obligations to all of its clients to the fullest extent possible, recognizing that in some cases certain clients may achieve a lower economic return, as a result of these conflicting client interests, than if WRIMCO's client account collectively held only a single category of the issuer's securities.

A floating rate loan offered as part of the original lending syndicate typically is purchased at par value. As part of the original lending syndicate, a purchaser generally earns a yield equal to the stated interest rate. In addition, members of the original syndicate typically are paid a commitment fee. In secondary market trading, floating rate loans may be purchased or sold above, at, or below par, which can result in a yield that is below, equal to, or above the stated interest rate, respectively. At certain times when reduced opportunities exist for investing in new syndicated floating rate loans, floating rate loans may be available only through the secondary market

If an agent becomes insolvent, or has a receiver, conservator, or similar official appointed for it by the appropriate bank or other regulatory authority, or becomes a debtor in a bankruptcy proceeding, the agent's appointment may be terminated, and a successor agent would be appointed. If an appropriate regulator or court determines that assets held by the agent for the benefit of the purchasers of floating rate loans are subject to the claims of the agent's general or secured creditors, the purchasers might incur certain costs and delays in realizing payment on a floating rate loan or suffer a loss of principal and/or interest. Furthermore, in the event of the borrower's bankruptcy or insolvency, the borrower's obligation to repay a floating rate loan may be subject to certain defenses that the borrower can assert as a result of improper conduct by the agent.

Collateral. Most floating rate loans are secured by specific collateral of the borrower and are senior to most other securities of the borrower. The collateral typically has a market value, at the time the floating rate loan is made, that equals or exceeds the principal amount of the floating rate loan. The value of the collateral may decline, be insufficient to meet the obligations of the borrower, or be difficult to liquidate. As a result, a floating rate loan may not be fully collateralized and can decline significantly in value. Floating rate loan collateral may consist of various types of assets or interests. Collateral may include working capital assets, such as accounts receivable or inventory; tangible or intangible assets; or assets or other types of guarantees of affiliates of the borrower. Inventory is the goods a company has in stock, including finished goods, goods in the process of being manufactured, and the supplies used in the process of manufacturing. Accounts receivable are the monies due to a company for merchandise or securities that it has sold, or for the services it has provided. Tangible fixed assets include real property, buildings, and equipment. Intangible assets include trademarks, copyrights and patent rights, and securities of subsidiaries or affiliates.

Generally, floating rate loans are secured unless (i) the purchaser's security interest in the collateral is invalidated for any reason by a court, or (ii) the collateral is fully released with the consent of the agent bank and lenders or under the terms of a loan agreement as the creditworthiness of the borrower improves. Collateral impairment is the risk that the value of the collateral for a floating rate loan will be insufficient in the event that a borrower defaults. Although the terms of a floating rate loan generally require that the collateral at issuance have a value at least equal to 100% of the amount of such floating rate loan, the value of the collateral may decline subsequent to the purchase of a floating rate loan. In most loan agreements there is no formal requirement to pledge additional collateral. There is no guarantee that the sale of collateral would allow a borrower to meet its obligations should the borrower be unable to repay principal or pay interest or that the collateral could be sold quickly or easily.

In addition, most borrowers pay their debts from the cash flow they generate. If the borrower's cash flow is insufficient to pay its debts as they come due, the borrower may seek to restructure its debts rather than sell collateral. Borrowers may try to restructure their debts by filing for protection under the Federal bankruptcy laws or negotiating a work-out. If a borrower becomes involved in bankruptcy proceedings, access to the collateral may be limited by bankruptcy and other laws. In the event that a court decides that access to the collateral is limited or void, it is unlikely that purchasers could recover the full amount of the principal and interest due.

There may be temporary periods when the principal asset held by a borrower is the stock of a related company, which may not legally be pledged to secure a floating rate loan. On occasions when such stock cannot be pledged, the floating rate loan will be temporarily unsecured until the stock can be pledged or is exchanged for, or replaced by, other assets.

Some floating rate loans are unsecured. If the borrower defaults on an unsecured floating rate loan, there is no specific collateral on which the purchaser can foreclose.

Floating Interest Rates. The rate of interest payable on floating rate loans is the sum of a base lending rate plus a specified spread. Base lending rates are generally the London Interbank Offered Rate (LIBOR), the Certificate of Deposit (CD) Rate of a designated U.S. bank, the Prime Rate of a designated U.S. bank, the Federal Funds Rate, or another base lending rate used by commercial lenders. A borrower usually has the right to select the base lending rate and to change the base lending rate at specified intervals. The applicable spread may be fixed at time of issuance or may adjust upward or downward to reflect changes in credit quality of the borrower.

The interest rate on LIBOR-based and CD Rate-based floating rate loans is reset periodically at intervals ranging from 30 to 180 days, while the interest rate on Prime Rate- or Federal Funds Rate-based floating rate loans floats daily as those rates change. Investment in floating rate loans with longer interest rate reset periods can increase fluctuations in the floating rate loans' values when interest rates change.

The yield on a floating rate loan will primarily depend on the terms of the underlying floating rate loan and the base lending rate chosen by the borrower. The relationship between LIBOR, the CD Rate, the Prime Rate, and the Federal Funds Rate will vary as market conditions change.

Floating rate loans typically will have a stated term of five to nine years. However, because floating rate loans are frequently prepaid, their average maturity is expected to be two to three years. The degree to which borrowers prepay floating rate loans, whether as a contractual requirement or at their election, may be affected by general business conditions, the borrower's financial condition, and competitive conditions among lenders. Prepayments cannot be predicted with accuracy. Prepayments of principal to the purchaser of a floating rate loan may result in the principal's being reinvested in floating rate loans with lower yields.

A Portfolio limits the amount of total assets that it will invest in any one issuer or in issuers within the same industry (see the Portfolio's investment restrictions). For purposes of these restrictions, a Portfolio generally will treat the borrower as the "issuer" of indebtedness held by the Portfolio. In the case of participation interests where a bank or other lending institution serves as intermediate participant between a Portfolio and the borrower, if the participation interest does not shift to the Portfolio the direct debtor-creditor relationship with the borrower, SEC interpretations require a fund, in appropriate circumstances, to treat both the lending bank or other lending institution and the borrower as "issuers" for these purposes. Treating an intermediate participant as an issuer of indebtedness may restrict a fund's ability to invest in indebtedness related to a single intermediate participant, or a group of intermediate participants engaged in the same industry, even if the underlying borrowers represent many different companies and industries.

A borrower must comply with various restrictive covenants contained in the loan agreement. In addition to requiring the scheduled payment of interest and principal, these covenants may include restrictions on dividend payments and other distributions to stockholders, provisions requiring the borrower to maintain specific financial ratios, and limits on total debt. The loan agreement may also contain a covenant requiring the borrower to prepay the floating rate loan with any free cash flow. A breach of a covenant that is not waived by the agent (or by the lenders directly) is normally an event of default, which provides the agent or the lenders the right to call the outstanding floating rate loan.

Direct Debt Instruments. A Portfolio may invest in direct debt instruments, subject to its policies and restrictions regarding the quality of debt securities. Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of principal and interest. Direct debt instruments may not be rated by any NRSRO. If a Portfolio does not receive scheduled interest or principal payments on such indebtedness, the Portfolio's share price and yield could be adversely affected. Loans that are fully secured offer the Portfolio more protection than an unsecured loan in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower's obligation, or that the collateral could be liquidated. Indebtedness of borrowers whose creditworthiness is poor involves substantially greater risks, and may be highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Direct indebtedness of developing countries also involves a risk that the governmental entities responsible for the repayment of the debt may be unable, or unwilling, to pay interest and principal when due.

Investments in loans through direct assignment of a financial institution's interests with respect to a loan may involve additional risks to the Portfolio. For example, if a loan is foreclosed, the Portfolio could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. Direct debt instruments may also involve a risk of insolvency of the lending bank or other intermediary. Direct debt instruments that are not in the form of securities may offer less legal protection to the Portfolio in the event of fraud or misrepresentation. In the absence of definitive regulatory guidance, the Portfolio relies on research by the Investment Manager in an attempt to avoid situations where fraud or misrepresentation could adversely affect the Portfolio.

A loan is often administered by a bank or other financial institution that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. Unless, under the terms of the loan or other indebtedness, the Portfolio has direct recourse against the borrower, it may have to rely on the agent to apply appropriate credit remedies against a borrower. If assets held by the agent for the benefit of the Portfolio were determined to be subject to the claims of the agent's general creditors, the Portfolio might incur certain costs and delays in realizing payment on the loan or loan participation and could suffer a loss of principal or interest.

Investments in direct debt instruments may entail less legal protection for the Portfolio. Direct indebtedness purchased by the Portfolio may include letters of credit, revolving credit facilities, or other standby financing commitments obligating the Portfolio to pay additional cash on demand. These commitments may have the effect of requiring the Portfolio to increase its investment in a borrower at a time when it would not otherwise have done so, even if the borrower's condition makes it unlikely that the amount will ever be repaid. The Portfolio will set aside appropriate liquid assets in a segregated custodial account to cover its potential obligations under standby financing commitments.

For purposes of the limitations on the amount of total assets that a Portfolio will invest in any one issuer or in issuers within the same industry, the Portfolio generally will treat the borrower as the issuer of indebtedness held by the Portfolio. In the case of loan participations where a bank or other lending institution serves as financial intermediary between the Portfolio and the borrower, if the participation does not shift to the Portfolio the direct debtor-creditor relationship with the borrower, SEC interpretations require the Portfolio, in appropriate circumstances, to treat both the lending bank or other lending institution and the borrower as issuers for these purposes. Treating a financial intermediary as an issuer of indebtedness may restrict the Portfolio's ability to invest in indebtedness related to a single financial intermediary, or a group of intermediaries engaged in the same industry, even if the underlying borrowers represent many different companies and industries.

         Master Limited Partnerships

Energy Portfolio may invest in master limited partnerships (MLPs). An MLP is a limited partnership (or similar entity) the interests in which are publicly traded. The majority of MLPs operate in oil and gas related businesses, including energy processing and distribution. MLPs often are pass-through entities or businesses that are taxed at the security-holder level and generally are not subject to Federal or state income tax at the entity level. Annual income, gains, losses, deductions and credits of an MLP pass through directly to its security holders.

Net income from an interest in a "qualified publicly traded partnership" (QPTP) is qualifying income for an entity such as a Portfolio that is a regulated investment company for Federal tax purposes (RIC). A QPTP is defined as a publicly traded partnership -- which is, generally, a partnership the interests in which are traded on an established securities market or are readily tradable on a secondary market (or the substantial equivalent thereof) -- other than a partnership at least 90% of the gross income of which consists of dividends, interest and other qualifying income for a RIC. Please see the section entitled Taxation of the Portfolios for additional information regarding the tax consequences of investing in QPTPs and the potential regulatory consequences if a Portfolio invests in an MLP that is not a QPTP.

         Money Market Instruments

Money market instruments are high-quality, short-term debt instruments that generally present minimal credit risk. They may include U.S. government securities, commercial paper and other short-term corporate obligations, certificates of deposit and other financial institution obligations. These instruments may carry fixed or variable interest rates.

         Mortgage-Backed and Asset-Backed Securities

Mortgage-Backed Securities. Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property and include single- and multi-class pass-through securities and collateralized mortgage obligations. Multi-class pass-through securities and collateralized mortgage obligations are collectively referred to in this SAI as CMOs. Some CMOs are directly supported by other CMOs, which in turn are supported by mortgage pools. Investors typically receive payments out of the interest and principal on the underlying mortgages. The portions of the payments that investors receive, as well as the priority of their rights to receive payments, are determined by the specific terms of the CMO class.

The U.S. government mortgage-backed securities in which the Portfolios may invest include mortgage-backed securities issued or guaranteed as to the payment of principal and interest (but not as to market value) by Fannie Mae, Government National Mortgage Association (Ginnie Mae) or Freddie Mac. Other mortgage-backed securities are issued by private issuers, generally originators of and investors in mortgage loans, including savings associations, mortgage bankers, commercial banks, investment bankers and special purpose entities. Payments of principal and interest (but not the market value) of such private mortgage-backed securities may be supported by pools of mortgage loans or other mortgage-backed securities that are guaranteed, directly or indirectly, by the U.S. government or one of its agencies or instrumentalities, or they may be issued without any government guarantee of the underlying mortgage assets but with some form of non-government credit enhancement. These credit enhancements do not protect investors from changes in market value.

The Portfolios may purchase mortgage-backed securities issued by both government and non-government entities such as banks, mortgage lenders or other financial institutions. Other types of mortgage-backed securities will likely be developed in the future, and a Portfolio may invest in them if the Investment Manager determines that such investments are consistent with the Portfolio's objective(s) and investment policies.

Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities are created when a U.S. government agency or a financial institution separates the interest and principal components of a mortgage-backed security and sells them as individual securities. The holder of the principal-only security (PO) receives the principal payments made by the underlying mortgage-backed security, while the holder of the interest-only security (IO) receives interest payments from the same underlying security.

For example, IO classes are entitled to receive all or a portion of the interest, but none (or only a nominal amount) of the principal payments, from the underlying mortgage assets. If the mortgage assets underlying an IO experience greater than anticipated principal prepayments, then the total amount of interest allocable to the IO class, and therefore the yield to investors, generally will be reduced. In some instances, an investor in an IO may fail to recoup all of the investor's initial investment, even if the security is guaranteed by the U.S. government or considered to be of the highest quality. Conversely, PO classes are entitled to receive all or a portion of the principal payments, but none of the interest, from the underlying mortgage assets. PO classes are purchased at substantial discounts from par, and the yield to investors will be reduced if principal payments are slower than expected. IOs, POs and other CMOs involve special risks, and evaluating them requires special knowledge.

Asset-Backed Securities. Asset-backed securities have structural characteristics similar to mortgage-backed securities, as discussed above. However, the underlying assets are not first lien mortgage loans or interests therein, but include assets such as motor vehicle installment sales contracts, other installment sale contracts, home equity loans, leases of various types of real and personal property and receivables from revolving credit (credit card) agreements. Such assets are securitized through the use of trusts or special purpose corporations. Payments or distributions of principal and interest may be guaranteed up to a certain amount and for a certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with the issuer, or other credit enhancements may be present. The value of asset-backed securities may also depend on the creditworthiness of the servicing agent for the loan pool, the originator of the loans or the financial institution providing the credit enhancement.

Special Characteristics of Mortgage-Backed and Asset-Backed Securities. The yield characteristics of mortgage-backed and asset-backed securities differ from those of traditional debt securities. Among the major differences are that interest and principal payments are made more frequently, usually monthly, and that principal may be prepaid at any time because the underlying mortgage loans or other obligations generally may be prepaid at any time. Prepayments on a pool of mortgage loans are influenced by a variety of economic, geographic, social and other factors, including changes in mortgagors' housing needs, job transfers, unemployment, mortgagors' net equity in the mortgaged properties and servicing decisions. Generally, however, prepayments on fixed-rate mortgage loans will increase during a period of falling interest rates and decrease during a period of rising interest rates. Similar factors apply to prepayments on asset-backed securities, but the receivables underlying asset-backed securities generally are of a shorter maturity and thus are likely to experience substantial prepayments. Such securities, however, often provide that for a specified time period the issuers will replace receivables in the pool that are repaid with comparable obligations. If the issuer is unable to do so, repayment of principal on the asset-backed securities may commence at an earlier date.

The rate of interest on mortgage-backed securities is lower than the interest rates paid on the mortgages included in the underlying pool due to the annual fees paid to the servicer of the mortgage pool for passing through monthly payments to certificate holders and to any guarantor, and due to any yield retained by the issuer. Actual yield to the holder may vary from the coupon rate, even if adjustable, if the mortgage-backed securities are purchased or traded in the secondary market at a premium or discount. In addition, there is normally some delay between the time the issuer receives mortgage payments from the servicer and the time the issuer makes the payments on the mortgage-backed securities, and this delay reduces the effective yield to the holder of such securities.

Yields on pass-through securities are typically quoted by investment dealers and vendors based on the maturity of the underlying instruments and the associated average life assumption. The average life of pass-through pools varies with the maturities of the underlying mortgage loans. A pool's term may be shortened by unscheduled or early payments of principal on the underlying mortgages. Because prepayment rates of individual pools vary widely, it is not possible to predict accurately the average life of a particular pool. In the past, a common industry practice has been to assume that prepayments on pools of fixed rate 30-year mortgages would result in a 12-year average life for the pool. At present, mortgage pools, particularly those with loans with other maturities or different characteristics, are priced on an assumption of average life determined for each pool. In periods of declining interest rates, the rate of prepayment tends to increase, thereby shortening the actual average life of a pool of mortgage-related securities. Conversely, in periods of rising interest rates, the rate of prepayment tends to decrease, thereby lengthening the actual average life of the pool. Changes in the rate or speed of these payments can cause the value of the mortgage-backed securities to fluctuate rapidly. However, these effects may not be present, or may differ in degree, if the mortgage loans in the pools have adjustable interest rates or other special payment terms, such as a prepayment charge. Actual prepayment experience may cause the yield of mortgage-backed securities to differ from the assumed average life yield.

The market for privately issued mortgage-backed and asset-backed securities is smaller and less liquid than the market for U.S. government mortgage-backed securities. CMO classes may be specifically structured in a manner that provides any of a wide variety of investment characteristics, such as yield, effective maturity and interest rate sensitivity. As market conditions change, however, and especially during periods of rapid or unanticipated changes in market interest rates, the attractiveness of some CMO classes and the ability of the structure to provide the anticipated investment characteristics may be reduced. These changes can result in volatility in the market value, and in some instances reduced liquidity, of the CMO class.

Direct Investments In Mortgages - Whole Loans. Mortgage Securities Portfolio and Real Estate Securities Portfolio may each invest up to 10% of the value of its net assets directly in mortgages securing residential or commercial real estate (that is, the Portfolio becomes the mortgagee). Such investments are not "mortgage-related securities" as described above. They are normally available from lending institutions which group together a number of mortgages for resale (usually from 10 to 50 mortgages) and which act as servicing agent for the purchaser with respect to, among other things, the receipt of principal and interest payments. (Such investments are also referred to as "whole loans".) The vendor of such mortgages receives a fee from a Portfolio for acting as servicing agent. The vendor does not provide any insurance or guarantees covering the repayment of principal or interest on the mortgages. Unlike pass-through securities, whole loans constitute direct investment in mortgages inasmuch as a Portfolio, rather than a financial intermediary, becomes the mortgagee with respect to such loans purchased by the Portfolio. At present, such investments are considered to be illiquid by the Investment Manager. The Portfolio will invest in such mortgages only if the Investment Manager has determined through an examination of the mortgage loans and their originators (which may include an examination of such factors as percentage of family income dedicated to loan service and the relationship between loan value and market value) that the purchase of the mortgages should not represent a significant risk of loss to the Portfolio.

         Mortgage Dollar Rolls

In connection with its ability to purchase securities on a when-issued or forward commitment basis, each of Mortgage Securities Portfolio and Real Estate Securities Portfolio may enter into mortgage "dollar rolls" in which the Portfolio sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar (same type, coupon and maturity) but not identical securities on a specified future date. In a mortgage dollar roll, a Portfolio gives up the right to receive principal and interest paid on the securities sold. However, a Portfolio would benefit to the extent of any difference between the price received for the securities sold and the lower forward price for the future purchase plus any fee income received. Unless such benefits exceed the income, capital appreciation and gain or loss due to mortgage prepayments that would have been realized on the securities sold as part of the mortgage dollar roll, the use of this technique will diminish the investment performance of a Portfolio compared with what such performance would have been without the use of mortgage dollar rolls. A Portfolio will hold and maintain in a segregated account until the settlement date cash or liquid securities in an amount equal to the forward purchase price. The benefits derived from the use of mortgage dollar rolls may depend upon the ability of the Investment Manager to predict correctly mortgage prepayments and interest rates. There is no assurance that mortgage dollar rolls can be successfully employed. In addition, the use of mortgage dollar rolls by a Portfolio while remaining substantially fully invested increases the amount of the Portfolio's assets that are subject to market risk to an amount that is greater than the Portfolio's NAV, which could result in increased volatility of the price of the Portfolio's shares.

For financial reporting and tax purposes, mortgage dollar rolls are considered as two separate transactions: one involving the sale of a security and a separate transaction involving a purchase. The Portfolios do not currently intend to enter into mortgage dollar rolls that are accounted for as a "financing" rather than as a separate sale and purchase transactions.

         Municipal Obligations

Municipal obligations are issued by a wide range of state and local governments, agencies and authorities for various purposes. The two main kinds of municipal bonds are general obligation bonds and revenue bonds. The issuer of a general obligation bond has pledged its full faith, credit and taxing power for the payment of principal and interest on the bond. Revenue bonds are payable only from specific sources; these may include revenues from a particular facility or class of facilities or special tax or other revenue source. Private activity bonds are revenue bonds issued by or on behalf of public authorities to obtain funds to finance privately operated facilities. Their credit quality is generally dependent on the credit standing of the company involved.

         Natural Resources and Physical Commodities

Since Energy Portfolio may invest a portion of its assets, and Global Natural Resources Portfolio normally invests a substantial portion of its assets, in securities of companies engaged in natural resources activities, these Portfolios may be subject to greater risks and market fluctuations than funds with more diversified portfolios. The value of a Portfolio's securities will fluctuate in response to market conditions generally, and will be particularly sensitive to the markets for those natural resources in which a particular issuer is involved. The values of natural resources may also fluctuate directly with respect to real and perceived inflationary trends and various political developments. In selecting a Portfolio's investments, the Investment Manager will consider each company's ability to create new products, secure any necessary regulatory approvals, and generate sufficient customer demand. A company's failure to perform well in any one of these areas, however, could cause its stock to decline sharply.

Natural resource industries throughout the world may be subject to greater political, environmental and other governmental regulation than many other industries. Changes in governmental policies and the need for regulatory approvals may have an adverse effect on the products and services of natural resources companies. For example, the exploration, development and distribution of coal, oil and gas in the U.S. are subject to significant Federal and state regulation, which may affect rates of return on such investments and the kinds of services that may be offered to companies in those industries. In addition, many natural resource companies have been subject to significant costs associated with compliance with environmental and other safety regulations. Such regulations may also hamper the development of new technologies. The direction, type or effect of any future regulations affecting natural resource industries are virtually impossible to predict.

Generally, energy commodities, such as coal, natural gas and crude oil, have distinctly higher volatility than other types of commodities, due in part to real time pricing and cross-commodity arbitrage described below. In purchasing related securities, the Investment Manager considers the integration of derivatives and physical trades for risk management in a real-time environment in order to meet the demands of the marketplace. As well, scheduling receipts, deliveries and transmission of a commodity can all impact investments in commodities.

Energy commodities have unique market risks and physical properties which can affect the available supply. Factors unique to energy commodities include: research and development, location, recovery costs, transportation costs, conversion costs, and storage costs, as well as global demand and other events that can affect demand such as war, weather and alternative energy sources. Natural gas and crude oil are especially susceptible to changes in supply and global demand.

As well, an investor in commodities must be able to manage cross-commodity arbitrage, that is, the ability to determine positions stated in equivalent units of measure (Btu units). When assessing an investment opportunity -- in coal, natural gas or crude oil-- this calculation can be critical in determining the success an investor has when calculating how a trade breaks down into a single common denominator. Coal tolling, for instance, involves the conversion of coal to electricity for a fee. The tolling of coal gives marketers, suppliers and generators another arbitrage opportunity if there is a disparity between coal and electricity prices while providing some added liquidity between the two commodities.

Principal risks of investing in certain types of commodities include:

• Cross-commodity arbitrage can negatively impact a Portfolio's investments;
• Fluctuations in demand can negatively impact individual commodities: alternative sources of energy can create unforeseen competition; changes in weather can negatively affect demand; and global production can alter demand and the need for specific sources of energy;
• Fluctuations in supply can negatively impact individual commodities: transportation costs, research and development, location, recovery/retrieval costs, conversion costs, storage costs and natural disasters can all adversely impact different investments and types of energy;
• Environmental restrictions can increase costs of production;
• Restrictions placed by the government of a developing country related to investment, exchange controls, and repatriation of the proceeds of investment in that country;
• War can limit production or access to available supplies and/or resources.

Investments in precious metals (such as gold) and other physical commodities are considered speculative and subject to special risk considerations, including substantial price fluctuations over short periods of time. On the other hand, investments in precious metals coins or bullion could help to moderate fluctuations in the value of a Portfolio's holdings, since the prices of precious metals have at times tended not to fluctuate as widely as shares of issuers engaged in the mining of precious metals. Because precious metals and other commodities do not generate investment income, however, the return on such investments will be derived solely from the appreciation or depreciation on such investments. A Portfolio may also incur storage and other costs relating to its investments in precious metals and other commodities, which may, under certain circumstances, exceed custodial and brokerage costs associated with investments in other types of securities. When a Portfolio purchases a precious metal or other physical commodity, the Investment Manager currently intends that it will only be in a form that is readily marketable. To qualify as a RIC under the Federal tax law, a Portfolio may not earn more than 10% of its yearly gross income from gains resulting from selling precious metals or any other physical commodity (or options on futures contracts thereon unless the gain is realized from certain hedging transactions). See Taxation of the Portfolios. Accordingly, a Portfolio may be required to hold its precious metals or sell them at a loss, or to sell its securities at a gain, when for investment reasons it would not otherwise do so.

The ability of a Portfolio, for defensive purposes, to purchase and hold precious metals such as gold, silver and platinum may allow it to benefit from a potential increase in the price of precious metals or stability in the price of such metals at a time when the value of securities may be declining. For example, during periods of declining stock prices, the price of gold may increase or remain stable, while the value of the stock market may be subject to a general decline.

Precious metal prices are affected by various factors, such as economic conditions, political events and monetary policies. As a result, the price of gold, silver or platinum may fluctuate widely. The sole source of return to a Portfolio from such investments will be gains realized on sales; a negative return will be realized if the metal is sold at a loss. Investments in precious metals do not provide a yield. A Portfolio's direct investment in precious metals is limited by tax considerations. See Taxation of the Portfolios.

         Options, Futures and Other Strategies

General. The Investment Manager may use certain options, futures contracts (sometimes referred to as futures), options on futures contracts, forward currency contracts, swaps, caps, floors, collars, indexed securities and other derivative instruments (collectively, Financial Instruments) to attempt to enhance income or yield or to attempt to hedge a Portfolio's investments. The strategies described below may be used in an attempt to manage the risks of a Portfolio's investments that can affect fluctuation in its NAV.

Generally, a Portfolio (other than Ivy Funds VIP Money Market) may purchase and sell any type of Financial Instrument. However, as an operating policy, a Portfolio will only purchase or sell a particular Financial Instrument if the Portfolio is authorized to invest in the type of asset by which the return on, or value of, the Financial Instrument is primarily measured. Since each Portfolio (other than Ivy Funds VIP Money Market) is authorized to invest in foreign securities denominated in other currencies, each such Portfolio may purchase and sell foreign currency derivatives.

Hedging strategies can be broadly categorized as short hedges and long hedges. A short hedge is a purchase or sale of a Financial Instrument intended partially or fully to offset potential declines in the value of one or more investments held in a Portfolio's portfolio. Thus, in a short hedge, the Portfolio takes a position in a Financial Instrument whose price is expected to move in the opposite direction of the price of the investment being hedged.

Conversely, a long hedge is a purchase or sale of a Financial Instrument intended partially or fully to offset potential increases in the acquisition cost of one or more investments that a Portfolio intends to acquire. Thus, in a long hedge, the Portfolio takes a position in a Financial Instrument whose price is expected to move in the same direction as the price of the prospective investment being hedged. A long hedge is sometimes referred to as an anticipatory hedge. In an anticipatory hedge transaction, the Portfolio does not own a corresponding security and, therefore, the transaction does not relate to a security the Portfolio owns. Rather, it relates to a security that the Portfolio intends to acquire. If the Portfolio does not complete the hedge by purchasing the security it anticipated purchasing, the effect on the Portfolio's holdings is the same as if the transaction were entered into for speculative purposes.

Financial Instruments on securities generally are used to attempt to hedge against price movements in one or more particular securities positions that a Portfolio owns or intends to acquire. Financial Instruments on indexes, in contrast, generally are used to attempt to hedge against price movements in market sectors in which a Portfolio has invested or expects to invest. Financial Instruments on debt securities may be used to hedge either individual securities or broad debt market sectors.

The use of Financial Instruments is subject to applicable regulations of the SEC, the several exchanges upon which they are traded and the Commodity Futures Trading Commission (CFTC). The Trust has claimed an exclusion from the definition of the term "commodity pool operator" under the Commodity Exchange Act and the regulations thereunder and, therefore, is not subject to registration or regulation as a commodity pool operator under such Act. In addition, a Portfolio's ability to use Financial Instruments may be limited by tax considerations. See Taxation of the Portfolios.

In addition to the instruments, strategies and risks described below, the Investment Manager expects to discover additional opportunities in connection with Financial Instruments and other similar or related techniques. These new opportunities may become available as new techniques are developed, as regulatory authorities broaden the range of permitted transactions and as new Financial Instruments or other techniques are developed. The Investment Manager may utilize these opportunities to the extent that they are consistent with a Portfolio's objective(s) and permitted by a Portfolio's investment policies and restrictions and applicable regulatory authorities. A Portfolio might not use any of these strategies, and there can be no assurance that any strategy used will succeed. The Prospectus or this SAI will be supplemented to the extent that new products or techniques involve materially different risks than those described below or in the Prospectus.

Special Risks. The use of Financial Instruments involves special considerations and risks, certain of which are described below. In general, these techniques may increase the volatility of a Portfolio and may involve a small investment of cash relative to the magnitude of the risk assumed. Risks pertaining to particular Financial Instruments are described in the sections that follow:

(1)         Successful use of most Financial Instruments depends upon the ability of the Investment Manager to predict movements of the overall securities, currency and interest rate markets, which requires different skills than predicting changes in the prices of individual securities. There can be no assurance that any particular strategy will succeed, and use of Financial Instruments could result in a loss, regardless of whether the intent was to reduce risk or increase return.

(2)         There might be imperfect correlation, or even no correlation, between price movements of a Financial Instrument and price movements of the investments being hedged. For example, if the value of a Financial Instrument used in a short hedge increased by less than the decline in value of the hedged investment, the hedge would not be fully successful. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as speculation or other pressures on the markets in which Financial Instruments are traded. The effectiveness of hedges using Financial Instruments on indexes will depend on the degree of correlation between price movements in the index and price movements in the securities being hedged.

Because there are a limited number of types of exchange-traded options and futures contracts, it is likely that the standardized contracts available will not match a Portfolio's current or anticipated investments exactly. A Portfolio may invest in options and futures contracts based on securities with different issuers, maturities, or other characteristics from the securities in which it typically invests, which involves a risk that the options or futures position will not track the performance of the Portfolio's other investments.

Options and futures prices can also diverge from the prices of their underlying instruments, even if the underlying instruments match a Portfolio's investments well. Options and futures prices are affected by such factors as current and anticipated short-term interest rates, changes in volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect security prices the same way. Imperfect correlation may also result from differing levels of demand in the options and futures markets and the securities markets, from structural differences in how options and futures and securities are traded, or from imposition of daily price fluctuation limits or trading halts. A Portfolio may purchase or sell options and futures contracts with a greater or lesser value than the securities it wishes to hedge or intends to purchase in order to attempt to compensate for differences in volatility between the contract and the securities, although this may not be successful in all cases. If price changes in a Portfolio's options or futures positions are poorly correlated with its other investments, the positions may fail to produce anticipated gains or result in losses that are not offset by gains in other investments.

(3)         If successful, the above-discussed strategies can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements. However, such strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements. For example, if a Portfolio entered into a short hedge because the Investment Manager projected a decline in the price of a security in the Portfolio's holdings, and the price of that security increased instead, the gain from that increase might be wholly or partially offset by a decline in the price of the Financial Instrument. Moreover, if the price of the Financial Instrument declined by more than the increase in the price of the security, the Portfolio could suffer a loss. In either such case, the Portfolio would have been in a better position had it not attempted to hedge at all.

(4)         As described below, a Portfolio might be required to maintain assets as cover, maintain segregated accounts or make margin payments when it takes positions in Financial Instruments involving obligations to third parties (that is, Financial Instruments other than purchased options). If the Portfolio were unable to close out its positions in such Financial Instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. These requirements might impair the Portfolio's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Portfolio sell a portfolio security at a disadvantageous time.

(5)         A Portfolio's ability to close out a position in a Financial Instrument prior to expiration or maturity depends on the existence of a liquid secondary market or, in the absence of such a market, the ability and willingness of the other party to the transaction (counterparty) to enter into a transaction closing out the position. Therefore, there is no assurance that any position can be closed out at a time and price that is favorable to the Portfolio.

Cover. Transactions using Financial Instruments, other than purchased options, expose a Portfolio to an obligation to another party. Each Portfolio will comply with SEC guidelines regarding cover for these instruments and will, if the guidelines so require, set aside cash or liquid assets in an account with its custodian in the prescribed amount as determined daily. A Portfolio will not enter into any such transactions unless it owns either (1) an offsetting (covered) position in securities, currencies or other options, futures contracts or forward contracts, or (2) cash and liquid assets with a value, marked-to-market daily, sufficient to cover its potential obligations to the extent not covered as provided in (1) above.

Assets used as cover or held in an account cannot be sold while the position in the corresponding Financial Instrument is open, unless they are replaced with other appropriate assets. As a result, the commitment of a large portion of a Portfolio's assets to cover or to segregated accounts could impede portfolio management or the Portfolio's ability to meet redemption requests or other current obligations.

Options. A call option gives the purchaser the right to buy, and obligates the writer to sell, the underlying investment at the agreed-upon price during the option period. A put option gives the purchaser the right to sell, and obligates the writer to buy, the underlying investment at the agreed-upon price during the option period. Purchasers of options pay an amount, known as a premium, to the option writer in exchange for the right under the option contract.

The purchase of call options can serve as a long hedge, and the purchase of put options can serve as a short hedge. Writing put or call options can enable a Portfolio to enhance income or yield by reason of the premiums paid by the purchasers of such options. However, if the market price of the security underlying a put option declines to less than the exercise price of the option, minus the premium received, the Portfolio would expect to suffer a loss.

Writing call options can serve as a limited short hedge, because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency appreciates to a price higher than the exercise price of the call option, it can be expected that the option will be exercised and the Portfolio will be obligated to sell the security or currency at less than its market value. If the call option is an OTC option, the securities or other assets used as cover would be considered illiquid to the extent described under Illiquid Investments.

Writing put options can serve as a limited long hedge because increases in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security or currency depreciates to a price lower than the exercise price of the put option, it can be expected that the put option will be exercised and the Portfolio will be obligated to purchase the security or currency at more than its market value. If the put option is an OTC option, the securities or other assets used as cover would be considered illiquid to the extent described under Illiquid Investments.

The value of an option position will reflect, among other things, the current market value of the underlying investment, the time remaining until expiration, the relationship of the exercise price to the market price of the underlying investment, the historical price volatility of the underlying investment and general market conditions. Options that expire unexercised have no value.

A Portfolio may effectively terminate its right or obligation under an option by entering into a closing transaction. For example, a Portfolio may terminate its obligation under a call or put option that it had written by purchasing an identical call or put option; this is known as a closing purchase transaction. Conversely, a Portfolio may terminate a position in a put or call option it had purchased by writing an identical put or call option; this is known as a closing sale transaction. Closing transactions permit a Portfolio to realize profits or limit losses on an option position prior to its exercise or expiration.

A type of put that a Portfolio may purchase is an optional delivery standby commitment, which is entered into by parties selling debt securities to the Portfolio. An optional delivery standby commitment gives a Portfolio the right to sell the security back to the seller on specified terms. This right is provided as an inducement to purchase the security.

Risks of Options on Securities. Options offer large amounts of leverage, which will result in a Portfolio's NAV being more sensitive to changes in the value of the related instrument. Each Portfolio may purchase or write both exchange-traded and OTC options. Exchange-traded options in the United States are issued by a clearing organization affiliated with the exchange on which the option is listed that, in effect, guarantees completion of every exchange-traded option transaction. In contrast, OTC options are contracts between a Portfolio and its counterparty (usually a securities dealer or a bank) with no clearing organization guarantee. Thus, when a Portfolio purchases an OTC option, it relies on the counterparty from whom it purchased the option to make or take delivery of the underlying investment upon exercise of the option. Failure by the counterparty to do so would result in the loss of any premium paid by the Portfolio as well as the loss of any expected benefit of the transaction.

A Portfolio's ability to establish and close out positions in exchange-listed options depends on the existence of a liquid market, and there can be no assurance that such a market will exist at any particular time. Closing transactions can be made for OTC options only by negotiating directly with the counterparty, or by a transaction in the secondary market if any such market exists. There can be no assurance that a Portfolio will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the counterparty, the Portfolio might be unable to close out an OTC option position at any time prior to its expiration.

If a Portfolio were unable to effect a closing transaction for an option it had purchased, it would have to exercise the option to realize any profit. The inability to enter into a closing purchase transaction for a covered call option written by a Portfolio could cause material losses because the Portfolio would be unable to sell the investment used as cover for the written option until the option expires or is exercised.

Options on Indexes. Puts and calls on indexes are similar to puts and calls on securities or futures contracts except that all settlements are in cash and gain or loss depends on changes in the index in question rather than on price movements in individual securities or futures contracts. When a Portfolio writes a call on an index, it receives a premium and agrees that, prior to the expiration date, the purchaser of the call, upon exercise of the call, will receive from the Portfolio an amount of cash if the closing level of the index upon which the call is based is greater than the exercise price of the call. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call times a specified multiple (multiplier), which determines the total dollar value for each point of such difference. When a Portfolio buys a call on an index, it pays a premium and has the same rights as to such call as are indicated above. When a Portfolio buys a put on an index, it pays a premium and has the right, prior to the expiration date, to require the seller of the put, upon the Portfolio's exercise of the put, to deliver to the Portfolio an amount of cash if the closing level of the index upon which the put is based is less than the exercise price of the put, which amount of cash is determined by the multiplier, as described above for calls. When a Portfolio writes a put on an index, it receives a premium and the purchaser of the put has the right, prior to the expiration date, to require the Portfolio to deliver to it an amount of cash equal to the difference between the closing level of the index and the exercise price times the multiplier if the closing level is less than the exercise price.

Risks of Options on Indexes. The risks of investment in options on indexes may be greater than options on securities. Because index options are settled in cash, when a Portfolio writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Portfolio can offset some of the risk of writing a call index option by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, the Portfolio cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will vary from the value of the index.

Even if a Portfolio could assemble a portfolio that exactly reproduced the composition of the underlying index, it still would not be fully covered from a risk standpoint because of the timing risk inherent in writing index options. When an index option is exercised, the amount of cash that the holder is entitled to receive is determined by the difference between the exercise price and the closing index level on the date when the option is exercised. As with other kinds of options, the Portfolio as the call writer will not learn of the assignment until the next business day at the earliest. The time lag between exercise and notice of assignment poses no risk for the writer of a covered call on a specific underlying security, such as a common stock, because there the writer's obligation is to deliver the underlying security, not to pay its value as of a fixed time in the past. So long as the writer already owns the underlying security, it can satisfy its settlement obligations by simply delivering it, and the risk that its value may have declined since the exercise date is borne by the exercising holder. In contrast, even if the writer of an index call holds securities that exactly match the composition of the underlying index, it will not be able to satisfy its assignment obligations by delivering those securities against payment of the exercise price. Instead, it will be required to pay cash in an amount based on the closing index value on the exercise date. By the time it learns that it has been assigned, the index may have declined, with a corresponding decline in the value of its portfolio. This timing risk is an inherent limitation on the ability of index call writers to cover their risk exposure by holding securities positions.

If a Portfolio has purchased an index option and exercises it before the closing index value for that day is available, it runs the risk that the level of the underlying index may subsequently change. If such a change causes the exercised option to fall out-of-the-money, the Portfolio will be required to pay the difference between the closing index value and the exercise price of the option (times the applicable multiplier) to the assigned writer.

OTC Options. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size and strike price, the terms of OTC options (options not traded on an exchange) generally are established through negotiation with the other party to the option contract. While this type of arrangement allows a Portfolio great flexibility to tailor the option to its needs, OTC options generally involve greater risk than exchange-traded options, which are guaranteed by the clearing organization of the exchanges where they are traded.

Generally, OTC foreign currency options used by a Portfolio are European-style options. This means that the option is only exercisable immediately prior to its expiration. This is in contrast to American-style options, which are exercisable at any time prior to the expiration date of the option.

Futures Contracts and Options on Futures Contracts. The purchase of futures contracts or call options on futures contracts can serve as a long hedge, and the sale of futures contracts or the purchase of put options on a futures contract can serve as a short hedge. Writing call options on futures contracts can serve as a limited short hedge, using a strategy similar to that used for writing call options on securities or indexes. Similarly, writing put options on futures contracts can serve as a limited long hedge. Futures contracts and options on futures contracts can also be purchased and sold to attempt to enhance income or yield.

In addition, futures contract strategies can be used to manage the average duration of a Portfolio's fixed-income portfolio. If the Investment Manager wishes to shorten the average duration of a Portfolio's fixed-income portfolio, the Portfolio may sell a debt futures contract or a call option thereon, or purchase a put option on that futures contract. If the Investment Manager wishes to lengthen the average duration of a Portfolio's fixed-income portfolio, the Portfolio may buy a debt futures contract or a call option thereon, or sell a put option thereon.

No price is paid upon entering into a futures contract. Instead, at the inception of a futures contract the Portfolio is required to deposit initial margin in an amount generally equal to 10% or less of the contract value. Margin must also be deposited when writing a call or put option on a futures contract, in accordance with applicable exchange rules. Unlike margin in securities transactions, initial margin on futures contracts does not represent a borrowing, but rather is in the nature of a performance bond or good-faith deposit that is returned to the Portfolio at the termination of the transaction if all contractual obligations have been satisfied. Under certain circumstances, such as periods of high volatility, the Portfolio may be required by an exchange to increase the level of its initial margin payment, and initial margin requirements might be increased generally in the future by regulatory action.

Subsequent variation margin payments are made to and from the futures broker daily as the value of the futures position varies, a process known as marking-to-market. Variation margin does not involve borrowing, but rather represents a daily settlement of the Portfolio's obligations to or from a futures broker. When a Portfolio purchases an option on a futures contract, the premium paid plus transaction costs is all that is at risk. In contrast, when a Portfolio purchases or sells a futures contract or writes a call or put option thereon, it is subject to daily variation margin calls that could be substantial in the event of adverse price movements. If the Portfolio has insufficient cash to meet daily variation margin requirements, it might need to sell securities at a time when such sales are disadvantageous.

Purchasers and sellers of futures contracts and options on futures contracts can enter into offsetting closing transactions, similar to closing transactions on options, by selling or purchasing, respectively, an instrument identical to the instrument purchased or sold. Positions in futures contracts and options on futures contracts may be closed only on an exchange or board of trade that provides a secondary market. However, there can be no assurance that a liquid secondary market will exist for a particular contract at a particular time. In such event, it may not be possible to close a futures contract or options position.

Under certain circumstances, futures contracts exchanges may establish daily limits on the amount that the price of a futures contract or an option on a futures contract can vary from the previous day's settlement price; once that limit is reached, no trades may be made that day at a price beyond the limit. Daily price limits do not limit potential losses because prices could move to the daily limit for several consecutive days with little or no trading, thereby preventing liquidation of unfavorable positions.

If a Portfolio were unable to liquidate a futures contract or an option on a futures position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Portfolio would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Portfolio would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the futures contract or option or to maintain cash or liquid assets in an account.

Risks of Futures Contracts and Options Thereon. The ordinary spreads between prices in the cash and futures markets (including the options on futures market), due to differences in the natures of those markets, are subject to the following factors which may create distortions. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions, which could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion. Third, from the point of view of speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities market. Therefore, increased participation by speculators in the futures market may cause temporary price distortions. Due to the possibility of distortion, a correct forecast of general interest rate, currency exchange rate or stock market trends by the Investment Manager may still not result in a successful transaction. The Investment Manager may be incorrect in its expectations as to the extent of various interest rate, currency exchange rate or stock market movements or the time span within which the movements take place.

Index Futures. The risk of imperfect correlation between movements in the price of an index futures contract and movements in the price of the securities that are the subject of the hedge increases as the composition of a Portfolio's holdings diverges from the securities included in the applicable index. The price of the index futures contract may move more than or less than the price of the securities being hedged. If the price of the index futures contract moves less than the price of the securities that are the subject of the hedge, the hedge will not be fully effective but, if the price of the securities being hedged has moved in an unfavorable direction, the Portfolio would be in a better position than if it had not hedged at all. If the price of the securities being hedged has moved in a favorable direction, this advantage will be partially offset by the futures contract. If the price of the futures contract moves more than the price of the securities, the Portfolio will experience either a loss or a gain on the futures contract that will not be completely offset by movements in the price of the securities that are the subject of the hedge. To compensate for the imperfect correlation of movements in the price of the securities being hedged and movements in the price of the index futures contract, a Portfolio may buy or sell index futures contracts in a greater dollar amount than the dollar amount of the securities being hedged if the historical volatility of the prices of the securities being hedged is more than the historical volatility of the prices of the securities included in the index. It is also possible that, where a Portfolio has sold index futures contracts to hedge against decline in the market, the market may advance and the value of the securities held in the portfolio may decline. If this occurred, the Portfolio would lose money on the futures contract and also experience a decline in value of its portfolio securities. However, while this could occur for a very brief period or to a very small degree, over time the value of a diversified portfolio of securities will tend to move in the same direction as the market indexes on which the futures contracts are based.

Where index futures contracts are purchased to hedge against a possible increase in the price of securities before a Portfolio is able to invest in them in an orderly fashion, it is possible that the market may decline instead. If the Portfolio then concludes not to invest in them at that time because of concern as to possible further market decline or for other reasons, it will realize a loss on the futures contract that is not offset by a reduction in the price of the securities it had anticipated purchasing.

To the extent that a Portfolio enters into futures contracts, options on futures contracts or options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are in-the-money at the time of purchase) will not exceed 5% of the liquidation value of the Portfolio's holdings, after taking into account unrealized profits and unrealized losses on any contracts the Portfolio has entered into. (In general, a call option on a futures contract is in-the-money if the value of the underlying futures contract exceeds the strike, i.e., exercise, price of the call; a put option on a futures contract is in-the-money if the value of the underlying futures contract is exceeded by the strike price of the put.) This policy does not limit to 5% the percentage of the Portfolio's total assets that are at risk in futures contracts, options on futures contracts and currency options.

Foreign Currency Hedging Strategies -- Special Considerations. Each Portfolio (other than Ivy Funds VIP Money Market) may use options and futures contracts on foreign currencies (including the euro), as described above, and forward foreign currency contracts (forward currency contracts), as described below, to attempt to hedge against movements in the values of the foreign currencies in which the Portfolio's securities are denominated or to attempt to enhance income or yield. Currency hedges can protect against price movements in a security that a Portfolio owns or intends to acquire that are attributable to changes in the value of the currency in which it is denominated. Such hedges do not, however, protect against price movements in the securities that are attributable to other causes.

A Portfolio might seek to hedge against changes in the value of a particular currency when no Financial Instruments on that currency are available or such Financial Instruments are more expensive than certain other Financial Instruments. In such cases, the Portfolio may seek to hedge against price movements in that currency by entering into transactions using Financial Instruments on another currency or a basket of currencies, the values of which the Investment Manager believes will have a high degree of positive correlation to the value of the currency being hedged. The risk that movements in the price of the Financial Instrument will not correlate perfectly with movements in the price of the currency subject to the hedging transaction is magnified when this strategy is used.

The value of Financial Instruments on foreign currencies depends on the value of the underlying currency relative to the U.S. dollar. Because foreign currency transactions occurring in the interbank market might involve substantially larger amounts than those involved in the use of such Financial Instruments, a Portfolio could be disadvantaged by having to deal in the odd lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.

There is no systematic reporting of last sale information for foreign currencies or any regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information generally is representative of very large transactions in the interbank market and thus might not reflect odd-lot transactions where rates might be less favorable. The interbank market in foreign currencies is a global, round-the-clock market. To the extent the U.S. options or futures markets are closed while the markets for the underlying currencies remain open, significant price and rate movements might take place in the underlying markets that cannot be reflected in the markets for the Financial Instruments until they reopen.

Settlement of transactions involving foreign currencies might be required to take place within the country issuing the underlying currency. Thus, a Portfolio might be required to accept or make delivery of the underlying foreign currency in accordance with any U.S. or foreign regulations regarding the maintenance of foreign banking arrangements by U.S. residents and might be required to pay any fees, taxes and charges associated with such delivery assessed in the issuing country.

Forward Currency Contracts. Each Portfolio (other than Ivy Funds VIP Money Market) may enter into forward currency contracts to purchase or sell foreign currencies for a fixed amount of U.S. dollars or another foreign currency. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (term) from the date of the forward currency contract agreed upon by the parties, at a price set at the time of the forward currency contract. These forward currency contracts are traded directly between currency traders (usually large commercial banks) and their customers.

Such transactions may serve as long hedges; for example, a Portfolio may purchase a forward currency contract to lock in the U.S. dollar price of a security denominated in a foreign currency that the Portfolio intends to acquire. Forward currency contract transactions may also serve as short hedges; for example, a Portfolio may sell a forward currency contract to lock in the U.S. dollar equivalent of the proceeds from the anticipated sale of a security or a dividend or interest payment denominated in a foreign currency.

A Portfolio may also use forward currency contracts to hedge against a decline in the value of existing investments denominated in foreign currency. For example, if the Portfolio owned securities denominated in euros, it could enter into a forward currency contract to sell euros in return for U.S. dollars to hedge against possible declines in the euro's value. Such a hedge, sometimes referred to as a position hedge, would tend to offset both positive and negative currency fluctuations, but would not offset changes in security values caused by other factors. The Portfolio could also hedge the position by selling another currency expected to perform similarly to the euro. This type of hedge, sometimes referred to as a proxy hedge, could offer advantages in terms of cost, yield or efficiency, but generally would not hedge currency exposure as effectively as a simple hedge into U.S. dollars. Proxy hedges may result in losses if the currency used to hedge does not perform similarly to the currency in which the hedged securities are denominated.

A Portfolio also may use forward currency contracts to attempt to enhance income or yield. The Portfolio could use forward currency contracts to increase its exposure to foreign currencies that the Investment Manager believes might rise in value relative to the U.S. dollar, or shift its exposure to foreign currency fluctuations from one country to another. For example, if the Portfolio owned securities denominated in a foreign currency and the Investment Manager believed that currency would decline relative to another currency, it might enter into a forward currency contract to sell an appropriate amount of the first foreign currency, with payment to be made in the second foreign currency. This is accomplished through contractual agreements to purchase or sell a specified currency at a specified future date and price set at the time of the contract. Forward currency contracts are individually negotiated and privately traded by currency traders and their customers. These forward currency contracts may involve the sale of U.S. dollars and the purchase of a foreign currency, or may be foreign cross-currency contracts involving the sale of one foreign currency and the purchase of another foreign currency; such foreign cross-currency contracts may be considered a hedging rather than a speculative strategy if the Portfolio's commitment to purchase the new (more favorable) currency is limited to the market value of the Portfolio's securities denominated in the old (less favorable) currency. Because these transactions are not entered into for hedging purposes, the Portfolio's custodian bank maintains, in a separate account of the Portfolio, liquid assets, such as cash, short-term securities and other liquid securities (marked to the market daily), having a value equal to, or greater than, any commitments to purchase currency on a forward basis. The prediction of currency movements is extremely difficult and the successful execution of a speculative strategy is highly uncertain.

The cost to a Portfolio of engaging in forward currency contracts varies with factors such as the currency involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts are usually entered into on a principal basis, no fees or commissions are involved. When the Portfolio enters into a forward currency contract, it relies on the counterparty to make or take delivery of the underlying currency at the maturity of the contract. Failure by the counterparty to do so would result in the loss of any expected benefit of the transaction.

As is the case with futures contracts, purchasers and sellers of forward currency contracts can enter into offsetting closing transactions by selling or purchasing, respectively, an instrument identical to the instrument purchased or sold. Secondary markets generally do not exist for forward currency contracts, with the result that closing transactions generally can be made for forward currency contracts only by negotiating directly with the counterparty. Thus, there can be no assurance that the Portfolio will in fact be able to close out a forward currency contract at a favorable price prior to maturity. In addition, in the event of insolvency of the counterparty, the Portfolio might be unable to close out a forward currency contract at any time prior to maturity. In either event, the Portfolio would continue to be subject to market risk with respect to the position, and would continue to be required to maintain a position in securities denominated in the foreign currency or to maintain cash or liquid assets in an account.

The precise matching of forward currency contract amounts and the value of the securities involved generally will not be possible because the value of such securities, measured in the foreign currency, will change after the forward currency contract has been established. Thus, a Portfolio might need to purchase or sell foreign currencies in the spot (cash) market to the extent such foreign currencies are not covered by forward currency contracts. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain.

Normally, consideration of the prospect for currency parities will be incorporated into the longer term investment decisions made with regard to overall diversification strategies. However, the Investment Manager believes that it is important to have the flexibility to enter into such forward currency contracts when it determines that the best interests of the Portfolio will be served.

Successful use of forward currency contracts depends on the skill of the Investment Manager in analyzing and predicting currency values. Forward currency contracts may substantially change a Portfolio's exposure to changes in currency exchange rates and could result in losses to the Portfolio if currencies do not perform as the Investment Manager anticipates. There is no assurance that WRIMCO's or a subadvisor's use of forward currency contracts will be advantageous to a Portfolio or that the Investment Manager will hedge at an appropriate time.

Combined Positions. A Portfolio may purchase and write options in combination with each other, or in combination with futures contracts or forward contracts, to adjust the risk and return characteristics of its overall position. For example, the Portfolio may purchase a put option and write a call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.

Turnover. A Portfolio's options and futures contracts activities may affect its turnover rate and brokerage commission payments. The exercise of calls or puts written by a Portfolio, and the sale or purchase of futures contracts, may cause it to sell or purchase related investments, thus increasing its turnover rate. Once a Portfolio has received an exercise notice on an option it has written, it cannot effect a closing transaction in order to terminate its obligation under the option and must deliver or receive the underlying securities at the exercise price. The exercise of puts purchased by a Portfolio may also cause the sale of related investments, also increasing turnover; although such exercise is within the Portfolio's control, holding a protective put might cause it to sell the related investments for reasons that would not exist in the absence of the put. A Portfolio will pay a brokerage commission each time it buys or sells a put or call or purchases or sells a futures contract. Such commissions may be higher than those that would apply to direct purchases or sales.

Swaps, Caps, Floors and Collars. Each Portfolio (other than Ivy Funds VIP Money Market) may enter into swaps, including caps, floors and collars, for any legal purpose consistent with its investment objective(s) and policies, including to attempt: to obtain or preserve a particular return or a spread on a particular investment or portion of its portfolio; to protect against an increase in the price of securities the Portfolio anticipates purchasing at a later date; to protect against currency fluctuations; as a duration management technique; to enhance income or capital gains; or to gain exposure to certain markets in an economical way.

A swap agreement is a derivative in the form of a bilateral financial contract under which the Portfolio and another party, normally a bank, broker-dealer or one of their affiliates, agree to make or receive payments at specified dates based on a specified "notional" amount. Examples of swap agreements include, but are not limited to, interest rate swaps, credit default swaps, foreign currency swaps, and equity, commodity, index or other total return swaps.

Swap agreements are individually negotiated and can be structured to provide exposure to a variety of different types of investments or market factors. For example, in an interest rate swap, fixed-rate payments may be exchanged for floating rate payments; in a commodity swap, U.S. dollar-denominated payments may be exchanged for payments denominated in a foreign currency; and in a total return swap, payments tied to the investment return on a particular asset, group of assets or index may be exchanged for payments that are effectively equivalent to interest payments or for payments tied to the return on another asset, group of assets, or index.

Caps, floors and collars have an effect similar to buying or writing options; they allow a purchaser to attempt to protect itself against interest rate movements exceeding specified minimum or maximum levels. The purchase of a cap entitles the purchaser to receive payments from the seller on a notional principal amount to the extent that a specified index exceeds a predetermined value. The purchase of a floor entitles the purchaser to receive payments from the seller on a notional principal amount to the extent that a specified index falls below a predetermined value. A collar combines elements of buying a floor and selling a cap.

In a total return commodity swap, a Portfolio will receive the price appreciation of a commodity index, a portion of the index, or a single commodity in exchange for payments equivalent to a floating rate of interest, or if the commodity swap is for the equivalent of one interest rate period, a fixed fee that is established at the outset of the swap. Floating rate payments are pegged to a base rate, such as LIBOR, that is periodically adjusted. Therefore, if interest rates increase over the term of the swap contract, a Portfolio may be required to pay a higher amount at each swap reset date.

A Portfolio may enter into credit default swap contracts for hedging or investment purposes. The Portfolio may either sell or buy credit protection under these contracts. The seller in a credit default swap contract is required to pay the par (or other agreed-upon) value of a referenced debt obligation to the buyer if there is an event of a default or other credit event by the issuer of that debt obligation. In return, the seller receives from the buyer a periodic stream of payments over the term of the contract or, if earlier, until the occurrence of a credit event. If the contract is terminated prior to its stated maturity, either the seller or the buyer would make a termination payment to the other in an amount approximately equal to the amount by which the value of the contract has increased in value to the recipient of the settlement payment. For example, if the contract is more valuable to the buyer (as would normally occur if the creditworthiness of the issuer of the referenced debt obligation has decreased), the seller would make a termination payment to the buyer. As the seller of credit protection, a Portfolio would effectively add leverage because, in addition to its total net assets, the Portfolio would be subject to the investment exposure of the notional amount of the swap. As the buyer, a Portfolio normally would be hedging its exposure on debt obligations that it holds.

Swap agreements may shift a Portfolio's investment exposure from one type of investment to another. For example, if the Portfolio agrees to exchange payments in U.S. dollars for payments in foreign currency, the swap agreement would tend to decrease the Portfolio's exposure to U.S. interest rates and increase its exposure to foreign currency and interest rates. Most swap agreements provide that when the periodic payment dates for both parties are the same, payments are netted, and only the net amount is paid to the counterparty entitled to receive the net payment. Consequently, a Portfolio's current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. Each Portfolio typically treats the net unrealized gain on each swap as illiquid. See Illiquid Investments.

Because swap agreements may have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in gains or losses that are substantially greater than the amount invested in the swap itself. Certain swaps have the potential for unlimited loss, regardless of the size of the initial investment. The net amount of the excess, if any, of a Portfolio's obligations over its entitlements with respect to each swap will be accrued on a daily basis and an amount of cash or liquid assets having an aggregate NAV at least equal to the accrued excess will be maintained in an account with the Portfolio's custodian that satisfies the requirements of the 1940 Act. The Portfolio will also establish and maintain such account with respect to its total obligations under any swaps that are not entered into on a net basis and with respect to any caps or floors that are written by the Portfolio. WRIMCO or the subadvisor, as applicable, and each Portfolio believe that such obligations do not constitute senior securities under the 1940 Act and, accordingly, do not treat them as being subject to the Portfolio's borrowing restrictions.

The use of swap agreements entails certain risks that may be different from, or possibly greater than, the risks associated with investing directly in the referenced assets that underlie the swap agreement. Swaps are highly specialized instruments that require investment techniques and risk analyses different from those associated with stocks, bonds, and other traditional investments. The use of a swap requires an understanding not only of the referenced asset, referenced rate, or index but also of the swap itself. If the Investment Manager attempts to use a swap as a hedge against, or as a substitute for, a Portfolio's portfolio investment, the Portfolio will be exposed to the risk that the swap will have or will develop an imperfect or no correlation with the portfolio investment. This could cause significant losses for the Portfolio. While hedging strategies involving swap instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other Portfolio investments.

As with other investments, swap agreements are subject to the risk that the market value of the instrument will change in a way detrimental to a Portfolio's interest. The Portfolio bears the risk that the Investment Manager will not accurately forecast future market trends or the values of assets, reference rates, indexes, or other economic factors in establishing swap positions for the Portfolio.

The use of a swap agreement also involves the risk that a loss may be sustained as a result of the insolvency or bankruptcy of the counterparty or the failure of the counterparty to make required payments or otherwise comply with the terms of the agreement. The creditworthiness of firms with which a Portfolio enters into swaps, caps, floors or collars will be monitored by the Investment Manager. If a firm's creditworthiness declines, the value of the agreement might decline, potentially resulting in losses. Changing conditions in a particular market area, such as those experienced in the subprime mortgage market over recent months, whether or not directly related to the referenced assets that underlie the swap agreement, may have an adverse impact on the creditworthiness of the counterparty. For example, the counterparty may have experienced losses as a result of its exposure to the subprime mortgage market that adversely affect its creditworthiness. If a default occurs by the other party to such transaction, the Portfolio may have contractual remedies pursuant to the agreements related to the transaction.

The swaps market is a continually evolving market and is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect a Portfolio's ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

         Real Estate Investment Trusts

Ivy Funds VIP Real Estate Securities may invest in securities issued by real estate investment trusts (REITs). A REIT is a corporation, trust, or association that meets certain requirements of the Internal Revenue Code of 1986, as amended (the Code). The Code permits a qualifying REIT to deduct dividends it pays, thereby effectively eliminating entity-level Federal income tax for a REIT that distributes all of its taxable income and net capital gain and making the REIT a pass-through vehicle for Federal income tax purposes. To qualify for treatment as a REIT, a company must, among other things, derive at least 75% of its gross income each taxable year from real estate sources such as rents from real property, mortgage interest, and gains from sales of real estate assets and must distribute to shareholders annually 90% or more of its taxable income. Moreover, at the end of each quarter of its taxable year, at least 75% of the value of its total assets must be represented by real estate assets, cash and cash items, and U.S. government securities.

REITs are sometimes informally characterized as equity REITs, mortgage REITs, and hybrid REITs. An equity REIT invests primarily in the fee ownership or leasehold ownership of land and buildings and derives its income primarily from rental income. A mortgage REIT invests primarily in mortgages on real estate and derives its income primarily from interest payments received on credit it has granted. A hybrid REIT combines the characteristics of equity REITs and mortgage REITs. It is anticipated, although not required, that under normal circumstances, a majority of the Portfolio's investments in REITs will consist of securities issued by equity REITs.

         Repurchase Agreements

Each of the Portfolios may purchase securities subject to repurchase agreements, subject to its restriction on investment in illiquid investments. A repurchase agreement is an instrument under which a Portfolio purchases a security and the seller (normally a commercial bank or broker-dealer) agrees, at the time of purchase, that it will repurchase the security at a specified time and price. The amount by which the resale price is greater than the purchase price reflects an agreed-upon market interest rate effective for the period of the agreement. The return on the securities subject to the repurchase agreement may be more or less than the return on the repurchase agreement.

The majority of repurchase agreements in which a Portfolio will engage are overnight transactions, and the delivery pursuant to the resale typically will occur within one to five days of the purchase. The primary risk is that a Portfolio may suffer a loss if the seller fails to pay the agreed-upon amount on the delivery date and that amount is greater than the resale price of the underlying securities and other collateral held by the Portfolio. In the event of bankruptcy or other default by the seller, there may be possible delays and expenses in liquidating the underlying securities or other collateral, decline in their value or loss of interest. The return on such collateral may be more or less than that from the repurchase agreement. A Portfolio's repurchase agreements will be structured so as to fully collateralize the loans. In other words, the value of the underlying securities, which will be held by the Portfolio's custodian bank or by a third party that qualifies as a custodian under Section 17(f) of the 1940 Act, is and, during the entire term of the agreement, will remain at least equal to the value of the loan, including the accrued interest earned thereon. Repurchase agreements are entered into only with those entities approved by WRIMCO.

         Restricted Securities

Each of the Portfolios may invest in restricted securities. Restricted securities are securities that are subject to legal or contractual restrictions on resale. However, restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act of 1933, as amended (1933 Act), or in a registered public offering. For example, a Portfolio may purchase commercial paper that is issued in reliance on the so-called private placement exemption from registration that is afforded by Section 4(2) of the 1933 Act (Section 4(2) paper). Section 4(2) paper is normally resold to other institutional investors through or with the assistance of investment dealers who make a market in the Section 4(2) paper, thus providing liquidity. Where registration is required, a Portfolio may be obligated to pay all or part of the registration expense and a considerable period may elapse between the time it decides to seek registration and the time the Portfolio may be permitted to sell a security under an effective registration statement. If, during such a period, adverse market conditions were to develop, a Portfolio might obtain a less favorable price than prevailed when it decided to seek registration of the security.

There are risks associated with investments in restricted securities in that there can be no assurance of a ready market for resale. Also, the contractual restrictions on resale might prevent a Portfolio from reselling the securities at a time when such sale would be desirable. Restricted securities that are traded in foreign markets are often subject to restrictions that prohibit resale to U.S. persons or entities or permit sales only to foreign broker-dealers who agree to limit their resale to such persons or entities. The buyer of such securities must enter into an agreement that, usually for a limited period of time, it will resell such securities subject to such restrictions. Restricted securities in which a Portfolio seeks to invest need not be listed or admitted to trading on a foreign or domestic exchange and may be less liquid than listed securities. Certain restricted securities, including Rule 144A securities, may be determined to be liquid in accordance with guidelines adopted by the Board of Trustees. See Illiquid Investments.

         Short Sales Against The Box

Each of Ivy Funds VIP Energy, Ivy Funds VIP International Value, Ivy Funds VIP Micro Cap Growth, Ivy Funds VIP Mortgage Securities, Ivy Funds VIP Real Estate Securities and Ivy Funds VIP Small Cap Value may sell securities "short against the box;" provided, however, that the Portfolio's aggregate short sales prices may not, at the time of any short sale, exceed 10% of its total assets. Whereas a short sale is the sale of a security a Portfolio does not own, a short sale is "against the box" if, at all times during which the short position is open, the Portfolio owns at least an equal amount of the securities sold short or other securities convertible into or exchangeable without further consideration for securities of the same issue as the securities sold short. None of the Portfolios has any present intention to sell securities short in this fashion.

         U.S. Government Securities

U.S. government securities are high quality debt instruments issued or guaranteed as to principal or interest by the U.S. Treasury or an agency or instrumentality of the U.S. government. These securities include Treasury Bills (which mature within one year of the date they are issued), Treasury Notes (which have maturities of one to ten years) and Treasury Bonds (which generally have maturities of more than ten years). All such Treasury securities are backed by the full faith and credit of the United States.

Certain securities issued or guaranteed by U.S. government agencies or instrumentalities are backed by the full faith and credit of the U.S. government, such as securities issued by the Export-Import Bank of the United States, Farm Credit System Financial Assistance Corporation, Farmers Home Administration, Federal Housing Administration, General Services Administration, Ginnie Mae, Maritime Administration or Small Business Administration.

Other securities issued or guaranteed by U.S. government agencies or instrumentalities are not backed by the full faith and credit of the U.S. government. For example, some securities are supported by the right of the agency or instrumentality to borrow from the Treasury, such as securities issued by the Federal Home Loan Banks, Freddie Mac, Fannie Mae, or Student Loan Marketing Association, and other securities are supported only by the credit of the agency or instrumentality, such as securities issued by the Federal Farm Credit Banks Funding Corporation or Tennessee Valley Authority.

If the securities issued or guaranteed by a U.S. government agency or instrumentality are not backed by the full faith and credit of the U.S. government, there can be no assurance that the U.S. government would provide financial support to the agency or instrumentality. A Portfolio will invest in securities of agencies and instrumentalities only if the Investment Manager is satisfied that the credit risk involved is acceptable.

U.S. government securities may include mortgage-backed securities issued or guaranteed as to the payment of principal and interest by U.S. government agencies or instrumentalities, including, but not limited to, Ginnie Mae, Freddie Mac and Fannie Mae. These mortgage-backed securities include pass-through securities, participation certificates and collateralized mortgage obligations. See Mortgage-Backed and Asset-Backed Securities. Timely payment of principal and interest on Ginnie Mae pass-throughs is guaranteed by the full faith and credit of the United States. Freddie Mac and Fannie Mae are both instrumentalities of the U.S. government, but their obligations are not backed by the full faith and credit of the United States. It is possible that the availability and the marketability (that is, liquidity) of the securities discussed in this section could be adversely affected by actions of the U.S. government to tighten the availability of its credit.

         Variable or Floating Rate Instruments

Variable or floating rate instruments (including notes purchased directly from issuers) bear variable or floating interest rates and may carry rights that permit holders to demand payment of the unpaid principal balance plus accrued interest from the issuers or certain financial intermediaries on dates prior to their stated maturities. Floating rate securities have interest rates that change whenever there is a change in a designated base rate while variable rate instruments provide for a specified periodic adjustment in the interest rate. These formulas are designed to result in a market value for the instrument that approximates its par value.

         Warrants and Rights

Each Portfolio (other than Ivy Funds VIP Money Market) may invest in warrants and rights. Warrants are options to purchase equity securities at specified prices for a specific period of time. Their prices do not necessarily move parallel to the prices of the underlying securities. Rights are similar to warrants but normally have a short duration and are distributed directly by the issuer to its shareholders. Rights and warrants have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer. Warrants and rights are highly volatile and, therefore, more susceptible to sharp declines in value than the underlying security might be. They are also generally less liquid than an investment in the underlying securities.

Warrants with Cash Extractions. Ivy Funds VIP International Value may also invest up to 5% of its total assets in warrants used in conjunction with the cash extraction method. If an investor wishes to replicate an underlying share, the investor can use the warrant with cash extraction method by purchasing warrants and holding cash. The cash component would be determined by subtracting the market price of the warrant from the underlying share price.

For example, assume one share for company "Alpha" has a current share price of $40 and issued warrants can be converted one for one share at an exercise price of $31 exercisable two years from today. Also assume that the market price of the warrant is $10 ($40 - $31 + $1) because investors are willing to pay a premium ($1) for previously stated reasons. If an investor wanted to replicate an underlying share by engaging in a warrant with cash extraction strategy, the amount of cash the investor would need to hold for every warrant would be $30 ($40 - $10 = $30). A warrant with cash extraction is, thus, simply a synthetically created quasi-convertible bond.

If an underlying share pays no or a low dividend and has an associated warrant with a market price that is low relative to its share price, a warrant with cash extraction may provide attractive cash yields and minimize capital loss risk, provided the underlying share is also considered a worthy investment. For example, assume Alpha's share is an attractive investment opportunity and its share pays no dividend. Given the information regarding Alpha provided above, also assume that short-term cash currently yields 5% per year and that the investor plans to hold the investment at least two years, barring significant near-term capital appreciation. If the share price were to fall below $30, the warrant with cash extraction strategy would yield a lower loss than the underlying share because an investor cannot lose more than the purchase cost of the warrant (capital risk minimized). The cash component for this strategy would yield $3.08 after two years (compound interest). The total value of the underlying investment would be $43.08 versus $40.00 for the non-yielding underlying share (attractive yield). Finally, it is important to note that this strategy will not be pursued if it is not economically more attractive than underlying shares.

         When-Issued and Delayed-Delivery Transactions

Subject to its investment policies and restrictions, each Portfolio may purchase securities in which it may invest on a when-issued or delayed-delivery basis or sell them on a delayed-delivery basis. In either case payment and delivery for the securities take place at a future date. The securities so purchased or sold are subject to market fluctuation; their value may be less or more when delivered than the purchase price paid or received. When purchasing securities on a when issued or delayed-delivery basis, a Portfolio assumes the rights and risks of ownership, including the risk of price and yield fluctuations. No interest accrues to the Portfolio until delivery and payment is completed. When a Portfolio makes a commitment to purchase securities on a when-issued or delayed-delivery basis, it will record the transaction and thereafter reflect the value of the securities in determining its NAV per share. When a Portfolio sells securities on a delayed-delivery basis, it does not participate in further gains or losses with respect to the securities. When a Portfolio makes a commitment to sell securities on a delayed-delivery basis, it will record the transaction and thereafter value the securities at the sale price in determining its NAV per share. If the other party to a delayed-delivery transaction fails to deliver or pay for the securities, the Portfolio could miss a favorable price or yield opportunity, or could suffer a loss.

The use of when-issued transactions and forward commitments enables a Portfolio to seek to hedge against anticipated changes in interest rates and prices. For instance, in periods of rising interest rates and falling prices, a Portfolio might sell securities in its portfolio on a forward commitment basis to limit its exposure to falling prices. In periods of falling interest rates and rising prices, a Portfolio might sell a security in its portfolio and purchase the same or a similar security on a when-issued or forward commitment basis, thereby fixing the purchase price to be paid on the settlement date at an amount below that to which the Portfolio anticipates the market price of such security to rise and, in the meantime, obtaining the benefit of investing the proceeds of the sale of its portfolio security at currently higher cash yields. Of course, the success of this strategy depends upon the ability of the Investment Manager to correctly anticipate increases and decreases in interest rates and prices of securities. If the Investment Manager anticipates a rise in interest rates and a decline in prices and, accordingly, a Portfolio sells securities on a forward commitment basis in order to hedge against falling prices, but in fact interest rates decline and prices rise, the Portfolio will have lost the opportunity to profit from the price increase. If the Investment Manager anticipates a decline in interest rates and a rise in prices and, accordingly, a Portfolio sells a security in its portfolio and purchases the same or a similar security on a when-issued or forward commitment basis in order to enjoy currently high cash yields, but in fact interest rates increase and prices fall, the Portfolio will have lost the opportunity to profit from investment of the proceeds of the sale of the security at the increased interest rates. The likely effect of this hedging strategy, whether the Investment Manager is correct or incorrect in its prediction of interest rate and price movements, is to reduce the chances of large capital gains or losses and thereby reduce the likelihood of wide variations in the Portfolio's NAV.

When-issued securities and forward commitments may be sold prior to the settlement date, but a Portfolio enters into when-issued and forward commitments only with the intention of actually receiving or delivering the securities, as the case may be. Each Portfolio may hold a when-issued security or forward commitment until the settlement date, even if the Portfolio will incur a loss upon settlement. In accordance with regulatory requirements, a Portfolio's custodian bank maintains, in a separate account of the Portfolio, liquid assets, such as cash, short-term securities and other liquid securities (marked to the market daily), having a value equal to, or greater than, any commitments to purchase securities on a when-issued or forward commitment basis and, with respect to forward commitments to sell portfolio securities of the Portfolio, the portfolio securities themselves. If a Portfolio, however, chooses to dispose of the right to acquire a when-issued security prior to its acquisition or dispose of its right to deliver or receive against a forward commitment, it can incur a gain or loss.

Mortgage Securities Portfolio may also enter into such transactions to generate incremental income. In some instances, the third-party seller of when-issued or forward commitment securities may determine prior to the settlement date that it will be unable or unwilling to meet its existing transaction commitments without borrowing securities. If advantageous from a yield perspective, the Portfolio may, in that event, agree to resell its purchase commitment to the third-party seller at the current market price on the date of sale and concurrently enter into another purchase commitment for such securities at a later date. As an inducement for a Portfolio to "roll over" its purchase commitment, the Portfolio may receive a negotiated fee. These transactions, referred to as "mortgage dollar rolls," are entered into without the intention of actually acquiring securities. For a description of mortgage dollar rolls and the Portfolios that may invest in such transactions, see Mortgage Dollar Rolls.

The purchase of securities on a when-issued or forward commitment basis exposes a Portfolio to risk because the securities may decrease in value prior to their delivery. Purchasing securities on a when-issued or forward commitment basis involves the additional risk that the return available in the market when the delivery takes place will be higher than that obtained in the transaction itself. A Portfolio's purchase of securities on a when-issued or forward commitment basis while remaining substantially fully invested increases the amount of the Portfolio's assets that are subject to market risk to an amount that is greater than the Portfolio's net asset value, which could result in increased volatility of the price of the Portfolio's shares. No more than 30% of the value of Mortgage Securities Portfolio's total assets will be committed to when-issued or forward commitment transactions, and of such 30%, no more than two-thirds (that is, 20% of its total assets) may be invested in mortgage dollar rolls.

         Zero Coupon Securities

Zero coupon securities are debt obligations that do not entitle the holder to any periodic payment of interest prior to maturity or do not specify a future date when the securities begin to pay current interest; instead, they are sold at a deep discount from their face value (that is, with original issue discount (OID)) and are redeemed at face value when they mature. Because zero coupon securities do not pay current income, their prices can be very volatile when interest rates change and generally are subject to greater price fluctuations in response to changing interest rates than prices of comparable debt obligations that make current distributions of interest in cash.

A Portfolio may invest in zero coupon securities that are stripped U.S. Treasury notes and bonds, zero coupon bonds of corporate or municipal issuers and other securities that are issued with OID. The Federal tax law requires that a holder of a security with OID accrue as income (take into account, in the case of OID on municipal securities) each year a ratable portion of the OID on the security, even though the holder may receive no interest payment on the security during the year. Accordingly, although a Portfolio generally will receive no payments on its zero coupon securities prior to their maturity or disposition, it will have current income attributable to those securities that will be includable in the dividends it pays to its shareholders. See Taxation of the Portfolios. A Portfolio will pay those dividends from its cash assets or by liquidation of portfolio securities, if necessary, at a time when it otherwise might not have done so. A Portfolio may realize capital gains or losses from those sales, which would increase or decrease its taxable income and/or net capital gains.

A broker-dealer creates a derivative zero coupon security by separating the interest and principal components of a U.S. Treasury security and selling them as two individual securities. CATS (Certificates of Accrual on Treasury Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury Receipts) are examples of derivative zeros.

The Federal Reserve Bank creates STRIPS (Separate Trading of Registered Interest and Principal of Securities) by separating the interest and principal components of an outstanding U.S. Treasury security and selling them as individual securities. Bonds issued by the Resolution Funding Corporation (REFCORP) and the Financing Corporation (FICO) can also be separated in this fashion. Original issue zeros are zero coupon securities originally issued by the U.S. government, a government agency, or a corporation in zero coupon form.

Investment Restrictions

Certain of the Portfolios' investment restrictions are described in this SAI. Each of the Portfolios is "diversified" as defined in the 1940 Act. This means that at least 75% of the value of the Portfolio's total assets is represented by cash and cash items (including receivables), U.S. government securities, securities of other investment companies, and securities of other issuers, which for purposes of this calculation, are limited in respect to any one issuer to an amount not greater in value than 5% of the Portfolio's total assets and to not more than 10% of the outstanding voting securities of such issuer.

         Fundamental Investment Restrictions

The following, set forth in their entirety, are each Portfolio's fundamental investment restrictions, which cannot be changed without shareholder approval for the affected Portfolio. For this purpose, shareholder approval for a Portfolio means the approval, at a meeting of the Portfolio's shareholders, by the vote of the lesser of (1) 67% or more of the Portfolio's voting securities present at the meeting, if more than 50% of the Portfolio's outstanding voting securities are present in person or by proxy or (2) more than 50% of the Portfolio's outstanding voting securities.

1.	The Portfolio may not borrow money, except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.
2.	The Portfolio may not issue senior securities, except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.
3.	The Portfolio may not engage in the business of underwriting securities except to the extent that the Fund may be considered an underwriter within the meaning of the Securities Act of 1933 in the acquisition, disposition or resale of its portfolio securities or in connection with investments in other investment companies, or to the extent otherwise permitted under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.
4.	For each Portfolio except Ivy Funds VIP Energy, Ivy Funds VIP Mortgage Securities, Ivy Funds VIP Real Estate Securities, Ivy Funds VIP Science and Technology and Ivy Funds VIP Money Market:
	The Portfolio may not purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities), securities of other investment companies and tax-exempt securities or such other securities as may be excluded for this purpose under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief) if, as a result, such purchase would result in the concentration (as that term may be defined in the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief) of its total assets in securities of issuers in any one industry.
	For Ivy Funds VIP Energy:
	Under normal market conditions, Ivy Funds VIP Energy will concentrate its investments in the energy industry.
	For Ivy Funds VIP Mortgage Securities:
	Under normal market conditions, Ivy Funds VIP Mortgage Securities will concentrate its investments in the mortgage and mortgage-finance industry.
	For Ivy Funds VIP Real Estate Securities:
	Under normal market conditions, Ivy Funds VIP Real Estate Securities will concentrate its investments in the real estate or real estate-related industry.
	For Ivy Funds VIP Science and Technology:
	Under normal market conditions, Ivy Funds VIP Science and Technology will concentrate its investments in securities of science and technology companies or companies that benefit from the application of science and/or technology.
	For Ivy Funds VIP Money Market:
	Under normal market conditions, Ivy Funds VIP Money Market will not make any investment if, as a result, the Portfolio's investments will be concentrated in any one industry, except that the Portfolio may invest without limit in obligations issued by banks.
5.	The Portfolio may not purchase or sell real estate, except to the extent permitted under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.
6.	The Portfolio may not purchase or sell commodities, contracts relating to commodities or options on contracts relating to commodities except to the extent permitted under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. This policy shall not prevent the Portfolio from purchasing or selling foreign currency or purchasing, selling or entering into futures contracts, options, forward contracts, swaps, caps, floors, collars and other financial instruments as currently exist or may in the future be developed.
7.	The Portfolio may make loans to the extent permitted under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.

         Non-Fundamental Investment Restrictions

The following investment restrictions are not fundamental (that is, they are operating policies) and may be changed as to a Portfolio by the Trust's Board of Trustees without approval of the shareholders of the Portfolio.

1.         "Name Rule" investments:

During normal market conditions, at least 80% of:

• Ivy Funds VIP Bond's net assets will be invested in bonds.

• Ivy Funds VIP Core Equity's net assets will be invested in equity securities.

• Ivy Funds VIP Dividend Opportunities' net assets will be invested in dividend-paying equity securities.

• Ivy Funds VIP Global Natural Resources' net assets will be invested in equity securities (including common stock, preferred stock and securities convertible into common stock) of companies of any size throughout the world that own, explore or develop natural resources and other basic commodities or supply goods and services to such companies.

• Ivy Funds VIP International Growth's net assets will be invested in foreign securities. Ivy Funds VIP International Growth may not purchase a foreign security if, as a result of such purchase, more than 75% of its total assets would be invested in issuers of that foreign country. Ivy Funds VIP International Growth currently intends to have at least 65% of its total assets invested in issuers of at least three different foreign countries.

• Ivy Funds VIP International Value's net assets will be invested in foreign securities and at least 65% of its total assets will be invested in at least three different countries outside the United States. The Portfolio may not purchase a foreign security if, as a result, more than 75% of its total assets would be invested in issuers of any one foreign country.

• Ivy Funds VIP Micro Cap Growth's net assets will be invested in the equity securities of micro cap companies. For purposes of this restriction, a micro cap company is typically a company with a market capitalization below $1 billion.

• Ivy Funds VIP Mid Cap Growth's net assets will be invested in mid-cap growth stocks, which are stocks of companies whose market capitalizations range between $1 billion and $18 billion.

• Ivy Funds VIP Mortgage Securities' net assets will be invested in the mortgage and mortgage-related industry.

• Ivy Funds VIP Real Estate Securities' net assets will be invested in the real estate or real estate-related industry.

• Ivy Funds VIP Science and Technology's net assets will be invested in securities of science or technology companies or companies benefited by the application of scientific or technological discoveries.

• Each of Ivy Funds VIP Small Cap Growth's and Ivy Funds VIP Small Cap Value's net assets will be invested in small cap companies. For purposes of this restriction, a small cap company is typically a company with a market capitalization below $3.5 billion.

• Ivy Funds VIP Energy's net assets will be invested in securities of companies within the energy sector, which includes all aspects of the energy industry, including exploration, discovery, production, distribution or infrastructure of energy and/or alternative energy sources.

The Portfolio will notify its shareholders with written notice at least 60 days prior to a change in the 80% investment policy.

2.         Investment in other investment companies:

Each Portfolio other than Ivy Funds VIP Money Market may buy shares of other investment companies only to the extent permitted under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief, except that a Portfolio in which a Pathfinder Portfolio invests may not acquire any securities of registered open-end investment companies or unit investment trusts in reliance on Section 12(d)(1)(F) or (G) of the 1940 Act.

3.         Investment in illiquid securities:

Each Portfolio (except Ivy Funds VIP Money Market) may not purchase a security if, as a result, more than 15% of its net assets would consist of illiquid investments.

Ivy Funds VIP Money Market may not purchase a security if, as a result, more than 10% of its net assets would consist of illiquid investments.

4.         Investment in debt securities:

Each of Ivy Funds VIP Balanced, Ivy Funds VIP Growth, Ivy Funds VIP Core Equity, Ivy Funds VIP International Growth, Ivy Funds VIP Science and Technology, Ivy Funds VIP Small Cap Growth and Ivy Funds VIP Value does not currently intend to invest in non-investment grade debt securities if, as a result of such investment, more than 5% of its total assets would consist of such investments. Ivy Funds VIP Asset Strategy may not invest more than 35% of its total assets in non-investment grade debt securities. Ivy Funds VIP Bond may not invest more than 20% of its total assets in non-investment grade debt securities.

Ivy Funds VIP International Value does not currently intend to invest more than 5% of its net assets in securities (including convertible securities) rated at least BBB by S&P or Baa by Moody's and may not invest in securities below those ratings.

Each of Ivy Funds VIP Micro Cap Growth and Ivy Funds VIP Small Cap Value does not currently intend to invest more than 10% of its net assets in debt securities (including convertible securities) rated at least B- by S&P or B3 by Moody's and may not invest in securities below those ratings.

Each of Ivy Funds VIP Dividend Opportunities, Ivy Funds VIP Energy, Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities does not currently intend to invest in non-investment grade debt securities if, as a result, more than 10% of its total assets would consist of such investments.

Ivy Funds VIP Mortgage Securities may not invest more than 35% of its total assets in securities rated BBB or below by S&P or Baa or below by Moody's.

Each of Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities may hold an additional 5% of its net assets in securities down-graded subsequent to purchase where such down-graded securities would not otherwise be eligible for purchase by the Portfolio.

5.         Investment in foreign securities:

Each of Ivy Funds VIP Asset Strategy and Ivy Funds VIP Energy may invest up to 100% of its total assets in foreign securities.

Ivy Funds VIP Balanced may purchase an unlimited amount of foreign securities; however, the Portfolio intends to have less than 10% of its total assets invested in foreign securities.

Each of Ivy Funds VIP Bond, Ivy Funds VIP Growth, Ivy Funds VIP High Income, Ivy Funds VIP Core Equity, Ivy Funds VIP Science and Technology and Ivy Funds VIP Small Cap Growth may not invest more than 20% of its total assets in foreign securities.

Ivy Funds VIP Value may not invest more than 25% of its total assets in foreign securities.

Each of Ivy Funds VIP Dividend Opportunities and Ivy Funds VIP Mid Cap Growth does not intend to invest more than 25% of its total assets in foreign securities.

Each of Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities does not intend to invest more than 10% of its total assets in securities of foreign issuers.

Each of Ivy Funds VIP Micro Cap Growth and Ivy Funds VIP Small Cap Value currently intends to limit its investments in foreign securities that are not traded in the U.S., under normal market conditions, to no more than 10% of its total assets; for this purpose, ADRs are not considered foreign securities.

Ivy Funds VIP International Value will, under normal market conditions, invest at least 65% of its total assets in at least three different countries outside the U.S.

6.         Investment in Financial Instruments:

Each Portfolio may invest in Financial Instruments if it is permitted to invest in the type of asset by which the return on, or value of, the Financial Instrument is measured.

To the extent that a Portfolio enters into futures contracts, options on futures contracts or options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are in-the-money at the time of purchase) will not exceed 5% of the liquidation value of the Portfolio, after taking into account unrealized profits and unrealized losses on any contracts the Portfolio has entered into. (In general, a call option on a futures contract is in-the-money if the value of the underlying futures contract is exceeded by the strike price of the put.) This policy does not limit to 5% the percentage of a Portfolio's total assets that are at risk in futures contracts, options on futures contracts and currency options.

Further Non-fundamental Restrictions:

Except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief, a Portfolio may not with respect to 75% of the Portfolio's total assets, purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities, and securities of other investment companies) if, as a result, (a) more than 5% of the Portfolio's total assets would be invested in the securities of that issuer, or (b) the Portfolio would hold more than 10% of the outstanding voting securities of that issuer.

At least 25% of Ivy Funds VIP Balanced's total assets will be invested during normal market conditions in fixed-income senior securities.

Ivy Funds VIP Money Market may not purchase the securities of any one issuer (other than U.S. government securities) if, as a result of such purchase, more than 5% of its total assets would be invested in the securities of any one issuer, as determined in accordance with Rule 2a-7; provided, however, the Portfolio may invest up to 25% of its total assets in first tier securities of a single issuer for a period of up to 3 business days after the purchase. The Portfolio may rely on this exception only as to one issuer at a time. Ivy Funds VIP Money Market may not invest more than 5% of its total assets in securities rated in the second highest rating category by the requisite rating organization(s) or comparable unrated securities, with investments in such securities of any one issuer (except U.S. government securities) limited to the greater of 1% of the Portfolio's total assets or $1,000,000, as determined in accordance with Rule 2a-7.

Ivy Funds VIP High Income may not purchase a common stock if, as a result, more than 20% of its total assets would be invested in common stocks. This 20% limit includes common stocks acquired on conversion of convertible securities, on exercise of warrants or call options or in any other voluntary manner. The Portfolio does not currently intend to invest more than 10% of its total assets in non-dividend paying common stocks.

Subject to the diversification requirements of Rule 2a-7, Ivy Funds VIP Money Market may invest up to 10% of its total assets in Canadian government obligations. Ivy Funds VIP Money Market may not invest more than 25% of its total assets in a combination of foreign obligations and instruments.

Ivy Funds VIP Asset Strategy does not currently intend to lend assets other than securities to other parties, except by acquiring loans, loan participations, or other forms of direct debt instruments. This limitation does not apply to purchases of debt securities or to repurchase agreements.

Ivy Funds VIP Asset Strategy does not currently intend to invest in oil, gas, or other mineral exploration or development programs or leases.

Ivy Funds VIP Money Market will not invest in any security whose interest rate or principal amount to be repaid, or timing of payments, varies or floats with the value of a foreign currency, the rate of interest payable on foreign currency borrowings, or with any interest rate or index expressed in a currency other than U.S. dollars.

Ivy Funds VIP International Value may also invest up to 5% of its total assets in warrants used in conjunction with the cash extraction method.

Each of Ivy Funds VIP International Value, Ivy Funds VIP Micro Cap Growth and Ivy Funds VIP Small Cap Value currently does not intend to invest in oil, gas, or other mineral exploration or development programs or leases.

The total market value of securities against which Ivy Funds VIP International Value may write, call or put options will not exceed 20% of the Portfolio's total assets. In addition, the Portfolio will not commit more than 5% of its total assets to premiums when purchasing put or call options.

Ivy Funds VIP Mortgage Securities will not purchase a Z bond if the Portfolio's aggregate investment in Z bonds which are then still in their accrual periods would exceed 20% of the Portfolio's total assets (Z bonds which have begun to receive cash payments are not included for purposes of this 20% limitation).

Each of Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities may invest up to 10% of the value of its net assets directly in mortgages securing residential or commercial real estate (that is, the Portfolio becomes the mortgagee).

No more than 30% of the value of each of Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities' total assets will be committed to when-issued or forward commitment transactions, and of such 30%, no more than two-thirds (that is, 20% of its total assets) may be invested in mortgage dollar rolls.

Under normal market conditions, Ivy Funds VIP Mortgage Securities may invest up to 20% of its net assets in cash or cash items. Under normal market conditions, Ivy Funds VIP Real Estate Securities may invest approximately 5% of its net assets in cash or cash items.

Non-fundamental investment restrictions for each of Ivy Funds VIP Pathfinder Aggressive, Ivy Funds VIP Pathfinder Moderately Aggressive, Ivy Funds VIP Pathfinder Moderate, Ivy Funds VIP Pathfinder Moderately Conservative, and Ivy Funds VIP Pathfinder Conservative:

• Each Pathfinder Portfolio may not purchase portfolio securities while borrowings in excess of 5% of its total assets are outstanding.

• Each Pathfinder Portfolio may not purchase, sell or enter into financial options and futures contracts, forward and spot currency contracts, swap transactions and other financial contracts or derivative instruments.

Notwithstanding the foregoing investment limitations, each of the Pathfinder Portfolios may invest in Underlying Funds that have adopted investment limitations that may be more or less restrictive than those listed above for the Pathfinder Portfolios. Therefore, the Pathfinder Portfolios may engage indirectly in investment strategies that are prohibited under the investment limitations listed above.

In accordance with each Pathfinder Portfolio's investment program as set forth in the Prospectus, a Pathfinder Portfolio may invest more than 25% of its net assets in any one Underlying Fund. However, each Underlying Fund in which a Pathfinder Portfolio may invest (other than Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities) will not invest more than 25% of its total assets in any one industry.

All Portfolios. An investment policy or limitation that states a maximum percentage of a Portfolio's assets that may be so invested or prescribes quality standards is typically applied immediately after, and based on, the Portfolio's acquisition of an asset. Accordingly, a subsequent change in the asset's value, net assets, or other circumstances will not be considered when determining whether the investment complies with the Portfolio's investment policies and limitations, except that Ivy Funds VIP International Value may not hold more than 5% of its net assets in securities that have been downgraded subsequent to purchase where such securities are not otherwise eligible for purchase by the Portfolio. (This is in addition to securities Ivy Funds VIP International Value may purchase under its other investment policies).

Portfolio Turnover

A Portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities for a year and dividing it by the monthly average of the market value of such securities during the year, excluding certain short-term securities. A portfolio turnover rate of 100% would mean that the Portfolio had sold and purchased securities valued at 100% of its net assets within a one-year period. A Portfolio's turnover rate may vary greatly from year to year as well as within a particular year and may be affected by cash requirements for the redemption of its shares.

The portfolio turnover rates for the fiscal years ended December 31, 2008 and December 31, 2007 for each of the Portfolios then in existence were as follows:

	2008 -----	2007 -----
Ivy Funds VIP Asset Strategy	190%	98%
Ivy Funds VIP Balanced	19%	8%
Ivy Funds VIP Bond	29%	42%
Ivy Funds VIP Core Equity	105%	83%
Ivy Funds VIP Dividend Opportunities	35%	17%
Ivy Funds VIP Energy	10%	13%
Ivy Funds VIP Global Natural Resources	206%	122%
Ivy Funds VIP Growth	53%	42%
Ivy Funds VIP High Income	37%	74%
Ivy Funds VIP International Growth	96%	95%
Ivy Funds VIP International Value	20%	23%
Ivy Funds VIP Micro Cap Growth	60%	57%
Ivy Funds VIP Mid Cap Growth	46%	31%
Ivy Funds VIP Money Market	NA	NA
Ivy Funds VIP Mortgage Securities	288%	138%
Ivy Funds VIP Real Estate Securities	45%	50%
Ivy Funds VIP Science and Technology	62%	73%
Ivy Funds VIP Small Cap Growth	82%	101%
Ivy Funds VIP Small Cap Value	110%	122%
Ivy Funds VIP Value	48%	51%
Ivy Funds VIP Pathfinder Aggressive	3%	---
Ivy Funds VIP Pathfinder Moderately Aggressive	0%	---
Ivy Funds VIP Pathfinder Moderate	0%	---
Ivy Funds VIP Pathfinder Moderately Conservative	0%	---
Ivy Funds VIP Pathfinder Conservative	2%	---

The high rates of turnover for both Ivy Funds VIP Asset Strategy and Ivy Funds VIP Core Equity are each attributed to style of portfolio management by their respective portfolio managers. The high rate of turnover for Ivy Funds VIP Global Natural Resources is due to the number of repositionings of the Portfolio as a result of the unprecedented volatility in 2008; it was a direct result of deflation shock and early recovery requiring more rapid portfolio repositioning, rather than as a result of a change in management approach. The high turnover rate of Ivy Funds VIP Mortgage Securities is due to the increase in exposure to pass-throughs in an attempt to reduce the Portfolio's volatility.

In general, a high turnover rate will increase transaction costs and commission costs that will be paid by the Portfolio. Because short-term securities are generally excluded from computation of the turnover rate, a rate is not computed for Ivy Funds VIP Money Market.

Disclosure of Portfolio Holdings

The Trust has adopted policies and procedures intended to prevent unauthorized disclosure of Portfolio holdings information (collectively, Disclosure Policy). The Disclosure Policy permits disclosure of non-public portfolio holdings to selected parties only when the Trust has legitimate business purposes for doing so and the recipients are subject to a duty of confidentiality, including a duty not to trade on the non-public information.

         Publicly Available Portfolio Holdings

A Portfolio's portfolio holdings are publicly available: (1) at the time such information is filed with the SEC in a publicly available filing; or (2) the day next following the day such information is posted on the Waddell & Reed website. This information may be a Portfolio's complete portfolio holdings disclosed in the Portfolio's semi-annual or annual reports and filed with the SEC on Form N-CSR or in the Trust's first and third quarter reports and filed with the SEC on Form N-Q. This information may also be a partial listing, such as the Portfolio's top ten portfolio holdings posted on the Waddell & Reed website (approximately 30 days after quarter-end).

         Non-Public Portfolio Holdings

The Disclosure Policy allows the disclosure of a Portfolio's non-public portfolio holdings for the Portfolio's legitimate business purposes, subject to certain conditions, to: (1) certain service providers; (2) rating and ranking organizations; and (3) certain other recipients.

The Trust's Treasurer or his designee may provide a Portfolio's non-public portfolio holdings to a rating and ranking organization (for example, Lipper, Morningstar, etc.) for the purpose of the ranking organization developing a rating for the Portfolio.

A service provider or other third party that receives information about the Portfolio's non-public portfolio holdings where necessary to enable the provider to perform its contractual services for the Portfolio (for example, a person that performs account maintenance and record keeping services) may receive non-public portfolio holdings on the condition that the non-public portfolio holdings will be used solely for the purpose of servicing the Portfolio and subject to an agreement requiring confidentiality.

A Portfolio's partial or complete portfolio holdings may be disclosed as frequently as monthly, to certain other persons (recipients), including broker/dealers, current and prospective shareholders of the Portfolio's and current and prospective clients of WRIMCO (or its affiliate), provided that:

1. The recipient requests such information from WRIMCO (or its affiliate);
2. The individual receiving the request, in conjunction with the Portfolio's CCO, determines that the Portfolio has a legitimate business purpose for disclosing non-public portfolio holdings information to the recipient;
3. The individual receiving the request obtains prior approval from the Legal Department;
4. The recipient signs a confidentiality agreement that provides that the non-public portfolio holdings: (a) will be kept confidential; (b) may not be used to trade in any such portfolio holding that has not been made publicly available nor to purchase or redeem shares of the Portfolio or any other fund managed by WRIMCO or its affiliate holding such security; and (c) may not be disseminated or used for any purpose other than the purpose referenced in the confidentiality agreement; and
5. No compensation is received by the Trust, WRIMCO or any other party in connection with the disclosure of information about portfolio securities.

The Disclosure Policy provides that attribution reports containing only sector and/or industry breakdown for the Portfolio can be released without a confidentiality agreement and without regard to any time constraints.

In determining whether there is a legitimate business purpose for making disclosure of a Portfolio's non-public portfolio holdings information, the Portfolio's CCO will typically consider whether the disclosure is in the best interests of the Portfolio's shareholders and whether any conflict of interest exists between the shareholders and the Portfolio or Waddell & Reed or its affiliates. As part of the annual review of the Trust's compliance policies and procedures, the Portfolios' CCO will report to the Board of Trustees regarding the operation and effectiveness of the Disclosure Policy, including as to any changes to the Disclosure Policy that have been made or recommendations for future changes to the Disclosure Policy.

The following is a list of those entities with which there is currently an ongoing arrangement to make available non-public information about the Portfolios' portfolio securities holdings.

Custodian, Auditors and Service Providers

UMB Bank, n.a.

Citigroup Global Transaction Services

Deloitte & Touche LLP

Waddell & Reed Investment Management Company

Waddell & Reed Services Company

Waddell & Reed, Inc.

K&L Gates LLP

Financial Times Interactive Data

Pursuant to a custodian contract, the Trust has selected UMB Bank, n.a. as custodian for each Portfolio's securities and cash. As custodian, UMB Bank, n.a. maintains all records relating to a Portfolio's activities and supplies the Portfolio with a daily tabulation of the securities it owns and that are held by the custodian. Each Portfolio's subcustodian, Citibank, N.A., serves a similar function for foreign securities.

Rating, Ranking and Research entities

Bloomberg

Ibbotson

Informa Investment Solutions

Institutional Shareholder Services

Lipper

Morningstar

Standard & Poor's

Thompson Financial

Vestek

Vickers

Wiesenberger

A Portfolio may send its complete portfolio holdings information to one or more of the rating, ranking and /or research entities listed above for the purpose of having such entity develop a rating, ranking or specific research product for the Portfolio.

Brokerage and Brokerage-related information entities

Advest, Inc.

American Technology Research

Bank of America Securities, LLC

Bank of Oklahoma

Barclays

BB & T Capital Markets

Belle Haven Investments, L.P.

Bergen Capital, Inc.

BMO Capital Markets

BOSC, Inc.

Broadpoint Securities

Canaccord Adams

Caris and Company

Citigroup Global Markets, Inc.

Commerce Bank

Cowen & Company

Crews & Associates, Inc.

CRT Capital Group, LLC

Credit Suisse Securities, LLC

D.A. Davidson

Deutsche Bank Securities, Inc.

Duncan Williams, Inc.

Empirical Research Partners, LLC

Fidelity Capital Markets

Fifth Third Securities, Inc.

First Albany Capital, Inc.

First Analysis Securities Corp.

Friedman, Billings, Ramsey & Co.

FTN Financial Capital Markets

George K. Baum & Company

Grigsby & Associates

GMS Group, LLC

Goldman Sachs & Co.

Hanifen, Imhoff, Inc.

Herbert J. Sims & Co.

Hibernia Southcoast Capital, Inc.

Jefferies & Company

JMP Securities

JP Morgan Securities, Inc.

LaSalle Financial Services

Lebenthal & Co. LLC

Loop Capital Markets

Merrill Lynch Pierce Fenner & Smith

Mesirow Financial, Inc.

Morgan Keegan & Co., Inc.

Morgan Stanley & Co., Inc.

M.R. Beal and Co.

Off The Record Research

Pacific Crest

Piper Jaffray & Co.

Prudential Equity Group

Raymond James & Associates, Inc.

RBC Dain Rauscher, Inc.

Robert W. Baird & Co., Inc.

Roth Capital Partners

Sanford C. Bernstein

Seattle Northwest Securities

Selector Management

Shepherd Kaplan, LLC

Sidoti & Company, LLC

SMA Capital

Soliel Securities

Southwest Securities, Inc.

Spartan Securities

Stifel, Nicolaus & Co.

Stone & Youngblood

Think Equity Partners

Thomas Weisel Partners

UBS Investment Bank

W.H. Mell Associates, Inc.

Wachovia Securities, LLC

Wedbush Morgan Securities

Wells Fargo

William Blair & Co.

(B.C.) Ziegler & Company

Each Portfolio may send its complete portfolio holdings information to one or more of the brokerage and/or research firms listed above for the purpose of having such entity provide specific research and security-related information to the Portfolio. No compensation is received by the Trust, WRIMCO or its affiliates and portfolio holdings information will only be provided for legitimate business purposes.

Consultants

Bidart & Ross

Callan Associates

Calvin Associates

Hammond Associates

FIS Group

Lowery Asset Consulting

Marco Consulting

PCA Retirement & Benefits

Peak Financial Management

PFM Advisors

R.V. Kuhns & Associates

Rogerscasey

Rust Consulting

TFC Financial Management

Watson Wyatt Consulting

Wilshire Associates

Each Portfolio may send its complete portfolio holdings information to one or more of the consultants listed above for the purpose of reviewing and recommending the Portfolios as possible investments for their clientele.

The Trust may, in the future, modify or terminate any or all of these arrangements and/or enter into additional arrangements of this nature.

MANAGEMENT OF THE TRUST

Trustees and Officers

The Trust is governed by its Board of Trustees (Board). Board members who are not "interested persons" of the Portfolios as defined in Section 2(a)(19) of the 1940 Act (Disinterested Trustees) constitute at least 75% of the Board. The Waddell & Reed Fund Complex (Fund Complex) is comprised of the Advisors Fund Complex and the Ivy Family of Funds. The Advisors Fund Complex is comprised of each of the Portfolios of the Trust (25 portfolios) and each of the funds within Waddell & Reed Advisors Funds (21 portfolios) and Waddell & Reed InvestEd Portfolios (formerly, Waddell & Reed InvestEd Portfolios, Inc.) (3 portfolios). The Ivy Family of Funds is comprised of each of the funds in Ivy Funds, Inc. (12 portfolios) and Ivy Funds, a Massachusetts business trust (18 portfolios).

Following is a list of the members of the Board and the principal officers of the Trust. The Board oversees the operations of the Trust, and is responsible for the overall management and supervision of the affairs of the Trust in accordance with the laws of the State of Delaware. Each of the Trustees also serves as a trustee of each of the other trusts in the Advisors Fund Complex. Jarold W. Boettcher, Joseph Harroz, Jr., Henry J. Herrmann and Eleanor B. Schwartz also serve as directors or trustees of each of the funds in the Ivy Family of Funds.

David P. Gardner serves as Independent Chair of the Board and of the boards of trustees of the other trusts in the Advisors 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 Board appoints officers and delegates to them the management of the day-to-day operations of the Trust, based on policies reviewed and approved by the Board, with general oversight by the Board.

         Disinterested Trustees

The following table provides information regarding each Disinterested Trustee.

NAME, ADDRESS AND YEAR OF BIRTH	POSITION HELD WITH THE TRUST AND FUND COMPLEX	TRUSTEE SINCE*	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF FUNDS IN FUND COMPLEX OVERSEEN	OTHER DIRECTORSHIPS HELD
Jarold W. Boettcher 6300 Lamar Avenue Overland Park, KS 66202 1940	Trustee	Fund: 2007 Fund Complex: 2003	President of Boettcher Enterprises, Inc. (agriculture products and services) (1979 to present), Boettcher Supply, Inc. (electrical and plumbing supplies distributor) (1979 to present), Boettcher Aerial, Inc. (Aerial Ag Applicator) (1983 to present); Member of Kansas Board of Regents (2007 to present)	79	Director of Guaranty State Bank & Trust Co. (financial services); Director of Guaranty, Inc. (financial services); Director, Ivy Funds, Inc.; Trustee, Ivy Funds (30 portfolios overseen)
James M. Concannon 6300 Lamar Avenue Overland Park, KS 66202 1947	Trustee	Fund: 1997 Fund Complex: 1997	Professor of Law, Washburn School of Law (1973 to present)	49	Director, Kansas Legal Services for Prisoners, Inc.
John A. Dillingham 6300 Lamar Avenue Overland Park, KS 66202 1939	Trustee	Fund: 1997 Fund Complex: 1997	President and Director, JoDill Corp. (1997 to present) and Dillingham Enterprises, Inc. (1997 to present), both farming enterprises	49	Advisory Director, UMB Northland Board (financial services); former President, Liberty Memorial Association (WW1 National Museum) (2005-2007); Director, Northland Betterment Commission (community service)
David P. Gardner 6300 Lamar Avenue Overland Park, KS 66202 1933	Trustee Independent Chair	Fund: 1998 Fund Complex: 1998 Fund and Complex: 2006	President Emeritus, University of Utah; President Emeritus, University of California; Chairman, Board of Trustees, J. Paul Getty Trust (until 2004); Professor, University of Utah (until 2005)	49	Director, Flour Corporation (construction/ engineering) (until 2005); Director, Salzberg Seminar (non-profit education (2003-2005)
Joseph Harroz, Jr. 6300 Lamar Avenue Overland Park, KS 66202 1967	Trustee	Fund: 1998 Fund Complex: 1998	President and Chief Operating Officer, Graymark HealthCare (medical holding company) (2008); Vice President and General Counsel of the Board of Regents, University of Oklahoma (1996 to 2008); Adjunct Professor, University of Oklahoma Law School (1997 to 2008); Managing Member, Harroz Investments, LLC, commercial enterprise investments (1998 to present); LSQ Manager, Inc. (2007 to present)	79	Director and Shareholder, Valliance Bank; Director, Melbourne Family Support Organization (non-profit); Director, Norman Economic Development Coalition (non-profit); Independent Chairman and Director, Ivy Funds, Inc.; Independent Chairman and Trustee, Ivy Funds (30 portfolios overseen)
Albert W. Herman, FHFMA, CPA 6300 Lamar Avenue Overland Park, KS 66202 1938	Trustee	Fund: 2008 Fund Complex: 2008	Business Consultant, Treasurer and Director, Wellness Council of America (health care initiatives) (1996 to present)	49	Finance Committee Member, Ascension Health (non-profit health system); Director, Baylor Health Care System Foundation (health care)
Glendon E. Johnson, Sr. 6300 Lamar Avenue Overland Park, KS 66202 1924	Trustee	Fund: 1986 Fund Complex: 1971	Chairman and Chief Executive Officer (CEO), Castle Valley Ranches, LLC (ranching and farming) (1995 to present)	49	Chairman Emeritus, Wellness Council of America (health care initiatives); Executive Board and Committee Member, Boy Scouts of America
Frank J. Ross, Jr. Polsinelli Shughart PC 700 West 47th Street Suite 1000 Kansas City, MO 64112 1953	Trustee	Fund: 1996 Fund Complex: 1996	Shareholder/Director, Polsinelli Shughart PC, a law firm (1980 to present)	49	Director, American Red Cross (social services); Director, Rockhurst University (education)
Eleanor B. Schwartz 6300 Lamar Avenue Overland Park, KS 66202 1937	Trustee	Fund: 1995 Fund Complex: 1995	Professor Emeritus, University of Missouri at Kansas City (2003 to present); formerly, Dean, Block School of Business (1980-1986), Vice Chancellor (1988-1991), Chancellor (1992-1999) and Professor of Business Administration, University of Missouri at Kansas City (until 2003)	79	Director, Ivy Funds, Inc.; Trustee, Ivy Funds (30 portfolios overseen)

* Each Trustee became a Trustee in 2009. The first date shows when the Trustee first became a director of the Corporation, and the second date shows when the Trustee first became a director of one or more of the other funds that are the predecessors to current funds within the Advisors Fund Complex.

         Interested Trustees

Messrs. Avery and Herrmann are "interested" by virtue of their current or former engagement as officers of Waddell & Reed Financial, Inc. (WDR) or its wholly owned subsidiaries, including the Portfolios' investment manager, Waddell & Reed Investment Management Company (WRIMCO), the Portfolios' principal underwriter, Waddell & Reed, Inc. (Waddell & Reed), and the Portfolios' shareholder servicing and accounting services agent, Waddell & Reed Services Company (WRSCO), as well as by virtue of their personal ownership of shares of WDR. Mr. Hechler could be determined to be an interested Trustee if a prior business relationship with Waddell & Reed were deemed material. It is anticipated that, effective January 1, 2010, Mr. Hechler will begin to serve as a Disinterested Trustee of the Trust. The address for each Interested Trustee and each of the officers in the following tables is 6300 Lamar Avenue, Overland Park, KS 66202.

NAME, ADDRESS AND YEAR OF BIRTH	POSITION(S) HELD WITH THE TRUST AND FUND COMPLEX	TRUSTEE/OFFICER SINCE*	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF FUNDS IN FUND COMPLEX OVERSEEN	OTHER DIRECTORSHIPS HELD
Michael L. Avery 1953	Trustee	Fund: 2007 Fund Complex: 2007	Chief Investment Officer (CIO) of WDR, WRIMCO and Ivy Investment Management Company (IICO), an affiliate of WDR (2005 to present); Senior Vice President of WDR (2005 to present); Executive Vice President of WRIMCO and IICO (2005 to present); portfolio manager for investment companies managed by WRIMCO and IICO (1994 to present); Director of Research for WRIMCO and IICO (1987 to 2005)	49	Director of WDR, WRIMCO and IICO
Henry J. Herrmann 1942	President Trustee	Fund: 2001 Fund Complex: 2001 Fund: 1998 Fund Complex: 1998	CEO of WDR (2005 to present); President, CEO and Chairman of WRIMCO (1993 to present); President, CEO and Chairman of IICO (2002 to present); formerly, President and CIO of WDR, WRIMCO and IICO (until 2005); President and Director/Trustee of each of the funds in the Fund Complex	79	Director of WDR, WRSCO and Waddell & Reed; Director, Ivy Funds, Inc.; Trustee, Ivy Funds (30 portfolios overseen); Director, Austin, Calvert & Flavin, Inc., an affiliate of WRIMCO
Robert L. Hechler 1936	Trustee	Fund: 1998 Fund Complex: 1998	Formerly, consultant of WDR and Waddell & Reed (2001 to 2008); formerly, Director of WDR (until 2003)	49	None

*Each Trustee became a Trustee in 2009. The first date shows when the Trustee first became a director (and, as applicable, an officer) of the Corporation, and the second date shows when the Trustee first became a director (and, as applicable, an officer) of one or more of the other funds that are the predecessors to current funds within the Advisors Fund Complex.

         Officers

The Board has appointed officers who are responsible for the day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. In addition to Mr. Herrmann, who is President, the Trust's principal officers are:

NAME, ADDRESS 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
Joseph W. Kauten 1969	Vice President Treasurer Principal Financial Officer Principal Accounting Officer	2006 2006 2007 2006	2006 2006 2007 2006	Principal Financial Officer of each of the funds in the Fund Complex (2007 to present); Vice President, Treasurer and Principal Accounting Officer of each of the funds in the Fund Complex (2006 to present); Assistant Treasurer of each of the funds in the Fund Complex (2003 to 2006)
Mara D. Herrington 1964	Vice President Secretary	2006 2006	2006 2006	Vice President and Secretary of each of the funds in the Fund Complex (2006 to present); Vice President of WRIMCO and IICO (2006 to present); formerly, Vice President and Associate General Counsel, Deutsche Investment Management Americas, Inc. (financial services) (1994 to 2005)
Kristen A. Richards 1967	Vice President Assistant Secretary Associate General Counsel	2000 2006 2000	2000 2006 2000	Senior Vice President of WRIMCO and IICO (2007 to present); Associate General Counsel and Chief Compliance Officer of WRIMCO (2000 to present) and IICO (2002 to present); Vice President and Associate General Counsel of each of the funds in the Fund Complex (2000 to present); Assistant Secretary of each of the funds in the Fund Complex (2006 to present); formerly, Vice President of WRIMCO (2000 to 2007) and IICO (2002 to 2007); formerly, Secretary of each of the funds in the Fund Complex (2000 to 2006)
Daniel C. Schulte 1965	Vice President General Counsel Assistant Secretary	2000 2000 2000	2000 2000 2000	Senior Vice President and General Counsel of WDR, Waddell & Reed, WRIMCO and WRSCO (2000 to present); Senior Vice President and General Counsel of IICO (2002 to present); Vice President, General Counsel and Assistant Secretary for each of the funds in the Fund Complex (2000 to present)
Scott J. Schneider 1968	Vice President Chief Compliance Officer	2006 2004	2006 2004	Chief Compliance Officer (2004 to present) and Vice President (2006 to present) of each of the funds in the Fund Complex; formerly, Senior Attorney and Compliance Officer for each of the funds in the Fund Complex (2000 to 2004)

*Each became an officer of the Trust in 2009.

Committees of the Board of Trustees

The Board has established the following standing committees: Audit Committee, Executive Committee and Nominating Committee. In addition, the Board has established a Special Compliance & Governance Committee and a Special Dilution & Distribution Committee. The respective duties and current memberships of the committees are:

Audit Committee. The Audit Committee meets with the Portfolios' independent registered public accounting firm, internal auditors and corporate officers to discuss the scope and results of the annual audit of the Portfolios, to review financial statements, reports, compliance matters, and to discuss such other matters as the Committee deems appropriate or desirable. The Audit Committee acts as a liaison between the Portfolios' independent registered public accounting firm and the Board. James M. Concannon (Chair), Jarold W. Boettcher, Glendon E. Johnson, Frank J. Ross, Jr. and Eleanor B. Schwartz are the members of the Audit Committee. During the fiscal year ended December 31, 2008, the Audit Committee met four times.

Executive Committee. When the Board is not in session, the Executive Committee has and may exercise any or all of the powers of the Board in the management of the business and affairs of the Portfolios except the power to increase or decrease the size of, or fill vacancies on, the Board, and except as otherwise provided by law. Henry J. Herrmann (Chair), John A. Dillingham and Frank J. Ross, Jr. are the members of the Executive Committee. During the fiscal year ended December 31, 2008, the Executive Committee met one time.

Nominating Committee. The Nominating Committee evaluates, selects and recommends to the Board candidates for Disinterested Trustees. The Nominating Committee will consider candidates recommended by shareholders of the Trust. Shareholders should direct the names of candidates they wish to be considered to the attention of the Trust's Nominating Committee, in care of the Trust's Secretary, at the address of the Trust listed on the front page of this SAI. Such candidates will be considered with any other Trustee candidates. Glendon E. Johnson (Chair), John A. Dillingham, Joseph Harroz, Jr. and Eleanor B. Schwartz are the members of the Nominating Committee. During the fiscal year ended December 31, 2008, the Nominating Committee met one time.

Special Compliance & Governance Committee. The Special Compliance & Governance Committee assists the Board in overseeing the Portfolio's compliance with Rule 38a-1 of the 1940 Act, including implementation and enforcement of compliance policies and procedures, addressing corporate governance procedures, and overseeing the activities of the Portfolio's CCO. Frank J. Ross, Jr. (chair), John Dillingham, Albert W. Herman and Eleanor B. Schwartz are members of this committee. During the fiscal year ended December 31, 2008, the Special Compliance & Governance Committee met three times.

Special Dilution & Distribution Committee. The Special Dilution and Distribution Committee assists the Board regarding dilution and distribution related matters in connection with settlements involving WRIMCO and certain of its affiliates and the SEC, New York Attorney General (NYAG) and State of Kansas. Joseph Harroz, Jr. (chair), James Concannon and Glendon E. Johnson are members of this committee. During the fiscal year ended December 31, 2008, the Special Dilution & Distribution Committee did not meet.

The Board has authorized the creation of a valuation committee comprised of such persons as may be designated from time to time by WRSCO and includes Henry J. Herrmann. This committee is responsible in the first instance for fair valuation and reports all valuations to the Board on a quarterly (or as needed) basis for its review and approval.

The Independent Chair of the Board, Mr. Gardner, is an ex officio member of each committee of the Board.

         Ownership of Portfolio Shares

         (as of December 31, 2008)

The following table provides information regarding shares of the Portfolios beneficially owned by each Trustee, as determined in accordance with Rule 16a-1(a)(2) under the Securities Exchange Act of 1934, as amended (1934 Act), as well as the aggregate dollar range of shares owned, by each Trustee, of funds within the Advisors Fund Complex. The Portfolios' shares are available for purchase only by Participating Insurance Companies and are indirectly owned by investors in the Policies for which the Portfolios serve as the underlying investment vehicle. A Trustee who is not an affiliated person of the Trust may elect to defer all or a portion of his or her annual compensation, which amount is deemed to be invested in shares of funds within the Advisors Fund Complex. The amounts listed below as "owned" shares include any shares in which the Trustee's deferred compensation is deemed invested.

DISINTERESTED TRUSTEES

Trustee	Dollar Range of Shares Owned in any of the Portfolios	Aggregate Dollar Range of Shares Owned of All Funds within the Advisors Fund Complex
Jarold W. Boettcher	see note 1 below	over $100,000
James M. Concannon	$0	over $100,000
John A. Dillingham	see note 2 below	over $100,000
David P. Gardner	$0	over $100,000
Joseph Harroz, Jr.	$0	over $100,000
Albert W. Herman	$0	$1 to $10,000
Glendon E. Johnson	$0	over $100,000
Frank J. Ross, Jr.	$0	over $100,000
Eleanor B. Schwartz	$0	over $100,000

Note 1: Dollar range of shares of the following Portfolios owned by Jarold W. Boettcher:

Ivy Funds VIP Asset Strategy	$1 to $10,000
Ivy Funds VIP Core Equity	$1 to $10,000
Ivy Funds VIP Global Natural Resources	$1 to $10,000
Ivy Funds VIP International Growth	$1 to $10,000

Note 2: Dollar range of shares of the following Portfolio owned by John A. Dillingham:

Ivy Funds VIP International Growth $1 to $10,000

INTERESTED TRUSTEES

Trustee	Dollar Range of Shares Owned in any of the Portfolios	Aggregate Dollar Range of Shares Owned of All Funds within the Advisors Fund Complex
Michael L. Avery	$0	over $100,000
Robert L. Hechler	$0	Over $100,000
Henry J. Herrmann	$0	over $100,000

         Compensation

The fees paid to the Trustees are divided among the funds in the Advisors Fund Complex based on each fund's net assets. During the fiscal year ended December 31, 2008, the Trustees received the following fees for service as a director of the Corporation and of each of the other funds in the Advisors Fund Complex:

COMPENSATION TABLE
	Aggregate	Total Compensation
	Compensation	from Trust and
	From Trust	Advisors Fund Complex1

Disinterested Trustees:

Jarold W. Boettcher	$26,647	$124,000
James M. Concannon	28,159	131,000
John A. Dillingham	29,005	135,000
David P. Gardner2	39,143	182,000
Joseph Harroz, Jr.	28,471	132,500
Albert W. Herman	26,909	125,000
Glendon E. Johnson	28,471	132,500
Frank J. Ross, Jr.	29,340	136,500
Eleanor B. Schwartz	29,005	135,000

Interested Trustees:

Michael L. Avery	0	0
Robert L. Hechler3	0	127,000
Henry J. Herrmann	0	0

¹No pension or retirement benefits have been accrued as a part of the Trust's expenses.

²For 2008, Mr. Gardner received an additional fee of $55,000 for his services as Independent Chair of the Board and of the board of trustees of each other trust in the Advisors Fund Complex. For 2009, this fee is unchanged.

³ Mr. Hechler became a Trustee on April 3, 2009.

The aggregate compensation from the Trust, as indicated above for each Trustee, was allocated to each Portfolio as follows:

	Ivy Funds VIP Asset Strategy	Ivy Funds VIP Balanced	Ivy Funds VIP Bond	Ivy Funds VIP Core Equity	Ivy Funds VIP Dividend Opportunities	Ivy Funds VIP Energy	Ivy Funds VIP Global Natural Resources
Jarold W. Boettcher	$3,676	$2,104	$1,275	$2,592	$529	$129	$627
James M. Concannon	3,882	2,221	1,352	2,735	562	137	660
John A. Dillingham	3,993	2,292	1,391	2,820	577	140	678
David P. Gardner	5,404	3,085	1,881	3,799	782	191	919
Joseph Harroz, Jr.	3,922	2,248	1,365	2,767	567	138	667
Albert W. Herman	3,719	2,117	1,299	2,606	540	132	630
Glendon E. Johnson	3,922	2,248	1,365	2,767	567	138	667
Frank J. Ross, Jr.	4,043	2,316	1,409	2,850	585	142	686
Eleanor B. Schwartz	3,993	2,292	1,391	2,820	577	140	678

	Ivy Funds VIP Growth	Ivy Funds VIP High Income	Ivy Funds VIP International Growth	Ivy Funds VIP International Value	Ivy Funds VIP Micro Cap Growth	Ivy Funds VIP Mid Cap Growth
Jarold W. Boettcher	$4,727	$826	$1,014	$2,239	$205	$235
James M. Concannon	4,987	874	1,068	2,364	216	249
John A. Dillingham	5,145	900	1,102	2,436	223	256
David P. Gardner	6,921	1,215	1,483	3,285	300	346
Joseph Harroz, Jr.	5,049	883	1,082	2,390	219	251
Albert W. Herman	4,742	837	1,015	2,256	205	238
Glendon E. Johnson	5,049	883	1,082	2,390	219	251
Frank J. Ross, Jr.	5,198	910	1,113	2,463	225	259
Eleanor B. Schwartz	5,145	900	1,102	2,436	223	256

	Ivy Funds VIP Money Market	Ivy Funds VIP Mortgage Securities	Ivy Funds VIP Real Estate Securities	Ivy Funds VIP Science and Technology	Ivy Funds VIP Small Cap Growth	Ivy Funds VIP Small Cap Value	Ivy Funds VIP Value
Jarold W. Boettcher	$507	$140	$196	$1,357	$1,822	$789	$1,319
James M. Concannon	541	148	208	1,433	1,922	834	1,394
John A. Dillingham	555	152	214	1,475	1,983	860	1,437
David P. Gardner	756	206	289	1,995	2,668	1,159	1,936
Joseph Harroz, Jr.	545	149	210	1,449	1,946	843	1,410
Albert W. Herman	527	142	200	1,373	1,827	798	1,330
Glendon E. Johnson	545	149	210	1,449	1,946	843	1,410
Frank J. Ross, Jr.	564	154	217	1,494	2,003	870	1,453
Eleanor B. Schwartz	555	152	214	1,475	1,983	860	1,437

	Ivy Funds VIP Pathfinder Aggressive	Ivy Funds VIP Pathfinder Moderately Aggressive	Ivy Funds VIP Pathfinder Moderate	Ivy Funds VIP Pathfinder Moderately Conservative	Ivy Funds VIP Pathfinder Conservative
Jarold W. Boettcher	$81	$145	$81	$24	$8
James M. Concannon	88	159	89	27	9
John A. Dillingham	89	161	90	27	9
David P. Gardner	124	224	125	38	12
Joseph Harroz, Jr.	88	158	89	27	9
Albert W. Herman	89	161	90	27	9
Glendon E. Johnson	88	158	89	27	9
Frank J. Ross, Jr.	91	165	93	28	9
Eleanor B. Schwartz	89	161	90	27	9

Of the Total Compensation listed above, the following amounts have been deferred:

Jarold W. Boettcher	$50,000
James M. Concannon	10,000
John A. Dillingham	10,000
David P. Gardner	75,000
Joseph Harroz, Jr.	66,250
Robert L. Hechler	10,000
Alvert W. Herman	10,000
Glendon E. Johnson	10,000
Frank J. Ross, Jr.	41,625
Eleanor B. Schwartz	13,500

The Trust's officers are paid by WRIMCO or its affiliates.

The Board has created an honorary position of Trustee Emeritus, whereby an incumbent Trustee who has attained the age of 70 may, or if initially elected on or after May 31, 1993, to the Board or to the board of trustees of another trust in the Advisors Fund Complex (Other Trust), or as a director of the Corporation or of another fund in the Advisors Fund Complex to which an Other Trust is the successor (Director), and has attained the age of 78 must, resign his or her position as Trustee and, unless he or she elects otherwise, will serve as Trustee Emeritus provided the Trustee has served as a Trustee or Director for at least five years which need not have been consecutive.

A Trustee or Director Emeritus receives an annual fee in an amount equal to the annual retainer he or she was receiving at the time he or she resigned as a Trustee or Director. For a Trustee or Director initially elected before May 31, 1993, such annual fee is payable as long as the Trustee or Director holds Emeritus status, which may be for the remainder of his or her lifetime. A Trustee or Director initially elected to a Board of Directors on or after May 31, 1993, receives such annual fee only for a period of three years commencing upon the date the Trustee or Director began his or her Emeritus service, or in an equivalent lump sum. A Trustee or Director Emeritus receives fees in recognition of his or her past services whether or not services are rendered in his or her Emeritus capacity, but he or she has no authority or responsibility with respect to the management of the Trust. Messrs. Henry L. Bellmon, John F. Hayes, William T. Morgan, Ronald K. Richey, Frederick Vogel III and Paul S. Wise each retired as Director of the Corporation and as Director or trustee of each of the other funds in the Advisors Fund Complex and, as applicable, Ivy Funds, Inc. that were overseen by the Director or trustee at the time of his retirement, and each serves as Director or Trustee Emeritus. Each of the current Directors/Trustee Emeritus was initially elected to a Board of Directors of a fund in the Advisors Fund Complex before May 31, 1993, and each therefore receives an amount equal to the annual retainer he was receiving at the time he resigned as a Director or trustee for as long as he holds Director or Trustee Emeritus status, which may be for the remainder of his lifetime.

The fees paid to each Director or Trustee Emeritus are allocated among the funds that were overseen by the Director or trustee at the time he elected Emeritus status, based on each fund's net assets at that time. The following table shows the fees paid to each Director/Trustee Emeritus, and the portion of that fee paid by the Corporation, for the fiscal year ended December 31, 2008.

		Total
		Compensation
	Compensation	paid to
Director Emeritus	from Corporation	Director Emeritus
Henry L. Bellmon	$4,352	$48,000
William T. Morgan	8,469	65,500
Ronald K. Richey	4,620	48,000
Frederick Vogel III	17,352	78,500
Paul S. Wise	4,620	48,000

Mr. Hayes retired as a Director of the Corporation and as a director or trustee of each of the other funds in the Advisors Fund Complex on April 6, 2009, and accordingly received no Emeritus fees in 2008.

The compensation paid by the Corporation for each Director Emeritus for the fiscal year ended December 31, 2008 was allocated to each Portfolio as follows:

	Ivy Funds VIP Asset Strategy	Ivy Funds VIP Balanced	Ivy Funds VIP Bond	Ivy Funds VIP Core Equity	Ivy Funds VIP Dividend Opportunities	Ivy Funds VIP Energy	Ivy Funds VIP Global Natural Resources
Henry L. Bellmon	$ 24	$160	$244	$1,476	$0	$0	$0
William T. Morgan	346	473	540	2,131	0	0	0
Ronald K. Richey	28	180	244	1,576	0	0	0
Frederick Vogel III	1,732	1,500	768	2,016	244	0	280
Paul S. Wise	28	180	244	1,576	0	0	0

	Ivy Funds VIP Growth	Ivy Funds VIP High Income	Ivy Funds VIP International Growth	Ivy Funds VIP International Value	Ivy Funds VIP Micro Cap Growth	Ivy Funds VIP Mid Cap Growth
Henry L. Bellmon	$1,456	$280	$268	$0	$0	$0
William T. Morgan	2,343	317	448	0	0	0
Ronald K. Richey	1,512	252	320	0	0	0
Frederick Vogel III	3,148	576	680	1,632	160	116
Paul S. Wise	1,512	252	320	0	0	0

	Ivy Funds VIP Money Market	Ivy Funds VIP Mortgage Securities	Ivy Funds VIP Real Estate Securities	Ivy Funds VIP Science and Technology	Ivy Funds VIP Small Cap Growth	Ivy Funds VIP Small Cap Value	Ivy Funds VIP Value
Henry L. Bellmon	$ 88	$0	$0	$ 24	$332	$0	$0
William T. Morgan	222	0	0	587	882	0	180
Ronald K. Richey	108	0	0	48	352	0	0
Frederick Vogel III	200	76	176	980	1,484	560	1,024
Paul S. Wise	108	0	0	48	352	0	0

	Ivy Funds VIP Pathfinder Aggressive	Ivy Funds VIP Pathfinder Moderately Aggressive	Ivy Funds VIP Pathfinder Moderate	Ivy Funds VIP Pathfinder Moderately Conservative	Ivy Funds VIP Pathfinder Conservative
Henry L. Bellmon	$0	$0	$0	$0	$0
William T. Morgan	0	0	0	0	0
Ronald K. Richey	0	0	0	0	0
Frederick Vogel III	0	0	0	0	0
Paul S. Wise	0	0	0	0	0

Code of Ethics

The Trust, Advantus Capital Management, Inc., Mackenzie Financial Corporation, Templeton Investment Counsel LLC, Templeton Global Advisors Limited, Wall Street Associates, LLC, WRIMCO and Waddell & Reed have adopted a Code of Ethics under Rule 17j-1 under the 1940 Act that permits their respective trustees, directors, officers and employees to invest in securities, including securities that may be purchased or held by a Portfolio. The Code of Ethics subjects covered personnel to certain restrictions that include prohibited activities, pre-clearance requirements and reporting obligations.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

The following table sets forth information with respect to the Trust, as of March 31, 2009, regarding the beneficial ownership of Portfolio shares.

		Shares owned
Name and Address		Beneficially
of Beneficial Owner	Portfolio	or of Record	Percent
-------------------	-----	------------	-------
Minnesota Life Insurance Co	Asset Strategy	6,698,564	8.08%
Individual Annuities	Balanced	12,100,240	25.94%
400 Robert St N	Core Equity	653,341	1.40%
Saint Paul MN 55101-2015	Global Natural Resources	2,300,880	10.12%
	Growth	14,407,034	14.86%
	International Growth	652,483	2.50%
	International Value	9,255,275	30.43%
	Micro Cap Growth	508,277	20.85%
	Science and Technology	559,134	2.95%
	Small Cap Growth	5,319,850	11.63%
	Small Cap Value	3,279,464	22.43%
	Value	5,867,924	10.74%
Minnesota Life Insurance Co	Asset Strategy	6.200,555	7.48%
Individual Life	Balanced	14,757,117	31.64%
400 Robert St N	Core Equity	940,682	2.01%
Saint Paul MN 55101-2015	Growth	18,368,503	18.94%
	International Growth	738,500	2.83%
	International Value	10,416,168	34.25%
	Micro Cap Growth	963,131	39.51%
	Science and Technology	377,975	2.00%
	Small Cap Growth	10,417,544	22.77%
	Small Cap Value	4,323,217	29.57%
	Value	11,478,056	21.01%
Minnesota Life Insurance Co	Balanced	1,075,879	2.31%
Group Life	International Value	3,647,304	11.99%
400 Robert St N	Small Cap Growth	1,782,250	3.90%
Saint Paul MN 55101-2015	Small Cap Value	1,743,523	11.93%
Minnesota Life Insurance Company	Asset Strategy	4,901,418	5.91%
Minnesota Life WRVA	Balanced	565,512	1.21%
400 Robert St N	Bond	5,809,002	9.02%
Saint Paul MN 55101-2015	Core Equity	1,222,937	2.62%
	Dividend Opportunities	2,237,012	8.30%
	Energy	1,236,679	22.85%
	Global Natural Resources	3,840,415	16.89%
	Growth	4,616,153	4.76%
	High Income	9,907,732	16.16%
	International Growth	2,002,359	7.67%
	International Value	1,975,342	6.49%
	Micro Cap Growth	344,127	14.12%
	Mid Cap Growth	1,890,463	16.58%
	Money Market	11,847,115	5.43%
	Mortgage Securities	2,700,701	46.81%
	Pathfinder Aggressive	925,009	2.64%
	Pathfinder Conservative	2,238,461	39.44%
	Pathfinder Moderate	9,253,655	34.32%
	Pathfinder Moderately
	Aggressive	14,369,537	39.43%
	Pathfinder Moderately
	Conservative	3,630,511	31.57%
	Real Estate Securities	1,924,268	29.32%
	Science and Technology	1,476,120	7.80%
	Small Cap Growth	1,637,498	3.58%
	Small Cap Value	1,665,959	11.39%
	Value	8,578,496	15.70%
Nationwide Insurance Company	Asset Strategy	6,689,843	8.07%
NWVA-D	Balanced	2,247,898	4.82%
c/o IPO Portfolio Accounting	Bond	6,802,538	10.57%
P O Box 182029	Core Equity	5,145,003	11.01%
Columbus OH 43218-2029	Dividend Opportunities	998,313	3.70%
	Energy	448,543	8.29%
	Global Natural Resources	1,621,518	7.13%
	Growth	6,194,711	6.39%
	High Income	7,032,676	11.47%
	International Growth	1,785,060	6.84%
	Micro Cap Growth	63,488	2.60%
	Mid Cap Growth	406,860	3.57%
	Money Market	23,685,728	10.85%
	Mortgage Securities	351,569	6.09%
	Real Estate Securities	505,305	7.70%
	Science and Technology	1,802,146	9.52%
	Small Cap Growth	2,699,329	5.90%
	Small Cap Value	188,722	1.29%
	Value	3,290,763	6.02%
Nationwide Insurance Company	Asset Strategy	2,829,252	3.41%
NWVLI-5	Balanced	707,539	1.52%
c/o IPO Portfolio Accounting	Bond	1,622,770	2.52%
P O Box 182029	Core Equity	1,502,872	3.22%
Columbus OH 43218-2029	Dividend Opportunities	631,282	2.34%
	Energy	219,884	4.06%
	Global Natural Resources	896,608	3.94%
	Growth	1,983,312	2.05%
	High Income	2,276,464	3.71%
	International Growth	752,794	2.88%
	Micro Cap Growth	59,824	2.45%
	Mid Cap Growth	377,856	3.31%
	Money Market	3,703,674	1.70%
	Mortgage Securities	154,686	2.68%
	Real Estate Securities	329,499	5.02%
	Science and Technology	904,770	4.78%
	Small Cap Growth	1,239,873	2.71%
	Small Cap Value	182,493	1.25%
	Value	1,416,931	2.59%
Nationwide Insurance Company	Real Estate Securities	133,198	2.03%
NWVLI4
c/o IPO Portfolio Accounting
P O Box 182029
Columbus OH 43218-2029
Nationwide Insurance Company	Asset Strategy	26,394,537	31.82%
NWVA-9	Balanced	7,560,341	16.21%
c/o IPO Portfolio Accounting	Bond	21,312,800	33.10%
P O Box 182029	Core Equity	15,850,743	33.92%
Columbus OH 43218-2029	Dividend Opportunities	4,404,617	16.34%
	Energy	2,030,236	37.51%
	Global Natural Resources	7,404,509	32.57%
	Growth	18,647,123	19.23%
	High Income	24,177,260	39.43%
	International Growth	6,582,861	25.22%
	International Value	1,254,643	4.12%
	Micro Cap Growth	258,996	10.63%
	Mid Cap Growth	1,900,882	16.67%
	Money Market	67,376,448	30.86%
	Mortgage Securities	1,338,049	23.19%
	Real Estate Securities	2,131,083	32.47%
	Science and Technology	6,130,813	32.38%
	Small Cap Growth	9,802,620	21.43%
	Small Cap Value	720,155	4.93%
	Value	13,904,792	25.45%
Nationwide Insurance Company	Asset Strategy	14,389,205	17.35%
NWVA-12	Balanced	2,790,305	5.98%
c/o IPO Portfolio Accounting	Bond	6,406,834	9.95%
P O Box 182029	Core Equity	4,413,197	9.44%
Columbus OH 43218-2029	Dividend Opportunities	6,362,803	23.60%
	Energy	1,472,389	27.20%
	Global Natural Resources	4,125,686	18.15%
	Growth	5,636,429	5.81%
	High Income	6,869,127	11.20%
	International Growth	1,813,441	6.95%
	International Value	742,789	2.44%
	Micro Cap Growth	232,844	9.55%
	Mid Cap Growth	3,325,347	29.17%
	Money Market	18,230,480	8.35%
	Mortgage Securities	1,222,177	21.18%
	Pathfinder Aggressive	11,860,125	96.47%
	Pathfinder Conservative	3,427,551	60.3 8%
	Pathfinder Moderate	17,538,131	65.04%
	Pathfinder Moderately
	Aggressive	21,863,042	60.00%
	Pathfinder Moderately
	Conservative	7,830,206	68.09%
	Real Estate Securities	1,529,475	23.30%
	Science and Technology	1,646,349	8.70%
	Small Cap Growth	1,333,373	2.91%
	Small Cap Value	643,169	4.40%
	Value	5,592,539	10.24%
Ohio National Life Insurance Co	Asset Strategy	4,906,288	5.92%
For the Benefit of its Separate	Global Natural Resources	2,509,795	11.04%
Accounts	Science and Technology	233,743	1.23%
1 Financial Way
Cincinnati OH 45242-5851
UMB Bank as Custodian for	Balanced	475,670	1.56%
Ivy Funds VIP Pathfinder	Bond	1,097,855	1.71%
	Dividend Opportunities Aggressive	1,280,075	4.75%
Fund Master Account	Growth	980,987	1.01%
c/o Carrie Kelly	International Growth	768,165	2.94%
6300 Lamar Ave	Mid Cap Growth	488,752	4.29%
Mission KS 66202-4247	Money Market	5,857,453	2.68%
	Small Cap Value	376,638	2.58%
	Value	768,451	1.41%
UMB Bank as Custodian for	Bond	1,414,727	2.20%
Ivy Funds VIP Pathfinder	Dividend Opportunities	968,566	3.59%
Conservative Fund Master Account	Money Market	7,518,662	3.44%
c/o Carrie Kelly
6300 Lamar Ave
Mission KS 66202-4247
UMB Bank as Custodian for	Balanced	667,714	2.20%
Ivy Funds VIP Pathfinder Moderate	Bond	4,425,141	6.87%
Fund Master Account	Dividend Opportunities	3,622,426	13.43%
c/o Carrie Kelly	Growth	1,614,470	1.67%
6300 Lamar Ave	International Growth	1,206,931	4.62%
Mission KS 66202-4247	Mid Cap Growth	913,882	8.02%
	Money Market	23,492,020	10.76%
	Small Cap Value	424,251	2.90%
	Value	1,288,428	2.36%
UMB Bank as Custodian for	Dividend Opportunities	4,809,836	17.84%
Ivy Funds VIP Pathfinder Mod	Growth	2,154,406	2.22%
Aggress Fund Master Account	International Growth	2,033,905	7.79%
c/o Carrie Kelly	Mid Cap Growth	1,523,763	13.36%
6300 Lamar Ave	Money Market	24,522,207	11.23
Mission KS 66202-4247	Small Cap Growth	688,491	1.50%
	Small Cap Value	999,207	6.83%
	Value	1,708,262	3.13%
UMB Bank as Custodian for	Dividend Opportunities	1,636,291	6.07%
Ivy Funds VIP Pathfinder Mod	International Growth	391,921	1.50%
Conserv Fund Master Account	Mid Cap Growth	410,930	3.60%
c/o Carrie Kelly	Money Market	12,666,965	5.80%
6300 Lamar Ave	Value	578,460	1.06%
Mission KS 66202-4247
United Investors Life	Asset Strategy	7,088,702	8.55%
Advantage II	Balanced	3,427,089	7.35%
P O Box 10287	Bond	6,997,485	10.87%
Birmingham AL 35202-0287	Core Equity	12,974,808	27.77%
	Growth	16,206,286	16.71%
	High Income	8,704,536	14.19%
	International Growth	5,196,517	19.91%
	Money Market	15,479,903	7.09%
	Science and Technology	3,586,818	18.95%
	Small Cap Growth	6,992,488	15.29%
United Investors Life	Asset Strategy	837,954	1.01%
Variable Universal Life (Plus)	Balanced	518,294	1.11%
P O Box 10287	Core Equity	1,863,354	3.99%
Birmingham AL 35202-0287	Growth	2,346,766	2.42%
	High Income	837,325	1.37%
	International Growth	1,215,955	4.66%
	Science and Technology	1,332,261	7.04%
	Small Cap Growth	1,574,784	3.44%

As of March 31, 2009, all of the Directors and officers of the Corporation, as a group, owned less than 1% of the outstanding shares of the Corporation.

INVESTMENT ADVISORY AND OTHER SERVICES

The Management Agreement

The Trust has an Investment Management Agreement with WRIMCO with respect to Ivy Funds VIP Asset Strategy, Ivy Funds VIP Balanced, Ivy Funds VIP Bond, Ivy Funds VIP Core Equity, Ivy Funds VIP Dividend Opportunities, Ivy Funds VIP Energy, Ivy Funds VIP Growth, Ivy Funds VIP High Income, Ivy Funds VIP International Growth, Ivy Funds VIP Mid Cap Growth, Ivy Funds VIP Money Market, Ivy Funds VIP Science and Technology, Ivy Funds VIP Small Cap Growth, Ivy Funds VIP Value, Ivy Funds VIP Pathfinder Aggressive, Ivy Funds VIP Pathfinder Moderately Aggressive, Ivy Funds VIP Pathfinder Moderate, Ivy Funds VIP Pathfinder Moderately Conservative and Ivy Funds VIP Pathfinder Conservative and separate Investment Management Agreement with WRIMCO with respect to Ivy Funds VIP International Value, Ivy Funds VIP Micro Cap Growth, Ivy Funds VIP Small Cap Value, Ivy Funds VIP Global Natural Resources, Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities (each, a Management Agreement). Under the Management Agreement, as to each Portfolio, WRIMCO is employed to supervise the investments of the Portfolio and provide investment advice to the Portfolio or monitor and supervise the activities of a subadvisor, if applicable. The Management Agreement obligates WRIMCO to make investments for the accounts of the Portfolio in accordance with its best judgment and within the investment objectives and restrictions set forth in the Prospectus, the 1940 Act and the provisions of the Code relating to RICs, subject to policy decisions adopted by the Board. WRIMCO also determines the securities to be purchased or sold by each Portfolio and places the orders (except to the extent those services are provided by the Portfolio's investment subadvisor). The Management Agreement with respect to Ivy Funds VIP Global Natural Resources, Ivy Funds VIP International Value, Ivy Funds VIP Micro Cap Growth, Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities also authorizes WRIMCO to appoint one or more qualified investment subadvisors to provide these Portfolios with certain services required by the Management Agreement.

WRIMCO is a wholly owned subsidiary of Waddell & Reed. Waddell & Reed is a wholly owned subsidiary of Waddell & Reed Financial Services, Inc., a holding company which is a wholly owned subsidiary of WDR, a publicly held company. The address of these companies is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission, Kansas 66201-9217.

WRIMCO and/or its predecessor have served as investment manager to each of the funds in the Advisors Fund Complex since each fund's inception and to each of their respective predecessor funds (each, a Predecessor Fund). Waddell & Reed serves as principal underwriter and distributor for the Trust and for each of the funds within Waddell & Reed Advisors Funds and Waddell & Reed InvestEd Portfolios and served as principal underwriter and distributor to their respective Predecessor Funds.

Each Management Agreement will continue in effect through September 30, 2009, unless sooner terminated. The Management Agreement may be renewed year to year as to each applicable Portfolio, provided that any such renewal has been specifically approved, at least annually, by the Board, including a majority of the Disinterested Trustees. The Management Agreement also provides that either party has the right to terminate it as to a Portfolio, without penalty, upon 60 days' written notice by the Trust to WRIMCO and 120 days' written notice by WRIMCO to the Trust, and that the Management Agreement automatically terminates in the event of its assignment (as defined in the 1940 Act).

Subadvisory Agreements

Advantus Capital Management, Inc. (Advantus Capital), an SEC-registered investment advisor located at 400 Robert Street North, St. Paul, Minnesota 55101, has been retained under an investment subadvisory agreement to provide investment advice for and, in general, conduct the investment management program of Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities, subject to the general control of the Board. Since its inception in 1985, Advantus Capital and its predecessor have provided investment advisory services for mutual funds and have managed investment portfolios for various private accounts, including its affiliate, Minnesota Life Insurance Company (Minnesota Life). Both Advantus Capital and Minnesota Life are wholly owned subsidiaries of Securian Financial Group, Inc., which is a second-tier subsidiary of Minnesota Mutual Companies, Inc., a mutual insurance holding company. Personnel of Advantus Capital also manage Minnesota Life's investment portfolios. Advantus Capital had approximately $17.1 billion in assets under management as of December 31, 2008.

Advantus Capital acts as investment subadvisor to Ivy Funds VIP Mortgage Securities and Ivy Funds VIP Real Estate Securities under an Investment Subadvisory Agreement (the Advantus Capital Agreement) with WRIMCO.

The Advantus Capital Agreement will terminate automatically in the event of its assignment or upon the termination of the Management Agreement. In addition, the Advantus Capital Agreement is terminable at any time, without penalty, by the Board or by WRIMCO on 60 days' written notice to Advantus Capital, or by Advantus Capital on 60 days' written notice to WRIMCO. Unless sooner terminated, the Advantus Capital Agreement shall continue in effect from year to year if approved at least annually by the Board, provided that such continuance is also approved by the vote of a majority of the Trustees who are not interested persons of any party to the Advantus Capital Agreement, cast in person at a meeting called for the purpose of voting on such approval.

For its services, Advantus Capital receives fees from WRIMCO, such fees accrued daily and payable in arrears on the last day of each calendar month, pursuant to the following schedule:

Fund Name	Annual Fee Payable to Advantus Capital as a
	Percentage of the Portfolio's Average Net Assets
Ivy Funds VIP Mortgage Securities	0.30%
Ivy Funds VIP Real Estate Securities	0.55%

Mackenzie Financial Corporation (Mackenzie) is a wholly owned subsidiary of IGM Financial Inc. Mackenzie, with offices at 150 Bloor Street West, Suite 400, Toronto, Ontario, Canada, M5S 3B5, is a corporation organized under the laws of Ontario. Mackenzie is registered in Ontario as a mutual fund dealer and also registered with the SEC as an investment adviser. Mackenzie has been retained under an investment subadvisory agreement to provide investment advice for and, in general, conduct the investment management program of Ivy Funds VIP Global Natural Resources, subject to the general control of the Board. Mackenzie had approximately $54.7 billion Canadian in assets under management as of December 31, 2008.

Mackenzie acts as investment subadvisor to Ivy Funds VIP Global Natural Resources under an Investment Subadvisory Agreement (the Mackenzie Agreement) with WRIMCO.

The Mackenzie Agreement will terminate automatically in the event of its assignment or upon the termination of the Management Agreement. In addition, the Mackenzie Agreement is terminable at any time, without penalty, by the Board or by WRIMCO on 60 days' written notice to Mackenzie, or by Mackenzie on 60 days' written notice to WRIMCO. Unless sooner terminated, the Mackenzie Agreement shall continue in effect from year to year if approved at least annually by the Board, provided that such continuance is also approved by the vote of a majority of the Trustees who are not interested persons of any party to the Mackenzie Agreement, cast in person at a meeting called for the purpose of voting on such approval.

From the management fee received with respect to Ivy Funds VIP Global Natural Resources, WRIMCO pays to Mackenzie a subadvisory fee computed at an annual rate, accrued daily and payable in arrears on the last day of each calendar month, pursuant to the following schedule:

	Fee Payable to Mackenzie as a Percentage of
Net Portfolio Assets	the Portfolio's Average Net Assets
Up to $500 million	0.500%
Over $500 million and up to $1 billion	0.425%
Over $1 billion and up to $2 billion	0.415%
Over $2 billion and up to $3 billion	0.400%
Over $3 billion	0.380%

Templeton Investment Counsel, LLC (Templeton), a Delaware limited liability company with principal offices at 500 East Broward Boulevard, Fort Lauderdale, Florida 33394, has been retained under an investment subadvisory agreement to provide investment advice for and, in general, conduct the investment management program of International Value Portfolio, subject to the general control of the Board. Templeton is an indirect, wholly owned subsidiary of Templeton Worldwide, Inc., Fort Lauderdale, Florida (TWI), which in turn is a wholly owned subsidiary of Franklin Resources, Inc. Templeton had approximately $25 billion in assets under management as of December 31, 2008.

Templeton acts as investment subadvisor to Ivy Funds VIP International Value under an Investment Subadvisory Agreement (the Templeton Agreement) with WRIMCO.

The Templeton Agreement will terminate automatically in the event of its assignment or upon the termination of the Management Agreement. In addition, the Templeton Agreement is terminable at any time, without penalty, by the Board or by WRIMCO on 60 days' written notice to Templeton, or by Templeton on 60 days' written notice to WRIMCO. Unless sooner terminated, the Templeton Agreement shall continue in effect from year to year if approved at least annually by the Board, provided that such continuance is also approved by the vote of a majority of the Trustees who are not interested persons of any party to the Templeton Agreement, cast in person at a meeting called for the purpose of voting on such approval.

Templeton Global Advisors Limited (TGAL) also acts as an investment subadviser to International Value Portfolio under a Subadvisory Agreement (the TGAL Agreement) with Templeton, which was approved by the Board, including a majority of the Disinterested Directors, at a meeting held on February 4, 2009. The TGAL Agreement will continue in effect until Edgerton Tucker Scott, the portfolio manager for International Value Portfolio, is no longer employed by TGAL, unless sooner terminated. TGAL is an indirect, wholly owned subsidiary of TWI. Templeton and the direct and indirect subsidiaries of TWI had approximately $114 billion in assets under management as of December 31, 2008..

From the management fee received with respect to Ivy Funds VIP International Value, WRIMCO pays to Templeton a subadvisory fee computed at an annual rate, which is a percentage of the average daily net assets of Ivy Funds VIP International Value, as follows: 0.50% of net assets up to $100 million, 0.35% of net assets over $100 million and up to $200 million, 0.30% of net assets over $200 million and up to $450 million, and 0.25% of net assets over $450 million. The subadvisory fee is accrued daily and payable in arrears on the last day of each calendar month. WRIMCO does not pay TGAL directly for its services.

Wall Street Associates, LLC (WSA), a limited liability corporation with principal offices at La Jolla Financial Building, Suite 100, 1200 Prospect Street, La Jolla, California 92037, has been retained under an investment subadvisory agreement to provide investment advice for and, in general, conduct the investment management program of Ivy Funds VIP Micro Cap Growth, subject to the general control of the Board. WSA, founded in 1987, provides investment advisory services for institutional clients and high net worth individuals. WSA had approximately $1.096 billion in assets under management as of December 31, 2008.

WSA acts as investment subadvisor to Ivy Funds VIP Micro Cap Growth under an Investment Subadvisory Agreement (the WSA Agreement) with WRIMCO.

The WSA Agreement will terminate automatically in the event of its assignment or upon the termination of the Management Agreement. In addition, the WSA Agreement is terminable at any time, without penalty, by the Board or by WRIMCO on 60 days' written notice to WSA, or by WSA on 60 days' written notice to WRIMCO. Unless sooner terminated, the WSA Agreement shall continue in effect from year to year if approved at least annually by the Board, provided that such continuance is also approved by the vote of a majority of the Trustees who are not interested persons of any party to the WSA Agreement, cast in person at a meeting called for the purpose of voting on such approval.

From the management fee received with respect to Ivy Funds VIP Micro Cap Growth, WRIMCO pays to WSA a subadvisory fee computed at an annual rate, which is a percentage of the average daily net assets of Ivy Funds VIP Micro Cap Growth, as follows: 0.50% of net assets. The subadvisory fee is accrued daily and payable in arrears on the last day of each calendar month.

         Payments for Management Services

Under its Management Agreement, for WRIMCO's management services, each Portfolio pays WRIMCO a fee as described in the Prospectus. The management fees paid to WRIMCO, during the last three fiscal years for each Portfolio then in existence were as follows:

Periods ended December 31,

	2008	2007	2006
Ivy Funds VIP Asset Strategy	$ 6,015,566	$ 5,069,591	$ 3,657,741
Ivy Funds VIP Balanced	3,338,840	3,934,013	3,996,274
Ivy Funds VIP Bond	1,479,216	1,241,780	1,075,919
Ivy Funds VIP Core Equity	4,086,170	5,322,329	5,135,376
Ivy Funds VIP Dividend Opportunities	875,770	712,494	421,075
Ivy Funds VIP Energy	250,423	115,546	29,055
Ivy Funds VIP Global Natural Resources	1,384,681	1,242,357	642,436
Ivy Funds VIP Growth	7,317,953	8,444,028	8,261,018
Ivy Funds VIP High Income	1,195,434	1,330,756	1,169,729
Ivy Funds VIP International Growth	1,891,208	2,245,577	1,890,003
Ivy Funds VIP International Value	4,331,885	5,277,695	4,360,700
Ivy Funds VIP Micro Cap Growth	412,223	577,213	553,464
Ivy Funds VIP Mid Cap Growth	460,894	409,554	216,740
Ivy Funds VIP Money Market	558,166	319,599	241,013
Ivy Funds VIP Mortgage Securities	166,492	147,606	141,278
Ivy Funds VIP Real Estate Securities	391,215	537,161	391,412
Ivy Funds VIP Science and Technology	2,685,812	3,212,675	3,017,650
Ivy Funds VIP Small Cap Growth	3,435,591	4,723,598	4,961,263
Ivy Funds VIP Small Cap Value	1,547,856	1,765,203	1,540,062
Ivy Funds VIP Value	2,113,638	2,677,188	2,488,437
Ivy Funds VIP Pathfinder Aggressive	---	---	---
Ivy Funds VIP Pathfinder Moderately Aggressive	---	---	---
Ivy Funds VIP Pathfinder Moderate	---	---	---
Ivy Funds VIP Pathfinder Moderately Conservative	---	---	---
Ivy Funds VIP Pathfinder Conservative	---	---	---

Each Portfolio accrues and pays this fee daily.

The Management Agreement for each Portfolio permits WRIMCO, or an affiliate of WRIMCO, to enter into a separate agreement for accounting services (the Accounting Services Agreement) and a separate agreement for transfer agency services (the Transfer Agency Agreement) with the Trust for the Portfolio. Each Management Agreement contains detailed provisions as to the matters to be considered by the Board prior to approving any Accounting Services Agreement or Transfer Agency Agreement.

Accounting Services

Under the Accounting Services Agreement entered into between the Trust and WRSCO for each Portfolio, WRSCO provides the Portfolio with bookkeeping and accounting services and assistance and other administrative services, including maintenance of the Portfolio's records, pricing of the Portfolio's shares, preparation of prospectuses for existing shareholders, preparation of proxy statements and certain shareholder reports. A new Accounting Services Agreement, or amendments to the existing one, may be approved by the Board without shareholder approval.

         Accounting Services Fees

Under the Accounting Services Agreement for each Portfolio except the Pathfinder Portfolios, each Portfolio pays WRSCO a monthly fee shown in the following table, based on the average daily net assets during the prior month.

Average Daily Net Assets for the Month							Monthly Fee
	$	0	-	$	10	million	$	0
	$	10	-	$	25	million	$	958
	$	25	-	$	50	million	$	1,925
	$	50	-	$	100	million	$	2,958
	$	100	-	$	200	million	$	4,033
	$	200	-	$	350	million	$	5,267
	$	350	-	$	550	million	$	6,875
	$	550	-	$	750	million	$	8,025
	$	750	-	$	1.0	billion	$	10,133
	$	1.0 billion and over					$	12,375

Under the Accounting Services Agreement for each Pathfinder Portfolio, the Pathfinder Portfolio pays WRSCO a monthly fee shown in the following table, based on the average daily net assets during the prior month.

Average Daily Net Assets for the Month							Monthly Fee
	$	0	-	$	10	million	$	0
	$	10	-	$	25	million	$	479.00
	$	25	-	$	50	million	$	962.50
	$	50	-	$	100	million	$	1,479.00
	$	100	-	$	200	million	$	2,016.50
	$	200	-	$	350	million	$	2,633.50
	$	350	-	$	550	million	$	3,437.50
	$	550	-	$	750	million	$	4,012.50
	$	750	-	$	1.0	billion	$	5,066.50
	$	1.0 billion and over					$	6,187.50

Each Portfolio also pays monthly a fee paid at the annual rate of 0.01% or one basis point for the first $1 billion of assets with no fee charges for assets in excess of $1 billion. This fee may be voluntarily waived until Portfolio assets are at least $10 million.

Fees paid to WRSCO for the last three fiscal years for each Portfolio then in existence were as follows:

Periods ended December 31,

	2008	2007	2006
Ivy Funds VIP Asset Strategy	$ 201,174	$177,150	$ 138,573
Ivy Funds VIP Balanced	130,219	152,530	153,374
Ivy Funds VIP Bond	94,618	87,603	84,061
Ivy Funds VIP Core Equity	151,090	191,562	181,642
Ivy Funds VIP Dividend Opportunities	60,902	53,212	39,465
Ivy Funds VIP Energy	22,169	7,751	---
Ivy Funds VIP Global Natural Resources	59,009	57,636	38,846
Ivy Funds VIP Growth	236,107	248,499	248,499
Ivy Funds VIP High Income	76,235	84,481	68,700
Ivy Funds VIP International Growth	81,881	89,583	85,715
Ivy Funds VIP International Value	140,474	158,348	136,104
Ivy Funds VIP Micro Cap Growth	29,495	41,589	41,342
Ivy Funds VIP Mid Cap Growth	37,820	34,127	19,839
Ivy Funds VIP Money Market	61,260	43,493	39,449
Ivy Funds VIP Mortgage Securities	26,449	26,028	25,926
Ivy Funds VIP Real Estate Securities	28,481	40,439	30,540
Ivy Funds VIP Science and Technology	102,814	120,404	111,861
Ivy Funds VIP Small Cap Growth	118,010	146,266	152,696
Ivy Funds VIP Small Cap Value	69,029	82,769	66,550
Ivy Funds VIP Value	93,268	120,877	107,964
Ivy Funds VIP Pathfinder Aggressive	9,583	---	---
Ivy Funds VIP Pathfinder Moderately Aggressive	16,131	---	---
Ivy Funds VIP Pathfinder Moderate	11,141	---	---
Ivy Funds VIP Pathfinder Moderately Conservative	3,228	---	---
Ivy Funds VIP Pathfinder Conservative	1,058	---	---

Since each Portfolio pays a management fee for investment supervision and an accounting services fee for accounting services as discussed above, WRIMCO and WRSCO, respectively, pay all of their own expenses, except as otherwise noted in the respective agreements, in providing these services. Waddell & Reed and affiliates pay the Trust's Trustees and officers who are affiliated with WRIMCO and Waddell & Reed. The Trust pays the fees and expenses of its other Trustees. The Trust pays all of its other expenses. These include the costs of printing and mailing materials sent to shareholders, audit and outside legal fees, taxes, brokerage commissions, interest, insurance premiums, fees payable under securities laws and to the Investment Company Institute, cost of processing and maintaining shareholder records, cost of systems or services used to price Portfolio securities and nonrecurring and extraordinary expenses, including litigation and indemnification relating to litigation.

Transfer Agency Services

Under the Transfer Agency Agreement entered into between the Trust and WRSCO, a subsidiary of Waddell & Reed, for each Portfolio WRSCO performs transfer agency functions, including the maintenance of shareholder accounts which are the separate accounts of the Participating Insurance Companies, the issuance, transfer and redemption of shares, distribution of dividends and other distributions and payment of redemption proceeds, and the furnishing of related information to the Portfolio. A new Transfer Agency Agreement, or amendments to the existing one, may be approved by the Board without shareholder approval. The Trust pays certain out-of-pocket expenses of WRSCO, which are 1) the charges of a sub-agent used by WRSCO in performing services under the Transfer Agency Agreement, including the cost of providing a record-keeping system, and 2) the cost of providing and/or mailing prospectuses to certain Policy holders (Policyowners). Fees paid to WRSCO for such out-of-pocket expenses for the last three fiscal years for each Portfolio then in existence were as follows:

	2008	2007	2006
Ivy Funds VIP Asset Strategy	$8,141	$21,760	$19,313
Ivy Funds VIP Balanced	4,312	19,486	21,109
Ivy Funds VIP Bond	2,992	3,440	7,631
Ivy Funds VIP Core Equity	5,354	21,880	27,483
Ivy Funds VIP Dividend Opportunities	1,218	2,977	2,151
Ivy Funds VIP Energy	277	544	113
Ivy Funds VIP Global Natural Resources	1,285	5,703	2,579
Ivy Funds VIP Growth	9,718	41,135	45,119
Ivy Funds VIP High Income	1,840	6,939	6,976
Ivy Funds VIP International Growth	2,086	8,594	8,296
Ivy Funds VIP International Value	4,749	20,655	18,644
Ivy Funds VIP Micro Cap Growth	435	2,066	2,111
Ivy Funds VIP Mid Cap Growth	550	1,397	931
Ivy Funds VIP Money Market	1,215	2,314	2,166
Ivy Funds VIP Mortgage Securities	358	1,014	1,059
Ivy Funds VIP Real Estate Securities	451	2,079	1,549
Ivy Funds VIP Science and Technology	2,953	12,184	13,531
Ivy Funds VIP Small Cap Growth	3,741	9,172	21,303
Ivy Funds VIP Small Cap Value	1,736	6,867	6,649
Ivy Funds VIP Value	2,799	12,921	12,730
Ivy Funds VIP Pathfinder Aggressive	251	---	---
Ivy Funds VIP Pathfinder Moderately Aggressive	472	---	---
Ivy Funds VIP Pathfinder Moderate	288	---	---
Ivy Funds VIP Pathfinder Moderately Conservative	100	---	---
Ivy Funds VIP Pathfinder Conservative	35	---	---

Distribution Services

Pursuant to the Principal Underwriting Agreement entered into between Waddell & Reed and the Trust, Waddell & Reed offers shares of the Portfolios to Participating Insurance Companies and may also engage in marketing and other promotional activities intended to result in the inclusion of shares of the Trust as investment options under variable life insurance and annuity products.

Service Plan

Under a Service Plan (Plan) adopted by the Trust pursuant to Rule 12b-1 under the 1940 Act, each Portfolio (other than Ivy Funds VIP Money Market and the Pathfinder Portfolios) may pay Waddell & Reed a fee not to exceed .25% of the Portfolio's average annual net assets, paid daily, to compensate Waddell & Reed and unaffiliated third parties for costs and expenses in connection with the provision of personal services to Policyowners.

The Plan permits Waddell & Reed to be compensated for amounts it expends in compensating, training and supporting registered financial advisors, sales managers and/or other appropriate personnel in providing personal services to Policyowners and/or maintenance of Policyowner accounts; increasing services provided to Policyowners by office personnel; engaging in other activities useful in providing personal service to Policyowners; and in compensating broker-dealers who may regularly sell Policies, and other third parties, for providing shareholder services and/or maintenance of Policyowner accounts.

The only Trustees or interested persons, as defined in the 1940 Act, of the Trust who have a direct or indirect financial interest in the operation of the Plan are the officers and Trustees who are also officers of either Waddell & Reed or its affiliate(s) or who are shareholders of Waddell & Reed Financial, Inc., the indirect parent company of Waddell & Reed. The Plan is anticipated to benefit each Portfolio and the Policyowners through Waddell & Reed's activities to provide directly, or indirectly, personal services to the Policyowners and thereby promote the maintenance of their accounts with respect to investment in the Portfolio. The Trust anticipates that Policyowners investing in a Portfolio may benefit to the extent that Waddell & Reed's activities are successful in increasing the assets of the Portfolio through reduced redemptions and reducing a Policyowner's share of Portfolio expenses. In addition, the Trust anticipates that the revenues from the Plan will provide Waddell & Reed with greater resources to make the financial commitments necessary to continue to improve the quality and level of services to the Trust and Policyowners.

The Plan was approved by the Board, including the Trustees who are not interested persons of the Trust and who have no direct or indirect financial interest in the operations of the Plan or any agreement referred to in the Plan (hereafter, Plan Trustees). The Plan was also approved as to each Portfolio by the shareholders of the Portfolio.

Among other things, the Plan provides that (1) Waddell & Reed will provide to the Trustees at least quarterly, and the Trustees will review, a report of amounts expended under the Plan and the purposes for which such expenditures were made, (2) the Plan will continue in effect only so long as it is approved at least annually, and any material amendments thereto will be effective only if approved, by the Board including the Plan Trustees, acting in person at a meeting called for that purpose, (3) amounts to be paid by a Portfolio under the Plan may not be materially increased without the vote of the holders of a majority of the outstanding shares of the Portfolio, and (4) while the Plan remains in effect, the selection and nomination of the Trustees who are Plan Trustees will be committed to the discretion of the Plan Trustees. During the fiscal year ended December 31, 2008, each Portfolio paid the following amount under the Plan:

Ivy Funds VIP Asset Strategy	$ 2,145,677
Ivy Funds VIP Balanced	1,192,444
Ivy Funds VIP Bond	784,480
Ivy Funds VIP Core Equity	1,461,731
Ivy Funds VIP Dividend Opportunities	312,776
Ivy Funds VIP Energy	73,654
Ivy Funds VIP Global Natural Resources	346,171
Ivy Funds VIP Growth	2,628,535
Ivy Funds VIP High Income	478,987
Ivy Funds VIP International Growth	557,293
Ivy Funds VIP International Value	1,274,092
Ivy Funds VIP Micro Cap Growth	108,480
Ivy Funds VIP Mid Cap Growth	135,790
Ivy Funds VIP Money Market	348,854*
Ivy Funds VIP Mortgage Securities	83,246
Ivy Funds VIP Real Estate Securities	108,671
Ivy Funds VIP Science and Technology	789,719
Ivy Funds VIP Small Cap Growth	1,009,582
Ivy Funds VIP Small Cap Value	455,253
Ivy Funds VIP Value	754,558
Ivy Funds VIP Pathfinder Aggressive	---
Ivy Funds VIP Pathfinder Moderately Aggressive	---
Ivy Funds VIP Pathfinder Moderate	---
Ivy Funds VIP Pathfinder Moderately Conservative	---
Ivy Funds VIP Pathfinder Conservative	---

*The Ivy Funds VIP Money Market Service Plan was terminated effective January 31, 2009.

Custodial and Auditing Services

The Portfolios' custodian is UMB Bank, n.a., and its address is 928 Grand Boulevard, Kansas City, Missouri. In general, the custodian is responsible for holding the Portfolios' cash and securities. Deloitte & Touche LLP, located at 1100 Walnut, Suite 3300, Kansas City, Missouri, the Trust's independent registered public accounting firm, audits the Portfolios' financial statements.

Portfolio Managers

Portfolio Managers employed by WRIMCO

The following tables provide information relating to the portfolio managers of the Portfolios as of December 31, 2008:

Michael L. Avery -- Ivy Funds VIP Asset Strategy, Ivy Funds VIP Pathfinder Aggressive, Ivy Funds VIP Pathfinder Moderately Aggressive, Ivy Funds VIP Pathfinder Moderate, Ivy Funds VIP Pathfinder Moderately Conservative, and Ivy Funds VIP Pathfinder Conservative

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	13	0	0
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$14,194	$0	$0
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Daniel Becker -- Ivy Funds VIP Growth

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	3	9	36
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$2,369	$1,929	$1,724
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Erik Becker -- Ivy Funds VIP Core Equity

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	3	1	14
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$2,957	$89	$248
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Chace Brundige -- Ivy Funds VIP International Growth

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	3	0	3
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$787	$0	$0.20
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Ryan Caldwell -- Ivy Funds VIP Asset Strategy

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	6	0	2
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$13,770	$0	$0.11
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

David Ginther -- Ivy Funds VIP Dividend Opportunities and Ivy Funds VIP Energy

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	6	3	0
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$1,128	$155	$0
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Kenneth McQuade -- Ivy Funds VIP Small Cap Growth

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	1	0	1
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$290	$0	$0.07
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Timothy J. Miller -- Ivy Funds VIP Small Cap Value

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	2	0	5
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$285	$0	$0.94
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

William Nelson -- Ivy Funds VIP High Income

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	2	1	5
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$906	$16	$0.92
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Matthew Norris -- Ivy Funds VIP Value

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	3	0	3
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$589	$0	$67
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Mark Otterstrom --Ivy Funds VIP Bond

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	4	0	20
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$2,217	$0	$518
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Cynthia Prince-Fox -- Ivy Funds VIP Balanced

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	4	0	2
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$1,258	$0	$59
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Philip Sanders -- Ivy Funds VIP Growth

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	3	9	36
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$2,369	$1,929	$1,723
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Kimberly Scott -- Ivy Funds VIP Mid Cap Growth

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	3	0	3
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$935	$0	$1
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Zachary Shafran -- Ivy Funds VIP Science and Technology

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	3	1	7
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$2,421	$2	$3
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Mira Stevovich -- Ivy Funds VIP Money Market

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	3	0	1
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$2,062	$0	$0.01
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Gustaf Zinn -- Ivy Funds VIP Core Equity

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	3	1	12
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$2,957	$89	$249
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Conflicts of Interest

Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or account, such as the following:

• The management of multiple funds and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each fund and/or other account. WRIMCO seeks to manage such competing interests for the time and attention of portfolio managers by having a portfolio manager focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment models that are used in connection with the management of the funds.

• The portfolio manager might execute transactions for another fund or account that may adversely impact the value of securities held by the fund. Securities selected for funds or accounts other than the fund might outperform the securities selected for the fund. WRIMCO seeks to manage this potential conflict by requiring all portfolio transactions to be allocated pursuant to WRIMCO's Allocation Procedures.

WRIMCO and the Portfolios have adopted certain compliance procedures, including the Code of Ethics, which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.

Compensation

WRIMCO believes that integral to the retention of investment professionals are: a) a competitive base salary, that is commensurate with the individual's level of experience and responsibility; b) an attractive bonus structure linked to investment performance, described below; and c) eligibility for a stock incentive plan in shares of WDR that rewards teamwork. Awards of equity-based compensation typically vest over time, so as to create an incentive to retain key talent; and d) to the extent a portfolio manager also manages institutional separate accounts, he or she will share in a percentage of the revenues earned, on behalf of such accounts, by WRIMCO.

Portfolio managers can receive significant annual performance-based bonuses. The better the pre-tax performance of the portfolio relative to an appropriate benchmark, the more bonus compensation the manager receives. The primary benchmark is the portfolio manager's percentile ranking against the performance of managers of the same investment style at other firms. The secondary benchmark is an index of securities matched to the same investment style. Half of a portfolio manager's bonus is based upon a three-year period, and half is based upon a one-year period. For truly exceptional results, bonuses can be multiples of base salary. In cases where portfolio managers have more than one portfolio to manage, all the portfolios are similar in investment style and all are taken into account in determining bonuses. Thirty percent of annual performance-based bonuses is deferred for a three-year period. During that time, the deferred portion of bonuses is deemed invested in one or more mutual funds managed by WRIMCO (or its affiliate), with a minimum of 50% of the deferred bonus required to be invested in a mutual fund managed by the portfolio manager. In addition to the deferred portion of bonuses being deemed invested in mutual funds managed by WRIMCO (or its affiliate), WDR's 401(k) plan offers mutual funds managed by WRIMCO (or its affiliate) as investment options. No compensation is based upon the amount of the mutual fund assets under management.

Ownership of Securities

As of December 31, 2008, the dollar range of shares beneficially owned by the portfolio managers was:

Manager	Portfolio Managed in Ivy Funds Variable Insurance Portfolios	Dollar Range of Shares Owned* in Portfolio Managed	Dollar Range of Shares Owned in Funds in Fund Complex
Michael Avery**	Ivy Funds VIP Asset Strategy	$0	$500,001 to $1,000,000
Daniel Becker	Ivy Funds VIP Growth	$0	$100,001 to $500,000
Erik Becker	Ivy Funds VIP Core Equity	$0	$100,001 to $500,000
Chace Brundige	Ivy Funds VIP International Growth	$0	$50,001 to $100,000
Ryan Caldwell	Ivy Funds VIP Asset Strategy	$0	$0
David Ginther	Ivy Funds VIP Dividend Opportunities Ivy Funds VIP Energy	$0 $0	$500,001 to $1,000,000
Kenneth McQuade	Ivy Funds VIP Small Cap Growth	$0	$100,001 to $500,000
Timothy Miller	Ivy Funds VIP Small Cap Value	$0	$0
William Nelson	Ivy Funds VIP High Income	$0	$100,001 to $500,000
Matthew Norris	Ivy Funds VIP Value	$0	$100,001 to $500,000
Mark Otterstrom	Ivy Funds VIP Bond	$0	$500,001 to $1,000,000
Cynthia Prince-Fox	Ivy Funds VIP Balanced	$0	over $1,000,000
Philip Sanders	Ivy Funds VIP Growth	$0	$100,001 to $500,000
Kimberly Scott	Ivy Funds VIP Mid Cap Growth	$0	$100,001 to $500,000
Zachary Shafran	Ivy Funds VIP Science and Technology	$0	$500,001 to $1,000,000
Mira Stevovich	Ivy Funds VIP Money Market	$0	$100,001 to $500,000
Gustaf Zinn	Ivy Funds VIP Core Equity	$0	$100,001 to $500,000

A portion of each portfolio manager's compensation is held in a deferred account, and deemed to be invested in funds within the Fund Complex. As of December 31, 2008, the dollar range of shares of the Portfolios deemed owned by the portfolio managers was:

Manager	Portfolio Managed in the Ivy Funds Variable Insurance Portfolios	Dollar Range of Shares Deemed Owned* in Portfolio or Style Managed1	Dollar Range of Shares Deemed Owned in Funds in Fund Complex
Michael Avery	Ivy Funds VIP Asset Strategy	$100,001 to $500,000	$100,001 to $500,000
Daniel Becker	Ivy Funds VIP Growth	$100,001 to $500,000	$100,001 to $500,000
Erik Becker	Ivy Funds VIP Core Equity	$100,001 to $500,000	$100,001 to $500,000
Chace Brundige	Ivy Funds VIP International Growth	$100,001 to $500,000	$100,001 to $500,000
Ryan Caldwell	Ivy Funds VIP Asset Strategy	$100,001 to $500,000	$100,001 to $500,000
David Ginther	Ivy Funds VIP Dividend Opportunities Ivy Funds VIP Energy	$100,001 to $500,000 $100,001 to $500,000	$100,001 to $500,000
Kenneth McQuade	Ivy Funds VIP Small Cap Growth	$50,001 to $100,000	$50,001 to $100,000
Timothy Miller	Ivy Funds VIP Small Cap Value	$10,001 to $50,000	$10,001 to $50,000
William Nelson	Ivy Funds VIP High Income	$100,001 to $500,000	$100,001 to $500,000
Matthew Norris	Ivy Funds VIP Value	$50,001 to $100,000	$50,001 to $100,000
Mark Otterstrom	Ivy Funds VIP Bond	$100,001 to $500,000	$100,001 to $500,000
Cynthia Prince-Fox	Ivy Funds VIP Balanced	$100,001 to $500,000	$100,001 to $500,000
Philip Sanders	Ivy Funds VIP Growth	$100,001 to $500,000	$100,001 to $500,000
Kimberly Scott	Ivy Funds VIP Mid Cap Growth	$100,001 to $500,000	$100,001 to $500,000
Zachary Shafran	Ivy Funds VIP Science and Technology	$500,001 to $1,000,000	$500,001 to $1,000,000
Mira Stevovich	Ivy Funds VIP Money Market	$10,001 to $50,000	$10,001 to $50,000
Gustaf Zinn	Ivy Funds VIP Core Equity	$100,001 to $500,000	$100,001 to $500,000

*The Portfolios' shares are available for purchase only by Participating Insurance Companies and are indirectly owned by investors in the Policies for which the Portfolios serve as the underlying investment vehicle.

¹ Shares deemed owned in any fund within the Fund Complex which is managed by the Manager.

Portfolio Managers employed by Advantus Capital Management, Inc.

The following tables provide information relating to the portfolio managers of the specified Portfolios as of December 31, 2008:

Christopher R. Sebald -- Ivy Funds VIP Mortgage Securities

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	6	2	16
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$953	$772	$1,739
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

David Land -- Ivy Funds VIP Mortgage Securities

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	6	1	10
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed	$803	$195	$1,462
Assets Managed with Performance-Based Advisory Fees	$0	$0	$0

Joseph R. Betlej -- Ivy Funds VIP Real Estate Securities

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	4	2	1
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed	$359	$22	$61
Assets Managed with Performance-Based Advisory Fees	$0	$0	$0

Lowell Bolken -- Ivy Funds VIP Real Estate Securities

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	4	2	1
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$359	$22	$61
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Conflicts of Interest

In the judgment of WRIMCO and Advantus Capital, no material conflicts of interest are likely to arise in connection with a portfolio manager's management of a Portfolio on the one hand and the management of any account identified above on the other. All portfolio managers must manage assets in their personal accounts in accordance with Advantus Capital's code of ethics. The Portfolios and all other accounts managed by a portfolio manager in a similar style are managed subject to substantially similar investment restrictions and guidelines, and therefore no conflict of interest is likely to arise due to material differences in investment strategy. Advantus Capital has also adopted policies and procedures designed for fair allocation of investment opportunities between a Portfolio and other accounts managed by the same portfolio manager, including accounts of Advantus Capital or their affiliates. In addition, Advantus Capital believes that material conflicts due to differences in compensation paid to portfolio managers (see below) are also unlikely to arise. Account performance is a factor in determining a portfolio manager's compensation, but no portfolio manager's compensation structure favors one account over another on the basis of performance.

Compensation

As of the end of the Portfolio's most recent fiscal year, each portfolio manager of a Portfolio is compensated for managing the Portfolio and for managing other accounts identified above in the manner set forth below. Portfolio managers also receive other compensation in the form of group insurance and medical benefits and pension and other retirement benefits which are available generally to all employees of Advantus Capital and which do not discriminate in favor of any portfolio manager.

Base Salary -- the portfolio manager's total compensation package is reviewed and adjusted annually using competitive compensation surveys. Base salary is designed to provide a measure of stability and is targeted to be competitive with peers.

Short-term Bonus -- the portfolio manager is eligible for an annual bonus that is based on the portfolio manager's ability to meet predetermined goals. Of the total goal, approximately 88% is based on the pre-tax investment performance versus an appropriate benchmark and peer group. In the case of a Portfolio, the appropriate benchmark is the Portfolio's benchmark index described in the Portfolio's prospectus. Appropriate peer groups are determined using applicable Lipper investment categories. Performance comparisons to the respective benchmark and peer group are performed using both one-year and three-year performance. The remaining goals (approximately 12%) are based on subjective fulfillment of position duties.

Long-term Incentive -- the portfolio manager is eligible for a long-term bonus that is dependent upon Advantus Capital's strategic business objectives such as profitability, sales, etc. If long-term bonuses are granted, the bonus has a four-year vesting schedule.

Deferred Compensation -- the portfolio manager has the option to defer all or part of his or her short-term and long-term bonuses into a non-qualified deferred compensation plan. All elections must be made prior to the start of the performance measurement period.

Revenue Share -- the portfolio manager is paid a percentage of revenue received for the management of assets for unaffiliated clients including Mortgage Securities Portfolio and Real Estate Securities Portfolio, except if investments are made through the portfolio manager's retirement account that invests in the Portfolios through separate accounts. Revenues received from accounts of Advantus Capital or any of its affiliates, are not subject to revenue share.

Ownership of Securities

As of December 31, 2008, the dollar range of shares of the Portfolios beneficially owned by the portfolio managers was:

Manager	Dollar Range of Shares owned* in Ivy Funds VIP Mortgage Securities	Dollar Range of Shares owned in Fund Complex
Christopher R. Sebald	$0	$0
David Land	$0	$1 to $10,000

Manager	Dollar Range of Shares owned* in Ivy Funds VIP Real Estate Securities	Dollar Range of Shares owned in Fund Complex
Joseph R. Betlej	$0	$50,001 to $100,000
Lowell R. Bolken	$0	$10,001 to $50,000

*The Portfolios' shares are available for purchase only by Participating Insurance Companies and are indirectly owned by investors in the Policies for which the Portfolios serve as the underlying investment vehicle.

Portfolio Managers employed by Mackenzie Financial Corporation

The following provides information relating to the portfolio manager of the Ivy Funds VIP Global Natural Resources as of December 31, 2008:

Fred Sturm

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	2	9	3
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$3,272.2	$1,461.3	$61.9
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Conflicts of Interest

Mackenzie, and the portfolio manager as its representative, may have other clients that lead to a variance in compensation schemes, however, Mackenzie has in place a Code of Conduct and Trade Allocation Policy which require fair treatment of all accounts. The portfolio manager, subject to the Code of Conduct, may invest in securities held by the Portfolio. The portfolio manager may also invest directly in other funds with overlapping mandates. Mackenzie reserves the sole discretion to periodically review, and materially alter the compensation schemes from time to time.

Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one fund or other account. More specifically, portfolio managers who manage multiple funds and /or other accounts may be presented (amongst others) with the following potential conflicts:

• The management of multiple funds and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each fund and/or other account. Individual mandate objectives may vary, but in general Mackenzie seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment approach. Most other accounts managed by a portfolio manager are managed using similar investment disciplines that are used in connection with the management of the Portfolios.
• If a portfolio manager identifies a limited investment opportunity that may be suitable for more than one fund or other account, a Portfolio may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible funds and other accounts. To deal with these situations, Mackenzie has adopted procedures for allocating portfolio transactions across multiple accounts.
• With respect to securities transactions for the Portfolios, Mackenzie determines which broker to use to execute each order, consistent with its duty to seek best execution of the transaction. However, with respect to certain other accounts (such as mutual funds for which Mackenzie or an affiliate acts as sub-advisor, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals), Mackenzie may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, Mackenzie or its affiliates may place separate, non-simultaneous, transactions for a Portfolio and another account which may temporarily affect the market price of the security or the execution of the transaction, or both, to the detriment of the Portfolio or the other account.
• Finally, the appearance of a conflict of interest may arise where Mackenzie has an incentive, such as a performance-based management fee, which relates to the management of one fund or account but not all funds and accounts with respect to which a portfolio manager has day-to-day management responsibilities.
• Mackenzie and the Portfolio have adopted certain compliance procedures which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.

Portfolio Manager Compensation

Mackenzie Financial Corporation (Mackenzie) compensates its portfolio managers and investment analysts through a combination of salary, bonuses and employee benefits. Mackenzie seeks to pay competitive base salaries based on the portfolio manager's or investment analyst's experience, responsibilities at Mackenzie corporately and with regard to the assets they manage, and length of service with Mackenzie. Mackenzie regularly engages service providers to provide data with regard to portfolio manager and investment analyst compensation in its home market and markets in which it competes to ensure that the base salaries it offers are competitive.

Mackenzie determines the annual cash bonus of each portfolio manager and investment analyst based on performance and the achievement of individual objectives set by the Chief Investment Officer and the individual at the beginning of each year. The manner in which performance bonuses are calculated depends on the category assigned to the individual. Individuals are assigned to one of three categories: Tier 1 -- consisting of senior portfolio managers; Tier 2 -- consisting of junior portfolio managers, who may be lead managers on certain funds, but also participate as members of an investment team under the supervision of a senior portfolio manager; and Tier 3 -- consisting of investment analysts, each of whom are members of a particular team. Performance-based bonuses can be as high as 150% of a Tier 1 portfolio manager's base salary and are determined through a formula that measures the performance of the fund or funds under management by that individual against relevant funds offered by Mackenzie's competitors or, in certain cases, against the appropriate market index or benchmark. (Tier 2 and Tier 3 individual's performance is, in most cases, measured by the performance of all funds managed by the team, even if the individual does not participate in the portfolio management decisions of the Fund.) The performance criteria is based on the percentile ranking of each fund managed by the Tier 1 individual (or by the team, in the case of Tier 2 and Tier 3 individuals) as measured by its average annual compounded total returns over the previous 1, 3 and 5 years. Performance is measured against the universe of funds in that category as determined by Globe HySales, a division of Bell Globemedia Publishing Inc., although that universe may be modified on the recommendation of the Chief Investment Officer of Mackenzie as ratified by the Chief Executive Officer of Mackenzie. Where relative performance measurement is impracticable, the performance against an appropriate market index or benchmark is used. That portion of the bonus relating to individual objectives may be based on personal achievement, assistance in the achievement of specific departmental objectives, or assistance in the achievement of specific corporate objectives.

Mackenzie offers its employees a wide range of benefits and these are offered to portfolio managers as well, including: a group medical and dental plan; a group disability plan; an optional life insurance plan; an employee share purchase plan (to purchase common shares of IGM Financial Inc. (IGM Shares), Mackenzie's parent company) pursuant to which an individual may direct that an amount up to 5% of their salary be used, monthly, toward the purchase of IGM Shares and Mackenzie will purchase IGM Shares for the employee having a value of 50% of the amount of the employee's contribution; an employee share option plan with respect to IGM Shares, for employees who hold the office of Vice-President and above, in an amount based on the individual's base salary; and a defined contribution group retirement plan under which Mackenzie contributes an amount equal to a proportion of the individual's salary, based on years of service, up to the maximum allowable by law (this amount is in addition to the employee's salary).

Ownership of Securities

As of December 31, 2008, the dollar range of shares of Ivy Funds VIP Global Natural Resources beneficially owned* by Fred Sturm was: $0.

As of December 31, 2008, the dollar range of shares of funds in the Fund Complex beneficially owned by Fred Sturm was: $0.

*The Portfolio's shares are available for purchase only by Participating Insurance Companies and are indirectly owned by investors in the Policies for which the Portfolio serves as the underlying investment vehicle.

Portfolio Managers employed by TGAL

The following provides information relating to the portfolio manager of the Ivy Funds VIP International Value as of December 31, 2008:

Edgerton Tucker Scott

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts1
Number of Accounts Managed	4	1	0
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	0
Assets Managed (in millions)	$10,893.6	$462.1	$0
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$0

Conflicts of Interest

The management of multiple funds, including the Portfolio, and accounts may also give rise to potential conflicts of interest if the funds and other accounts have different objectives, benchmarks, time horizons, and fees as the portfolio manager must allocate his or her time and investment ideas across multiple funds and accounts. The manager seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment strategies that are used in connection with the management of the Portfolio. Accordingly, portfolio holdings, position sizes, and industry and sector exposures tend to be similar across similar portfolios, which may minimize the potential for conflicts of interest. The separate management of the trade execution and valuation functions from the portfolio management process also helps to reduce potential conflicts of interest. However, securities selected for funds or accounts other than the Portfolio may outperform the securities selected for the Portfolio. Moreover, if a portfolio manager identifies a limited investment opportunity that may be suitable for more than one fund or other account, the Portfolio may not be able to take full advantage of that opportunity due to an allocation of that opportunity across all eligible funds and other accounts. The manager seeks to manage such potential conflicts by using procedures intended to provide a fair allocation of buy and sell opportunities among funds and other accounts.

The structure of a portfolio manager's compensation may give rise to potential conflicts of interest. A portfolio manager's base pay and bonus tend to increase with additional and more complex responsibilities that include increased assets under management. As such, there may be an indirect relationship between a portfolio manager's marketing or sales efforts and his or her bonus.

Finally, the management of personal accounts by a portfolio manager may give rise to potential conflicts of interest. While the Portfolio and TGAL have adopted a code of ethics which they believe contains provisions reasonably necessary to prevent a wide range of prohibited activities by portfolio managers and others with respect to their personal trading activities, there can be no assurance that the code of ethics addresses all individual conduct that could result in conflicts of interest.

TGAL and the Portfolio have adopted certain compliance procedures that are designed to address these, and other, types of conflicts.  However, there is no guarantee that such procedures will detect each and every situation where a conflict arises.

Portfolio Manager Compensation

Templeton seeks to maintain a compensation program that is competitively positioned to attract, retain and motivate top-quality investment professionals. Portfolio managers receive a base salary, a cash incentive bonus opportunity, an equity compensation opportunity, and a benefits package. Portfolio manager compensation is reviewed annually and the level of compensation is based on individual performance, the salary range for a portfolio manager's level of responsibility and Templeton guidelines. Portfolio managers are provided no financial incentive to favor one fund or account over another. Each portfolio manager's compensation consists of the following three elements:

Base salary Each portfolio manager is paid a base salary.

Annual bonus Annual bonuses are structured to align the interests of the portfolio manager with those of the Portfolio's shareholders. Each portfolio manager is eligible to receive an annual bonus. Bonuses generally are split between cash (50% to 65%) and restricted shares of Franklin Resources stock (17.5% to 25%) and mutual fund shares (17.5% to 25%). The deferred equity-based compensation is intended to build a vested interest of the portfolio manager in the financial performance of both Franklin Resources and mutual funds advised by the manager. The bonus plan is intended to provide a competitive level of annual bonus compensation that is tied to the portfolio manager achieving consistently strong investment performance, which aligns the financial incentives of the portfolio manager and Portfolio shareholders. The Chief Investment Officer of the manager and/or other officers of the manager, with responsibility for the Portfolio, have discretion in the granting of annual bonuses to portfolio managers in accordance with Templeton guidelines. The following factors are generally used in determining bonuses under the plan:

• Investment performance. Primary consideration is given to the historic investment performance over the 1, 3 and 5 preceding years of all accounts managed by the portfolio manager. The pre-tax performance of each fund managed is measured relative to a relevant peer group and/or applicable benchmark as appropriate.
• Research. Where the portfolio management team also has research responsibilities, each portfolio manager is evaluated on the number and performance of recommendations over time, productivity and quality of recommendations, and peer evaluation.
• Non-investment performance. For senior portfolio managers, there is a qualitative evaluation based on leadership and the mentoring of staff.
• Responsibilities. The characteristics and complexity of funds managed by the portfolio manager are factored in the manager's appraisal.

Additional long-term equity-based compensation Portfolio managers may also be awarded restricted shares or units of Franklin Resources stock or restricted shares or units of one or more mutual funds, and options to purchase common shares of Franklin Resources stock. Awards of such deferred equity-based compensation typically vest over time, so as to create incentives to retain key talent.

Portfolio managers also participate in benefit plans and programs available generally to all employees of the manager.

Ownership of Securities

As of December 31, 2008, the dollar range of shares of Ivy Funds VIP International Value beneficially owned* by Mr. Scott was: $0.

As of December 31, 2008, the dollar range of shares of funds in the Fund Complex beneficially owned by Mr. Scott was: $0.

*The Portfolio's shares are available for purchase only by Participating Insurance Companies and are indirectly owned by investors in the Policies for which the Portfolio serves as the underlying investment vehicle.

Portfolio Managers employed by Wall Street Associates, LLC

The following provides information relating to the portfolio managers of Ivy Funds VIP Micro Cap Growth as of December 31, 2008:

William Jeffery III

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	2	0	41
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	5
Assets Managed (in millions)	$151.8	$0	$922.3
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$269.8

Kenneth F. McCain

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	2	0	41
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	5
Assets Managed (in millions)	$151.8	$0	$922.3
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$269.8

Paul J. Ariano

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	2	0	41
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	5
Assets Managed (in millions)	$151.8	$0	$922.3
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$269.8

Paul K. LeCoq

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	2	1	41
Number of Accounts Managed with Performance-Based Advisory Fees	0	1	5
Assets Managed (in millions)	$151.8	$22.3	$922.3
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$22.3	$269.8

Carl Wiese

	Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Number of Accounts Managed	2	0	41
Number of Accounts Managed with Performance-Based Advisory Fees	0	0	5
Assets Managed (in millions)	$151.8	$0	$922.3
Assets Managed with Performance-Based Advisory Fees (in millions)	$0	$0	$269.8

Conflicts of Interest

WSA discloses in its ADV potential conflicts of interest arising from situations where portfolio managers oversee "long-only" client accounts, such as mutual fund sub-advisory accounts and/or pension funds, as well as pooled investment funds, such as hedge funds. In general, the combination of policies, procedures, and a compensation arrangement whereby portfolio managers are primarily rewarded on the overall success of the firm ensures that no account is favored over another. WSA has adopted the following policies and procedures designed to eliminate and/or mitigate such conflicts of interest situations:

Code of Ethics and Statement of Policy and Procedures Regarding Personal Securities Transactions -- WSA's Code of Ethics covers all employees, including portfolio managers, and is based on the principal that we owe a fiduciary duty to the clients of WSA and must avoid activities, interests and relationships that might interfere with making decisions in the best interests of clients. The Code governs personal trading activities by all employees and/or other associated persons and subjects such personal trading activities to internal review and preclearance. Personal securities transactions may be restricted in recognition of impending investment decisions on behalf of clients and other factors. WSA maintains "blackout" periods during which WSA, its employees or other associated persons may not cause the execution of a transaction in a security for their own account or an account in which they have beneficial ownership. Copies of all statements of employee trades (that is, Preclearance Forms, Trade Confirmations, and Account Statements) are sent to WSA's Compliance Officer for the purposes of oversight and verification.

Statement of Policy and Procedures Regarding Hedge Fund Securities Transactions -- WSA's Hedge Fund Trading Policy governs securities transactions conducted by hedge fund investment personnel and is intended to ensure that transactions are conducted in accordance with the following principals: (a) a duty at all times to place first the interests of the firm's clients (both "long-only" and hedge funds); (b) the requirement that all hedge fund transactions be conducted in a manner that avoids any actual or potential conflict of interest or any abuse of an individual's responsibility and position of trust; and, (c) the fundamental standard that WSA personnel not take inappropriate advantage of their positions.

• Aggregated Trades - Through WSA's interest in its investment funds (hedge funds) it does invest in securities in which it invests "long-only" client funds in accordance with the following policy: Purchases and sales of securities which are common to client accounts and WSA's investment funds will be allocated pro-rata according to the relative sizes of accounts and desired position sizes among accounts. Great care is taken to avoid even the appearance of impropriety in all situations when trades for WSA "long-only" clients and investment funds are aggregated. Prior to each aggregated trade, senior portfolio managers, traders, and the Compliance Officer discuss each account's relative position size resulting from the initiation of an aggregated trade. The goal is that each trade allocation plan involving aggregated trades between WSA "long-only" clients and investment funds be designed to treat each client fairly and equitably, without advantaging any client over another.
• Prohibitions and Preclearance -- Hedge fund transactions may be effected so long as: (a) purchases or sales do not involve securities in which hedge fund investment personnel have any direct or indirect beneficial ownership unless prior written approval of the transaction is obtained by a Senior Member of the Portfolio Management Staff, the Senior Trader and the Compliance Officer; (b) hedge fund investment personnel initiate a request for pre-clearance in writing in advance of the transaction to the Trading Desk, Senior Management, and the Compliance Officer, disclosing the circumstances and considerations of any possible conflicts of interest surrounding each trade; (c) hedge fund investment personnel not acquire any direct or indirect beneficial ownership in any securities in any initial public offering; (d) hedge fund investment personnel may not acquire any beneficial ownership in any securities in any private placement of securities unless the Compliance Officer and Senior Portfolio Management Team have given express prior written approval.

Trading Policy -- WSA's trading practices and procedures prohibit unfair trading practices and seeks to disclose and avoid any conflicts of interests or resolve such conflicts in the client's favor. WSA views trade allocation planning as a crucial step in our attempt to obtain best execution and in ensuring the fair and equitable treatment of each client account during the trading process. Trade allocation plans, automatically generated by WSA's computerized trade/portfolio management system allows the trading desk to automatically screen individual account parameters to ensure compliance with client guidelines and objectives, check for any cash restraints, and "Reserve" the appropriate amount of shares, generally on a pro rata basis, for each account within the selected strategies. The Trade Allocation plan ensures: (a) performance-based accounts within a strategy do not get favored over client accounts in a strategy. Also, the firm's own accounts (proprietary accounts) are never favored over any client accounts; (b) no group of accounts is systematically disadvantaged versus any other group; (c) the proper treatment of "hot issues."

This typically results in a trade that is fairly and equitably allocated among accounts on either a pro-rata or rebalancing (that is, effecting a "bunched" trade in such a way as to even out the position sizes among accounts in a strategy) basis. Exceptions, however, may occur. Individual account constraints and low cash levels may, from time to time, require a "manual override" of the Allocation Plan by the trading desk. In situations where such constraints exist, trades for the constrained accounts can be changed (for example, constrained accounts may not obtain shares with the other accounts within the strategy, or may instead only obtain a portion of the shares "reserved" for the constrained account) by direction of the portfolio manager.

Portfolio Manager Compensation

With regards to compensation, the portfolio managers of the Portfolio all received a base salary. Effective October 1, 2007 all five portfolio managers were equity owners in the firm and will receive quarterly partnership distributions. All other employees (including Trading Staff and Analysts) received a base salary based on their experience level. In addition, employees received two semi-annual bonuses based on the overall profitability of the firm. All non-equity employees also participate in the firm's profit sharing plan and receive medical and dental benefits.

Ownership of Securities

As of December 31, 2008, the dollar range of shares of the Portfolio beneficially owned by the portfolio managers was:

Manager	Dollar Range of Shares owned* in Ivy Funds VIP Micro Cap Growth	Dollar Range of Shares owned in the Fund Complex
William Jeffery III	$0	$0
Kenneth F. McCain	$0	$0
Paul J. Ariano	$0	$0
Paul K. Lecoq	$0	$0
Carl Wiese	$0	$0

*The Portfolio's shares are available for purchase only by Participating Insurance Companies and are indirectly owned by investors in the Policies for which the Portfolio serves as the underlying investment vehicle.

BROKERAGE ALLOCATION AND OTHER PRACTICES

Each of the Pathfinder Portfolios purchases and sells the shares of the Underlying Funds without commission or other sales charge. To the extent that a Pathfinder Portfolio purchases or sells U.S. government securities, commercial paper and other short-term corporate obligations and other money market instruments, including repurchase agreements, such transactions may be made directly with the issuers, dealers or banks, as further described below.

One of the duties undertaken by WRIMCO pursuant to the Management Agreement is to arrange the purchase and sale of securities for the Portfolios. With respect to most fixed-income portfolios, many purchases are made directly from issuers or from underwriters, dealers or banks. Purchases from underwriters include a commission or concession paid by the issuer to the underwriter. Purchases from dealers will include the spread between the bid and the asked prices. Otherwise, transactions in securities other than those for which an exchange is the primary market are generally effected with dealers acting as principals or market makers. Brokerage commissions are paid primarily for effecting transactions in securities traded on an exchange and otherwise only if it appears likely that a better price or execution can be obtained. The individuals who manage the Portfolios may manage other advisory accounts with similar investment objectives. It can be anticipated that the portfolio manager will frequently, yet not always, place concurrent orders for all or most accounts for which the manager has responsibility or WRIMCO and/or IICO, an affiliate of WRIMCO, may otherwise combine orders for a Portfolio with those of other Portfolios, funds within Waddell & Reed Advisors Funds and the Ivy Family of Funds and/or other accounts for which WRIMCO and/or IICO has investment discretion, including accounts affiliated with WRIMCO and/or IICO. WRIMCO, at its discretion, may aggregate such orders. Under current written procedures, transactions effected pursuant to such combined orders are averaged as to price and allocated in accordance with the purchase or sale orders actually placed for each fund or advisory account, except where the combined order is not filled completely. In this case, for a transaction not involving an initial public offering (IPO), WRIMCO will ordinarily allocate the transaction pro rata based on the orders placed, subject to certain variances provided for in the written procedures. For a partially filled IPO order, subject to certain variances specified in the written procedures, WRIMCO generally allocates the shares as follows: the IPO shares are initially allocated pro rata among the included portfolios/funds and/or advisory accounts grouped according to investment objective, based on relative total assets of each group; and the shares are then allocated within each group pro rata based on relative total assets of the included portfolios/funds and/or advisory accounts, except that (a) within a group having a small cap-related investment objective or an international investment objective, shares are allocated on a rotational basis after taking into account the impact of the anticipated initial gain on the value of the included portfolio/fund or advisory account and (b) within a group having a mid cap-related investment objective, shares are allocated based on the portfolio manager's review of various factors, including but not limited to such factors as the portfolio's/fund's or advisory account's investment strategies and policies, cash availability, any minimum investment policy, liquidity, anticipated term of the investment and current securities positions. In all cases, WRIMCO seeks to implement its allocation procedures to achieve a fair and equitable allocation of securities among its portfolios/funds and other advisory accounts. Sharing in large transactions could affect the price a Portfolio pays or receives or the amount it buys or sells. As well, a better negotiated commission may be available through combined orders.

To effect the portfolio transactions of each Portfolio, the Investment Manager is authorized to engage broker-dealers (brokers) which, in its best judgment based on all relevant factors, will implement the policy of the Portfolio to seek best execution (prompt and reliable execution at the best price obtainable) for reasonable and competitive commissions. The Investment Manager need not seek competitive commission bidding but is expected to minimize the commissions paid to the extent consistent with the interests and policies of the Portfolio. Subject to review by the Board, such policies include the selection of brokers which provide execution and/or research services and other services, including pricing or quotation services directly or through others (research and brokerage services) considered by the Investment Manager to be useful or desirable for its investment management of the Portfolio and/or the other funds and accounts over which the Investment Manager has investment discretion.

Research and brokerage services are, in general, defined by reference to Section 28(e) of the 1934 Act, as including (1) advice, either directly or through publications or writings, as to the value of securities, the advisability of investing in, purchasing or selling securities and the availability of securities and purchasers or sellers, (2) furnishing analyses and reports, or (3) effecting securities transactions and performing functions incidental thereto (such as clearance, settlement and custody). Investment discretion is, in general, defined as having authorization to determine what securities shall be purchased or sold for an account.

The commissions paid to brokers that provide such research and/or brokerage services may be higher than the commission another qualified broker would charge for effecting comparable transactions and are permissible if a good faith determination is made by the Investment Manager that the commission is reasonable in relation to the research or brokerage services provided. No allocation of brokerage or principal business is made to provide any other benefits to the Investment Manager. The Investment Manager does not direct Portfolio brokerage to compensate brokers for the sale of Portfolio shares. The Trust has adopted a policy that prohibits the Investment Manager from using Portfolio brokerage commissions to compensate broker-dealers for promotion or sale of Portfolio shares.

The investment research provided by a particular broker may be useful only to one or more of the other advisory accounts of the Investment Manager and investment research received for the commissions of those other accounts may be useful both to a Portfolio and one or more of such other accounts. To the extent that electronic or other products provided by such brokers to assist the Investment Manager in making investment management decisions are used for administration or other non-research purposes, a reasonable allocation of the cost of the product attributable to its non-research use is made and this cost is paid by the Investment Manager.

Such investment research, which may be supplied by a third party at the request of a broker, includes information on particular companies and industries as well as market, economic or institutional activity areas. In general, such investment research serves to broaden the scope and supplement the research activities of the Investment Manager, serves to make available additional views for consideration and comparisons, and enables the Investment Manager to obtain market information on the price of securities held in a Portfolio or being considered for purchase.

The Trust may also use its brokerage to pay for pricing or quotation services to value securities. The table below sets forth the brokerage commissions paid during the fiscal years ended December 31, 2008, December 31, 2007 and December 31, 2006:

Periods ended December 31,

	2008	2007	2006
Ivy Funds VIP Asset Strategy	$3,462,966	$ 2,028,934	$ 1,749,559
Ivy Funds VIP Balanced	174,557	176,221	432,446
Ivy Funds VIP Bond	---	---	---
Ivy Funds VIP Core Equity	1,300,641	1,439,481	1,624,640
Ivy Funds VIP Dividend Opportunities	103,545	47,842	43,894
Ivy Funds VIP Energy	15,723	9,376	3,966
Ivy Funds VIP Global Natural	764,440	413,402	233,345
Ivy Funds VIP Growth	819,991	1,009,964	1,666,875
Ivy Funds VIP High Income	750	9,082	20,364
Ivy Funds VIP International Growth	818,989	995,554	945,185
Ivy Funds VIP International Value	295,415	382,395	467,412
Ivy Funds VIP Micro Cap Growth	166,614	223,074	195,233
Ivy Funds VIP Mid Cap Growth	67,512	51,985	26,189
Ivy Funds VIP Money Market	---	---	---
Ivy Funds VIP Mortgage Securities	1,255	830	340
Ivy Funds VIP Real Estate Securities	71,075	59,925	58,260
Ivy Funds VIP Science and Technology	537,162	847,800	885,215
Ivy Funds VIP Small Cap Growth	1,095,222	1,543,942	1,738,147
Ivy Funds VIP Small Cap Value	690,443	707,975	714,134
Ivy Funds VIP Value	393,255	455,933	711,151
Ivy Funds VIP Pathfinder Aggressive	---	---	---
Ivy Funds VIP Pathfinder Moderately Aggressive	---	---	---
Ivy Funds VIP Pathfinder Moderate	---	---	---
Ivy Funds VIP Pathfinder Moderately Conservative	---	---	---
Ivy Funds VIP Pathfinder Conservative	---	---	---
	----------	----------	----------
Total	$10,779,555	$10,403,715	$11,516,355

The next table shows the transactions, other than principal transactions, which were directed to broker-dealers who provided research services as well as execution and the brokerage commissions paid for the fiscal year ended December 31, 2008. These transactions were allocated to these broker-dealers by the internal allocation procedures described above.

	Amount of Transactions	Brokerage Commissions
Ivy Funds VIP Asset Strategy	$1,813,169,596	$2,825,988
Ivy Funds VIP Balanced	174,058,174	167,264
Ivy Funds VIP Bond	---	---
Ivy Funds VIP Core Equity	1,165,885,785	1,231,955
Ivy Funds VIP Dividend Opportunities	92,897,982	88,889
Ivy Funds VIP Energy	15,975,347	13,159
Ivy Funds VIP Global Natural Resources	---	---
Ivy Funds VIP Growth	1,048,374,723	744,184
Ivy Funds VIP High Income	885,131	750
Ivy Funds VIP International Growth	403,879,297	807,858
Ivy Funds VIP International Value	---	---
Ivy Funds VIP Micro Cap Growth	---	---
Ivy Funds VIP Mid Cap Growth	50,129,335	56,506
Ivy Funds VIP Money Market	---	---
Ivy Funds VIP Mortgage Securities	---	---
Ivy Funds VIP Real Estate Securities	---	---
Ivy Funds VIP Science and Technology	263,829,978	391,718
Ivy Funds VIP Small Cap Growth	495,844,161	781,709
Ivy Funds VIP Small Cap Value	205,109,010	370,768
Ivy Funds VIP Value	233,015,674	287,211
Ivy Funds VIP Pathfinder Aggressive	---	---
Ivy Funds VIP Pathfinder Moderately Aggressive	---	---
Ivy Funds VIP Pathfinder Moderate	---	---
Ivy Funds VIP Pathfinder Moderately Conservative	---	---
Ivy Funds VIP Pathfinder Conservative	---	---
	-------------	----------
Total	$5,963,054,193	$7,767,959

As of December 31, 2008, each of the Portfolios held securities issued by their respective regular broker-dealers, as follows (all amounts in thousands):

Ivy Funds VIP Asset Strategy owned Bank of America Corporation, Citigroup Inc., Credit Suisse, Credit Suisse Group, Goldman Sachs Group, Inc. (The), J.P. Morgan Chase & Co., Merrill Lynch & Co., Inc. and Morgan Stanley securities in the aggregate amounts of $154, $2,585, $866, $ 4,988, $9,519, $1,280, $11,250 and $1,918, respectively. Bank of America Corporation is the parent of Banc of America Securities LLC, a regular broker of the Portfolio. Citigroup Inc. is the parent of Citigroup Global Markets Inc., a regular broker of the Portfolio. Credit Suisse Group is the parent of Credit Suisse, a regular broker of the Portfolio. Goldman Sachs Group, Inc. (The) is the parent of Goldman, Sachs & Co., a regular broker of the Portfolio. J.P. Morgan Chase & Co. is the parent of J.P. Morgan Securities Inc., a regular broker of the Portfolio. Merrill Lynch & Co., Inc. is the parent of Merrill Lynch, Pierce, Fenner & Smith Inc., a regular broker of the Portfolio. Morgan Stanley is the parent of Morgan Stanley & Co. Incorporated, a regular broker of the Portfolio.

Ivy Funds VIP Balanced owned Goldman Sachs Group, Inc. (The) and J.P. Morgan Chase & Co. securities in the aggregate amounts of $2,000 and $5,940, respectively. Goldman Sachs Group, Inc. (The) is the parent of Goldman, Sachs & Co., a regular broker of the Portfolio. J.P. Morgan Chase & Co. is the parent of J.P. Morgan Securities Inc., a regular broker of the Portfolio.

Ivy Funds VIP Bond owned Goldman Sachs Group, Inc. (The), J.P. Morgan Chase & Co., Merrill Lynch & Co., Inc. and Morgan Stanley securities in the aggregate amounts of $4,173, $3,167, $2,966 and $4,168, respectively. Goldman Sachs Group, Inc. (The) is the parent of Goldman, Sachs & Co., a regular broker of the Portfolio. J.P. Morgan Chase & Co. is the parent of J.P. Morgan Securities Inc., a regular broker of the Portfolio. Merrill Lynch & Co., Inc. is the parent of Merrill Lynch, Pierce, Fenner & Smith Inc., a regular broker of the Portfolio. Morgan Stanley is the parent of Morgan Stanley & Co. Incorporated, a regular broker of the Portfolio.

Ivy Funds VIP Core Equity owned Bank of America Corporation and J.P. Morgan Chase & Co. securities in the aggregate amounts of $3,903 and $17,228, respectively. Bank of America Corporation is the parent of Banc of America Securities LLC, a regular broker of the Portfolio. . J.P. Morgan Chase & Co. is the parent of J.P. Morgan Securities Inc., a regular broker of the Portfolio.

Ivy Funds VIP Dividend Opportunities owned Bank of America Corporation and J.P. Morgan Chase & Co., in the aggregate amounts of $548 and $3,297, respectively. Bank of America Corporation is the parent of Banc of America Securities LLC, a regular broker of the Portfolio. J.P. Morgan Chase & Co. is the parent of J.P. Morgan Securities Inc., a regular broker of the Portfolio.

Ivy Funds VIP Growth owned Goldman Sachs Group, Inc. (The) and J.P. Morgan Chase & Co. in the aggregate amounts of $6,649 and $15,274, respectively. Goldman Sachs Group, Inc. (The) is the parent of Goldman, Sachs & Co., a regular broker of the Portfolio. J.P. Morgan Chase & Co. is the parent of J.P. Morgan Securities Inc., a regular broker of the Portfolio.

Ivy Funds VIP International Growth owned Credit Suisse Group security in the aggregate amount of $1,766. Credit Suisse Group is the parent of Credit Suisse, a regular broker of the Portfolio.

Ivy Funds VIP International Value owned UBS AG securities in the aggregate amounts of $2,699. UBS AG is the parent of UBS Securities LLC, a regular broker of the Portfolio.

Ivy Funds VIP Money Market owned Citigroup Inc. and Merrill Lynch & Co., Inc. securities in the aggregate amounts of $1,000 and $8,489, respectively. Citigroup Inc. is the parent of Citigroup Global Markets Inc., a regular broker of the Portfolio. Merrill Lynch & Co., Inc. is the parent of Merrill Lynch, Pierce, Fenner & Smith Inc., a regular broker of the Fund.

Ivy Funds VIP Value owned Bank of America Corporation and J.P. Morgan Chase & Co. securities in the aggregate amounts of $2,094 and $5,378, respectively. Bank of America Corporation is the parent of Banc of America Securities LLC, a regular broker of the Portfolio. J.P. Morgan Chase & Co. is the parent of J.P. Morgan Securities Inc., a regular broker of the Portfolio.

PROXY VOTING POLICY

The Trust has delegated all proxy voting responsibilities to WRIMCO. WRIMCO has established guidelines that reflect what it believes are desirable principles of corporate governance.

Listed below are several reoccurring issues and WRIMCO's corresponding positions.

Board of Directors Issues:

WRIMCO generally supports proposals requiring that a majority of the board of directors consist of outside, or independent, directors.

WRIMCO generally votes against proposals to limit or eliminate liability for monetary damages for violating the duty of care.

WRIMCO generally votes against indemnification proposals that would expand coverage to more serious acts such as negligence, willful or intentional misconduct, derivation of improper personal benefit, absence of good faith, reckless disregard for duty, and unexcused pattern of inattention. The success of a corporation in attracting and retaining qualified directors and officers, in the best interest of shareholders, is partially dependent on its ability to provide some satisfactory level of protection from personal financial risk. WRIMCO will support such protection so long as it does not exceed reasonable standards.

WRIMCO generally votes against proposals requiring the provision for cumulative voting in the election of directors as cumulative voting may allow a minority group of shareholders to cause the election of one or more directors.

Corporate Governance Issues:

WRIMCO generally supports proposals to ratify the appointment of independent accountants/auditors unless reasons exist which cause it to vote against the appointment.

WRIMCO generally votes against proposals to restrict or prohibit the right of shareholders to call special meetings.

WRIMCO generally votes against proposals which include a provision to require a supermajority vote to amend any charter or bylaw provision, or to approve mergers or other significant business combinations.

WRIMCO generally votes for proposals to authorize an increase in the number of authorized shares of common stock.

WRIMCO generally votes against proposals for the adoption of a Shareholder Rights Plan (sometimes referred to as "Purchase Rights Plan"). It believes that anti-takeover proposals are generally not in the best interest of shareholders. Such a Plan gives the board of directors virtual veto power over acquisition offers which may well offer material benefits to shareholders.

Executive/Employee Issues:

WRIMCO will generally vote for proposals to establish an Employee Stock Ownership Plan (ESOP) as long as the size of the ESOP is reasonably limited.

Political Activity:

WRIMCO will generally vote against proposals relating to corporate political activity or contributions, or requiring the publication of reports on political activity or contributions made by political action committees (PACs) sponsored or supported by the corporation. PAC contributions are generally made with funds contributed voluntarily by employees, and provide positive individual participation in the political process of a democratic society. In addition, Federal and most state laws require full disclosure of political contributions made by PACs. This is public information and available to all interested parties. Requiring reports in newspaper publications results in added expense without commensurate benefit to shareholders.

Conflicts of Interest Between WRIMCO and the Trust:

WRIMCO will use the following three-step process to address conflicts of interest: (1) WRIMCO will attempt to identify any potential conflicts of interest; (2) WRIMCO will then determine if the conflict as identified is material; and (3) WRIMCO will follow the procedures established below to ensure that its proxy voting decisions are based on the best interests of the Portfolio and are not the product of a material conflict.

I. Identifying Conflicts of Interest: WRIMCO will evaluate the nature of its relationships to assess which, if any, might place its interests, as well as those of its affiliates, in conflict with those of the Portfolio's shareholders on a proxy voting matter. WRIMCO will review any potential conflicts that involve the following four general categories to determine if there is a conflict and if so, if the conflict is material:

• Business Relationships -- WRIMCO will review any situation for a material conflict where WRIMCO provides investment advisory services for a company or an employee group, manages pension assets, administers employee benefit plans, leases office space from a company, or provides brokerage, underwriting, insurance, banking or consulting services to a company or if it is determined that WRIMCO (or an affiliate) otherwise has a similar significant relationship with a third party such that the third party might have an incentive to encourage WRIMCO to vote in favor of management.
• Personal Relationships -- WRIMCO will review any situation where it (or an affiliate) has a personal relationship with other proponents of proxy proposals, participants in proxy contests, corporate directors, or candidates for directorships to determine if a material conflict exists.
• Familial Relationships -- WRIMCO will review any situation where it (or an affiliate) has a known familial relationship relating to a company (for example, a spouse or other relative who serves as a director of a public company or is employed by the company) to determine if a material conflict exists.

WRIMCO will designate an individual or committee to review and identify proxies for potential conflicts of interest on an ongoing basis.

II. "Material Conflicts": WRIMCO will review each relationship identified as having a potential conflict based on the individual facts and circumstances. For purposes of this review, WRIMCO will attempt to detect those relationships deemed material based on the reasonable likelihood that they would be viewed as important by the average shareholder.

III. Procedures to Address Material Conflicts: WRIMCO will use the following techniques to vote proxies that have been determined to present a "Material Conflict."

• Use a Proxy Voting Service for Specific Proposals -- As a primary means of voting material conflicts, WRIMCO will vote in accordance with the recommendation of an independent proxy voting service (Institutional Shareholder Services (ISS) or another independent third party if a recommendation from ISS is unavailable).
• Client directed -- If the Material Conflict arises from WRIMCO's management of a third party account and the client provides voting instructions on a particular vote, WRIMCO will vote according to the directions provided by the client.
• Use a Predetermined Voting Policy -- If no directives are provided by either ISS or the client, WRIMCO may vote material conflicts pursuant to the pre-determined Proxy Voting Policies, established herein, should such subject matter fall sufficiently within the identified subject matter. If the issue involves a material conflict and WRIMCO chooses to use a predetermined voting policy, WRIMCO will not be permitted to vary from the established voting policies established herein.
• Seek Board Guidance -- If the Material Conflict does not fall within one of the situations referenced above, WRIMCO may seek guidance from the Board on matters involving a conflict. Under this method, WRIMCO will disclose the nature of the conflict to the Board and obtain the Board's consent or direction to vote the proxies. WRIMCO may use the Board guidance to vote proxies for its non-mutual fund clients.

Echo Voting:

Each Pathfinder Portfolio is a fund of funds that invests primarily in a combination of the other Portfolios (Underlying Funds). The Board has adopted proxy voting policies to govern the voting of proxies received by each Pathfinder Portfolio with respect to its investments in Underlying Funds. If an Underlying Fund has a shareholder meeting, a Pathfinder Portfolio, if possible, will vote its interests in the Underlying Fund in the same proportion as the votes cast by all of the other shareholders of the Underlying Fund. This is known as "echo voting" and is designed to avoid potential conflicts of interest.

The proxy voting policies of the investment subadvisors are set forth in Appendix B to this SAI.

PROXY VOTING RECORD

The Trust is required to file with the SEC the complete proxy voting record of each Portfolio for the 12-month period ending June 30, by no later than August 31 of each year. Information regarding how the proxies for each Portfolio were voted during the most recent 12-month period ended June 30, 2008, is available on Waddell & Reed's website, www.waddell.com, and on the SEC's website at http://www.sec.gov.

TRUST SHARES

Shares of the Trust are is currently divided into the following classes which are a type of class designated a series as that term is defined in the Trust Instrument: Ivy Funds VIP Asset Strategy, Ivy Funds VIP Balanced, Ivy Funds VIP Bond, Ivy Funds VIP Core Equity, Ivy Funds VIP Dividend Opportunities, Ivy Funds VIP Energy, Ivy Funds VIP Global Natural Resources, Ivy Funds VIP Growth, Ivy Funds VIP High Income , Ivy Funds VIP International Growth, Ivy Funds VIP International Value, Ivy Funds VIP Micro Cap Growth, Ivy Funds VIP Mid Cap Growth, Ivy Funds VIP Money Market, Ivy Funds VIP Mortgage Securities, Ivy Funds VIP Real Estate Securities, Ivy Funds VIP Science and Technology, Ivy Funds VIP Small Cap Growth, Ivy Funds VIP Small Cap Value, Ivy Funds VIP Value, Ivy Funds VIP Pathfinder Aggressive, Ivy Funds VIP Pathfinder Moderately Aggressive, Ivy Funds VIP Pathfinder Moderate, Ivy Funds VIP Pathfinder Moderately Conservative, and Ivy Funds VIP Pathfinder Conservative. The Board may change the designation of any Portfolio and may increase or decrease the numbers of shares of any Portfolio but may not decrease the number of shares of any Portfolio below the number of shares then outstanding.

The shares of a Portfolio represent an interest in the Portfolio's securities and other assets and in its profits and losses. Each fractional share of a Portfolio has the same rights, in proportion, as a full share of that Portfolio. Each issued and outstanding share in a Portfolio is entitled to participate equally in dividends and other distributions declared by the Portfolio and, upon liquidation or dissolution, in net assets of such Portfolio remaining after satisfaction of outstanding liabilities. The shares of each Portfolio when issued are fully paid and nonassessable.

The Trust does not hold annual meetings of shareholders; however, certain significant corporate matters, such as the approval of a new investment advisory agreement or a change in a fundamental investment policy, which require shareholder approval, will be presented to shareholders at a meeting called by the Board for such purpose.

Special meetings of shareholders may be called for any purpose upon receipt by the Trust of a request in writing signed by shareholders owning not less than 25% of the aggregate number of votes to which shareholders are entitled at such meeting, as provided in the Trust Instrument and By-laws of the Trust. There will normally be no meeting of the shareholders for the purpose of electing Trustees until such time as less than a majority of Trustees holding office have been elected by shareholders, at which time the Trustees then in office will call a shareholders' meeting for the election of Trustees. To the extent that Section 16(c) of the 1940 Act applies to a Portfolio, the Trustees are required to call a meeting of shareholders for the purpose of voting upon the question of removal of any Trustee when requested in writing to do so by the shareholders owning at least 10% of the aggregate number of votes to which shareholders of the Portfolio are entitled, as provided in the Trust Instrument and By-laws of the Trust.

Each shareholder of the Trust is entitled to one vote for each dollar of NAV of a Portfolio owned by the shareholder.

Matters in which the interests of all the Portfolios are substantially identical (such as the election of Trustees) will be voted on by all shareholders without regard to the separate Portfolios. Matters that affect a particular Portfolio (such as approval of its Investment Management Agreement or a change in its fundamental investment restrictions) will be voted on separately by the Portfolio.

To the extent required by law, Policyowners are entitled to give voting instructions with respect to Portfolio shares held in the separate accounts of Participating Insurance Companies. Participating Insurance Companies will vote with respect to the shares in accordance with such instructions unless otherwise legally required or permitted to act with respect to such instructions.

PURCHASE, REDEMPTION AND PRICING OF SHARES

The separate accounts of the Participating Insurance Companies place orders to purchase and redeem shares of each Portfolio based on, among other things, the amount of premium payments to be invested and the number of surrender and transfer requests to be effected on any day according to the terms of the Policies. Orders for shares of the Portfolios are executed at the time they are received by Waddell & Reed and at the NAV determined as of the close of trading on the previous business day, provided that the applicable Participating Insurance Company represents it has received such orders prior to the close of the NYSE on the previous business day. The applicable Participating Insurance Company may aggregate separately all purchase and/or redemption orders for shares of the Portfolios that it received prior to the close of trading on the NYSE (4:00 p.m. Eastern time, unless the NYSE closes earlier in which case such earlier time shall apply). The applicable Participating Insurance Company will not aggregate pre-4:00 p.m. Eastern time trades with post-4:00 p.m. Eastern time trades. The Portfolios may refuse to sell shares to any person or may suspend or terminate the offering of its shares if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the directors of the Portfolios, necessary in the best interest of the shareholders of the Portfolios. No sales charge is paid by any Participating Insurance Company for purchase of shares. Except where required or otherwise permitted by applicable law, redemption payment is generally made within seven days after receipt of a proper request to redeem. The Trust may suspend the right of redemption of shares of any Portfolio and may postpone payment for any period if any of the following conditions exist: (1) the NYSE is closed other than customary weekend and holiday closings or trading on the NYSE is restricted; (2) the SEC has determined that a state of emergency exists which may make payment or transfer not reasonably practicable; (3) the SEC has permitted suspension of the right of redemption of shares for the protection of the shareholders of the Trust; or (4) applicable laws and regulations otherwise permit the Trust to suspend payment on the redemption of shares. Redemptions are ordinarily made in cash but under extraordinary conditions the Trust's Board may determine that the making of cash payments is undesirable. In such case, redemption payments may be made in Portfolio securities. The redeeming shareholders would incur brokerage costs in selling such securities. The Trust has elected to be governed by Rule 18f-1 under the 1940 Act, pursuant to which it is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder.

Should any conflict between Policyowners arise which would require that a substantial amount of net assets be withdrawn from a Portfolio, orderly portfolio management could be disrupted to the potential detriment of Policyowners.

Except as otherwise noted, and only through the Participating Insurance Company, a Policyowner may indirectly sell shares and buy shares of another Portfolio, also known as a transfer or an exchange privilege.

         Shareholder Communications

Policyowners will receive, from the Participating Insurance Companies, financial statements of the Portfolios as required under the 1940 Act. Each report shows the investments owned by the Portfolios and the market values thereof and provides other information about the Trust and its operations.

         Net Asset Value

The NAV of one of the shares of a Portfolio is the value of the Portfolio's assets, less liabilities, divided by the total number of shares outstanding. For example, if on a particular day a Portfolio owned securities worth $100 and held cash of $15, the total value of the assets would be $115. If it had a liability of $5, the NAV would be $110 ($115 minus $5). If it had 11 shares outstanding, the NAV of one share would be $10 ($110 divided by 11).

In the calculation of the NAV of a Pathfinder Portfolio, the shares of the Underlying Funds held by the Pathfinder Portfolio are valued at their respective NAVs per share.

The NAV per share of each Portfolio is ordinarily computed once on each day that the NYSE is open for trading as of the later of the close of the regular session of the NYSE, 4:00 p.m. Eastern time, or the close of the regular session of any other securities or commodities exchange on which an option or futures contract held by the Portfolio is traded. The NYSE annually announces the days on which it will not be open for trading. The most recent announcement indicates that the NYSE will not be open on the following days: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. However, it is possible that the NYSE may close on other days. The NAV per share of a Portfolio (other than Ivy Funds VIP Money Market) will likely change every business day, since typically the value of the assets and the number of shares outstanding change every business day. Ivy Funds VIP Money Market is designed so that its NAV per share will remain fixed at $1.00 per share, except under extraordinary circumstances, although this may not always be possible.

         Valuation--Ivy Funds VIP Money Market and Money Market Instruments

Under Rule 2a-7, Ivy Funds VIP Money Market uses the amortized cost method for valuing its portfolio securities provided it meets certain conditions. As a general matter, the primary conditions imposed under Rule 2a-7 relating to the Portfolio's investments are that the Portfolio must: (1) not maintain a dollar-weighted average portfolio maturity in excess of 90 days; (2) limit its investments, including repurchase agreements, to those instruments which are U.S. dollar denominated and which WRIMCO, pursuant to guidelines established by the Board, determines present minimal credit risks and which are rated in one of the two highest rating categories by the NRSRO(s), as defined in Rule 2a-7; or, in the case of any instrument that is not rated, of comparable quality as determined under procedures established by and under the general supervision and responsibility of the Board; (3) limit its investments in the securities of any one issuer (except U.S. government securities) to no more than 5% of its assets; (4) limit its investments in securities rated in the second highest rating category by the NRSRO(s) or comparable unrated securities to no more than 5% of its assets; (5) limit its investments in the securities of any one issuer which are rated in the second highest rating category by the NRSRO(s) or comparable unrated securities to the greater of 1% of its assets or $1,000,000; and (6) limit its investments to securities with a remaining maturity of not more than 397 days. Rule 2a-7 sets forth the method by which the maturity of a security is determined. The amortized cost method involves valuing a security at its cost and thereafter assuming a constant amortization rate to maturity of any discount or premium, and does not reflect the impact of fluctuating interest rates on the market value of the security. This method does not take into account unrealized gains or losses.

While the amortized cost method provides some degree of certainty in valuation, there may be periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if it sold the instrument. During periods of declining interest rates, the daily yield on the Portfolio's shares may tend to be higher than a like computation made by a fund with identical investments utilizing a method of valuation based upon market prices and estimates of market prices for all of its portfolio instruments and changing its dividends based on these changing prices. Thus, if the use of amortized cost by the Portfolio resulted in a lower aggregate portfolio value on a particular day, a prospective investor in the Portfolio's shares would be able to obtain a somewhat higher yield than would result from investment in such a fund, and existing investors in the Portfolio's shares would receive less investment income. The converse would apply in a period of rising interest rates.

Under Rule 2a-7, the Board must establish procedures designed to stabilize, to the extent reasonably possible, the Portfolio's price per share as computed for the purpose of sales and redemptions at $1.00. Such procedures must include review of the portfolio holdings by the Board at such intervals as it may deem appropriate and at such intervals as are reasonable in light of current market conditions to determine whether the Portfolio's NAV calculated by using available market quotations (see below) deviates from the per share value based on amortized cost.

For the purpose of determining whether there is any deviation between the value of the Portfolio based on amortized cost and that determined on the basis of available market quotations, if there are readily available market quotations, investments are valued at the mean between the bid and asked prices. If such market quotations are not available, the investments will be valued at their fair value as determined in good faith under procedures established by and under the general supervision and responsibility of the Board, including being valued at prices based on market quotations for investments of similar type, yield and duration.

Under Rule 2a-7, if the extent of any deviation between the NAV per share based upon available market quotations and the NAV per share based on amortized cost exceeds one-half of 1%, the Board must promptly consider what action, if any, will be initiated. When the Board believes that the extent of any deviation may result in material dilution or other unfair results to investors or existing shareholders, it is required to take such action as it deems appropriate to eliminate or reduce to the extent reasonably practicable such dilution or unfair results. Such actions could include the sale of portfolio securities prior to maturity to realize capital gains or losses or to shorten average portfolio maturity, withholding dividends or payment of distributions from capital or capital gains, redemptions of shares in kind, or establishing a NAV per share using available market quotations.

         Valuation--Other Portfolios

The portfolio securities of the Portfolios (other than Ivy Funds VIP Money Market and other money market instruments) that are listed or traded on a stock exchange are ordinarily valued at the last sale on that day prior to the close of the regular session of the NYSE as reported by the principal securities exchange on which the security is traded or, if no sale is recorded, the average of the last bid and ask prices. (If a security is traded on one or more exchange(s) and in the OTC market, quotations from the market in which the security is primarily traded will be used.) Stocks that are traded OTC are valued using the National Association of Securities Dealers Automated Quotations (NASDAQ) Official Closing Price (NOCP), as determined by NASDAQ or, lacking an NOCP, at the last current reported sales prices as of the time of valuation on NASDAQ or, lacking any current reported sales on NASDAQ, at the time of valuation at the average of the last bid and asked prices.

Bonds (other than convertible bonds), municipal bonds, government securities, mortgage-backed securities and swap agreements are ordinarily valued at the price provided by an independent pricing service. Convertible bonds are ordinarily valued at the last sale price prior to the close of the regular session of the NYSE or, if none is reported, at the value provided by an independent pricing service. Short-term debt securities are valued at amortized cost, which approximates market value. Securities or other assets that are not valued by the foregoing methods (or those described below) and for which market quotations are not readily available are valued at fair value as determined in good faith under procedures established by, and under the general supervision and responsibility of, the Board.

Options and futures contracts held by a Portfolio are ordinarily valued at the last sales price on the securities or commodities exchange on which they are traded. If there are no transactions that day for a specific option contract or the option contract is not listed on a securities or commodities exchange, but OTC quotations are readily available for the contract, such option contract ordinarily will be valued at the price provided by an independent pricing service or, if not available from such pricing service, at the mean between last bid and asked prices. Ordinarily, the close of the regular session for options trading on national securities exchanges is 4:10 p.m. Eastern time and the close for the regular session for commodities exchanges is 4:15 p.m. Eastern time. Futures contracts will be valued with reference to established futures exchanges.

When a Portfolio writes a put or call, an amount equal to the premium received is included in the Statement of Assets and Liabilities as an asset, and an equivalent deferred credit is included in the liability section. The deferred credit is marked-to-market (that is, treated as sold for its fair market value) to reflect the current market value of the put or call. If a call a Portfolio wrote is exercised, the proceeds received on the sale of the related investment are increased by the amount of the premium the Portfolio received. If a Portfolio exercised a call it purchased, the amount paid to purchase the related investment is increased by the amount of the premium paid. If a put written by a Portfolio is exercised, the amount that the Portfolio pays to purchase the related investment is decreased by the amount of the premium it received. If a Portfolio exercises a put it purchased, the amount the Portfolio receives from the sale of the related investment is reduced by the amount of the premium it paid. If a put or call written by a Portfolio expires, it has a gain in the amount of the premium; if a Portfolio enters into a closing purchase transaction, it will have a gain or loss depending on whether the premium was more or less than the cost of the closing transaction.

Futures contracts ordinarily are valued at the settlement price as set by the securities or commodities exchange on which they are traded; however, certain foreign futures contracts held by a Portfolio may be valued based on the indication of fair value provided by the Portfolio's third-party pricing service, in accordance with guidelines adopted by the Board.

Foreign currency exchange rates are generally determined prior to the close of trading of the regular session of the NYSE. Occasionally events affecting the value of foreign investments and such exchange rates occur between the time at which they are determined and the close of the regular session of trading on the NYSE, which events will not be reflected in a computation of a Portfolio's NAV on that day. If events materially affecting the value of such investments or currency exchange rates occur during such time period, investments will be valued at their fair value as determined in good faith by or under the direction of the Board. The foreign currency exchange transactions of a Portfolio conducted on a spot (that is, cash) basis are valued at the spot rate for purchasing or selling currency prevailing on the foreign exchange market. This rate under normal market conditions differs from the prevailing exchange rate in an amount generally less than one-tenth of one percent due to the costs of converting from one currency to another.

Optional delivery standby commitments are valued at fair value under the general supervision and responsibility of the Board. They are accounted for in the same manner as exchange-listed puts.

Precious metals are valued at the last traded spot price immediately prior to the close of the regular session of the NYSE.

TAXATION OF THE PORTFOLIOS

General

Shares of the Portfolios are offered only to Participating Insurance Companies' separate accounts that fund Policies. See the applicable Disclosure Policy prospectus for a discussion of the special taxation of insurance companies with respect to such accounts and of the Policyowners.

Each Portfolio is treated as a separate corporation for Federal tax purposes. Each Portfolio has qualified since its inception, for treatment as a RIC under the Code, and each intends to continue to qualify therefore so that it will be relieved of Federal income tax on that part of its investment company taxable income (consisting generally of net investment income, the excess of net short-term capital gain over net long-term capital loss, and, for each Portfolio other than Ivy Funds VIP Money Market and the Pathfinder Portfolios, net gains and losses from foreign currency transactions, all determined without regard to the deduction for dividends paid) and net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss) that it distributes to its shareholders. To qualify or to continue to qualify for treatment as a RIC, a Portfolio must distribute to its shareholders for each taxable year at least 90% of its investment company taxable income (Distribution Requirement) and must meet several additional requirements. For each Portfolio, these requirements include the following:

(1) the Portfolio must derive at least 90% of its gross income each taxable year from (a) dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of securities or foreign currencies or other income (including gains from options, futures, or forward contracts) derived with respect to its business of investing in securities or those currencies and (b) net income from an interest in a QPTP (Income Requirement); and

(2) at the close of each quarter of the Portfolio's taxable year, (a) at least 50% of the value of its total assets must be represented by cash and cash items, U.S. government securities, securities of other RICs, and other securities that are limited, in respect of any one issuer, to an amount that does not exceed 5% of the value of the Portfolio's total assets and that does not represent more than 10% of the issuer's outstanding voting securities (equity securities of QPTPs being considered voting securities for these purposes) (50% Diversification Requirement) and (b) not more than 25% of the value of its total assets may be invested in (i) the securities (other than U.S. government securities or securities of other RICs) of any one issuer, (ii) the securities (other than securities of other RICs) of two or more issuers the Portfolio controls that are determined to be engaged in the same, similar, or related trades or businesses, or (iii) the securities of one or more QPTPs (collectively, RIC Diversification Requirements).

The gains that a Portfolio derives from investments in options or futures contracts on gold that are made for the purpose of hedging the Portfolio's investment in securities of companies in the businesses of mining, processing, producing, exploring for, refining, or selling gold generally constitute qualifying income for purposes of the Income Requirement. However, direct investments by a Portfolio in precious metals or in options or futures contracts on gold made for non-hedging purposes would have adverse tax consequences for the Portfolio and its shareholders if it either (1) derived more than 10% of its gross income in any taxable year from the disposition of such metals, options, and futures contracts and from other income that does not qualify under the Income Requirement or (2) held such metals, options, and futures contracts in such quantities that it failed to satisfy the 50% Diversification Requirement. Each Portfolio intends to continue to manage its holdings so as to avoid failing to satisfy those requirements for these reasons.

Each Portfolio intends to continue to comply for its current and future taxable years, with the diversification requirements imposed on the Participating Insurance Companies' separate accounts by section 817(h) of the Code and the regulations thereunder. These requirements, which are in addition to the RIC Diversification Requirements and the diversification requirements imposed on the Portfolios by the 1940 Act, place certain limitations on the assets of each separate account -- and, because section 817(h) and those regulations treat the assets of each Portfolio as assets of the related separate account, of each Portfolio -- that may be invested in securities of a single issuer. Specifically, the regulations provide that, except as permitted by the safe harbor described below, as of the end of each calendar quarter or within 30 days thereafter, no more than 55% of the value of a Portfolio's total assets may be represented by any one investment, no more than 70% thereof by any two investments, no more than 80% thereof by any three investments, and no more than 90% thereof by any four investments. For this purpose, all securities of the same issuer are considered a single investment, and while each U.S. government agency and instrumentality is considered a separate issuer, a particular foreign government and its agencies, instrumentalities and political subdivisions all are considered the same issuer. Furthermore, each Participating Insurance Company separate account, instead of treating its investment in a Pathfinder Portfolio as a single investment, will treat a proportionate part of the assets of each Pathfinder Portfolio in which it invests, which it will treat as consisting of a proportionate part of the assets of each Underlying Fund in which that Pathfinder Portfolio invests (so long as the Underlying Fund satisfies the section 817(h) diversification requirements), as its own assets for purposes of determining whether that account satisfies those requirements. In addition, Section 817(h) provides, as a safe harbor, that a separate account will be treated as being adequately diversified if the RIC Diversification Requirements are satisfied and no more than 55% of the value of the account's total assets are cash and cash items, government securities, and securities of other RICs. Failure of a Portfolio to satisfy the section 817(h) requirements would result in taxation of the Participating Insurance Companies and treatment of the Policyowners other than as described in the prospectuses for the Policies.

If any Portfolio failed to qualify for treatment as a RIC for any taxable year, (1) it would be taxed at corporate rates on the full amount of its taxable income for that year without being able to deduct the distributions it makes to its shareholders, and (2) more importantly, each Participating Insurance Company separate account invested therein would fail to satisfy the diversification requirements of Code section 817(h), with the result that the Policies supported by that account would no longer be eligible for tax deferral. In addition, the Portfolio could be required to recognize unrealized gains, pay substantial taxes and interest, and make substantial distributions before requalifying for RIC treatment.

Pathfinder Portfolios. Each Pathfinder Portfolio invests almost exclusively in shares of the Underlying Funds and may also invest in U.S. government securities, commercial paper, and other short-term corporate obligations and money market instruments. Accordingly, a Pathfinder Portfolio's income will consist of dividends and other distributions it receives from the Underlying Funds in which it invests, net gains it realizes from the disposition of those Underlying Funds' shares and other securities, and interest it earns. If an Underlying Fund qualifies for tax treatment as a RIC as described above (and each Underlying Fund has done so for each of its past taxable years and intends to continue to do so for its current and future taxable years): (1) dividends paid to a Pathfinder Portfolio from the Underlying Fund's investment company taxable income will be taxable to the Pathfinder Portfolio as ordinary income to the extent of the Underlying Fund's earnings and profits and (2) distributions paid to a Pathfinder Portfolio from the Underlying Fund's net capital gain will be taxable to the Pathfinder Portfolio as long-term capital gain, regardless of how long the Pathfinder Portfolio has held the Underlying Fund's shares. If a Pathfinder Portfolio qualifies for treatment as a RIC, these tax consequences will have little impact, because, as noted in the Prospectus, each Pathfinder Portfolio intends to distribute substantially all its net investment income and net capital gains each year and thus will pay no Federal income tax on the dividends, other distributions, and gains it receives and realizes.

Taxation of Particular Investments

Because each Pathfinder Portfolio invests substantially all of its assets in shares of the Underlying Funds, the following discussion refers to the Underlying Funds and other Portfolios but also applies to any direct investments that a Pathfinder Portfolio makes.

Income from Foreign Securities

Dividends and interest a Portfolio receives, and gains it realizes, on foreign securities may be subject to income, withholding or other taxes imposed by foreign countries and U.S. possessions that would reduce the yield and/or total return on its securities. Tax conventions between certain countries and the United States may reduce or eliminate those taxes, however, and many foreign countries do not impose taxes on capital gains in respect of investments by foreign investors.

Each Portfolio (other than Ivy Funds VIP Money Market) may invest in the stock of passive foreign investment companies (PFICs). A PFIC is any foreign corporation (with certain exceptions) that, in general, meets either of the following tests: (1) at least 75% of its gross income for the taxable year is passive or (2) an average of at least 50% of its assets produce, or are held for the production of, passive income. Under certain circumstances, a Portfolio will be subject to Federal income tax on a portion of any excess distribution received on the stock of a PFIC or of any gain on disposition of the stock (collectively, PFIC income), plus interest thereon, even if the Portfolio distributes the PFIC income as a dividend to its shareholders. The balance of the PFIC income will be included in the Portfolio's investment company taxable income and, accordingly, will not be taxable to it to the extent it distributes that income to its shareholders.

If a Portfolio invests in a PFIC and elects to treat the PFIC as a qualified electing fund (QEF), then in lieu of the foregoing tax and interest obligation, the Portfolio will be required to include in income each year its pro rata share of the QEF's annual ordinary earnings and net capital gain -- which the Portfolio probably would have to distribute to satisfy the Distribution Requirement -- even if those earnings and gain were not distributed to the Portfolio by the QEF. In most instances it will be very difficult, if not impossible, to make this election because of certain requirements thereof.

A Portfolio may elect to mark to market its stock in any PFIC. Marking-to-market, in this context, means including in gross income each taxable year (and treating as ordinary income) the excess, if any, of the fair market value of a PFIC's stock over a Portfolio's adjusted basis therein as of the end of that year. Pursuant to the election, a Portfolio also may deduct (as an ordinary, not a capital, loss) the excess, if any, of its adjusted basis in PFIC stock over the fair market value thereof as of the taxable year-end, but only to the extent of any net mark-to-market gains with respect to that stock the Portfolio included in income for prior taxable years under the election. A Portfolio's adjusted basis in each PFIC's stock with respect to which it makes the election will be adjusted to reflect the amounts of income included and deductions taken under the election.

Foreign Currency Gains and Losses

Gains or losses (1) from the disposition of foreign currencies, including forward currency contracts, (2) except in certain circumstances, from options and forward contracts on foreign currencies (and on financial instruments involving foreign currencies) and from notional principal contracts (for example, swaps, caps, floors and collars) involving payments denominated in foreign currencies, (3) on the disposition of each debt security denominated in a foreign currency that are attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security and the date of its disposition and (4) that are attributable to fluctuations in exchange rates that occur between the time a Portfolio accrues interest, dividends or other receivables, or expenses or other liabilities, denominated in a foreign currency and the time the Portfolio actually collects the receivables or pays the liabilities, generally are treated as ordinary income or loss. These gains or losses may increase or decrease the amount of a Portfolio's investment company taxable income to be distributed to its shareholders as ordinary income, rather than affecting the amount of its net capital gain.

Income from Financial Instruments and Foreign Currencies

The use of hedging and option income strategies, such as writing (selling) and purchasing options and futures contracts and entering into forward currency contracts, involves complex rules that will determine for income tax purposes the amount, character and timing of recognition of the gains and losses a Portfolio realizes in connection therewith. Gains from the disposition of foreign currencies (except certain gains that may be excluded by future regulations), and gains from options, futures contracts and forward currency contracts a Portfolio derives with respect to its business of investing in securities or foreign currencies (see the discussion above regarding options and futures contracts on gold), will qualify as permissible income under the Income Requirement.

Any income a Portfolio earns from writing options is treated as short-term capital gain. If the Portfolio enters into a closing purchase transaction, it will have a short-term capital gain or loss based on the difference between the premium it receives for the option it wrote and the premium it pays for the option it buys. If an option written by the Portfolio lapses without being exercised, the premium it receives also will be a short-term capital gain. If such an option is exercised and the Portfolio thus sells the securities subject to the option, the premium the Portfolio receives will be added to the exercise price to determine the gain or loss on the sale.

Certain futures contracts, foreign currency contracts and non-equity options (that is, certain listed options, such as those on a broad-based securities index) in which the Portfolios may invest will be "Section 1256" contracts. Section 1256 contracts a Portfolio holds at the end of its taxable year, other than contracts subject to a mixed straddle election the Portfolio may make, are marked-to-market (that is, treated as sold at that time for their fair market value) for Federal income tax purposes, with the result that unrealized gains or losses are treated as though they were realized. Sixty percent of any net gains or losses recognized on these deemed sales, and 60% of any net realized gains or losses from any actual sales of Section 1256 contracts, are treated as long-term capital gains or losses, and the balance is treated as short-term capital gains or losses. Section 1256 contracts are also marked-to-market at the end of October for purposes of satisfying the Distribution Requirement. A Portfolio may need to distribute any mark-to-market gains as of the end of October or its taxable year to its shareholders to satisfy the Distribution Requirement even though it may not have closed the transactions and received cash to pay the distributions.

Code section 1092 (dealing with straddles) may also affect the taxation of options and futures contracts and forward currency contracts in which a Portfolio may invest. That section defines a "straddle" as offsetting positions with respect to actively traded personal property; for these purposes, options, futures contracts and forward currency contracts are positions in personal property. Section 1092 generally provides that any loss from the disposition of a position in a straddle may be deducted only to the extent the loss exceeds the unrealized gain on the offsetting position(s) of the straddle. In addition, these rules may postpone the recognition of loss that would otherwise be recognized under the mark-to-market rules discussed above. The regulations under section 1092 also provide certain "wash sale" rules, which apply to any transaction where a position is sold at a loss and a new offsetting position is acquired within a prescribed period, and "short sale" rules applicable to straddles. If a Portfolio makes certain elections, the amount, character and timing of the recognition of gains and losses from the affected straddle positions will be determined under rules that vary according to the elections made. Because only a few of the regulations implementing the straddle rules have been promulgated, the tax consequences of straddle transactions to a Portfolio are not entirely clear.

Income from Zero Coupon Securities

Certain Portfolios may acquire zero coupon or other securities issued with OID. As a holder of those securities, a Portfolio must include in its gross income the portion of the OID that accrues on them during the taxable year, even if the Portfolio receives no corresponding payment on the securities during the year. Because a Portfolio annually must distribute substantially all of its investment company taxable income, including any accrued OID, to satisfy the Distribution Requirement it may be required in a particular year to distribute as a dividend an amount that is greater than the total amount of cash it actually receives. Those distributions will be made from the Portfolio's cash assets or from the proceeds of sales of portfolio securities, if necessary. A Portfolio may realize capital gains or losses from those sales, which would increase or decrease its investment company taxable income and/or net capital gains.

Income from REITs

Certain Portfolios may invest in REITs that (1) hold residual interests in real estate mortgage investment conduits (REMICs) or (2) engage in mortgage securitization transactions that cause the REITs to be taxable mortgage pools (TMPs) or have a qualified REIT subsidiary that is a TMP. A portion of the net income allocable to REMIC residual interest holders may be an "excess inclusion." The Code authorizes the issuance of regulations dealing with the taxation and reporting of excess inclusion income of REITs and RICs that hold residual REMIC interests and of REITs, or qualified REIT subsidiaries, that are TMPs. Although those regulations have not yet been issued, the U.S. Treasury Department and the Internal Revenue Service (Service) issued a notice in 2006 (Notice) announcing that, pending the issuance of further guidance, the Service would apply the principles in the following paragraphs to all excess inclusion income, whether from REMIC residual interests or TMPs.

The Notice provides that a REIT must (1) determine whether it or its qualified REIT subsidiary (or a part of either) is a TMP and, if so, calculate the TMP's excess inclusion income under a "reasonable method," (2) allocate its excess inclusion income to its shareholders generally in proportion to dividends paid, (3) inform shareholders that are not "disqualified organizations" (that is, governmental units and tax-exempt entities that are not subject to the unrelated business income tax) of the amount and character of the excess inclusion income allocated thereto, (4) pay tax (at the highest Federal income tax rate imposed on corporations) on the excess inclusion income allocated to its disqualified organization shareholders, and (5) apply the withholding tax provisions with respect to the excess inclusion part of dividends paid to foreign persons without regard to any treaty exception or reduction in tax rate. Excess inclusion income allocated to certain tax-exempt entities (including qualified retirement plans, individual retirement accounts, and public charities) constitutes unrelated business taxable income to them.

A RIC with excess inclusion income is subject to rules identical to those in clauses (2) through (5) (substituting "that are nominees" for "that are not 'disqualified organizations'" in clause (3) and inserting "record shareholders that are" after "its" in clause (4)). The Notice further provides that a RIC is not required to report the amount and character of the excess inclusion income allocated to its shareholders that are not nominees, except that, (1) a RIC with excess inclusion income from all sources that exceeds 1% of its gross income must do so and (2) any other RIC must do so by taking into account only excess inclusion income allocated to the RIC from REITs the excess inclusion income of which exceeded 3% of its dividends. A Portfolio will not invest directly in REMIC residual interests and does not intend to invest in REITs that, to its knowledge, invest in those interests or are TMPs or have a qualified REIT subsidiary that is a TMP.

FINANCIAL STATEMENTS

The Portfolios' Financial Statements, including notes thereto and the report of the Portfolios' independent registered public accounting firm, for the fiscal year ended December 31, 2008 are incorporated herein by reference. They are contained in the Portfolios' Annual Report to Shareholders, dated December 31, 2008, which is available upon request.

Quarterly Portfolio Holdings

A complete schedule of each Portfolio's portfolio holdings for the first and third quarters of each fiscal year is filed with the SEC on the Trust's Form N-Q. This form may be obtained in the following ways:

• On the SEC's website at http://www.sec.gov.
• For review and copy at the SEC's Public Reference Room in Washington, D.C. Information on the operations of the Public Reference Room may be obtained by calling 1.800.SEC.0330.
• Without charge, at http://www.waddell.com.

APPENDIX A

         The following are descriptions of some of the ratings of securities which WRIMCO may use. WRIMCO may also use ratings provided by other nationally recognized statistical rating organizations in determining the eligibility of securities for the Portfolios.

DESCRIPTION OF BOND RATINGS

         Standard & Poor's, a division of The McGraw-Hill Companies, Inc. An S&P corporate or municipal bond rating is a current assessment of the creditworthiness of an obligor with respect to a specific obligation. This assessment of creditworthiness may take into consideration obligors such as guarantors, insurers or lessees.

         The debt rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment as to market price or suitability for a particular investor.

         The ratings are based on current information furnished to S&P by the issuer or obtained by S&P from other sources it considers reliable. S&P does not perform any audit in connection with any ratings and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended or withdrawn as a result of changes in, or unavailability of, such information, or based on other circumstances.

         The ratings are based, in varying degrees, on the following considerations:

1.	Likelihood of default -- capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation;
2.	Nature of and provisions of the obligation;
3.	Protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.

         A brief description of the applicable S&P rating symbols and their meanings follow:

         AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.

         AA -- Debt rated AA also qualifies as high-quality debt. Capacity to pay interest and repay principal is very strong, and debt rated AA differs from AAA issues only in a small degree.

         A -- Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.

         BBB -- Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.

         BB, B, CCC, CC, C -- Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. BB indicates the lowest degree of speculation and C the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major exposures to adverse conditions.

         BB -- Debt rated BB has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The BB rating category is also used for debt subordinated to senior debt that is assigned an actual or implied BBB- rating.

         B -- Debt rated B has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The B rating category is also used for debt subordinated to senior debt that is assigned an actual or implied BB or BB- rating.

         CCC -- Debt rated CCC has a currently indefinable vulnerability to default, and is dependent upon favorable business, financial and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The CCC rating category is also used for debt subordinated to senior debt that is assigned an actual or implied B or B- rating.

         CC -- The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

         C -- The rating C is typically applied to debt subordinated to senior debt which is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

         CI -- The rating CI is reserved for income bonds on which no interest is being paid.

         D -- Debt rated D is in payment default. It is used when interest payments or principal payments are not made on a due date even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace periods. The D rating will also be used upon a filing of a bankruptcy petition if debt service payments are jeopardized.

         Plus (+) or Minus (-) -- To provide more detailed indications of credit quality, the ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

         NR -- Indicates that no public rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy.

         Debt Obligations of issuers outside the United States and its territories are rated on the same basis as domestic corporate and municipal issues. The ratings measure the creditworthiness of the obligor but do not take into account currency exchange and related uncertainties.

         Bond Investment Quality Standards: Under present commercial bank regulations issued by the Comptroller of the Currency, bonds rated in the top four categories (AAA, AA, A, BBB, commonly known as Investment Grade ratings) are generally regarded as eligible for bank investment. In addition, the Legal Investment Laws of various states governing legal investments may impose certain rating or other standards for obligations eligible for investment by savings banks, trust companies, insurance companies and fiduciaries generally.

         Moody's Investors Service, Inc. A brief description of the applicable Moody's rating symbols and their meanings follows:

         Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as gilt edge. Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

         Aa -- Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuations of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.

         A -- Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.

         Baa -- Bonds which are rated Baa are considered as medium grade obligations, that is, they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Some bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

NOTE: Bonds within the above categories which possess the strongest investment attributes are designated by the symbol 1 following the rating.

         Ba -- Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during good and bad times over the future. Uncertainty of position characterizes bonds in this class.

         B -- Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

         Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

         Ca -- Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

         C -- Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

DESCRIPTION OF PREFERRED STOCK RATINGS

         Standard & Poor's, a division of The McGraw-Hill Companies, Inc. An S&P preferred stock rating is an assessment of the capacity and willingness of an issuer to pay preferred stock dividends and any applicable sinking fund obligations. A preferred stock rating differs from a bond rating inasmuch as it is assigned to an equity issue, which issue is intrinsically different from, and subordinated to, a debt issue. Therefore, to reflect this difference, the preferred stock rating symbol will normally not be higher than the debt rating symbol assigned to, or that would be assigned to, the senior debt of the same issuer.

         The preferred stock ratings are based on the following considerations:

1.	Likelihood of payment - capacity and willingness of the issuer to meet the timely payment of preferred stock dividends and any applicable sinking fund requirements in accordance with the terms of the obligation;
2.	Nature of, and provisions of, the issue;
3.	Relative position of the issue in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.

         AAA -- This is the highest rating that may be assigned by S&P to a preferred stock issue and indicates an extremely strong capacity to pay the preferred stock obligations.

         AA -- A preferred stock issue rated AA also qualifies as a high-quality fixed income security. The capacity to pay preferred stock obligations is very strong, although not as overwhelming as for issues rated AAA.

         A -- An issue rated A is backed by a sound capacity to pay the preferred stock obligations, although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.

         BBB -- An issue rated BBB is regarded as backed by an adequate capacity to pay the preferred stock obligations. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to make payments for a preferred stock in this category than for issues in the 'A' category.

         BB, B, CCC -- Preferred stock rated BB, B, and CCC are regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay preferred stock obligations. BB indicates the lowest degree of speculation and CCC the highest degree of speculation. While such issues will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.

         CC -- The rating CC is reserved for a preferred stock issue in arrears on dividends or sinking fund payments but that is currently paying.

         C -- A preferred stock rated C is a non-paying issue.

         D -- A preferred stock rated D is a non-paying issue with the issuer in default on debt instruments.

         NR -- This indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular type of obligation as a matter of policy.

         Plus (+) or minus (-) -- To provide more detailed indications of preferred stock quality, the rating from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

         A preferred stock rating is not a recommendation to purchase, sell, or hold a security inasmuch as it does not comment as to market price or suitability for a particular investor. The ratings are based on current information furnished to S&P by the issuer or obtained by S&P from other sources it considers reliable. S&P does not perform an audit in connection with any rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended, or withdrawn as a result of changes in, or unavailability of, such information, or based on other circumstances.

         Moody's Investors Service, Inc. Note: Moody's applies numerical modifiers 1, 2 and 3 in each rating classification; the modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.

         Preferred stock rating symbols and their definitions are as follows:

         aaa -- An issue which is rated aaa is considered to be a top-quality preferred stock. This rating indicates good asset protection and the least risk of dividend impairment within the universe of preferred stocks.

         aa -- An issue which is rated aa is considered a high-grade preferred stock. This rating indicates that there is a reasonable assurance the earnings and asset protection will remain relatively well-maintained in the foreseeable future.

         a -- An issue which is rated a is considered to be an upper-medium grade preferred stock. While risks are judged to be somewhat greater than in the aaa and aa classification, earnings and asset protection are, nevertheless, expected to be maintained at adequate levels.

         baa -- An issue which is rated baa is considered to be a medium-grade preferred stock, neither highly protected nor poorly secured. Earnings and asset protection appear adequate at present but may be questionable over any great length of time.

         ba -- An issue which is rated ba is considered to have speculative elements and its future cannot be considered well assured. Earnings and asset protection may be very moderate and not well safeguarded during adverse periods. Uncertainty of position characterizes preferred stocks in this class.

         b -- An issue which is rated b generally lacks the characteristics of a desirable investment. Assurance of dividend payments and maintenance of other terms of the issue over any long period of time may be small.

         caa -- An issue which is rated caa is likely to be in arrears on dividend payments. This rating designation does not purport to indicate the future status of payments.

         ca -- An issue which is rated ca is speculative in a high degree and is likely to be in arrears on dividends with little likelihood of eventual payments.

         c -- This is the lowest rated class of preferred or preference stock. Issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

         S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt considered short-term in the relevant market. Ratings are graded into several categories, ranging from A-1 for the highest quality obligations to D for the lowest. Issuers rated A are further referred to by use of numbers 1, 2 and 3 to indicate the relative degree of safety. Issues assigned an A rating (the highest rating) are regarded as having the greatest capacity for timely payment. An A-1 designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. An A-2 rating indicates that capacity for timely payment is satisfactory; however, the relative degree of safety is not as high as for issues designated A-1. Issues rated A-3 have adequate capacity for timely payment; however, they are more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations. Issues rated B are regarded as having only speculative capacity for timely payment. A C rating is assigned to short-term debt obligations with a doubtful capacity for payment. Debt rated D is in payment default, which occurs when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period.

         Moody's commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of nine months. Moody's employs the designations of Prime 1, Prime 2 and Prime 3, all judged to be investment grade, to indicate the relative repayment capacity of rated issuers. Issuers rated Prime 1 have a superior capacity for repayment of short-term promissory obligations and repayment capacity will normally be evidenced by (1) leading market positions in well established industries; (2) high rates of return on funds employed; (3) conservative capitalization structures with moderate reliance on debt and ample asset protection; (4) broad margins in earnings coverage of fixed financial charges and high internal cash generation; and (5) well established access to a range of financial markets and assured sources of alternate liquidity. Issuers rated Prime 2 also have a strong capacity for repayment of short-term promissory obligations as will normally be evidenced by many of the characteristics described above for Prime 1 issuers, but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation; capitalization characteristics, while still appropriate, may be more affected by external conditions; and ample alternate liquidity is maintained. Issuers rated Prime 3 have an acceptable capacity for repayment of short-term promissory obligations, as will normally be evidenced by many of the characteristics above for Prime 1 issuers, but to a lesser degree. The effect of industry characteristics and market composition may be more pronounced; variability in earnings and profitability may result in changes in the level of debt protection measurements and requirement for relatively high financial leverage; and adequate alternate liquidity is maintained.

DESCRIPTION OF NOTE RATINGS

Standard & Poor's, a division of The McGraw-Hill Companies, Inc. An S&P note rating reflects the liquidity factors and market access risks unique to notes. Notes maturing in 3 years or less will likely receive a note rating. Notes maturing beyond 3 years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment.

--Amortization schedule (the larger the final maturity relative to other maturities, the more likely the issue is to be treated as a note).

--Source of Payment (the more the issue depends on the market for its refinancing, the more likely it is to be treated as a note.)

The note rating symbols and definitions are as follows:

SP-1         Strong capacity to pay principal and interest. Issues determined to possess very strong characteristics are given a plus (+) designation.

SP-2         Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.

SP-3         Speculative capacity to pay principal and interest.

Moody's Investors Service, Inc. Moody's Short-Term Loan Ratings -- Moody's ratings for state and municipal short-term obligations will be designated Moody's Investment Grade (MIG). This distinction is in recognition of the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower are uppermost in importance in short-term borrowing, while various factors of major importance in bond risk are of lesser importance over the short run. Rating symbols and their meanings follow:

MIG 1 -- This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.

MIG 2 -- This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.

MIG 3 -- This designation denotes favorable quality. All security elements are accounted for but this is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.

MIG 4 -- This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk.

Fitch Ratings-National Short-term Credit Ratings

F1-Indicates the strongest capacity for timely payment of financial commitments relative to other issuers or issues in the same country. Under Fitch Ratings' national rating scale, this rating is assigned to the best credit risk relative to all others in the same country and is normally assigned to all financial commitments issued or guaranteed by the government. Where the credit risk is particularly strong, a + is added to the assigned rating.

F2-Indicates a satisfactory capacity for timely payment of financial commitments relative other issuers in the same country. However, the margin of safety is not as great as in the case of the higher ratings.

F3-Indicates an adequate capacity for timely payment of financial commitments relative to other issuers or issues in the same country. However, such capacity is more susceptible to near-term adverse changes than for financial commitments in higher rated categories.

B-Indicates an uncertain capacity for timely payment of financial commitments relative to other issuers or issues in the same country. Such capacity is highly susceptible to near-term adverse changes in financial and economic conditions.

C-Indicates a highly uncertain capacity for timely payment of financial commitments relative to other issues in the same country. Capacity or meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.

D-Indicates actual or imminent payment default.

Notes to Short-term national rating:

+ or - may be appended to a national rating to denote relative status within a major rating category. Such suffixes are not added to Short-term national ratings other than F1.

Ratings Watch: Ratings are placed on Rating Watch to notify investors that there is a reasonable probability of a rating change and the likely direction of such change. These are designated as Positive, indicating a potential upgrade, Negative, for a potential downgrade, or Evolving, if ratings may be raised, lowered or maintained. Rating Watch is typically resolved over a relatively short period.

Appendix B

Proxy Voting Policies of Investment Subadvisors

ADVANTUS CAPITAL MANAGEMENT, INC.

Summary of Proxy Voting Policies and Procedures

Advantus Capital has adopted policies and procedures relating to the voting of proxies (the "Proxy Voting Policies") in connection with voting securities held in client accounts, including accounts subadvised by Advantus Capital that are designed to ensure that proxies are voted in the best interests of clients in accordance with Advantus Capital's fiduciary duties and legal and regulatory requirements. The Proxy Voting Policies do not apply to any client that has explicitly retained authority and discretion to vote its own proxies or delegated such authority and discretion to a third party; Advantus Capital takes no responsibility for the voting of any proxies on behalf of any such client.

A copy of the complete Proxy Voting Policies is available to all clients of Advantus Capital upon request, subject to the provision that such Proxy Voting Policies are subject to change at any time without notice.

The role of shareholders in corporate governance is typically limited. A majority of decisions regarding operations of the business of a corporation should be left to management's discretion. It is Advantus Capitals policy that the shareholder should become involved with these matters only when management has failed and the corporation's performance has suffered or to protect the rights of shareholders to take action.

The guiding principle by which Advantus Capital votes on all matters submitted to security holders is the maximization of the ultimate economic value of the securities held by its clients. This involves not only the immediate impact of each proposal but other considerations with respect to the security of the shareholders' investments over the long term.

It is the general policy of Advantus Capital to vote on all matters presented to security holders in any proxy, but Advantus Capital reserves the right to abstain on any particular vote or otherwise withhold its vote on any matter if in the judgment of Advantus Capital, the costs associated with voting such proxy outweigh the benefits to clients or if circumstances make such an abstention or withholding otherwise advisable and in the best interest of clients, in the judgment of Advantus Capital.

Advantus Capital has an Investment Policy Committee, which is responsible for overseeing the Proxy Voting Policies, modifying the Proxy Voting Policies from time to time, and monitoring voting decisions to avoid and resolve any conflicts of interest. The Investment Policy Committee is charged with ensuring that all conflicts of interest are resolved in the best interest of the clients.

The actual mechanical methods employed for voting proxies is dependent upon the type of client. For those clients who have hired Advantus Capital as an adviser, and not as a sub-adviser, and who have also selected Wells Fargo Bank as their custodian, Advantus Capital has delegated to Wells Fargo Bank the authority to vote proxies on behalf of the client. Proxies are directly sent to Wells Fargo Bank. Wells Fargo Bank votes the proxies according to the Wells Fargo Proxy Guidelines. Wells Fargo Bank employs Institutional Shareholder Services (ISS) as its proxy voting agent, responsible for analyzing proxies and recommending a voting position consistent with the Wells Fargo Bank Proxy Guidelines.

For all other clients, including those clients whose accounts are managed by Advantus Capital as a subadvisor, Advantus Capital will vote Proxies according to the Advantus Proxy Guidelines. Advantus Capital will endeavor to cast votes for these client portfolios in a manner consistent with the votes cast by Wells Fargo Bank on behalf of those Advantus Capital clients who rely on Wells Fargo Bank to vote their proxies. Advantus Capital will receive the proxy voting information from the client's custodian, then vote the proxy and return it to the company as directed on the proxy form and finally return a copy of each such proxy vote to the client for their record keeping purposes.

The Proxy Voting Policies include proxy voting guidelines that describe generally how proxies will be voted with respect to the issues listed therein. However, these guidelines are just that -- guidelines; they are not strict rules that must be obeyed in all cases. Advantus Capital's Proxy Voting Policies allow it to vote shares contrary to the typical vote indicated by the guidelines if such a vote is in a client's best interests

Advantus Capital maintains records of all proxy voting decisions and votes cast to the extent required by applicable law and regulations.

Listed below are examples of several recurring issues and Advantus Capital's corresponding positions as described in the guidelines.

• Advantus Capital generally supports proposals requiring that at least two thirds of the board be independent directors. An independent board faces fewer conflicts and is best prepared to protect stockholders' interests.

• Advantus Capital generally supports indemnification of directors and officers when the actions taken were on behalf of the company and no criminal violations occurred.

• Advantus Capital generally does not support indemnity proposals that are overly broad. For example, Advantus Capital will oppose proposals to indemnify directors for acts going beyond mere carelessness.

• Advantus Capital generally supports proposals to ratify the appointment of independent auditors unless there is reason to believe that such ratification is not appropriate.

• Advantus Capital will generally vote for all uncontested director nominees.

• Advantus Capital will consider contested elections on a case by case basis considering the facts and circumstances of each particular case.

• Advantus Capital will consider cumulative voting on a case by case basis based upon the existence of a counter balancing governance structure and company performance.

MACKENZIE FINANCIAL CORPORATION
IVY FUNDS VIP GLOBAL NATURAL RESOURCES
SUMMARY - PROXY VOTING POLICIES AND PROCEDURES

Mackenzie Financial Corporation ("Mackenzie"), as investment subadvisor to the Ivy Funds VIP Global Natural Resources (the "Portfolio"), has always been committed to the support of good corporate governance. As an investment fund subadvised by Mackenzie, the Portfolio follows the policies and procedures mandated by Mackenzie, a general description of which follows.

Mackenzie's objective is to vote the securities of companies for which it has proxy-voting authority in a manner most consistent with the long-term economic interest of Portfolio investors.

Voting Practices

The portfolio manager takes reasonable steps to vote all proxies received. However, the portfolio manager cannot guarantee that he or she will vote in all circumstances. The portfolio manager may refrain from voting where administrative or other procedures result in the costs of voting outweighing the benefits. The portfolio manager may also refrain from voting if in his or her opinion abstaining or otherwise withholding his or her vote is in the best interests of Portfolio investors.

Summary of Proxy Voting Policies

Below is a statement of principles that generally describe how Mackenzie may vote on some commonly raised issues. Mackenzie may elect to vote contrary to these guidelines provided the vote is in the best economic interest of the Portfolio.

• Mackenzie generally votes in favour of: proposals that support a majority of Board members being independent of management; the appointment of outside directors to an issuer Board or Audit Committee; as well as requirements that the Chair of the Board be separate from the office of the Chief Executive Officer.
  
  
• Proxies related to executive compensation are voted on a case-by-case basis. Generally, Mackenzie will vote in favour of stock options and other forms of compensation that: do not result in a potential dilution of more than 10% of the issued and outstanding securities; are granted under clearly defined and reasonable terms; are commensurate with the duties of plan participants; and are tied to the achievement of corporate objectives.
  
  
• Mackenzie will generally not support: the repricing of options; plans that give the Board broad discretion in setting the terms of the grant of options; or plans that authorize allocation of 20% or more of the available options to any individual in any single year.
  
  
• Mackenzie will generally vote in favour of shareholder rights plans designed to provide sufficient time to undertake a fair and complete shareholder value maximization process and that do not merely seek to entrench management or deter a public bidding process. In addition, Mackenzie will generally support plans that promote the interests and equal treatment of all shareholders, and that allow for periodic shareholder ratification.
  
  
• Mackenzie will evaluate and vote on shareholder proposals on a case-by-case basis. All proposals on financial matters will be given consideration. Generally, proposals that place arbitrary or artificial constraints on the company will not be supported.

Conflicts of Interest

Circumstances may occur where the Portfolio has a potential conflict of interest relative to its proxy voting activities. Where a portfolio manager has a conflict or potential conflict, he or she will notify Mackenzie's Chief Investment Officer ("CIO"), and either the Senior Vice-President, General Counsel or his/her designee ("General Counsel"), or the Chief Compliance Officer ("CCO"). Should the CIO and either the General Counsel or the CCO conclude that a conflict exists, the CCO will document the nature of the conflict and inform Senior Corporate Changes Administrators (the "Administrators") who is responsible for the administration of all proxy voting activities.

The Administrator shall maintain a proxy voting watch list ("Watch List") that records the names of issuer companies that may be in a proxy voting conflict and will notify the CIO, and either the General Counsel or CCO of any meeting circulars and proxies received from an issuer on the Watch List. The CIO and either the General Counsel or CCO will discuss the voting matter(s) with the portfolio manager and ensure that the proxy voting decision is based on Mackenzie's proxy voting policies and is in the best interests of the Portfolio. All voting decisions made under this section are documented and filed by the Administrator.

TEMPLETON INVESTMENT COUNSEL, LLC
PROXY VOTING POLICIES AND PROCEDURES

RESPONSIBILITY OF INVESTMENT MANAGER TO VOTE PROXIES

Templeton Investment Counsel, LLC (hereinafter "Investment Manager") has delegated its administrative duties with respect to voting proxies to the Proxy Group within Franklin Templeton Companies, LLC (the "Proxy Group"), a wholly-owned subsidiary of Franklin Resources, Inc. Franklin Templeton Companies, LLC provides a variety of general corporate services to its affiliates, including but not limited to legal and compliance activities. Proxy duties consist of analyzing proxy statements of issuers whose stock is owned by any client (including both investment companies and any separate accounts managed by Investment Manager) that has either delegated proxy voting administrative responsibility to Investment Manager or has asked for information and/or recommendations on the issues to be voted. The Proxy Group will process proxy votes on behalf of, and Investment Manager votes proxies solely in the interests of, separate account clients, Investment Manager-managed mutual fund shareholders, or, where employee benefit plan assets are involved, in the interests of the plan participants and beneficiaries (collectively, "Advisory Clients") that have properly delegated such responsibility or will inform Advisory Clients that have not delegated the voting responsibility but that have requested voting advice about Investment Manager's views on such proxy votes. The Proxy Group also provides these services to other advisory affiliates of Investment Manager.

HOW INVESTMENT MANAGER VOTES PROXIES

Fiduciary Considerations

All proxies received by the Proxy Group will be voted based upon Investment Manager's instructions and/or policies. To assist it in analyzing proxies, Investment Manager subscribes to RiskMetrics Group ("RiskMetrics"), an unaffiliated third party corporate governance research service that provides in-depth analyses of shareholder meeting agendas, vote recommendations, record keeping and vote disclosure services. In addition, Investment Manager subscribes to Glass Lewis & Co., LLC ("Glass Lewis"), an unaffiliated third party analytical research firm, to receive analyses and vote recommendations on the shareholder meetings of publicly held U.S. companies. Although RiskMetrics' and/or Glass Lewis's analyses are thoroughly reviewed and considered in making a final voting decision, Investment Manager does not consider recommendations from RiskMetrics, Glass Lewis, or any other third party to be determinative of Investment Manager's ultimate decision. As a matter of policy, the officers, directors and employees of Investment Manager and the Proxy Group will not be influenced by outside sources whose interests conflict with the interests of Advisory Clients.

Conflicts of Interest

All conflicts of interest will be resolved in the interests of the Advisory Clients. Investment Manager is an affiliate of a large, diverse financial services firm with many affiliates and makes its best efforts to avoid conflicts of interest. However, conflicts of interest can arise in situations where:

1.	The issuer is a client1 of Investment Manager or its affiliates;
2.	The issuer is a vendor whose products or services are material or significant to the business of Investment Manager or its affiliates;
3.	The issuer is an entity participating to a material extent in the distribution of investment products advised, administered or sponsored by Investment Manager or its affiliates (e.g., a broker, dealer or bank);2
4.	The issuer is a significant executing broker dealer;3
5.	An Access Person4 of Investment Manager or its affiliates also serves as a director or officer of the issuer;
6.	A director or trustee of Franklin Resources, Inc. or any of its subsidiaries or of a Franklin Templeton investment product, or an immediate family member5 of such director or trustee, also serves as an officer or director of the issuer; or
7.	The issuer is Franklin Resources, Inc. or any of its proprietary investment products.

¹ For purposes of this section, a "client" does not include underlying investors in a commingled trust, Canadian pooled fund, or other pooled investment vehicle managed by the Investment Manager or its affiliates. Sponsors of funds sub-advised by Investment Manager or its affiliates will be considered a "client."

² The top 40 distributors (based on aggregate 12b-1 distribution fees), will be considered to present a potential conflict of interest. In addition, any insurance company that has entered into a participation agreement with a Franklin Templeton entity to distribute the Franklin Templeton Variable Insurance Products Trust or other variable products will be considered to present a potential conflict of interest.

³ The top 40 executing broker-dealers (based on gross brokerage commissions and client commissions).

⁴ "Access Person" shall have the meaning provided under the current Code of Ethics of Franklin Resources, Inc.

⁵ The term "immediate family member" means a person's spouse; child residing in the person's household (including step and adoptive children); and any dependent of the person, as defined in Section 152 of the Internal Revenue Code (26 U.S.C. 152).

Nonetheless, even though a potential conflict of interest exists, the Investment Manager may vote in opposition to the recommendations of an issuer's management.

Material conflicts of interest are identified by the Proxy Group based upon analyses of client, distributor, broker dealer and vendor lists, information periodically gathered from directors and officers, and information derived from other sources, including public filings. The Proxy Group gathers and analyzes this information on a best efforts basis, as much of this information is provided directly by individuals and groups other than the Proxy Group, and the Proxy Group relies on the accuracy of the information it receives from such parties.

In situations where a material conflict of interest is identified between the Investment Manager or one of its affiliates and an issuer, the Proxy Group may defer to the voting recommendation of RiskMetrics, Glass Lewis, or those of another independent third party provider of proxy services or send the proxy directly to the relevant Advisory Clients with the Investment Manager's recommendation regarding the vote for approval. If the conflict is not resolved by the Advisory Client, the Proxy Group may refer the matter, along with the recommended course of action by the Investment Manager, if any, to a Proxy Review Committee comprised of representatives from the Portfolio Management (which may include portfolio managers and/or research analysts employed by Investment Manager), Fund Administration, Legal and Compliance Departments within Franklin Templeton for evaluation and voting instructions. The Proxy Review Committee may defer to the voting recommendation of RiskMetrics, Glass Lewis, or those of another independent third party provider of proxy services or send the proxy directly to the relevant Advisory Clients.

Where the Proxy Group or the Proxy Review Committee refer a matter to an Advisory Client, it may rely upon the instructions of a representative of the Advisory Client, such as the board of directors or trustees, a committee of the board, or an appointed delegate in the case of a U. S. registered mutual fund, the conducting officer in the case of an open-ended collective investment scheme formed as a Société d'investissement à capital variable (SICAV), the Independent Review Committee for Canadian investment funds, or a plan administrator in the case of an employee benefit plan. The Proxy Group or the Proxy Review Committee may determine to vote all shares held by Advisory Clients in accordance with the instructions of one or more of the Advisory Clients.

The Proxy Review Committee may independently review proxies that are identified as presenting material conflicts of interest; determine the appropriate action to be taken in such situations (including whether to defer to an independent third party or refer a matter to an Advisory Client); report the results of such votes to Investment Manager's clients as may be requested; and recommend changes to the Proxy Voting Policies and Procedures as appropriate.

The Proxy Review Committee will also decide whether to vote proxies for securities deemed to present conflicts of interest that are sold following a record date, but before a shareholder meeting date. The Proxy Review Committee may consider various factors in deciding whether to vote such proxies, including Investment Manager's long-term view of the issuer's securities for investment, or it may defer the decision to vote to the applicable Advisory Client.

Where a material conflict of interest has been identified, but the items on which the Investment Manager's vote recommendations differ from Glass Lewis, RiskMetrics, or another independent third party provider of proxy services relate specifically to (1) shareholder proposals regarding social or environmental issues or political contributions, (2) "Other Business" without describing the matters that might be considered, or (3) items the Investment Manager wishes to vote in opposition to the recommendations of an issuer's management, the Proxy Group may defer to the vote recommendations of the Investment Manager rather than sending the proxy directly to the relevant Advisory Clients for approval.

To avoid certain potential conflicts of interest, the Investment Manager will employ echo voting, if possible, in the following instances: (1) when a Franklin Templeton investment company invests in an underlying fund in reliance on any one of Sections 12(d)(1)(E), (F), or (G) of the Investment Company Act of 1940, as amended, or pursuant to an SEC exemptive order; (2) when a Franklin Templeton investment company invests uninvested cash in affiliated money market funds pursuant to an SEC exemptive order ("cash sweep arrangement"); or (3) when required pursuant to an account's governing documents or applicable law. Echo voting means that the Investment Manager will vote the shares in the same proportion as the vote of all of the other holders of the fund's shares.

Weight Given Management Recommendations

One of the primary factors Investment Manager considers when determining the desirability of investing in a particular company is the quality and depth of that company's management. Accordingly, the recommendation of management on any issue is a factor that Investment Manager considers in determining how proxies should be voted. However, Investment Manager does not consider recommendations from management to be determinative of Investment Manager's ultimate decision. As a matter of practice, the votes with respect to most issues are cast in accordance with the position of the company's management. Each issue, however, is considered on its own merits, and Investment Manager will not support the position of a company's management in any situation where it determines that the ratification of management's position would adversely affect the investment merits of owning that company's shares.

THE PROXY GROUP

The Proxy Group is part of the Franklin Templeton Companies, LLC Legal Department and is overseen by legal counsel. Full-time staff members are devoted to proxy voting administration and providing support and assistance where needed. On a daily basis, the Proxy Group will review each proxy upon receipt as well as any agendas, materials and recommendations that they receive from RiskMetrics, Glass Lewis, or other sources. The Proxy Group maintains a log of all shareholder meetings that are scheduled for companies whose securities are held by Investment Manager's managed funds and accounts. For each shareholder meeting, a member of the Proxy Group will consult with the research analyst that follows the security and provide the analyst with the meeting notice, agenda, RiskMetrics and/or Glass Lewis analyses, recommendations and any other available information. Except in situations identified as presenting material conflicts of interest, Investment Manager's research analyst and relevant portfolio manager(s) are responsible for making the final voting decision based on their review of the agenda, RiskMetrics and/or Glass Lewis analyses, their knowledge of the company and any other information readily available. In situations where the Investment Manager has not responded with vote recommendations to the Proxy Group by the deadline date, the Proxy Group may defer to the vote recommendations of an independent third party provider of proxy services. Except in cases where the Proxy Group is deferring to the voting recommendation of an independent third party service provider, the Proxy Group must obtain voting instructions from Investment Manager's research analyst, relevant portfolio manager(s), legal counsel and/or the Advisory Client or Proxy Review Committee prior to submitting the vote. In the event that an account holds a security that the Investment Manager did not purchase on its behalf, and the Investment Manager does not normally consider the security as a potential investment for other accounts, the Proxy Group may defer to the voting recommendations of an independent third party service provider.

GENERAL PROXY VOTING GUIDELINES

Investment Manager has adopted general guidelines for voting proxies as summarized below. In keeping with its fiduciary obligations to its Advisory Clients, Investment Manager reviews all proposals, even those that may be considered to be routine matters. Although these guidelines are to be followed as a general policy, in all cases each proxy and proposal will be considered based on the relevant facts and circumstances. Investment Manager may deviate from the general policies and procedures when it determines that the particular facts and circumstances warrant such deviation to protect the interests of the Advisory Clients. These guidelines cannot provide an exhaustive list of all the issues that may arise nor can Investment Manager anticipate all future situations. Corporate governance issues are diverse and continually evolving and Investment Manager devotes significant time and resources to monitor these changes.

INVESTMENT MANAGER'S PROXY VOTING POLICIES AND PRINCIPLES

Investment Manager's proxy voting positions have been developed based on years of experience with proxy voting and corporate governance issues. These principles have been reviewed by various members of Investment Manager's organization, including portfolio management, legal counsel, and Investment Manager's officers. The Board of Directors of Franklin Templeton's U.S.-registered mutual funds will approve the proxy voting policies and procedures annually.

The following guidelines reflect what Investment Manager believes to be good corporate governance and behavior:

Board of Directors: The election of directors and an independent board are key to good corporate governance. Directors are expected to be competent individuals and they should be accountable and responsive to shareholders. Investment Manager supports an independent board of directors, and prefers that key committees such as audit, nominating, and compensation committees be comprised of independent directors. Investment Manager will generally vote against management efforts to classify a board and will generally support proposals to declassify the board of directors. Investment Manager will consider withholding votes from directors who have attended less than 75% of meetings without a valid reason. While generally in favor of separating Chairman and CEO positions, Investment Manager will review this issue on a case-by-case basis taking into consideration other factors including the company's corporate governance guidelines and performance. Investment Manager evaluates proposals to restore or provide for cumulative voting on a case-by-case basis and considers such factors as corporate governance provisions as well as relative performance. The Investment Manager generally will support non-binding shareholder proposals to require a majority vote standard for the election of directors; however, if these proposals are binding, the Investment Manager will give careful review on a case-by-case basis of the potential ramifications of such implementation.

Ratification of Auditors: Investment Manager will closely scrutinize the role and performance of auditors. On a case-by-case basis, Investment Manager will examine proposals relating to non-audit relationships and non-audit fees. Investment Manager will also consider, on a case-by-case basis, proposals to rotate auditors, and will vote against the ratification of auditors when there is clear and compelling evidence of accounting irregularities or negligence attributable to the auditors.

Management & Director Compensation: A company's equity-based compensation plan should be in alignment with the shareholders' long-term interests. Investment Manager believes that executive compensation should be directly linked to the performance of the company. Investment Manager evaluates plans on a case-by-case basis by considering several factors to determine whether the plan is fair and reasonable. Investment Manager reviews the RiskMetrics quantitative model utilized to assess such plans and/or the Glass Lewis evaluation of the plan. Investment Manager will generally oppose plans that have the potential to be excessively dilutive, and will almost always oppose plans that are structured to allow the repricing of underwater options, or plans that have an automatic share replenishment "evergreen" feature. Investment Manager will generally support employee stock option plans in which the purchase price is at least 85% of fair market value, and when potential dilution is 10% or less.

Severance compensation arrangements will be reviewed on a case-by-case basis, although Investment Manager will generally oppose "golden parachutes" that are considered excessive. Investment Manager will normally support proposals that require that a percentage of directors' compensation be in the form of common stock, as it aligns their interests with those of the shareholders.

Anti-Takeover Mechanisms and Related Issues: Investment Manager generally opposes anti-takeover measures since they tend to reduce shareholder rights. However, as with all proxy issues, Investment Manager conducts an independent review of each anti-takeover proposal. On occasion, Investment Manager may vote with management when the research analyst has concluded that the proposal is not onerous and would not harm Advisory Clients' interests as stockholders. Investment Manager generally supports proposals that require shareholder rights plans ("poison pills") to be subject to a shareholder vote. Investment Manager will closely evaluate shareholder rights' plans on a case-by-case basis to determine whether or not they warrant support. Investment Manager will generally vote against any proposal to issue stock that has unequal or subordinate voting rights. In addition, Investment Manager generally opposes any supermajority voting requirements as well as the payment of "greenmail." Investment Manager usually supports "fair price" provisions and confidential voting.

Changes to Capital Structure: Investment Manager realizes that a company's financing decisions have a significant impact on its shareholders, particularly when they involve the issuance of additional shares of common or preferred stock or the assumption of additional debt. Investment Manager will carefully review, on a case-by-case basis, proposals by companies to increase authorized shares and the purpose for the increase. Investment Manager will generally not vote in favor of dual-class capital structures to increase the number of authorized shares where that class of stock would have superior voting rights. Investment Manager will generally vote in favor of the issuance of preferred stock in cases where the company specifies the voting, dividend, conversion and other rights of such stock and the terms of the preferred stock issuance are deemed reasonable. Investment Manager will review proposals seeking preemptive rights on a case-by-case basis.

Mergers and Corporate Restructuring: Mergers and acquisitions will be subject to careful review by the research analyst to determine whether they would be beneficial to shareholders. Investment Manager will analyze various economic and strategic factors in making the final decision on a merger or acquisition. Corporate restructuring proposals are also subject to a thorough examination on a case-by-case basis.

Social and Corporate Policy Issues: As a fiduciary, Investment Manager is primarily concerned about the financial interests of its Advisory Clients. Investment Manager will generally give management discretion with regard to social, environmental and ethical issues although Investment Manager may vote in favor of those issues that are believed to have significant economic benefits or implications.

Global Corporate Governance: Investment Manager manages investments in countries worldwide. Many of the tenets discussed above are applied to Investment Manager's proxy voting decisions for international investments. However, Investment Manager must be flexible in these worldwide markets and must be mindful of the varied market practices of each region. As experienced money managers, Investment Manager's analysts are skilled in understanding the complexities of the regions in which they specialize and are trained to analyze proxy issues germane to their regions.

PROXY PROCEDURES

The Proxy Group is fully cognizant of its responsibility to process proxies and maintain proxy records pursuant to SEC rules and regulations. In addition, Investment Manager understands its fiduciary duty to vote proxies and that proxy voting decisions may affect the value of shareholdings. Therefore, Investment Manager will generally attempt to process every proxy it receives for all domestic and foreign securities. However, there may be situations in which Investment Manager may be unable to vote a proxy, or may chose not to vote a proxy, such as where: (i) a meeting notice was received too late; (ii) there are fees imposed upon the exercise of a vote and it is determined that such fees outweigh the benefit of voting; (iii) there are legal encumbrances to voting, including blocking restrictions in certain markets that preclude the ability to dispose of a security if Investment Manager votes a proxy or where Investment Manager is prohibited from voting by applicable law or other regulatory or market requirements, including but not limited to, effective Powers of Attorney; (iv) the Investment Manager held shares on the record date but has sold them prior to the meeting date; (v) proxy voting service is not offered by the custodian in the market; (vi) the Investment Manager believes it is not in the best interest of the Advisory Client to vote the proxy for any other reason not enumerated herein; or (vii) a security is subject to a securities lending or similar program that has transferred legal title to the security to another person. Investment Manager or its affiliates may, on behalf of one or more of the registered investment companies advised by Investment Manager or its affiliates, determine to use its best efforts to recall any security on loan where Investment Manager or its affiliates (a) learn of a vote on a material event that may affect a security on loan and (b) determine that it is in the best interests of such registered investment companies to recall the security for voting purposes. Investment Managers will not generally make such efforts on behalf of other Advisory Clients, or notify such Advisory Clients or their custodians that Investment Manager or its affiliates has learned of such a vote.

Investment Manager may vote against an agenda item where no further information is provided, particularly in non-U.S. markets. For example, if "Other Business" is listed on the agenda with no further information included in the proxy materials, Investment Manager may vote against the item to send a message to the company that if it had provided additional information, Investment Manager may have voted in favor of that item. Investment Manager may also enter a "withhold" vote on the election of certain directors from time to time based on individual situations, particularly where Investment Manager is not in favor of electing a director and there is no provision for voting against such director.

The following describes the standard procedures that are to be followed with respect to carrying out Investment Manager's proxy policy:

1.	The Proxy Group will identify all Advisory Clients, maintain a list of those clients, and indicate those Advisory Clients who have delegated proxy voting authority to the Investment Manager. The Proxy Group will periodically review and update this list.
2.	All relevant information in the proxy materials received (e.g., the record date of the meeting) will be recorded immediately by the Proxy Group in a database to maintain control over such materials.
3.	The Proxy Group will review and compile information on each proxy upon receipt of any agendas, materials, reports, recommendations from RiskMetrics and/or Glass Lewis, or other information. The Proxy Group will then forward this information to the appropriate research analyst and/or legal counsel for review and voting instructions.
4.	In determining how to vote, Investment Manager's analysts and relevant portfolio manager(s) will consider the General Proxy Voting Guidelines set forth above, their in-depth knowledge of the company, any readily available information and research about the company and its agenda items, and the recommendations put forth by RiskMetrics, Glass Lewis, or other independent third party providers of proxy services.
5.	The Proxy Group is responsible for maintaining the documentation that supports Investment Manager's voting position. Such documentation may include, but is not limited to, any information provided by RiskMetrics, Glass Lewis, or other proxy service providers, and, especially as to non-routine, materially significant or controversial matters, memoranda describing the position it has taken. Additionally, the Proxy Group may include documentation obtained from the research analyst, portfolio manager, legal counsel and/or the Proxy Review Committee.
6.	After the proxy is completed but before it is returned to the issuer and/or its agent, the Proxy Group may review those situations including special or unique documentation to determine that the appropriate documentation has been created, including conflict of interest screening.
7.	The Proxy Group will attempt to submit Investment Manager's vote on all proxies to RiskMetrics for processing at least three days prior to the meeting for U.S. securities and 10 days prior to the meeting for foreign securities. However, in certain foreign jurisdictions it may be impossible to return the proxy 10 days in advance of the meeting. In these situations, the Proxy Group will use its best efforts to send the proxy vote to RiskMetrics in sufficient time for the vote to be processed.
8.	The Proxy Group will file Powers of Attorney in all jurisdictions that require such documentation on a best efforts basis.
9.	The Proxy Group prepares reports for each Advisory Client that has requested a record of votes cast. The report specifies the proxy issues that have been voted for the Advisory Client during the requested period and the position taken with respect to each issue. The Proxy Group sends one copy to the Advisory Client, retains a copy in the Proxy Group's files and forwards a copy to either the appropriate portfolio manager or the client service representative. While many Advisory Clients prefer quarterly or annual reports, the Proxy Group will provide reports for any timeframe requested by an Advisory Client.
10.	If the Franklin Templeton Services, LLC Fund Treasury Department learns of a vote on a material event that will affect a security on loan from a proprietary registered investment company, the Fund Treasury Department will notify Investment Manager and obtain instructions regarding whether Investment Manager desires the Fund Treasury Department to contact the custodian bank in an effort to retrieve the securities. If so requested by Investment Manager, the Fund Treasury Department shall use its best efforts to recall any security on loan and will use other practicable and legally enforceable means to ensure that Investment Manager is able to fulfill its fiduciary duty to vote proxies for Advisory Clients with respect to such loaned securities. The Fund Treasury Department will advise the Proxy Group of all recalled securities.
11.	The Proxy Group, in conjunction with Legal Staff responsible for coordinating Fund disclosure, on a timely basis, will file all required Form N-PXs, with respect to proprietary registered investment company clients, disclose that its proxy voting record is available on the web site, and will make available the information disclosed in its Form N-PX as soon as is reasonably practicable after filing Form N-PX with the SEC.
12.	The Proxy Group, in conjunction with Legal Staff responsible for coordinating Fund disclosure, will ensure that all required disclosure about proxy voting of the proprietary registered investment company clients is made in such clients' disclosure documents.
13.	The Proxy Group will review the guidelines of RiskMetrics and Glass Lewis, with special emphasis on the factors they use with respect to proxy voting recommendations.
14.	The Proxy Group will familiarize itself with the procedures of RiskMetrics that govern the transmission of proxy voting information from the Proxy Group to RiskMetrics and periodically review how well this process is functioning.
15.	The Proxy Group will investigate, or cause others to investigate, any and all instances where these Procedures have been violated or there is evidence that they are not being followed. Based upon the findings of these investigations, the Proxy Group, if practicable, will recommend amendments to these Procedures to minimize the likelihood of the reoccurrence of non-compliance.
16.	At least annually, the Proxy Group will verify that:

• Each proxy or a sample of proxies received has been voted in a manner consistent with these Procedures and the Proxy Voting Guidelines;
  
  
• Each proxy or sample of proxies received has been voted in accordance with the instructions of the Investment Manager;
  
  
• Adequate disclosure has been made to clients and fund shareholders about the procedures and how proxies were voted; and
  
  
• Timely filings were made with applicable regulators related to proxy voting.

The Proxy Group is responsible for maintaining appropriate proxy voting records. Such records will include, but are not limited to, a copy of all materials returned to the issuer and/or its agent, the documentation described above, listings of proxies voted by issuer and by client, and any other relevant information. The Proxy Group may use an outside service such as RiskMetrics to support this function. All records will be retained for at least five years, the first two of which will be on-site. Advisory Clients may request copies of their proxy voting records by calling the Proxy Group collect at 1-954-527-7678, or by sending a written request to: Franklin Templeton Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy Group. Advisory Clients may review Investment Manager's proxy voting policies and procedures on-line at www.franklintempleton.com and may request additional copies by calling the number above. For U.S. proprietary registered investment companies, an annual proxy voting record for the period ending June 30 of each year will be posted to www.franklintempleton.com no later than August 31 of each year. For proprietary Canadian mutual fund products, an annual proxy voting record for the period ending June 30 of each year will be posted to www.franklintempleton.ca no later than August 31 of each year. The Proxy Group will periodically review web site posting and update the posting when necessary. In addition, the Proxy Group is responsible for ensuring that the proxy voting policies, procedures and records of the Investment Manager are available as required by law and is responsible for overseeing the filing of such policies, procedures and mutual fund voting records with the SEC, the CSA and other applicable regulators.

As of January 15, 2009

WALL STREET ASSOCIATES, LLC
(re: Ivy Funds VIP Micro Cap Growth)
Proxy Voting Policy

Wall Street Associates, LLC recognizes that it is a fiduciary that owes its clients the duty of care and loyalty with respect to all services it provides to clients, including proxy voting. The duty of care requires an adviser with proxy voting authority to monitor corporate events and to vote the proxies. The duty of loyalty requires an adviser to cast proxy votes in a manner consistent with the best interest of its clients, at no time subrogating client interests to its own.

1. Wall Street Associates, LLC follows Proxy Voting Procedures. The proxy voting procedures below explain the role of Wall Street Associates' Proxy Voting Committee, Proxy Voting Chairman, Proxy Coordinator, Proxy Voting Service, as well as how the process will work when a proxy question needs to be handled on a case-by-case basis.

a.	Proxy Voting Committee and Chairman. Wall Street Associates, LLC's Proxy Voting Committee, which is made up of members of the investment team and led by the Proxy Voting Chairman, oversees the proxy voting process. The Committee monitors corporate actions, and reviews and recommends guidelines governing proxy votes, including how votes are cast on specific proposals and which matters are to be considered on a case-by-case basis. The Chairman is responsible for the oversight and execution of Wall Street Associates LLC's Proxy Voting Procedures.
b.	Proxy Coordinator. The Proxy Coordinator, appointed by the Proxy Voting Committee, assists in the coordination and voting of proxies. The Proxy Coordinator deals directly with the Proxy Voting Service and, on a case-by-case basis, will solicit voting recommendations and instructions from the Proxy Voting Committee should proxy questions be referred by the Proxy Voting Service. The Proxy Coordinator is responsible for ensuring that such questions and referrals are responded to in a timely fashion for transmitting appropriate voting instructions to the proxy voting service.
c.	Proxy Voting Service. Wall Street Associates, LLC has engaged an independent proxy voting service to assist in the voting of proxies. The proxy voting service is responsible for coordinating with custodians to ensure that all proxy material received by the custodians relating to portfolio securities are processed in a timely fashion. To the extent applicable, the proxy voting service votes all the proxies in accordance with Wall Street Associates, LLC's Proxy Voting Guidelines. The proxy voting service will refer proxy questions to the Proxy Coordinator for instructions under circumstances where: (1) the application of the proxy voting guidelines is unclear; (2) a particular proxy question is not covered by the guidelines; or (3) the guidelines call for specific instructions on a case-by-case basis. The proxy voting service is also requested to call to the Proxy Coordinator's attention specific proxy questions that, while governed by a guideline, appear to involve unusual or controversial issues. The proxy voting service also assists in disclosing to Clients how proxy votes were cast. Clients may request and obtain a record of proxy votes cast on their behalf. Proxy Voting reports, when requested, are generally delivered in conjunction with client quarterly reports.
d.	Proxy Votes are made on a Case-by-Case Basis. In voting shares on economic issues, Wall Street Associates, LLC shall make voting decisions on a case-by-case basis. Shares shall not be automatically voted either for or against management on a particular economic issue but shall be voted based on an analysis of the impact of the vote on the economic value of the shares and solely in the interest of the plan's participants and beneficiaries. Wall Street Associates, LLC shall not subordinate the interest of plan participants and beneficiaries in their retirement income to unrelated objectives, even if it is believed such objective to be socially desirable.
e.	Conflicts of Interest. Wall Street Associates, LLC has developed procedures designed to ensure it carries out its duty of care in voting proxies in the Client's best interest. To ensure proxy votes are not the product of a conflict of interest, votes will generally be made in accordance with Wall Street Associates LLC's Proxy Voting Guidelines, and on recommendations of an independent third party (the Proxy Voting Service). Occasions may arise where a person or organization involved in the proxy voting process may have a conflict of interest. A conflict of interest may exist, for example, from business relationships with either the company soliciting the proxy or a third party that has a material interest in the outcome of a proxy vote or that is actively lobbying for a particular outcome of a proxy vote. Any individual with knowledge of a personal conflict of interest (e.g., familial relationship with company management) relating to a particular referral item shall disclose that conflict to the Proxy Voting Chairman and the Compliance Officer and otherwise remove himself or herself from the proxy voting process. In such cases, the Proxy Voting Chairman and Compliance Officer will review each item to determine if a conflict of interest exists and whether such conflict is "material." In this context, "material" conflicts may be: (1) instances where an adviser has an interest in maintaining or developing business with a particular issuer whose management is soliciting proxies; (2) instances where the adviser has a business relationship with a proponent of a proxy proposal; (3) personal and business relationships with participants in a proxy contest, corporate directors or director candidates; and (4) instances where the adviser has a personal interest in the outcome of a proxy contest (e.g., relative serves as director). If a conflict is potentially material, the Proxy Voting Chairman and Compliance Officer will engage in an intensive internal and/or external (if necessary) fact gathering exercise. After assessing the circumstances surrounding an identified and potentially material conflict, the Proxy Voting Chairman and Compliance Officer may take one or more of the following actions: (1) follow the prescribed Proxy Voting Policy and Guidelines; (2) split the votes: (3) delegate the decision to a third party; (4) have the Client vote its own proxy, in cases where the Client has entered into an agreement to do so in the event of an actual material conflict. The Proxy Voting Chairman and Compliance Officer will also advise the Proxy Coordinator for each referral item the (1) describes the conflict of interest; (2) discusses the procedures used to address such conflict of interest; and (3) discloses any contacts from parties outside Wall Street Associates, LLC (other than routine communications from proxy solicitors) with respect to the referral item not otherwise reported in an investment professional's recommendation. Written confirmation will be made that any recommendation from an investment professional provided under circumstances where a conflict of interest exists was made solely on the investment merits and without regard to any other consideration.

2.	Wall Street Associates, LLC makes independent voting decisions. In voting shares on economic issues, voting decisions are made independently of directions given or threats of loss of business expressed or implied by an opponent or proponent of an economic issue, including the issuer of shares, plan sponsors, any other fiduciaries of the plan, or their respective agents. Wall Street Associates, LLC may allow such persons to express opinions with regard to economic issues but shall not reach a voting decision as a result of any improper pressure or directions.
	Wall Street Associates, LLC shall monitor information on the economic effect of proposals which are frequently submitted to stockholder votes so as: to have the necessary background to evaluate in a timely fashion the economic merits of particular proposals, to vote consistently on recurring proposals, absent unique economic effects and to be able to record clearly the reasons for taking the action chosen. Although Wall Street Associates, LLC will ordinarily vote consistently on recurring proposals, the case-by-case analysis required by this policy may require a vote which is inconsistent with prior votes on similar proposals.
3.	Recordkeeping Requirements. Wall Street Associates, LLC relies on the EDGAR system to maintain proxy statements regarding client securities, and utilized an independent third party to record proxy votes cast and to provide copies of such documents promptly on request. Also, the following records shall be maintained for a minimum of five years, the first two years in the office of Wall Street Associates, LLC:

a.	Wall Street Associates LLC's updated Proxy Voting Policy;
b.	Records of client requests for proxy voting information;
c.	Copies of written responses to oral or written client requests for proxy voting information; and
d.	Documents prepares by Wall Street Associates, LLC material to the voting decision.

4.	ERISA Considerations. Wall Street Associates, LLC shall not undertake on behalf of ERISA plans initiatives to place proposals before an issuer's stockholders unless such initiatives are judged to be in the interest of the plan participants and beneficiaries, to be cost beneficial, and to be otherwise consistent with ERISA.
5.	Tender Offers. The policies set forth above shall be applied when Wall Street Associates, LLC is called upon to decide whether to tender issues in a tender offer, including an issuer tender offer.

REGISTRATION STATEMENT

PART C

OTHER INFORMATION

23.	Exhibits:
	(a)	Articles of Incorporation:
		(a)(1)	Trust Instrument for Ivy Funds Variable Insurance Portfolios dated January 15, 2009, filed with Post-Effective Amendment No. 47, and incorporated herein by reference.
	(b)	Bylaws:
		(b)(1)	By-laws for Ivy Funds Variable Insurance Portfolios dated January 15, 2009, filed with Post-Effective Amendment No. 47, and incorporated herein by reference.
	(c)	Instruments Defining the Rights of Security Holders:
		Articles IV, V, VI, and IX of the Trust Instrument and Articles II and VII of the Bylaws each define the rights of shareholders.
	(d)	Investment Advisory Contracts:
		(d)(1)	Investment Management Agreement between Ivy Funds Variable Insurance Portfolios and Waddell & Reed Investment Management Company on behalf of each of the Funds in the Trust, dated April 10, 2009, filed with this Post-Effective Amendment No. 49.
		(d)(2)	Investment Management Agreement between Ivy Funds Variable Insurance Portfolios and Waddell & Reed Investment Management Company on behalf of each of the Subadvised Funds in the Trust, dated April 10, 2009, filed with this Post-Effective Amendment No. 49.
		(d)(3)	Investment Subadvisory Agreement between Waddell & Reed Investment Management Company and Advantus Capital Management, Inc., effective April 30, 2009, filed with this Post-Effective Amendment No. 49.
		(d)(4)	Investment Subadvisory Agreement between Waddell & Reed Investment Management Company and Mackenzie Financial Corporation, effective April 30, 2009, filed with this Post-Effective Amendment No. 49.
		(d)(5)	Subadvisory Agreement between Templeton Investment Counsel, LLC, and Templeton Global Advisors Limited, effective April 30, 2009, filed with this Post-Effective Amendment No. 49.
		(d)(6)	Investment Subadvisory Agreement between Waddell & Reed Investment Management Company and Templeton Investment Counsel, LLC, effective April 30, 2009, filed with this Post-Effective Amendment No. 49.
		(d)(7)	Investment Subadvisory Agreement between Waddell & Reed Investment Management Company and Wall Street Associates, effective April 30, 2009, filed with this Post-Effective Amendment No. 49.
	(e)	Underwriting Contracts:
		Distribution Contract between TMK/United Funds, Inc. and United Investors Life Insurance Company, dated April 4, 1997, filed by EDGAR on March 1, 2001 as EX-99.B(e)tmkdist to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A*
		Agreement Amending Distribution Contract, dated March 3, 1998, reflecting termination of the agreement as of December 31, 1998 filed by EDGAR on March 1, 2001 as EX-99.B(e)tmkterm1 to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A*
		Agreement Amending Distribution Contract, effective December 31, 1998, to rescind the provision to terminate the agreement filed by EDGAR on March 1, 2001 as EX-99.B(e)amnddist to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A*
		Letter Agreement, dated July 8, 1999, filed by EDGAR on March 1, 2001 as EX-99.B(e)amendpua to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A*
		Limited Selling Agreement, dated May 16, 2001, filed by EDGAR on April 29, 2002 as EX-99.B(e)tgtuilicsel to Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A*
		Fund Participation Agreement with Nationwide Life Insurance Company, dated December 1, 2000, filed by EDGAR on March 1, 2001 as EX-99.B(e)tgtnwpart to Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A*
		Amendment 1, efffective November 5, 2003, to the Fund Participation Agreement with Nationwide Life Insurance Company, dated December 1, 2000, filed by EDGAR on April 29, 2008 as EX-99.B(e)nwpartamend1 to Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A*
		Amendment 2, dated December 11, 2007, to the Fund Participation Agreement with Nationwide Life Insurance Company, dated December 1, 2000, filed by EDGAR on April 29, 2008 as EX-99.B(e)nwpartamend2 to Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A*
		Amendment 3, effective February 14, 2008, to the Fund Participation Agreement with Nationwide Life Insurance Company, dated December 1, 2000, filed by EDGAR on April 29, 2008 as EX-99.B(e)nwpartamend3 to Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A*
		Fund Participation Agreement with Minnesota Life Insurance Company, dated September 19, 2003, filed by EDGAR September 19, 2003 as EX-99.B(e)tgtmlipart to Post-Effective Amendment No. 34 to the Registration Statement on Form N-1A*
		Amendment 1, effective April 29, 2005, to the Fund Participation Agreement with Minnesota Life Insurance Company, dated September 19, 2003, filed by EDGAR on April 29, 2008 as EX-99.B(e)mnl1partamend1 to Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A*
		Amendment 2, dated July 1, 2007, to the Fund Participation Agreement with Minnesota Life Insurance Company, dated September 19, 2003, filed by EDGAR on April 29, 2008 as EX-99.B(e)mnl1partamend2 to Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A*
		Fund Participation Agreement with Minnesota Life Insurance Company, dated December 12, 2003, filed by EDGAR on April 28, 2005 as EX-99.B(e)tgtmlipart2 to Post-Effective Amendment No. 39 to the Registration Statement on Form N-1A*
		Amendment 1, dated June 4, 2004, to the Fund Participation Agreement with Minnesota Life Insurance Company, dated December 12, 2003, filed by EDGAR on April 29, 2008 as EX-99.B(e)mnl2partamend1 to Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A*
		Amendment 2, effective April 29, 2005, to the Fund Participation Agreement with Minnesota Life Insurance Company, dated December 12, 2003, filed by EDGAR on April 29, 2008 as EX-99.B(e)mnl2partamend2 to Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A*
		Amendment 3, dated July 1, 2007, to the Fund Participation Agreement with Minnesota Life Insurance Company, dated December 12, 2003, filed by EDGAR on April 29, 2008 as EX-99.B(e)mnl2partamend3 to Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A*
		Amendment 4, dated March 1, 2008, to the Fund Participation Agreement with Minnesota Life Insurance Company, dated December 12, 2003, filed by EDGAR on April 29, 2008 as EX-99.B(e)mnl2partamend4 to Post-Effective Amendment No. 46 to the Registration Statement on Form N-1A*
		Fund Participation Agreement with Northstar Life Insurance Company, dated April 30, 2004, filed by EDGAR on April 28, 2005 as EX-99.B(e)tgtnstrpart to Post-Effective Amendment No. 39 to the Registration Statement on Form N-1A*
		(e)(1)	Participation Agreement with The Union Central Life Insurance Company, dated November 3, 2008, filed with this Post-Effective Amendment No. 49.
		(e)(2)	Participation Agreement with The Ohio National Life Insurance Company, dated September 22, 2008, filed with this Post-Effective Amendment No. 49.
		(e)(3)	Participation Agreement with National Security Life and Annuity Company, dated September 22, 2008, filed with this Post-Effective Amendment No. 49.
		(e)(4)	Trademark License Agreement by and among Ivy Funds Distributor, Inc., Waddell & Reed, Inc. and Ivy Funds Variable Insurance Portfolios, dated April 15, 2009, filed with this Post-Effective Amendment No. 49.
		(e)(5)	Underwriting Agreement between Ivy Funds Variable Insurance Portfolios and Waddell & Reed, Inc., dated April 15, 2009, filed with this Post-Effective Amendment No. 49.
	(f)	Bonus or Profit Sharing Contracts: Not applicable
	(g)	Custodian Agreements:
		Custodian Agreement for W&R Target Funds, Inc. on behalf of each of its Portfolios, filed by EDGAR on September 5, 2003 as EX-99.B(g)tgtca to Post-Effective Amendment No. 33 to the Registration Statement on Form N-1A*
		Appendix B to the Custodian Agreement, amended to include Global Natural Resources Portfolio and Mid Cap Growth Portfolio, filed by EDGAR on March 2, 2005 as EX-99.B(g)tgtcaexb to Post-Effective Amendment No. 38 to the Registration Statement on Form N-1A*
		Appendix B to the Custodian Agreement, amended November 9, 2005 to include Energy Portfolio, filed by EDGAR on April 3, 2006 as EX-99.B(g)tgtcaexb2 to Post-Effective Amendment No. 41 to the Registration Statement on Form N-1A*
		Appendix B to the Custodian Agreement, amended November 28, 2007 to include Pathfinder Aggressive Portfolio, Pathfinder Moderately Aggressive Portfolio, Pathfinder Moderate Portfolio, Pathfinder Moderately Conservative Portfolio and Pathfinder Conservative Portfolio, filed by EDGAR on December 28, 2007 as EX-99.B(g)tgtcaexb3 to Post-Effective Amendment No. 45 to the Registration Statement on Form N-1A*
		The Custodian Agreements and revised Appendix A for each of the predecessor funds of which the series of the Registrant are the successor are substantially identical to the Custodian Agreement that is incorporated by reference.
		(g)(1)	Assignment of the Custodian Agreements for the Registrant and for each of the predecessor funds to which a series of the Registrant is the successor, dated April 30, 2009, filed with this Post-Effective Amendment No. 49.
			Rule 17f-5 Delegation Agreement for W&R Target Funds, Inc. on behalf of each of its Portfolios, filed by EDGAR on March 2, 2005 as EX-99.B(g)mcgpcadel to Post-Effective Amendment No. 38 to the Registration Statement on Form N-1A*
			The Rule 17f-5 Delegation Agreements for each for each of the predecessor funds of which the series of the Registrant are the successor are substantially identical to the Rule 17f-5 Delegation Agreement that is incorporated by Reference.
		(g)(2)	Assignment of Rule 17f-5 Delegation Agreements for the Registrant and for each of the predecessor funds to which a series of the Registrant is the successor, dated April 30, 2009, filed with this Post-Effective Amendment No. 49.
	(h)	Other Material Contracts:
			(h)(1)	Transfer Agency Agreement between Ivy Funds Variable Insurance Portfolios and Waddell & Reed Services Company, dated April 15, 2009, filed with this Post-Effective Amendment No. 49.
			(h)(2)	Accounting Services Agreement between Ivy Funds Variable Insurance Portfolios and Waddell & Reed Services Company, effective April 30, 2009, filed with this Post-Effective Amendment No. 49.
	(i)	Opinion and Consent of Counsel filed with this Post-Effective Amendment No. 49.
	(j)	Consent of Independent Registered Public Accounting Firm filed with this Post-Effective Amendment No. 49.
	(k)	Omitted Financial Statements: Not applicable
	(l)	Initial Capital Agreements:
		Agreement between United Investors Life Insurance Company and Income Portfolio filed April 21, 1992 as Exhibit No. 13 to Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A*
		Agreement between United Investors Life Insurance Company and International Portfolio, Small Cap Portfolio, Balanced Portfolio and Limited-Term Bond Portfolio filed February 15, 1995 as EX-99.B13-tmkuil to Post-Effective Amendment No. 11 to the Registration Statement on Form N-1A*
		Agreement between United Investors Life Insurance Company and Asset Strategy Portfolio filed October 3, 1995 as EX-99.B13-tmkuilasp to Post-Effective Amendment No. 12 to the Registration Statement on Form N-1A*
		Agreement between United Investors Life Insurance Company and Science and Technology Portfolio filed October 31, 1996 as EX-B.13-tmkuilst to Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A*
	(m)	Rule 12b-1 Plans
		(m)(1)	Service Plan for Ivy Funds Variable Insurance Portfolios, effective April 30, 2009, filed with this Post-Effective Amendment No. 49.
	(n)	Rule 18f-3 Plans: Not applicable
	(p)	Codes of Ethics
		Code of Ethics, as amended August 2007, filed by EDGAR on December 28, 2007 as EX-99.B(p)code to Post-Effective Amendment No. 45 to the Registration Statement on Form N-1A*
		Code of Ethics pursuant to the Sarbanes-Oxley Act of 2002, filed by EDGAR on November 19, 2003 as EX-99.B(p)code-so to Post-Effective Amendment No. 35 to the Registration Statement on Form N-1A*
		(p)(1)	Code of Ethics for Advantus Capital Management, Inc., dated January 2009, filed with this Post-Effective Amendment No. 49.
		(p)(2)	Code of Ethics for Mackenzie Financial Corporation, dated October 2008, filed with this Post-Effective Amendment No. 49.
		(p)(3)	Code of Ethics for Franklin Templeton Investments, dated May 2008, filed with this Post-Effective Amendment No. 49.
		(p)(4)	Code of Ethics for Wall Street Associates, dated December 2008, filed with this Post-Effective Amendment No. 49.
24.	Persons Controlled by or under common control with Registrant
	-----------------------------------------------------------------------------
	None
25.	Indemnification
	----------------------
	Reference is made to Article IX of the Trust Instrument of Registrant filed by EDGAR on February 27, 2009, as Exhibit (a)(1) to Post-Effective Amendment No. 10; to Paragraph 12 of the Fund Participation Agreement with Nationwide Life Insurance Company, dated December 1, 2000, filed by EDGAR on March 1, 2001 as EX-99.B(e)tgtnwpart to Post-Effective Amendment No. 24; to Section 11 of the Fund Participation Agreement with Minnesota Life Insurance Company, dated September 19, 2003, filed by EDGAR September 19, 2003 as EX-99.B(e)tgtmlipart to Post-Effective Amendment No. 34; to Section 11 of the Fund Participation Agreement with Minnesota Life Insurance Company, dated December 12, 2003, filed by EDGAR on April 28, 2005 as EX-99.B(e)tgtmlipart2 to Post-Effective Amendment No. 39; to Section  14  of the Fund Participation Agreement with Ameritas Life Insurance Corp. and The Union Central Life Insurance Company, filed with this Post-Effective Amendment No. 49; to Section  14  of the Fund Participation Agreement with  National Security Life  and Annuity Company, filed with this Post-Effective Amendment No. 49;  and to Section  14  of the Fund Participation Agreement with Ohio National Life Insurance Company and Ohio National Life Assurance Corporation, filed with this Post-Effective Amendment No. 49, each of which provide indemnification.
	Registrant undertakes to carry out all indemnification provisions of its Trust Instrument and the above-described contracts in accordance with the Investment Company Act Release No. 11330 (September 4, 1980) and successor releases.
	Insofar as indemnification for liability arising under the 1933 Act, as amended, may be provided to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of the Registrant of expenses incurred or paid by a director, officer of controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
26.	Business and Other Connections of Investment Manager
	--------------------------------------------------------------------
	Waddell & Reed Investment Management Company (WRIMCO) is the investment manager of the Registrant. WRIMCO is not engaged in any business other than the provision of investment management services to those registered investment companies as described in Part A and Part B of this Post-Effective Amendment and to other investment advisory clients.
	Each director and executive officer of WRIMCO or its predecessors, has had as his sole business, profession, vocation or employment during the past two years only his duties as an executive officer and/or employee of WRIMCO or its predecessors, except as to persons who are directors and/or officers of the Registrant and have served in the capacities shown in the Statement of Additional Information of the Registrant. The address of such officers is 6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200.
	As to each director and officer of WRIMCO, reference is made to the Prospectus and SAI of this Registrant.
27.	Principal Underwriter and Distributor
	-------------------------------------
	(a)	Waddell & Reed, Inc. is the Principal Underwriter and Distributor of the Registrant's shares. It is the principal underwriter to the following investment companies:
		Waddell & Reed Advisors Funds
		Waddell & Reed InvestEd Portfolios
	(b)	The information contained in the underwriter's application on Form BD, as filed on April 24, 2009, SEC No. 8-27030 under the Securities Exchange Act of 1934, is herein incorporated by reference.
	(c)	No compensation was paid by the Registrant to any principal underwriter who is not an affiliated person of the Registrant or any affiliated person of such affiliated person.
28.	Location of Accounts and Records
	------------------------------------------
	The accounts, books and other documents required to be maintained by Registrant pursuant to Section 31(a) of the Investment Company Act and rules promulgated thereunder are under the possession of Ms. Kristen A. Richards and Mr. Joseph W. Kauten, as officers of the Registrant, each of whose business address is Post Office Box 29217, Shawnee Mission, Kansas 66201-9217.
29.	Management Services
	-------------------
	There are no service contracts other than as discussed in Part A and B of this Post-Effective Amendment and as listed in response to Items 22(h) and 22(m) hereof.
30.	Undertakings
	---------------
Not applicable
---------------------------------
*Incorporated herein by reference

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, That the undersigned, W&R TARGET FUNDS, INC. (hereinafter called the Corporation), and certain directors and officers for the Corporation, do hereby constitute and appoint HENRY J. HERRMANN, DANIEL C. SCHULTE and KRISTEN A. RICHARDS, and each of them individually, their true and lawful attorneys and agents to take any and all action and execute any and all instruments which said attorneys and agents may deem necessary or advisable to enable each Corporation to comply with the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, and any rules, regulations, orders or other requirements of the United States Securities and Exchange Commission thereunder, in connection with the registration under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, including specifically, but without limitation of the foregoing, power and authority to sign the names of each of such directors and officers in his/her behalf as such director or officer as indicated below opposite his/her signature hereto, to any Registration Statement and to any amendment or supplement to the Registration Statement filed with the Securities and Exchange Commission under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, and to any instruments or documents filed or to be filed as a part of or in connection with such Registration Statement or amendment or supplement thereto; and each of the undersigned hereby ratifies and confirms all that said attorneys and agents shall do or cause to be done by virtue hereof.

Date: May 21, 2008

/s/David P. Gardner	Chairman and Director
David P. Gardner
/s/Henry J. Herrmann	Director
Henry J. Herrmann
/s/Michael L. Avery	Director
Michael L. Avery
/s/Jarold W. Boettcher	Director
Jarold W. Boettcher
/s/James M. Concannon	Director
James M. Concannon
/s/John A. Dillingham	Director
John A. Dillingham
/s/Joseph Harroz, Jr.	Director
Joseph Harroz, Jr.
/s/John F. Hayes	Director
John F. Hayes
/s/Albert W. Herman	Director
Albert W. Herman
/s/Glendon E. Johnson	Director
Glendon E. Johnson
/s/Frank J. Ross, Jr.	Director
Frank J. Ross, Jr.
/s/Eleanor B. Schwartz	Director
Eleanor B. Schwartz
Attest:
/s/Kristen A. Richards
Kristen A. Richards
Assistant Secretary

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, That the undersigned, IVY FUNDS VARIABLE INSURANCE PORTFOLIOS (hereinafter called the Trust), and certain directors and officers for the Trust, do hereby constitute and appoint HENRY J. HERRMANN, DANIEL C. SCHULTE and KRISTEN A. RICHARDS, and each of them individually, their true and lawful attorneys and agents to take any and all action and execute any and all instruments which said attorneys and agents may deem necessary or advisable to enable the Trust to comply with the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, and any rules, regulations, orders or other requirements of the United States Securities and Exchange Commission thereunder, in connection with the registration under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, including specifically, but without limitation of the foregoing, power and authority to sign the names of each of such directors and officers in his/her behalf as such director or officer as indicated below opposite his/her signature hereto, to any Registration Statement and to any amendment or supplement to the Registration Statement filed with the Securities and Exchange Commission under the Securities Act of 1933 and/or the Investment Company Act of 1940, as amended, and to any instruments or documents filed or to be filed as a part of or in connection with such Registration Statement or amendment or supplement thereto; and each of the undersigned hereby ratifies and confirms all that said attorneys and agents shall do or cause to be done by virtue hereof.

Date: January 15, 2009

	/s/Henry J. Herrmann
	Henry J. Herrmann, President
/s/David P. Gardner	Chairman and Trustee
David P. Gardner
/s/Michael L. Avery	Trustee
Michael L. Avery
/s/Jarold W. Boettcher	Trustee
Jarold W. Boettcher
/s/James M. Concannon	Trustee
James M. Concannon
/s/John A. Dillingham	Trustee
John A. Dillingham
/s/Joseph Harroz, Jr.	Trustee
Joseph Harroz, Jr.
/s/John F. Hayes	Trustee
John F. Hayes
/s/Albert W. Herman	Trustee
Albert W. Herman
/s/Henry J. Herrmann	Trustee
Henry J. Herrmann
/s/Glendon E. Johnson	Trustee
Glendon E. Johnson
/s/Frank J. Ross, Jr.	Trustee
Frank J. Ross, Jr.
/s/Eleanor B. Schwartz	Trustee
Eleanor B. Schwartz
Attest:
/s/Mara D. Herrington
Mara D. Herrington, Secretary

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment pursuant to Rule 485(b) of the Securities Act of 1933 and has duly caused this Post-Effective Amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Overland Park, and State of Kansas, on the 29th day of April, 2009.

W&R TARGET FUNDS, INC.**

(Registrant)

By /s/ Henry J. Herrmann

Henry J. Herrmann, President

Pursuant to the requirements of the Securities Act of 1933, and/or the Investment Company Act of 1940, this Post-Effective Amendment has been signed below by the following persons in the capacities and on the 29th day of April, 2009.

Signatures	Title
/s/Henry J. Herrmann	President and Director
Henry J. Herrmann
/s/Joseph W. Kauten	Vice President, Treasurer, Principal Financial Officer
Joseph W. Kauten	and Principal Accounting Officer
/s/Michael L. Avery*	Director
Michael L. Avery
/s/Jarold W. Boettcher*	Director
Jarold W. Boettcher
/s/James M. Concannon*	Director
James M. Concannon
/s/John A. Dillingham*	Director
John A. Dillingham

/s/David P. Gardner*	Director
David P. Gardner
/s/Joseph Harroz, Jr.*	Director
Joseph Harroz, Jr.
/s/Albert W. Herman*	Director
Albert W. Herman
/s/Glendon E. Johnson*	Director
Glendon E. Johnson
/s/Frank J. Ross, Jr.*	Director
Frank J. Ross, Jr.
/s/Eleanor B. Schwartz*	Director
Eleanor B. Schwartz

*By	/s/Kristen A. Richards	ATTEST:/s/Mara D. Herrington
	Kristen A. Richards	Mara D. Herrington
	Attorney-in-Fact	Secretary

**Effective July 31, 2008, the name of W&R Target Funds, Inc. (Corporation) is changed to the following:
    IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment pursuant to Rule 485(b) of the Securities Act of 1933 and has duly caused this Post-Effective Amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Overland Park, and State of Kansas, on the 29th day of April, 2009.

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS

A Delaware Statutory Trust

(Registrant)

By /s/ Henry J. Herrmann

Henry J. Herrmann, President

Pursuant to the requirements of the Securities Act of 1933, and/or the Investment Company Act of 1940, this Post-Effective Amendment has been signed below by the following persons in the capacities and on the 29th day of April, 2009.

Signatures	Title
/s/Henry J. Herrmann	President and Trustee
Henry J. Herrmann
/s/Joseph W. Kauten	Vice President, Treasurer, Principal Financial Officer
Joseph W. Kauten	and Principal Accounting Officer
/s/Michael L. Avery*	Trustee
Michael L. Avery
/s/Jarold W. Boettcher*	Trustee
Jarold W. Boettcher
/s/James M. Concannon*	Trustee
James M. Concannon
/s/John A. Dillingham*	Trustee
John A. Dillingham
/s/David P. Gardner*	Trustee
David P. Gardner
/s/Joseph Harroz, Jr.*	Trustee
Joseph Harroz, Jr.
/s/Albert W. Herman*	Trustee
Albert W. Herman
/s/Glendon E. Johnson*	Trustee
Glendon E. Johnson
/s/Frank J. Ross, Jr.*	Trustee
Frank J. Ross, Jr.
/s/Eleanor B. Schwartz*	Trustee
Eleanor B. Schwartz

*By	/s/Kristen A. Richards	ATTEST:	/s/Mara D. Herrington
	Kristen A. Richards		Mara D. Herrington
	Attorney-in-Fact		Secretary

EX-99.(D)(1)

         Exhibit (d)(1)

INVESTMENT MANAGEMENT AGREEMENT

THIS AGREEMENT, dated as of April 10, 2009, is entered into by and between Ivy Funds Variable Insurance Portfolios (the "Trust") and Waddell & Reed Investment Management Company ("WRIMCO"), with respect to each series of the Trust listed in Appendix A (each, a "Fund").

WITNESSETH:

In consideration of the mutual promises and agreements herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, it is hereby agreed by and between the parties hereto as follows:

I.         In General

         WRIMCO agrees to act as investment adviser to each Fund with respect to the investment of its assets and in general to supervise the investments of each Fund, subject at all times to the direction and control of the Board of Trustees of the Trust, all as more fully set forth herein.

II.         Duties of WRIMCO with respect to investment of assets of the Trust

         A. WRIMCO shall regularly provide investment advice to each Fund and shall, subject to the succeeding provisions of this section, continuously supervise the investment and reinvestment of cash, securities or other property comprising the assets of the investment portfolios of each Fund; and in furtherance thereof, WRIMCO shall as to each Fund:

         1. obtain and evaluate pertinent information about significant developments and economic, statistical and financial data, domestic, foreign or otherwise, whether affecting the economy generally or one or more of the portfolios of the Fund, and whether concerning the individual companies whose securities are included in the Fund's portfolios or the industries in which they engage, or with respect to securities which WRIMCO considers desirable for inclusion in the Fund's portfolio;

         2. furnish continuously an investment program for the Fund;

         3. determine what securities shall be purchased or sold by the Fund; and

         4. take, on behalf of the Fund, all actions which appear to WRIMCO necessary to carry into effect such investment programs and supervisory functions as aforesaid, including the placing of purchase and sell orders.

         B. WRIMCO shall make appropriate and regular reports to the Board of Trustees of the Trust on the actions it takes pursuant to Section II.A. above. Any investment programs furnished by WRIMCO under this section, or any supervisory function taken hereunder by WRIMCO shall at all times conform to and be in accordance with any requirements imposed by:

         1. the provisions of the Investment Company Act of 1940 Act, as amended ("1940 Act") and any rules or regulations in force thereunder;

         2. any other applicable provision of law;

         3. the provisions of the Trust Instrument of the Trust as amended from time to time;

         4. the provisions of the Bylaws of the Trust as amended from time to time;

         5. the terms of the registration statements of the Trust, as amended from time to time, under the Securities Act of 1933 and the 1940 Act.

         C. Any investment programs furnished by WRIMCO under this section or any supervisory functions taken hereunder by WRIMCO shall at all times be subject to any directions of the Board of Trustees of the Trust, its Executive Committee, or any committee or officer of the Trust acting pursuant to authority given by the Board of Trustees.

III.         Allocation of Expenses

         The expenses of the Trust and the expenses of WRIMCO in performing its functions under this Agreement shall be divided into two classes, to wit: (i) those expenses which will be paid in full by WRIMCO as set forth in subparagraph "A" hereof, and (ii) those expenses which will be paid in full by each Fund, as set forth in subparagraph "B" hereof.

         A. With respect to the duties of WRIMCO under Section II above, it shall pay in full, except as to the brokerage and research services acquired through the allocation of commissions as provided in Section IV hereinafter, for (a) the salaries and employment benefits of all employees of WRIMCO who are engaged in providing these advisory services; (b) adequate office space and suitable office equipment for such employees; and (c) all telephone and communications costs relating to such functions. In addition, WRIMCO shall pay the fees and expenses of all trustees of the Trust who are employees of WRIMCO or an affiliated corporation and the salaries and employment benefits of all officers of the Trust who are affiliated persons of WRIMCO.

         B. The Funds shall pay in full for all of their respective expenses which are not listed above (other than those assumed by WRIMCO or its affiliates in their respective capacities as principal underwriter of the shares of each of the Funds, as Shareholder Servicing Agent or as Accounting Services Agent for the Funds), including (a) the costs of preparing and printing prospectuses and reports to shareholders of the Funds, including mailing costs; (b) the costs of printing all proxy statements and all other costs and expenses of meetings of shareholders of the Funds (unless the Trust and WRIMCO shall otherwise agree); (c) interest, taxes, brokerage commission and premiums on fidelity and other insurance; (d) audit fees and expenses of independent accountants and legal fees and expenses of attorneys, but not of attorneys who are employees of WRIMCO or an affiliated company; (e) fees and expenses of its trustees not affiliated with WRIMCO or its affiliates; (f) custodian fees and expenses; (g) fees payable by the Trust and/or the Funds under the Securities Act of 1933, the 1940 Act and the securities or "Blue-Sky" laws of any jurisdiction; (h) fees and assessments of the Investment Company Institute or any successor organization; (i) such nonrecurring or extraordinary expenses as may arise, including litigation affecting the Trust and/or the Funds, and any indemnification by the Trust of its officers, directors, employees and agents with respect thereto; (j) the costs and expenses provided for in any Shareholder Servicing Agreement or Accounting Services Agreement, including amendments thereto, contemplated by subsection C of this Section III. In the event that any of the foregoing shall, in the first instance, be paid by WRIMCO, a Fund shall pay the same to WRIMCO on presentation of a statement with respect thereto.

         C. WRIMCO, or an affiliate of WRIMCO, may also act as (i) transfer agent or shareholder servicing agent of each Fund of the Trust and/or as (ii) accounting services agent of each Fund of the Trust if at the time in question there is a separate agreement, "Shareholder Servicing Agreement" and/or "Accounting Services Agreement," covering such functions between the Trust and WRIMCO or such affiliate. The corporation, whether WRIMCO or its affiliate, which is the party to such Agreement with the Trust is referred to as the "Agent." Each such Agreement shall provide in substance that it shall not go into effect, or be amended, or a new agreement covering the same topics between the Trust and the Agent be entered into as to a Fund, unless the terms of such Agreement, such amendment or such new agreement have been approved by the Board of Trustees of the Trust, including the vote of a majority of the trustees who are not "interested persons" as defined in the 1940 Act, of either party to the Agreement, such amendment or such new agreement (considering WRIMCO to be such a party even if at the time in question the Agent is an affiliate of WRIMCO), cast in person at a meeting called for the purpose of voting on such approval. Such a vote is referred to as a "disinterested trustee" vote. Each such Agreement shall also provide in substance for its continuance, unless terminated, for a specified period which shall not exceed two years from the date of its execution and from year to year thereafter only if such continuance is specifically approved at least annually by a disinterested trustee vote, and that any disinterested trustee vote shall include a determination that (i) the Agreement, amendment, new agreement or continuance in question is in the best interests of each affected Fund and its shareholders; (ii) the services to be performed under the Agreement, the Agreement as amended, new agreement or agreement to be continued are services required for the operation of the Fund; (iii) the Agent can provide services the nature and quality of which are at least equal to those provided by others offering the same or similar services; and (iv) the fees for such services are fair and reasonable in light of the usual and customary charges made by others for services of the same nature and quality. Any such Agreement may also provide in substance that any disinterested trustee vote may be conditioned on the favorable vote of the holders of a majority (as defined in or under the 1940 Act) of the outstanding shares of each class or series of the Trust. Any such Agreement shall also provide in substance that it may be terminated as to a Fund by the Agent at any time without penalty upon giving the Trust one hundred twenty (120) days' written notice (which notice may be waived by the Trust) and may be terminated as to a Fund by the Trust at any time without penalty upon giving the Agent sixty (60) days' written notice (which notice may be waived by the Agent), provided that such termination by the Trust shall be directed or approved by the vote of a majority of the Board of Trustees of the Trust in office at the time or by the vote of the holders of a majority (as defined in or under the 1940 Act) of the outstanding shares of each class or series of the Trust.

IV.         Brokerage

         A. WRIMCO may select brokers to effect the portfolio transactions of each Fund on the basis of its estimate of their ability to obtain, for reasonable and competitive commissions, the best execution of particular and related portfolio transactions. For this purpose, "best execution" means prompt and reliable execution at the most favorable price obtainable. Such brokers may be selected on the basis of all relevant factors including the execution capabilities required by the transaction or transactions, the importance of speed, efficiency, or confidentiality, and the willingness of the broker to provide useful or desirable investment research and/or special execution services. WRIMCO shall have no duty to seek advance competitive commission bids and may select brokers based solely on its current knowledge of prevailing commission rates.

         B. Subject to the foregoing, WRIMCO shall have discretion, in the interest of the Funds, to direct the execution of its portfolio transactions to brokers who provide brokerage and/or research services (as such services are defined in Section 28(e) of the Securities Exchange Act of 1934) for the Funds and/or other accounts for which WRIMCO exercises "investment discretion" (as that term is defined in Section 3(a)(35) of the Securities Exchange Act of 1934); and in connection with such transactions, to pay commission in excess of the amount another adequately qualified broker would have charged if WRIMCO determines, in good faith, that such commission is reasonable in relation to the value of the brokerage and/or research services provided by such broker, viewed in terms of either that particular transaction or the overall responsibilities of WRIMCO with respect to the accounts for which it exercises investment discretion. In reaching such determination, WRIMCO will not be required to attempt to place a specified dollar amount on the brokerage and/or research services provided by such broker; provided that WRIMCO shall be prepared to demonstrate that such determinations were made in good faith, and that all commissions paid by the Funds over a representative period selected by the Trust's Board of Trustees were reasonable in relation to the benefits to the Funds.

V.         Compensation of WRIMCO

         As compensation in full for services rendered and for the facilities and personnel furnished under sections I, II, and IV of this Agreement, each Fund will pay to WRIMCO for each day the fees specified in Appendix B hereto.

         The amounts payable to WRIMCO shall be determined as of the close of business each day; shall, except as set forth below, be based upon the value of net assets computed in accordance with the Trust Instrument; and shall be paid in arrears whenever requested by WRIMCO. In computing the value of the net assets of each Fund, there shall be excluded the amount owed to the Fund with respect to shares which have been sold but not yet paid to the Fund by Waddell & Reed, Inc.

         Notwithstanding the foregoing, if the laws, regulations or policies of any state in which shares of the Funds are qualified for sale limit the operation and management expenses of the Funds, WRIMCO will refund to the Funds the amount by which such expenses exceed the lowest of such state limitations.

VI.         Undertakings of WRIMCO; Liabilities

         WRIMCO shall give to the Trust the benefit of its best judgment, efforts and facilities in rendering advisory services hereunder.

         WRIMCO shall at all times be guided by and be subject to each Fund's investment policies, the provisions of the Trust Instrument and Bylaws of the Trust as each shall from time to time be amended, and to the decision and determination of the Trust's Board of Trustees.

         This Agreement shall be performed in accordance with the requirements of the 1940 Act, the Investment Advisers Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934, to the extent that the subject matter of this Agreement is within the purview of such Acts. Insofar as applicable to WRIMCO as an investment adviser and affiliated person of the Trust, WRIMCO shall comply with the provisions of the 1940 Act, the Investment Advisers Act of 1940 and the respective rules and regulations of the Securities and Exchange Commission thereunder.

         In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of WRIMCO it shall not be subject to liability to the Trust or to any shareholder of the Funds (direct or beneficial) for any act or omission in the course of or connected with rendering services thereunder or for any losses that may be sustained in the purchase, holding or sale of any security.

VII.         Duration of this Agreement

         This Agreement shall become effective on April 30, 2009, and shall continue in effect as to a Fund, unless terminated as hereinafter provided, for a period of one year and from year-to-year thereafter only if such continuance is specifically approved at least annually by the Board of Trustees, including the vote of a majority of the trustees who are not parties to this Agreement or "interested persons" (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval, or by the vote of the holders of a majority (as defined in the 1940 Act) of the outstanding voting securities of the Fund.

VIII.         Termination

         This Agreement may be terminated as to a Fund by WRIMCO at any time without penalty upon giving the Trust one hundred twenty (120) days' written notice (which notice may be waived by the Trust) and may be terminated as to a Fund by the Trust at any time without penalty upon giving WRIMCO sixty (60) days' written notice (which notice may be waived by WRIMCO), provided that such termination by the Trust shall be directed or approved by the vote of a majority of the Board of Trustees of the Trust in office at the time or by the vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the affected Fund. This Agreement shall automatically terminate in the event of its assignment, the term "assignment" for this purpose having the meaning defined in Section 2(a)(4) of the 1940 Act and the rules and regulations thereunder.

IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be executed by their duly authorized officers and their corporate seal to be hereunto affixed, all as of the day and year first above written.

		IVY FUNDS VARIABLE INSURANCE
		PORTFOLIOS
		By:		/s/ Mara Herrington
				Mara Herrington
				Vice President
ATTEST:
By:	/s/ Megan E. Bray
	Megan E. Bray
	Assistant Secretary
			WADDELL & REED INVESTMENT
			MANAGEMENT COMPANY
			By:	/s/ Henry J. Herrman
				Henry J. Herrmann
				President
ATTEST:
By:	/s/ Wendy J. Hills
	Wendy J. Hills
	Secretary

APPENDIX A

TO INVESTMENT MANAGEMENT AGREEMENT

Ivy Funds VIP Asset Strategy

Ivy Funds VIP Balanced

Ivy Funds VIP Bond

Ivy Funds VIP Core Equity

Ivy Funds VIP Dividend Opportunities

Ivy Funds VIP Energy

Ivy Funds VIP Growth

Ivy Funds VIP High Income

Ivy Funds VIP International Growth

Ivy Funds VIP Mid Cap Growth

Ivy Funds VIP Money Market

Ivy Funds VIP Science and Technology

Ivy Funds VIP Small Cap Growth

Ivy Funds VIP Value

Ivy Funds VIP Pathfinder Aggressive

Ivy Funds VIP Pathfinder Moderately Aggressive

Ivy Funds VIP Pathfinder Moderate

Ivy Funds VIP Pathfinder Moderately Conservative

Ivy Funds VIP Pathfinder Conservative

APPENDIX B
TO INVESTMENT MANAGEMENT AGREEMENT
IVY FUNDS VARIABLE INSURANCE PORTFOLIOS
FEE SCHEDULE
A cash fee computed each day on net asset value for each Fund at the annual rates listed below*:
Asset Strategy
Net Assets	Fee
Up to $1 billion	0.70%
Over $1 billion and up to $2 billion	0.65%
Over $2 billion and up to $3 billion	0.60%
Over $3 billion	0.55%
Balanced
Net Assets	Fee
Up to $1 billion	0.70%
Over $1 billion and up to $2 billion	0.65%
Over $2 billion and up to $3 billion	0.60%
Over $3 billion	0.55%
Bond
Net Assets	Fee
Up to $1 billion	0.475%
Over $1 billion and up to $1.5 billion	0.450%
Over $1.5 billion	0.400%
Core Equity
Net Assets	Fee
Up to $1 billion	0.70%
Over $1 billion and up to $2 billion	0.65%
Over $2 billion and up to $3 billion	0.60%
Over $3 billion	0.55%
Dividend Opportunities
Net Assets	Fee
Up to $1 billion	0.70%
Over $1 billion and up to $2 billion	0.65%
Over $2 billion and up to $3 billion	0.60%
Over $3 billion	0.55%
Energy
Net Assets	Fee
Up to $1 billion	0.85%
Over $1 billion and up to $2 billion	0.83%
Over $2 billion and up to $3 billion	0.80%
Over $3 billion	0.76%
Growth
Net Assets	Fee
Up to $1 billion	0.70%
Over $1 billion and up to $2 billion	0.65%
Over $2 billion and up to $3 billion	0.60%
Over $3 billion	0.55%
High Income
Net Assets	Fee
Up to $500 million	0.625%
Over $500 million and up to $1 billion	0.600%
Over $1 billion and up to $1.5 billion	0.550%
Over $1.5 billion	0.500%
International Growth
Net Assets	Fee
Up to $1 billion	0.85%
Over $1 billion and up to $2 billion	0.83%
Over $2 billion and up to $3 billion	0.80%
Over $3 billion	0.76%
Mid Cap Growth
Net Assets	Fee
Up to $1 billion	0.85%
Over $1 billion and up to $2 billion	0.83%
Over $2 billion and up to $3 billion	0.80%
Over $3 billion	0.76%
Money Market
A cash fee computed each day on net asset values for the Fund at the annual rate of 0.40% of net assets.
Science & Technology
Net Assets	Fee
Up to $1 billion	0.85%
Over $1 billion and up to $2 billion	0.83%
Over $2 billion and up to $3 billion	0.80%
Over $3 billion	0.76%
Small Cap Growth
Net Assets	Fee
Up to $1 billion	0.85%
Over $1 billion and up to $2 billion	0.83%
Over $2 billion and up to $3 billion	0.80%
Over $3 billion	0.76%
Value
Net Assets	Fee
Up to $1 billion	0.70%
Over $1 billion and up to $2 billion	0.65%
Over $2 billion and up to $3 billion	0.60%
Over $3 billion	0.55%
W&R Target Pathfinder Aggressive
W&R Target Pathfinder Moderately Aggressive
W&R Target Pathfinder Moderate
W&R Target Pathfinder Moderately Conservative
W&R Target Pathfinder Conservative
Net Assets	Fee
All net assets	0.00%
*If a Fund's net assets are less than $25 million, WRIMCO has agreed to voluntarily waive the management fee, subject to its right to change or modify this waiver.

EX-99.(D)(2)

         Exhibit (d)(2)

INVESTMENT MANAGEMENT AGREEMENT

THIS AGREEMENT, dated as of April 10, 2009, is entered into by and between Ivy Funds Variable Insurance Portfolios (the "Trust") and Waddell & Reed Investment Management Company ("WRIMCO"), with respect to each series of the Trust listed in Appendix A (each, a "Fund").

WITNESSETH:

In consideration of the mutual promises and agreements herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, it is hereby agreed by and between the parties hereto as follows:

I.         In General

         WRIMCO agrees to act as investment adviser to each Fund with respect to the investment of its assets and in general to supervise the investments of each Fund, subject at all times to the direction and control of the Board of Trustees of the Trust, all as more fully set forth herein.

II.         Duties of WRIMCO with respect to investment of assets of the Trust

         A. WRIMCO shall regularly provide investment advice to each Fund and shall, subject to the succeeding provisions of this section, continuously supervise the investment and reinvestment of cash, securities or other property comprising the assets of the investment portfolios of each Fund; and in furtherance thereof, WRIMCO shall as to each Fund:

         1. obtain and evaluate pertinent information about significant developments and economic, statistical and financial data, domestic, foreign or otherwise, whether affecting the economy generally or one or more of the portfolios of the Fund, and whether concerning the individual companies whose securities are included in the Fund's portfolios or the industries in which they engage, or with respect to securities which WRIMCO considers desirable for inclusion in the Fund's portfolio;

         2. furnish continuously an investment program for the Fund;

         3. determine what securities shall be purchased or sold by the Fund; and

         4. take, on behalf of the Fund, all actions which appear to WRIMCO necessary to carry into effect such investment programs and supervisory functions as aforesaid, including the placing of purchase and sell orders.

         B. Subject to the provisions of this Agreement and the requirements of the Investment Company Act of 1940 (and any rules or regulations in force thereunder), WRIMCO is authorized to appoint one or more qualified investment sub-advisers (each, a "Sub-Adviser") to provide the Funds with certain services required by this Agreement. Each Sub-Adviser shall have such investment discretion and shall make all determinations with respect to the investment of the Funds' assets as shall be assigned to that Sub-Adviser by WRIMCO and the purchase and sale of portfolio securities and other financial instruments with respect to those assets.

         Subject to the supervision and direction of the Board of Trustees of each Fund WRIMCO shall:

         1. have overall supervisory responsibility for the general management and investment of the Fund's assets;

         2. determine the allocation and reallocation of assets among the Sub-Advisers, if any; and

         3. have full investment discretion to make all determinations with respect to the investment of a Funds' assets not otherwise assigned to a Sub-Adviser.

         WRIMCO shall research and evaluate each Sub-Adviser, if any, including: performing initial due diligence on prospective Sub-Advisers and monitoring each Sub-Adviser's ongoing performance; communicating performance expectations and evaluations to each Sub-Adviser; and recommending to the Board of Trustees of each Fund whether a Sub-Adviser's contract should be renewed, modified or terminated. When appropriate, WRIMCO shall also recommend to the Board of Trustees of each Fund changes or additions to the Sub-Advisers.

C. WRIMCO shall make appropriate and regular reports to the Board of Trustees of the Trust on the actions it takes pursuant to Section II.A. above. Any investment programs furnished by WRIMCO under this section, or any supervisory function taken hereunder by WRIMCO shall at all times conform to and be in accordance with any requirements imposed by:

         1. the provisions of the Investment Company Act of 1940 Act, as amended ("1940 Act") and any rules or regulations in force thereunder;

         2. any other applicable provision of law;

         3. the provisions of the Trust Instrument of the Trust as amended from time to time;

         4. the provisions of the Bylaws of the Trust as amended from time to time;

         5. the terms of the registration statements of the Trust, as amended from time to time, under the Securities Act of 1933 and the 1940 Act.

         D. Any investment programs furnished by WRIMCO under this section or any supervisory functions taken hereunder by WRIMCO shall at all times be subject to any directions of the Board of Trustees of the Trust, its Executive Committee, or any committee or officer of the Trust acting pursuant to authority given by the Board of Trustees.

III.         Allocation of Expenses

         The expenses of the Trust and the expenses of WRIMCO in performing its functions under this Agreement shall be divided into two classes, to wit: (i) those expenses which will be paid in full by WRIMCO as set forth in subparagraph "A" hereof, and (ii) those expenses which will be paid in full by each Fund, as set forth in subparagraph "B" hereof.

         A. With respect to the duties of WRIMCO under Section II above, it shall pay in full, except as to the brokerage and research services acquired through the allocation of commissions as provided in Section IV hereinafter, for (a) the salaries and employment benefits of all employees of WRIMCO who are engaged in providing these advisory services; (b) adequate office space and suitable office equipment for such employees; and (c) all telephone and communications costs relating to such functions. In addition, WRIMCO shall pay the fees and expenses of all trustees of the Trust who are employees of WRIMCO or an affiliated corporation and the salaries and employment benefits of all officers of the Trust who are affiliated persons of WRIMCO.

         B. The Funds shall pay in full for all of their respective expenses which are not listed above (other than those assumed by WRIMCO or its affiliates in their respective capacities as principal underwriter of the shares of each of the Funds, as Shareholder Servicing Agent or as Accounting Services Agent for the Funds), including (a) the costs of preparing and printing prospectuses and reports to shareholders of the Funds, including mailing costs; (b) the costs of printing all proxy statements and all other costs and expenses of meetings of shareholders of the Funds (unless the Trust and WRIMCO shall otherwise agree); (c) interest, taxes, brokerage commission and premiums on fidelity and other insurance; (d) audit fees and expenses of independent accountants and legal fees and expenses of attorneys, but not of attorneys who are employees of WRIMCO or an affiliated company; (e) fees and expenses of its trustees not affiliated with WRIMCO or its affiliates; (f) custodian fees and expenses; (g) fees payable by the Trust and/or the Funds under the Securities Act of 1933, the 1940 Act and the securities or "Blue-Sky" laws of any jurisdiction; (h) fees and assessments of the Investment Company Institute or any successor organization; (i) such nonrecurring or extraordinary expenses as may arise, including litigation affecting the Trust and/or the Funds, and any indemnification by the Trust of its officers, directors, employees and agents with respect thereto; (j) the costs and expenses provided for in any Shareholder Servicing Agreement or Accounting Services Agreement, including amendments thereto, contemplated by subsection C of this Section III. In the event that any of the foregoing shall, in the first instance, be paid by WRIMCO, a Fund shall pay the same to WRIMCO on presentation of a statement with respect thereto.

         C. WRIMCO, or an affiliate of WRIMCO, may also act as (i) transfer agent or shareholder servicing agent of each Fund of the Trust and/or as (ii) accounting services agent of each Fund of the Trust if at the time in question there is a separate agreement, "Shareholder Servicing Agreement" and/or "Accounting Services Agreement," covering such functions between the Trust and WRIMCO or such affiliate. The corporation, whether WRIMCO or its affiliate, which is the party to such Agreement with the Trust is referred to as the "Agent." Each such Agreement shall provide in substance that it shall not go into effect, or be amended, or a new agreement covering the same topics between the Trust and the Agent be entered into as to a Fund, unless the terms of such Agreement, such amendment or such new agreement have been approved by the Board of Trustees of the Trust, including the vote of a majority of the trustees who are not "interested persons" as defined in the 1940 Act, of either party to the Agreement, such amendment or such new agreement (considering WRIMCO to be such a party even if at the time in question the Agent is an affiliate of WRIMCO), cast in person at a meeting called for the purpose of voting on such approval. Such a vote is referred to as a "disinterested trustee" vote. Each such Agreement shall also provide in substance for its continuance, unless terminated, for a specified period which shall not exceed two years from the date of its execution and from year to year thereafter only if such continuance is specifically approved at least annually by a disinterested trustee vote, and that any disinterested trustee vote shall include a determination that (i) the Agreement, amendment, new agreement or continuance in question is in the best interests of each affected Fund and its shareholders; (ii) the services to be performed under the Agreement, the Agreement as amended, new agreement or agreement to be continued are services required for the operation of the Fund; (iii) the Agent can provide services the nature and quality of which are at least equal to those provided by others offering the same or similar services; and (iv) the fees for such services are fair and reasonable in light of the usual and customary charges made by others for services of the same nature and quality. Any such Agreement may also provide in substance that any disinterested trustee vote may be conditioned on the favorable vote of the holders of a majority (as defined in or under the 1940 Act) of the outstanding shares of each class or series of the Trust. Any such Agreement shall also provide in substance that it may be terminated as to a Fund by the Agent at any time without penalty upon giving the Trust one hundred twenty (120) days' written notice (which notice may be waived by the Trust) and may be terminated as to a Fund by the Trust at any time without penalty upon giving the Agent sixty (60) days' written notice (which notice may be waived by the Agent), provided that such termination by the Trust shall be directed or approved by the vote of a majority of the Board of Trustees of the Trust in office at the time or by the vote of the holders of a majority (as defined in or under the 1940 Act) of the outstanding shares of each class or series of the Trust.

IV.         Brokerage

         A. WRIMCO may select brokers to effect the portfolio transactions of each Fund on the basis of its estimate of their ability to obtain, for reasonable and competitive commissions, the best execution of particular and related portfolio transactions. For this purpose, "best execution" means prompt and reliable execution at the most favorable price obtainable. Such brokers may be selected on the basis of all relevant factors including the execution capabilities required by the transaction or transactions, the importance of speed, efficiency, or confidentiality, and the willingness of the broker to provide useful or desirable investment research and/or special execution services. WRIMCO shall have no duty to seek advance competitive commission bids and may select brokers based solely on its current knowledge of prevailing commission rates.

         B. Subject to the foregoing, WRIMCO shall have discretion, in the interest of the Funds, to direct the execution of its portfolio transactions to brokers who provide brokerage and/or research services (as such services are defined in Section 28(e) of the Securities Exchange Act of 1934) for the Funds and/or other accounts for which WRIMCO exercises "investment discretion" (as that term is defined in Section 3(a)(35) of the Securities Exchange Act of 1934); and in connection with such transactions, to pay commission in excess of the amount another adequately qualified broker would have charged if WRIMCO determines, in good faith, that such commission is reasonable in relation to the value of the brokerage and/or research services provided by such broker, viewed in terms of either that particular transaction or the overall responsibilities of WRIMCO with respect to the accounts for which it exercises investment discretion. In reaching such determination, WRIMCO will not be required to attempt to place a specified dollar amount on the brokerage and/or research services provided by such broker; provided that WRIMCO shall be prepared to demonstrate that such determinations were made in good faith, and that all commissions paid by the Funds over a representative period selected by the Trust's Board of Trustees were reasonable in relation to the benefits to the Funds.

V.         Compensation of WRIMCO

         As compensation in full for services rendered and for the facilities and personnel furnished under sections I, II, and IV of this Agreement, each Fund will pay to WRIMCO for each day the fees specified in Appendix B hereto.

         The amounts payable to WRIMCO shall be determined as of the close of business each day; shall, except as set forth below, be based upon the value of net assets computed in accordance with the Trust Instrument; and shall be paid in arrears whenever requested by WRIMCO. In computing the value of the net assets of each Fund, there shall be excluded the amount owed to the Fund with respect to shares which have been sold but not yet paid to the Fund by Waddell & Reed, Inc.

         Notwithstanding the foregoing, if the laws, regulations or policies of any state in which shares of the Funds are qualified for sale limit the operation and management expenses of the Funds, WRIMCO will refund to the Funds the amount by which such expenses exceed the lowest of such state limitations.

VI.         Undertakings of WRIMCO; Liabilities

         WRIMCO shall give to the Trust the benefit of its best judgment, efforts and facilities in rendering advisory services hereunder.

         WRIMCO shall at all times be guided by and be subject to each Fund's investment policies, the provisions of the Trust Instrument and Bylaws of the Trust as each shall from time to time be amended, and to the decision and determination of the Trust's Board of Trustees.

         This Agreement shall be performed in accordance with the requirements of the 1940 Act, the Investment Advisers Act of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934, to the extent that the subject matter of this Agreement is within the purview of such Acts. Insofar as applicable to WRIMCO as an investment adviser and affiliated person of the Trust, WRIMCO shall comply with the provisions of the 1940 Act, the Investment Advisers Act of 1940 and the respective rules and regulations of the Securities and Exchange Commission thereunder.

         In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of WRIMCO it shall not be subject to liability to the Trust or to any shareholder of the Funds (direct or beneficial) for any act or omission in the course of or connected with rendering services thereunder or for any losses that may be sustained in the purchase, holding or sale of any security.

VII.         Duration of this Agreement

         This Agreement shall become effective on April 30, 2009 and shall continue in effect as to a Fund, unless terminated as hereinafter provided, for a period of one year and from year-to-year thereafter only if such continuance is specifically approved at least annually by the Board of Trustees, including the vote of a majority of the trustees who are not parties to this Agreement or "interested persons" (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval, or by the vote of the holders of a majority (as defined in the 1940 Act) of the outstanding voting securities of the Fund.

VIII.         Termination

         This Agreement may be terminated as to a Fund by WRIMCO at any time without penalty upon giving the Trust one hundred twenty (120) days' written notice (which notice may be waived by the Trust) and may be terminated as to a Fund by the Trust at any time without penalty upon giving WRIMCO sixty (60) days' written notice (which notice may be waived by WRIMCO), provided that such termination by the Trust shall be directed or approved by the vote of a majority of the Board of Trustees of the Trust in office at the time or by the vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of the affected Fund. This Agreement shall automatically terminate in the event of its assignment, the term "assignment" for this purpose having the meaning defined in Section 2(a)(4) of the 1940 Act and the rules and regulations thereunder.

IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be executed by their duly authorized officers and their corporate seal to be hereunto affixed, all as of the day and year first above written.

(Seal)		IVY FUNDS VARIABLE INSURANCE
		PORTFOLIOS
		By:		__/s/ Mara Herrington______________
				Mara Herrington
				Vice President
ATTEST:
By:	_/s/ Megan E. Bray______________
	Megan E. Bray
	Assistant Secretary
(Seal)			WADDELL & REED INVESTMENT
			MANAGEMENT COMPANY
			By:	__/s/ Henry J. Herrmann______________
				Henry J. Herrmann
				President
ATTEST:
By:	__/s/ Wendy J. Hills______________
	Wendy J. Hills
	Secretary

APPENDIX A

TO INVESTMENT MANAGEMENT AGREEMENT

Ivy Funds VIP Global Natural Resources

Ivy Funds VIP International Value

Ivy Funds VIP Micro Cap Growth

Ivy Funds VIP Mortgage Securities

Ivy Funds VIP Real Estate Securities

Ivy Funds VIP Small Cap Value

APPENDIX B TO INVESTMENT MANAGEMENT AGREEMENT
IVY FUNDS VARIABLE INSURANCE PORTFOLIOS
FEE SCHEDULE
A cash fee computed each day on net asset value for each Fund at the annual rates listed below:
Global Natural Resources
Net Fund Assets	Fee
Up to $500 million	1.00%
Over $500 million and up to $1 billion	0.85%
Over $1 billion and up to $2 billion	0.83%
Over $2 billion and up to $3 billion	0.80%
Over $3 billion	0.76%
International Value
Net Assets	Fee
Up to $1 billion	0.85%
Over $1 billion and up to $2 billion	0.83%
Over $2 billion and up to $3 billion	0.80%
Over $3 billion	0.76%
Micro Cap Growth
Net Assets	Fee
Up to $1 billion	0.95%
Over $1 billion and up to $2 billion	0.93%
Over $2 billion and up to $3 billion	0.90%
Over $3 billion	0.86%
Mortgage Securities
Net Assets	Fee
Up to $500 million	0.50%
Over $500 million and up to $1 billion	0.45%
Over $1 billion and up to $1.5 billion	0.40%
Over $1.5 billion	0.35%
Real Estate Securities
Net Assets	Fee
Up to $1 billion	0.90%
Over $1 billion and up to $2 billion	0.87%
Over $2 billion and up to $3 billion	0.84%
Over $3 billion	0.80%
Small Cap Value
Net Assets	Fee
Up to $1 billion	0.85%
Over $1 billion and up to $2 billion	0.83%
Over $2 billion and up to $3 billion	0.80%
Over $3 billion	0.76%

EX-99.(D)(3)

Exhibit (d)(3)

INVESTMENT SUB-ADVISORY AGREEMENT

THIS AGREEMENT, dated as of April 15, 2009, shall become effective on April 30, 2009 and is entered into by and between Waddell & Reed Investment Management Company, a Kansas corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Adviser") and Advantus Capital Management, Inc., a Minnesota corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Sub-Adviser").

WHEREAS, the Adviser is the investment manager to Ivy Funds Variable Insurance Portfolios (the "Trust"), an open-end diversified management investment company organized as a series fund pursuant to the laws of the state of Delaware, and registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with portfolio selection and related research and statistical services in connection with the Adviser's investment advisory activities on behalf of the Trust's Mortgage Securities Portfolio and Real Estate Securities Portfolio (hereinafter, each a "Fund" and collectively, the "Funds"), and the Sub-Adviser desires to furnish such services to the Adviser;

NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, it is agreed as follows:

1.	Appointment of Sub-Adviser
	In accordance with and subject to the Investment Management Agreement between the Trust and the Adviser dated April 10, 2009, the Adviser hereby appoints the Sub-Adviser to perform portfolio selection services described herein for investment and reinvestment of the assets of each Fund, subject to the control and direction of the Trust's Board of Trustees, for the period and on the terms hereinafter set forth. The Sub-Adviser accepts such appointment and agrees to furnish the services hereinafter set forth for the compensation herein provided. The Sub-Adviser shall for all purposes herein be deemed to be an independent contractor and shall, except as expressly provided or authorized, have no authority to act for or represent the Trust or the Adviser in any way or otherwise be deemed an agent of the Trust or the Adviser.
2.	Obligations of and Services to be Provided by the Sub-Adviser
	(a)	The Sub-Adviser shall provide the following services and assume the following obligations with respect to each Fund:
		(1)	The investment of the assets of the Funds shall at all times be subject to the applicable provisions of the Trust Instrument, the Bylaws, the Registration Statement, the current Prospectus and the Statement of Additional Information of the Trust and shall conform to the investment objectives, policies and restrictions of the Funds as set forth in such documents and as interpreted from time to time by the Board of Trustees of the Trust and by the Adviser, including diversification of the holdings of each Fund as a segregated asset account in accordance with Section 817 of the Internal Revenue Code, as amended (the "Code"), and Regulation Section 1.817-5 thereunder, provided that the Adviser shall be responsible for ensuring that the Trust as a whole is "adequately diversified" if and to the extent required by Section 817(h) of the Code and Regulation 1.817-5 thereunder. Within the framework of the investment objectives, policies and restrictions of the Funds, and subject to the supervision of the Adviser, the Sub-Adviser shall have the sole and exclusive responsibility for the making and execution of all investment decisions for each Fund. The Adviser agrees to promptly inform the Sub-Adviser if such objective, policies or restrictions change and to deliver to the Sub-Adviser updated documents, if prepared.
		(2)	In carrying out its obligations to manage the investments and reinvestments of the assets of the Funds, the Sub-Adviser shall: (1) obtain and evaluate pertinent economic, statistical, financial and other information affecting the economy generally and individual companies or industries the securities of which are included in the Funds or are under consideration for inclusion therein; (2) formulate and implement a continuous investment program for the Funds consistent with the investment objective and related investment policies for such Fund as set forth in the Trust's Registration Statement, as amended; and (3) take such steps as are necessary to implement the aforementioned investment program by purchase and sale of securities including the placing, or directing the placement through an affiliate of the Sub-Adviser, of orders for such purchases and sales.
		(3)	In connection with the purchase and sale of securities of the Funds, the Sub-Adviser shall arrange for the transmission to the Adviser (or its designee) and the Custodian for the Trust on a daily basis such confirmation, trade tickets and other documents as may be necessary to enable them to perform their administrative responsibilities with respect to the Funds. With respect to portfolio securities to be purchased or sold through the Depository Trust Company, the Sub-Adviser shall arrange for the automatic transmission of the I.D. confirmation of the trade to the Custodian of the Funds.
			a.	The Adviser shall retain responsibility for the settlement of each purchase or sale executed by the Sub-Adviser on behalf of the Trust.
			b.	The Sub-Adviser shall be responsible for determining the level of cash to be held in each Fund. However, the Adviser shall retain all responsibility for the management of all cash for the Trust and for investing this cash in compliance with applicable regulations.
	c.	The Sub-Adviser shall render such reports to the Adviser and/or to the Trust's Board of Trustees concerning the investment activity and portfolio composition of the Funds in such form and at such intervals as the Adviser or the Board may from time to time require.
		(4)	The Sub-Adviser shall, in the name of the Trust, place or direct the placement of orders for the execution of portfolio transactions in accordance with the policies with respect thereto, as set forth in the Trust's Registration Statement, as amended from time to time, and under the Securities Act of 1933, as amended (the "1933 Act") and the 1940 Act. In connection with the placement of orders for the execution of the Fund's portfolio transactions, the Sub-Adviser shall create and maintain all necessary brokerage records of the Trust in accordance with all applicable laws, rules and regulations, including but not limited to, records required by Section 31(a) of the 1940 Act. All records shall be the property of the Trust and shall be available for inspection and use by the Securities and Exchange Commission, the Trust or any person retained by the Trust. Where applicable, such records shall be maintained by the Sub-Adviser for the period and in the place required by Rule 31a-2 under the 1940 Act.
		(5)	In placing orders or directing the placement of orders for the execution of portfolio transactions, the Sub-Adviser shall select brokers and dealers for the execution of the Funds' transactions. In selecting brokers or dealers to execute such orders, the Sub-Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services which enhance the Sub-Adviser's investment research and portfolio management capability generally. It is further understood in accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, that the Sub-Adviser may negotiate with and assign to a broker a commission which may exceed the commission which another broker would have charged for effecting the transaction if the Sub-Adviser determines in good faith that the amount of commission charged was reasonable in relation to the value of brokerage and/or research services (as defined in Section 28(e) provided by such broker, viewed in terms either of the Funds or the Sub-Adviser's overall responsibilities to the Sub-Adviser's discretionary accounts.
			The Sub-Adviser shall render such reports to the Adviser and/or to the Fund's Board of Trustees regarding the total amount and usage of all commissions generated as a result of trades executed for the Fund's holdings, as well as information regarding third-party services, if any, received by the Sub-Adviser as a result of trading activity with select brokers and dealers.
	(b)	The Sub-Adviser shall use the same skill and care in providing services to the Trust as it uses in providing services to fiduciary accounts for which it has investment responsibility. The Sub-Adviser will comply with all applicable rules and regulations of the Securities and Exchange Commission.
	(c)	The Sub-Adviser shall (i)  comply with all reasonable requests of the Trust (through the Adviser) for information, including information required in connection with the Trust's filings with the Securities and Exchange Commission (the "SEC") and state securities commissions, and (ii)  provide such other services as the Sub-Adviser shall from time to time determine to be necessary or useful to the administration of the Trust.
	(d)	The Sub-Adviser shall furnish to the Adviser for distribution to the Trust's Board of Trustees periodic reports and information as the Trust's officers or Board of Trustees shall reasonably request.
	(e)	On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as other customers, the Sub-Adviser, to the extent permitted by applicable law, may aggregate the securities to be so sold or purchased in order to obtain the best execution or lower brokerage commissions, if any. The Sub-Adviser also may purchase or sell a particular security for one or more customers in different amounts. On either occasion, and to the extent permitted by applicable law and regulations, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Sub-Adviser in the manner it considers to be the most equitable and consistent with its fiduciary obligations to the Funds and to such other customers. In no instance, however, will the Funds' assets be purchased from or sold to the Adviser, the Sub-Adviser, the Trust's principal underwriter, or any affiliated person of either the Trust, the Adviser, the Sub-Adviser or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the SEC and the 1940 Act.
	(f)	Consistent with U.S. securities laws, the Sub-Adviser agrees to adopt written trade allocation procedures that are "fair and equitable" to its clients which are consistent with the investment policies set out in the prospectuses and statements of additional information (including amendments) of the Funds or as the Trust's Board of Trustees may direct from time to time. The Sub-Adviser also agrees to effect securities transactions in client accounts consistent with the allocation system described in such written procedures, to keep accurate records of such transactions and to fully disclose such trade allocation procedures and practices to clients.
	(g)	The Sub-Adviser shall review all proxy solicitation materials and be responsible for voting and handling all proxies in relation to the securities held in the Funds. The Adviser shall instruct the custodian and other appropriate parties providing services to the Funds to promptly forward misdirected proxies to the Sub-Adviser.
		The Sub-Adviser shall provide to the Advisor a copy of Sub-Adviser's written proxy voting policies and procedures, as adopted, including policies on addressing potential conflicts of interest and a copy of any summary of the procedures, if applicable. Sub-Adviser shall also be responsible for maintaining records with respect to the proxy votes cast for the Funds. The records shall conform to the applicable SEC proxy regulations.
		Records of all applicable proxy voting records will be provided to the Adviser within 3 business days of any request, written or oral (voting records should be available in hard and soft copy).
	(h)	The Sub-Adviser shall review all notices, including but not limited to corporate action notices, and provide and respond to all corresponding requests for information in relation to the securities held in the Funds. The Adviser shall instruct the custodian and other appropriate parties providing services to the Funds to promptly forward misdirected corporate action notices to the Sub-Adviser.
	(i)	The Sub-Adviser shall promptly notify the Adviser of any financial condition that is likely to impair the Sub-Adviser's ability to fulfill its commitment under this Agreement and/or any termination or resignation of senior (key) personnel.
3.	Delivery of Documents to the Adviser. The Sub-Adviser has furnished the Adviser with copies of each of the following documents:
	(a)	The Sub-Adviser's current Form ADV and any amendments thereto, if applicable;
	(b)	The Sub-Adviser's most recent audited balance sheet;
	(c)	Separate lists of persons whom the Sub-Adviser wishes to have authorized to give written and/or oral instructions to the custodian and the fund accounting agent of the Trust regarding assets for the Funds; and
	(d)	The Code of Ethics of the Sub-Adviser as currently in effect.
		The Sub-Adviser will furnish the Adviser from time to time with copies, properly certified or otherwise authenticated, of all material amendments of or supplements to the foregoing, if any. Additionally, the Sub-Adviser will provide to the Adviser such other documents relating to its services under this Agreement as the Adviser may reasonably request on a periodic basis. Such amendments or supplements as to items (a) through (d) above will be provided within 30 days of the time such materials became available to the Sub-Adviser.
4.	Expenses
	During the terms of this Agreement, the Sub-Adviser will pay all expenses incurred by it in connection with its activities under this Agreement unless otherwise specifically stated.
5.	Compensation
	In payment for the investment sub-advisory services to be rendered by the Sub-Adviser in respect of the Funds hereunder, the Adviser shall pay to the Sub-Adviser as full compensation for all services hereunder a fee computed at an annual rate which shall be a percentage of the average daily value of the net assets of the Funds. The fee shall be accrued daily and shall be based on the net asset values of all of the issued and outstanding shares of the Funds as determined as of the close of each business day pursuant to the Trust Instrument, Bylaws and currently effective Prospectus and Statement of Additional Information of the Trust. The fee shall be payable in arrears on the last day of each calendar month.
	The amount of such annual fee, as applied to the average daily value of the net assets of the Funds shall be as described in the schedule below:

Fund	Fee
Mortgage Securities Portfolio	0.30%
Real Estate Securities Portfolio	0.55%

6.	Renewal and Termination
	This Agreement shall continue in effect until September 30, 2009, and from year to year thereafter provided such continuance is specifically approved at least annually by a vote of the holders of the majority of the outstanding voting securities of a Fund, or by a vote of the majority of the Trust's Board of Trustees. And further provided that such continuance is also approved annually by a vote of the majority of the Trust's Board of Trustees who are not parties to this Agreement or interested persons of parties hereto, cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated at any time without payment of penalty: (i) by the Trust's Board of Trustees or by a vote of a majority of the outstanding voting securities of the class of capital stock of the Fund on sixty days' prior written notice, or (ii) by either party hereto upon sixty days' prior written notice to the other. This Agreement will terminate automatically upon any termination of the Investment Management Agreement between the Trust and the Adviser or in the event of its assignment. The terms "interested person," "assignment" and "vote of a majority of the outstanding voting securities" shall have the meanings set forth in the 1940 Act.
7.	General Provisions
	(a)	The Sub-Adviser may rely on information reasonably believed by it to be accurate and reliable. Except as may otherwise be provided by the 1940 Act, neither the Sub-Adviser nor its officers, directors, employees or agents shall be subject to any liability for any error of judgment or mistake of law or for any loss arising out of any investment or other act or omission in the performance by the Sub-Adviser of its duties under this Agreement or for any loss or damage resulting from the imposition by any government or exchange control restrictions which might affect the liquidity of the Funds' assets, or from acts or omissions of custodians or securities depositories, or from any war or political act of any foreign government to which such assets might be exposed, provided that nothing herein shall be deemed to protect, or purport to protect, the Sub-Adviser against any liability to the Trust or to its shareholders to which the Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the Sub-Adviser's reckless disregard of its obligations and duties hereunder.
	(b)	The Adviser and the Trust's Board of Trustees understand that the value of investments made for the Funds may go up as well as down, is not guaranteed and that investment decisions will not always be profitable. The Adviser has not made and is not making any guarantees, including any guarantee as to any specific level of performance of the Funds. The Adviser and the Trust's Board of Trustees acknowledge that each Fund is designed for the described investment objective and is not intended as a complete investment program. They also understand that investment decisions made on behalf of the Funds by Sub-Adviser are subject to various market and business risks.
	(c)	This Agreement shall not become effective unless and until it is approved by the Board of Trustees of the Trust, including a majority of the members who are not "interested persons" to parties to this Agreement, by a vote cast in person at a meeting called for the purpose of voting such approval, and by a majority of the outstanding voting securities of the class of capital stock of the Funds.
	(d)	The Adviser understands that the Sub-Adviser now acts, will continue to act, or may act in the future, as investment adviser to fiduciary and other managed accounts, including other investment companies, and the Adviser has no objection to the Sub-Adviser so acting, provided that the Sub-Adviser duly performs all obligations under this Agreement. The Adviser also understands that the Sub-Adviser may give advice and take action with respect to any of its other clients or for its own account which may differ from the timing or nature of action taken by the Sub-Adviser with respect to the Funds. Nothing in this Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell or to recommend for purchase or sale, with respect to the Trust, any security which the Sub-Adviser or its shareholders, directors, officers, employees or affiliates may purchase or sell for its or their own account(s) or for the account of any other client.
	(e)	Except to the extent necessary to perform its obligations hereunder, nothing herein shall be deemed to limit or restrict the right of the Sub-Adviser, or the right of any of its officers, directors or employees who may also be an officer, director or employee of the Trust, or persons otherwise affiliated with the Trust (within the meaning of the 1940 Act) to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other trust, corporation, firm, individual or association.
8.	Confidential Treatment. It is understood that any information or recommendation supplied by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Adviser, the Funds or such persons as the Adviser may designate in connection with the Funds. It is also understood that any information supplied to the Sub-Adviser in connection with the performance of its obligations hereunder, particularly, but not limited to, any list of securities which, on a temporary basis, may not be bought or sold for the Funds, is to be regarded as confidential and for use only by the Sub-Adviser in connection with its obligation to provide investment advice and other services to the Funds.
9.	Representations and Warranties. The Sub-Adviser hereby represents and warrants as follows:
	(a)	The Sub-Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and such registration is current, complete and in full compliance with all material applicable provisions of the Advisers Act and the rules and regulations thereunder;
	(b)	The Sub-Adviser has all requisite authority to enter into, execute, deliver and perform the Sub-Adviser's obligations under this Agreement;
	(c)	The Sub-Adviser's performance of its obligations under this Agreement does not conflict with any law, regulation or order to which the Sub-Adviser is subject; and
	(d)	The Sub-Adviser has reviewed the portion of (i) the registration statement filed with the SEC, as amended from time to time, for the Funds ("Registration Statement"), and (ii) the Funds' prospectuses and statements of additional information (including amendments) thereto, in each case in the form received from the Adviser with respect to the disclosure about the Sub-Adviser and the Funds of which the Sub-Adviser has knowledge and except as advised in writing to the Adviser such Registration Statement, prospectuses and statements of additional information (including amendments) contain, as of their respective dates, no untrue statement of any material fact of which the Sub-Adviser has knowledge and do not omit any statement of a material fact of which the Sub-Adviser has knowledge which was required to be stated therein or necessary to make the statements contained therein not misleading.
10.	Use of Names.
	(a)	The Sub-Adviser acknowledges and agrees that the names Ivy Funds Variable Insurance Portfolios and Waddell & Reed Investment Management Company, and abbreviations or logos associated with those names, are the valuable property of the Adviser and its affiliates; that the Trust, the Adviser and their affiliates have the right to use such names, abbreviations and logos; and that the Sub-Adviser shall use the names Ivy Funds Variable Insurance Portfolios and Waddell & Reed Investment Management Company, and associated abbreviations and logos, only in connection with the Sub-Adviser's performance of its duties hereunder. Further, in any communication with the public and in any marketing communications of any sort, the Sub-Adviser agrees to obtain prior written approval from the Adviser before using or referring to Ivy Funds Variable Insurance Portfolios and Waddell & Reed Investment Management Company, or the Funds or any abbreviations or logos associated with those names; provided that nothing herein shall be deemed to prohibit the Sub-Adviser from referring to the performance of the Funds in the Sub-Adviser's marketing material as long as such marketing material does not constitute "sales literature" or "advertising" for the Funds, as those terms are used in the rules, regulations and guidelines of the SEC and the Financial Industry Regulatory Authority.
	(b)	The Adviser acknowledges and agrees that the names Advantus Capital Management, Inc. and Advantus Capital, and abbreviations or logos associated with those names, are the valuable property of the Sub-Adviser and its affiliates; that Sub-Adviser and its affiliates have the right to use such names, abbreviations and logos; and that the Adviser shall use the names Advantus Capital Management, Inc. and Advantus Capital, and associated abbreviations and logos, only in connection with the Adviser's duties hereunder. Further, in any communication with the public and in any marketing communications of any sort, the Adviser agrees to obtain prior written approval from the Sub-Adviser before using or referring to Advantus Capital Management, Inc. or Advantus Capital, or any abbreviations or logos associated with those names.
11.	Reports by the Sub-Adviser and Records of the Funds. The Sub-Adviser shall furnish the Adviser monthly, quarterly and annual reports concerning transactions of the Funds, including information required to be disclosed in the Trust's Registration Statement, in such form as may be mutually agreed. The Sub-Adviser shall permit the financial statements, books and records with respect to the Funds to be inspected and audited by the Trust, the Adviser or their agents at all reasonable times during normal business hours. The Sub-Adviser shall immediately notify and forward to both the Adviser and legal counsel for the Trust any legal process served upon it on behalf of the Adviser or the Trust. The Sub-Adviser shall promptly notify the Adviser of any changes in any information concerning the Sub-Adviser of which the Sub-Adviser becomes aware that would be required to be disclosed in the Trust's Registration Statement.
	In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser agrees that all records it maintains for the Funds are the property of the Funds and the Trust and further agrees to surrender promptly to the Trust or the Adviser any such records upon the Trust's or the Adviser's request. The Sub-Adviser further agrees to maintain for the Trust the records the Trust is required to maintain under Rule 31a-1(b) insofar as such records relate to the investment affairs of the Funds. The Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains for the Trust.
12.	Indemnification. The Sub-Adviser agrees to indemnify and hold harmless the Adviser, any affiliated person within the meaning of Section 2(a)(3) of the 1940 Act ("affiliated person") of the Adviser and each person, if any, who, within the meaning of Section 15 of the Securities Act of 1933, as amended (the "1933 Act"), controls ("controlling person") the Adviser, against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Adviser, the Funds, the Trust or such affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of the Sub-Adviser's responsibilities as sub-adviser of the Funds (1) to the extent of and as a result of the willful misconduct, bad faith, or gross negligence of the Sub-Adviser, any of the Sub-Adviser's employees or representatives or any affiliate of or any person acting on behalf of the Sub-Adviser, or (2) as a result of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, prospectuses or statements of additional information covering the Funds or the Trust or any amendment thereof or any supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission was made in reliance upon written information furnished by the Sub-Adviser to the Adviser, the Trust or any affiliated person of the Adviser or the Trust expressly for use in the Trust's Registration Statement, or upon verbal information confirmed by the Sub-Adviser in writing expressly for use in the Trust's Registration Statement or (3) to the extent of, and as a result of, the failure of the Sub-Adviser to execute, or cause to be executed, portfolio transactions according to the standards and requirements of the 1940 Act; provided, however, that in no case is the Sub-Adviser's indemnity in favor of the Adviser or any affiliated person or controlling person of the Adviser deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.
	The Adviser agrees to indemnify and hold harmless the Sub-Adviser against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Sub-Adviser or such affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of the Adviser's responsibilities as investment manager of the Funds (1) to the extent of and as a result of the willful misconduct, bad faith, or gross negligence of the Adviser, any of the Adviser's employees or representatives or any affiliate of or any person acting on behalf of the Adviser, or (2) as a result of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, prospectuses or statements of additional information covering the Funds or the Trust or any amendment thereof or any supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission was made by the Trust other than in reliance upon written information furnished by the Sub-Adviser, or any affiliated person of the Sub-Adviser, expressly for use in the Trust's Registration Statement or other than upon verbal information confirmed by the Sub-Adviser in writing expressly for use in the Trust's Registration Statement; provided, however, that in no case is the Adviser's indemnity in favor of the Sub-Adviser deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.
13.	Assignment by the Sub-Adviser. This Agreement shall not be assigned by the Sub-Adviser to any other person or company without the Adviser's prior written consent.
14.	Jurisdiction. The Sub-Adviser irrevocably submits to the jurisdiction of any state or U.S. federal court sitting in the State of Kansas over any suit, action or proceeding arising out of or relating to this proposal and the agreement contemplated herein. The Sub-Adviser irrevocably waives, to the fullest extent permitted by law, any objection which it may have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum.
	Nothing in this Section 14 shall affect the right of the Adviser to serve process in any manner permitted by law or limit the right of the Adviser to bring proceedings against the Sub-Adviser in the courts of any jurisdiction or jurisdictions.
15.	Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered or sent by pre-paid first class letter post to the following addresses or to such other address as the relevant addressee shall hereafter notify for such purpose to the others by notice in writing and shall be deemed to have been given at the time of delivery.

If to the Adviser:	WADDELL & REED INVESTMENT
	MANAGEMENT COMPANY
	6300 Lamar Avenue
	Overland Park, KS 66202, U.S.A.
	Attention: Henry J. Herrmann, President
If to the Trust or Funds:	IVY FUNDS VARIABLE
	INSURANCE PORTFOLIOS
	6300 Lamar Avenue
	Overland Park, KS 66202, U.S.A.
	Attention: Mara D. Herrington, Vice President and Secretary
If to the Sub-Adviser:	ADVANTUS CAPITAL MANAGEMENT, INC.
	400 Robert Street North
	St. Paul, MN 55101
	Attention: Diane Orbison, President

19.	Severability. Should any part of this Agreement be held invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors.
20.	Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all such counterparts shall constitute a single instrument.

IN WITNESS WHEREOF, the parties have duly executed this Agreement.
WADDELL & REED INVESTMENT MANAGEMENT COMPANY
By:	/s/Henry J. Herrmann
	Henry J. Herrmann
Its:	President
ADVANTUS CAPITAL MANAGEMENT, INC.
By:	/s Theodore R. Hoxmeier	By:	/s/James W. Tobin
Its:	Vice President	Its:	Vice President

EX-99.(D)(4)

Exhibit (d)(4)

INVESTMENT SUB-ADVISORY AGREEMENT

THIS AGREEMENT, dated as of April 15, 2009, shall become effective on April 30, 2009 and is entered into by and between Waddell & Reed Investment Management Company, a Kansas corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Adviser") and Mackenzie Financial Corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Sub-Adviser").

WHEREAS, the Adviser is the investment manager to Ivy Funds Variable Insurance Portfolios (the "Trust"), an open-end diversified management investment company organized as a series fund, registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with portfolio management services in connection with the Adviser's investment advisory activities on behalf of the Trust's Global Natural Resources Portfolio (hereinafter "Fund"), and the Sub-Adviser desires to furnish such services to the Adviser;

NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, it is agreed as follows:

1.	Appointment of Sub-Adviser
	In accordance with and subject to the Investment Management Agreement between the Funds and the Adviser dated April 10, 2009, the Adviser hereby appoints the Sub-Adviser to perform portfolio selection services described herein for investment and reinvestment of the assets of the Fund, subject to the control and direction of the Trust's Board of Trustees, for the period and on the terms hereinafter set forth. The Sub-Adviser accepts such appointment and agrees to furnish the services hereinafter set forth for the compensation herein provided. The Sub-Adviser shall for all purposes herein be deemed to be an independent contractor and shall, except as expressly provided or authorized, have no authority to act for or represent the Trust or the Adviser in any way or otherwise be deemed an agent of the Trust or the Adviser.
2.	Obligations of and Services to be Provided by the Sub-Adviser
	(a)	The Sub-Adviser shall provide the following services and assume the following obligations with respect to the Fund:
		(1)	The investment of the assets of the Fund shall at all times be subject to the applicable provisions of the Trust Instrument, the Bylaws, the Registration Statement, the current Prospectus and the Statement of Additional Information of the Trust and shall conform to the investment objectives, policies and restrictions of the Fund as set forth in such documents provided to Sub-Adviser and as interpreted from time to time by the Board of Trustees of the Trust and by the Adviser, including diversification of the holdings of the Fund as a segregated asset account in accordance with Section 817 of the Internal Revenue Code, as amended (the "Code"), and Regulation Section 1.817-5 thereunder, provided that the Adviser shall be responsible for ensuring that the Trust as a whole is "adequately diversified" if and to the extent required by Section 817(h) of the Code and Regulation 1.817-5 thereunder. Within the framework of the investment objectives, policies and restrictions of the Fund, and subject to the supervision of the Adviser, the Sub-Adviser shall have the sole and exclusive responsibility for the making and execution of all investment decisions for the Fund. The Adviser agrees to promptly inform the Sub-Adviser in writing if such objective, policies or restrictions change and to deliver to the Sub-Adviser updated documents, if prepared.
		(2)	In carrying out its obligations to manage the investments and reinvestments of the assets of the Fund, the Sub-Adviser shall: (i)  formulate and implement a continuous investment program for the Fund consistent with the investment objective and related investment policies for the Fund as described above; and (ii) take such steps as are necessary to implement the aforementioned investment program by placing orders for purchases and sales of securities with broker-dealers.
		(3)	In connection with the purchase and sale of securities of the Fund, the Sub-Adviser shall arrange for the transmission to the Adviser (or its designee) for the Trust on a daily basis, to be no later than 1:00 p.m. CST on trade date + 1 (T+1) such confirmation, trade tickets and other documents as may be necessary to enable them to perform their administrative responsibilities with respect to the Fund. The Sub-Adviser shall render such reports to the Adviser and/or to the Trust's Board of Trustees concerning the investment activity and portfolio composition of the Fund in such form and at such intervals as the Adviser or the Board may from time to time reasonably require.
		(4)	The Sub-Adviser shall, in the name of the Trust, place or direct the placement of orders for the execution of portfolio transactions in accordance with the policies with respect thereto, as described above. In connection with the placement of orders for the execution of the Fund's portfolio transactions, the Sub-Adviser shall create and maintain all necessary brokerage records of the Trust in accordance with all applicable laws, rules and regulations, including but not limited to, records required by Section 31(a) of the 1940 Act. All records shall be the joint property of the Trust and the Sub-Adviser, and the Sub-Adviser shall make such records available for inspection and use by the Securities and Exchange Commission, the Trust or any person retained by the Trust. Where applicable, such records shall be maintained by the Sub-Adviser for the period and in the place required by Rule 31a-2 under the 1940 Act.
		(5)	In placing orders or directing the placement of orders for the execution of portfolio transactions, the Sub-Adviser shall select brokers and dealers for the execution of the Fund's transactions. In selecting brokers or dealers to execute such orders, the Sub-Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services which enhance the Sub-Adviser's investment research and portfolio management capability generally. It is further understood in accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, that the Sub-Adviser may negotiate with and assign to a broker a commission which may exceed the commission which another broker would have charged for effecting the transaction if the Sub-Adviser determines in good faith that the amount of commission charged was reasonable in relation to the value of brokerage and/or research services (as defined in Section 28(e)) provided by such broker, viewed in terms either of the Fund's or the Sub-Adviser's overall responsibilities to the Sub-Adviser's discretionary accounts.
			The Sub-Adviser shall render such reports to the Adviser and/or to the Fund's Board of Trustees at such intervals and in such form as may be mutually agreed regarding the total amount and usage of all commissions generated as a result of trades executed for the Fund's holdings, as well as information regarding third-party services, if any, received by the Sub-Adviser as a result of trading activity with select brokers and dealers.
	(b)	The Sub-Adviser shall use the same skill and care in providing services to the Trust as it uses in providing services to fiduciary accounts for which it has investment responsibility. The Sub-Adviser will materially comply with all applicable rules and regulations of the Securities and Exchange Commission in providing investment management services with respect to the Fund.
	(c)	The Sub-Adviser shall (i) comply with all reasonable requests of the Trust (through the Adviser) for information, including information required in connection with the Trust's filings with the Securities and Exchange Commission (the "SEC") and state securities commissions, and (ii) provide such other services as the Sub-Adviser shall from time to time determine to be necessary to the administration of the Trust.
	(d)	At such intervals and in such form as may be mutually agreed, the Sub-Adviser shall furnish to the Adviser for distribution to the Trust's Board of Trustees reports on the investment performance of the Fund and on the performance of its obligations under this Agreement and shall supply such additional reports and information as the Trust's officers or Board of Trustees shall reasonably request.
	(e)	On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as other clients, the Sub-Adviser, to the extent permitted by applicable law, may aggregate the securities to be so sold or purchased in order to obtain the best execution or lower brokerage commissions, if any. The Sub-Adviser also may purchase or sell a particular security for one or more clients in different amounts. On either occasion, and to the extent permitted by applicable law and regulations, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Sub-Adviser in the manner it considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to such other clients. In no instance, however, will the Fund's assets be purchased from or sold to the Adviser, the Sub-Adviser, the Trust's principal underwriter, or any affiliated person of either the Trust, the Adviser, the Sub-Adviser or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the SEC and the 1940 Act.
	(f)	Consistent with U.S. securities laws, the Sub-Adviser agrees to adopt written trade allocation procedures that the Sub-Adviser considers "fair and equitable" to its clients which are consistent with the investment objectives, policies and restrictions of the Fund, as described above. The Sub-Adviser also agrees to effect securities transactions in client accounts consistent with the allocation system described in such written procedures.
	(g)	The Sub-Adviser shall review all proxy solicitation materials and be responsible for voting in its discretion and handling all proxies in relation to the securities held in the Fund. The Adviser shall instruct the custodian and other appropriate parties providing services to the Fund to promptly forward misdirected proxies to the Sub-Adviser.
The Sub-Adviser shall provide to the Advisor a copy of Sub-Adviser's written proxy voting policies and procedures, as adopted, including policies on addressing potential conflicts of interest and a copy of any summary of the procedures, if applicable. Sub-Adviser shall also be responsible for maintaining records with respect to the proxy votes cast for the Fund. The records shall conform to the applicable SEC proxy regulations.
Records of all applicable proxy voting records will be provided to the Adviser within 5 business days of any request, written or oral (voting records should be available in hard and soft copy).
	(h)	The Sub-Adviser shall review all notices, including but not limited to corporate action notices, and provide and respond to all corresponding requests for information in relation to the securities held in the Fund. The Adviser shall instruct the custodian and other appropriate parties providing services to the Fund to promptly forward misdirected corporate action notices to the Sub-Adviser.
	(i)	The Sub-Adviser shall promptly notify the Adviser of any financial condition that is likely to impair the Sub-Adviser's ability to fulfill its commitment under this Agreement and/or any termination or resignation of senior (key) personnel who are directly responsible for portfolio management for the Fund.
	(j)	The Sub-Adviser shall have no responsibility for filing claims on behalf of the Adviser or the Trust with respect to any class action, bankruptcy proceeding or any other action or proceeding in which the Adviser or the Trust may be entitled to participate as a result of the Fund's security holdings. The Sub-Adviser's responsibility with respect to such matters shall be limited to cooperating with the Adviser and the Trust in making such filings and to using its best efforts in sharing applicable information regarding such matters with the Adviser and the Trust.
3.	Delivery of Documents to the Adviser
The Sub-Adviser has furnished the Adviser with copies of each of the following documents:
	(a)	The Sub-Adviser's current Form ADV and any amendments thereto, if applicable;
	(b)	The Sub-Adviser's most recent audited balance sheet, which may be provided via the consolidated balance sheet for Investors Group, Inc.;
	(c)	Separate lists of persons whom the Sub-Adviser wishes to have authorized to give written and/or oral instructions to the fund accounting agent of the Trust regarding assets for the Fund; and
	(d)	The Business Conduct Policy and/or the Code of Ethics of the Sub-Adviser as currently in effect.
The Sub-Adviser will furnish the Adviser from time to time with copies, properly certified or otherwise authenticated, of all material amendments of or supplements to the foregoing, if any. Additionally, the Sub-Adviser will provide to the Adviser such other documents relating to its services under this Agreement as the Adviser may reasonably request on a periodic basis. Such amendments or supplements as to items (a) through (d) above will be provided within 30 days of the time such materials became available to the Sub-Adviser.
4.	Expenses
During the terms of this Agreement, the Sub-Adviser will pay all expenses incurred by it in connection with its activities under this Agreement, except as otherwise agreed to by the Sub-Adviser and the Adviser.
5.	Compensation
In payment for the investment sub-advisory services to be rendered by the Sub-Adviser in respect of the Fund hereunder, the Adviser shall pay to the Sub-Adviser as full compensation for all services hereunder a fee computed at an annual rate which shall be a percentage of the average daily value of the net assets of the Fund. The fee shall be accrued daily and shall be based on the net asset values of all of the issued and outstanding shares of the Fund as determined as of the close of each business day pursuant to the Trust Instrument, Bylaws and currently effective Prospectus and Statement of Additional Information of the Trust. The fee shall be payable in arrears on the last day of each calendar month.
The amount of such annual fee, in U.S. dollars, as applied to the average daily value of the net assets of the Fund shall be as described in the schedule below:

Net Fund Assets	Fee
Up to $500 million	0.500%
Over $500 million and up to $1 billion	0.425%
Over $1 billion and up to $2 billion	0.415%
Over $2 billion and up to $3 billion	0.400%
Over $3 billion	0.380%

6.	Renewal and Termination
This Agreement shall continue in effect until September 30, 2009, and from year to year thereafter provided such continuance is specifically approved at least annually by a vote of the holders of the majority of the outstanding voting securities of a Fund, or by a vote of the majority of the Trust's Board of Trustees. And further provided that such continuance is also approved annually by a vote of the majority of the Trust's Board of Trustees who are not parties to this Agreement or interested persons of parties hereto, cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated at any time without payment of penalty: (i) by the Trust's Board of Trustees or by a vote of a majority of the outstanding voting securities of the class of capital stock of the Fund on ninety days' prior written notice, or (ii) by either party hereto upon ninety days' prior written notice to the other. This Agreement will terminate automatically upon any termination of the Investment Management Agreement between the Trust and the Adviser or in the event of its assignment. The terms "interested person," "assignment" and "vote of a majority of the outstanding voting securities" shall have the meanings set forth in the 1940 Act.
7.	General Provisions
	(a)	The Sub-Adviser may rely on information reasonably believed by it to be accurate and reliable. Except as may otherwise be provided by the 1940 Act, neither the Sub-Adviser nor its officers, directors, employees or agents shall be subject to any liability for any error of judgment or mistake of law or for any loss arising out of any investment or other act or omission in the performance by the Sub-Adviser of its duties under this Agreement or for any loss or damage resulting from the imposition by any government or exchange control restrictions which might affect the liquidity of the Fund's assets, or from acts or omissions of the Adviser or custodians or other agents of the Trust or the Fund or securities depositories, or from any war or political act of any foreign government to which such assets might be exposed, provided that nothing herein shall be deemed to protect, or purport to protect, the Sub-Adviser against any liability to the Trust which the Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the Sub-Adviser's reckless disregard of its obligations and duties hereunder.
	(b)	The Adviser and the Trust's Board of Trustees understand that the value of investments made for the Account may go up as well as down, is not guaranteed and that investment decisions will not always be profitable. Neither the Sub-Adviser nor the Adviser have made and are not making any guarantees, including any guarantee as to any specific level of performance of the Fund. The Adviser and the Trust's Board of Trustees acknowledge that each Fund is designed for the described investment objective and is not intended as a complete investment program. They also understand that investment decisions made on behalf of the Fund by the Sub-Adviser are subject to various market and business risks.
	(c)	This Agreement shall not become effective unless and until it is approved by the Board of Trustees of the Trust, including a majority of the members who are not "interested persons" to parties to this Agreement, by a vote cast in person at a meeting called for the purpose of voting such approval, and by a majority of the outstanding voting securities of the class of capital stock of the Fund.
	(d)	The Adviser understands that the Sub-Adviser now acts, will continue to act, or may act in the future, as investment adviser to fiduciary and other managed accounts, including other investment companies, and the Adviser has no objection to the Sub-Adviser so acting, provided that the Sub-Adviser duly performs all obligations under this Agreement. The Adviser also understands that the Sub-Adviser may give advice and take action with respect to any of its other clients or for its own account which may differ from the timing or nature of action taken by the Sub-Adviser with respect to the Fund. Nothing in this Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell or to recommend for purchase or sale, with respect to the Trust, any security which the Sub-Adviser or its shareholders, directors, officers, employees or affiliates may purchase or sell for its or their own account(s) or for the account of any other client.
	(e)	Except to the extent necessary to perform its obligations hereunder, nothing herein shall be deemed to limit or restrict the right of the Sub-Adviser, or the right of any of its officers, directors or employees who may also be an officer, director or employee of the Trust, or persons otherwise affiliated with the Trust (within the meaning of the 1940 Act) to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other trust, corporation, firm, individual or association.
8.	Confidential Treatment
It is understood that any information or recommendation supplied by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Adviser, the Fund or such persons as the Adviser may designate in connection with the Fund. It is also understood that any information supplied to the Sub-Adviser in connection with the performance of its obligations hereunder, particularly, but not limited to, any list of securities which, on a temporary basis, may not be bought or sold for the Fund, is to be regarded as confidential and for use only by the Sub-Adviser in connection with its obligation to provide investment advice and other services to the Fund.
9.	Representations and Warranties
The Sub-Adviser hereby represents and warrants as follows:
	(a)	The Sub-Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and such registration is current, complete and in full compliance with all material applicable provisions of the Advisers Act and the rules and regulations thereunder;
	(b)	The Sub-Adviser has all requisite authority to enter into, execute, deliver and perform the Sub-Adviser's obligations under this Agreement;
	(c)	The Sub-Adviser's performance of its obligations under this Agreement does not conflict with any law, regulation or order to which the Sub-Adviser is subject; and
	(d)	The Sub-Adviser has reviewed the portion of (i) the registration statement filed with the SEC, as amended from time to time, for the Fund ("Registration Statement"), and (ii) the Fund's prospectuses and statements of additional information (including amendments) thereto, in each case in the form received from the Adviser with respect to the disclosure about the Sub-Adviser and the Fund of which the Sub-Adviser has knowledge and except as advised in writing to the Adviser such Registration Statement, prospectuses and statements of additional information (including amendments) contain, as of their respective dates, no untrue statement of any material fact of which the Sub-Adviser has knowledge and do not omit any statement of a material fact of which the Sub-Adviser has knowledge which was required to be stated therein or necessary to make the statements contained therein not misleading.
10.	Representations and Warranties
The Adviser hereby represents and warrants as follows:
	(a)	The Adviser is registered with the SEC as an investment adviser under the Advisers Act, and such registration is current, complete and in full compliance with all material applicable provisions of the Advisers Act and the rules and regulations thereunder;
	(b)	The Adviser has all requisite authority to enter into and execute this Investment Sub-Advisory Agreement, in accordance with the Investment Management Agreement between the Trust and the Adviser, dated April 10, 2009;
	(c)	The Adviser's performance of its obligations under this Agreement does not conflict with any law, regulation or order to which the Adviser is subject.
11.	Reports by the Sub-Adviser and Records of the Fund
The Sub-Adviser shall furnish the Adviser with reports concerning transactions and performance of the Fund, including information required to be disclosed in the Trust's Registration Statement, in such form and at such intervals as may be mutually agreed from time to time. The Sub-Adviser shall permit the financial statements, books and records with respect to the Fund to be inspected and audited by the Trust, the Adviser or their agents during normal business hours, upon reasonable notice to the Sub-Adviser. The Sub-Adviser shall immediately notify and forward to the Adviser any legal process served upon it on behalf of the Adviser or the Trust. The Sub-Adviser shall promptly notify the Adviser of any changes in any information concerning the Sub-Adviser of which the Sub-Adviser becomes aware that would be required to be disclosed in the Trust's Registration Statement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser agrees that all records it maintains for the Fund are the joint property of the Sub-Adviser and the Trust and further agrees to deliver to the Trust or the Adviser copies of any such records upon the Trust's or the Adviser's request. The Sub-Adviser further agrees to maintain for the Trust the records the Trust is required to maintain under Rule 31a-1(b) insofar as such records relate to the investment affairs of the Fund. The Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains for the Trust.
I2.	Indemnification
The Sub-Adviser agrees to indemnify and hold harmless the Adviser, any affiliated person within the meaning of Section 2(a)(3) of the 1940 Act ("affiliated person") of the Adviser and each person, if any, who, within the meaning of Section 15 of the Securities Act of 1933, as amended (the "1933 Act"), controls ("controlling person") the Adviser, against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Adviser, the Fund, the Trust or such affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of the Sub-Adviser's responsibilities as sub-adviser of the Fund pursuant to this Agreement (1) to the extent of and as a result of the willful misconduct, bad faith, or gross negligence of the Sub-Adviser, any of the Sub-Adviser's employees or representatives or any affiliate of or any person acting on behalf of the Sub-Adviser, or (2) as a result of any untrue statement of a material fact contained in the Registration Statement, prospectuses or statements of additional information covering the Fund or the Trust or any amendment thereof or any supplement thereto or the omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission was made in reliance upon written information furnished by the Sub-Adviser to the Adviser, the Trust or any affiliated person of the Adviser or the Trust expressly for use in the Trust's Registration Statement, or (3) to the extent of, and as a result of, the failure of the Sub-Adviser to execute, or cause to be executed, portfolio transactions according to the standards and requirements of the 1940 Act; provided, however, that in no case is the Sub-Adviser's indemnity in favor of the Adviser or any affiliated person or controlling person of the Adviser deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.
The Adviser agrees to indemnify and hold harmless the Sub-Adviser, each affiliated person of the Sub-Adviser and each controlling person of the Sub-Adviser against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Sub-Adviser or such affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of (1) the Adviser's responsibilities as investment manager of the Fund to the extent of and as a result of the willful misconduct, bad faith, or gross negligence of the Adviser, any of the Adviser's employees or representatives or any affiliate of or any person acting on behalf of the Adviser, or (2) as a result of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, prospectuses or statements of additional information covering the Fund or the Trust or any amendment thereof or any supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission was made by the Trust other than in reliance upon written information furnished by the Sub-Adviser, or any affiliated person of the Sub-Adviser, expressly for use in the Trust's Registration Statement; provided, however, that in no case is the Adviser's indemnity in favor of the Sub-Adviser deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.
13.	Assignment by the Sub-Adviser
This Agreement shall not be assigned by the Sub-Adviser to any other person or company without the Adviser's prior written consent which consent shall not be unreasonably withheld by the Adviser, although such consent shall be subject to the approval of the Board of Trustees for the Trust.
14.	Jurisdiction
The Sub-Adviser irrevocably submits to the jurisdiction of any state or U.S. federal court sitting in the State of Kansas over any suit, action or proceeding arising out of or relating to this proposal and the agreement contemplated herein. The Sub-Adviser irrevocably waives, to the fullest extent permitted by law, any objection which it may have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. The Sub-Adviser agrees that final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding upon the Sub-Adviser, and may be enforced to the extent permitted by applicable law in any court of the jurisdiction of which the Sub-Adviser is subject by a suit upon such judgment.
Nothing in this Section 14 shall affect the right of the Adviser to serve process in any manner permitted by law or limit the right of the Adviser to bring proceedings against the Sub-Adviser in the courts of any jurisdiction or jurisdictions.
15.	Notices
All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered or sent by pre-paid first class letter post to the following addresses or to such other address as the relevant addressee shall hereafter notify for such purpose to the others by notice in writing and shall be deemed to have been given at the time of delivery.

If to the Adviser:	WADDELL & REED INVESTMENT MANAGEMENT COMPANY
	6300 Lamar Avenue
	Overland Park, KS 66202, U.S.A.
	Attention:	Henry J. Herrmann, President
	cc:	Kristen A. Richards, Senior Vice President
If to the Trust or Fund:	IVY FUNDS VARIABLE INSURANCE PORTFOLIOS
	6300 Lamar Avenue
	Overland Park, KS 66202, U.S.A.
	Attention:	Mara D. Herrington, Vice President and Secretary
If to the Sub-Adviser:	MACKENZIE FINANCIAL CORPORATION
	150 Bloor Street West, Suite 810
	Toronto, Ontario M5S 3B5
	Attention:	W. Sian B. Burgess, Senior Vice-President
		and General Counsel

16.	Severability
Should any part of this Agreement be held invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors.
17.	Counterparts
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all such counterparts shall constitute a single instrument.

IN WITNESS WHEREOF, the parties have duly executed this Agreement.
WADDELL & REED INVESTMENT MANAGEMENT COMPANY
By:	/s/Henry J. Herrmann
Its:	President
MACKENZIE FINANCIAL CORPORATION
By:	/s/David Feather	By:	/s/Edward Merchand
Its:	Executive Vice President	Its:	Chief Financial Officer

EX-99.(D)(5)

Exhibit (d)(5)

SUBADVISORY AGREEMENT

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS

This SUBADVISORY AGREEMENT, dated as of April 15, 2009, shall become effective on April 30, 2009 (this "Agreement") and is entered into by and between TEMPLETON INVESTMENT COUNSEL, LLC, a Delaware limited liability company ("TIC") and TEMPLETON GLOBAL ADVISORS LIMITED ("TGAL"), a Bahamian corporation located in Nassau.

WITNESSETH

WHEREAS, TIC and TGAL are each registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and are engaged in the business of supplying investment management services, each as an independent contractor; and

WHEREAS, TIC and TGAL are affiliates and are under common control and management; and

WHEREAS, TIC, pursuant to a Subadvisory Agreement with WADDELL & REED INVESTMENT MANAGEMENT COMPANY (the "Client") effective as of April 30, 2009 (the "Investment Subadvisory Agreement"), has been retained to render investment advisory services with respect to certain assets of the International Value Portfolio, which is a separate series of Ivy Funds Variable Insurance Portfolios (the "Account"); and

WHEREAS, E. Tucker Scott, a portfolio manager for the Account, has relocated to Nassau, Bahamas and is employed by TGAL, and TIC wishes to enter into this agreement with TGAL to enable Mr. Scott to continue to perform his responsibilities as a portfolio manager of the Account during his employment with TGAL; and

WHEREAS, E. Tucker Scott continues to serve as an officer of TIC, but performs investment advisory services as an employee of TGAL.

NOW, THEREFORE, in consideration of the covenants and the mutual promises hereinafter set forth, the parties hereto, intending to be legally bound hereby, mutually agree as follows:

1. TIC hereby retains TGAL, and TGAL hereby accepts such engagement, to furnish certain investment advisory services with respect to the assets of the Account, as more fully set forth herein.

(a) Subject to the applicable provisions of the Trust Instrument, the Bylaws, the Registration Statement, the current Prospectus and the Statement of Additional Information of the Account, and the investment objectives, policies and restrictions of the Account as set forth in such documents and as interpreted from time to time by the Board of Trustees of Ivy Funds Variable Insurance Portfolios and by the Client, including diversification of the holdings of the Account as a segregated asset account in accordance with Section 817 of the Internal Revenue Code, and Regulation Section 1.817.-5 thereunder (collectively, the "Investment Guidelines"), and subject also to the instructions and supervision of TIC, TGAL agrees to provide certain investment advisory services with respect to securities and investments and cash equivalents in the Account. TIC will continue to have full responsibility for all investment advisory services provided to the Account. TIC acknowledges that the only services that TGAL will provide under this agreement are the portfolio management services of E. Tucker Scott while he remains employed by TGAL. Client shall continue to be responsible for ensuring that the Account as a whole is "adequately diversified" if and to the extent required by Section 817(h) of the Internal Revenue Code and Regulation 1.817-5 thereunder.

(b) Both TGAL and TIC may place all purchase and sale orders on behalf of the Account. In connection with the purchase and sale of securities of the Account, TGAL shall operate as though subject to, and shall conform to, the obligations imposed on TIC under the Investment Subadvisory Agreement.

(c) Unless otherwise instructed by TIC or the Client, and subject to the provisions of this Agreement and to any guidelines or limitations specified from time to time by TIC or by the Client, TGAL shall report daily all transactions effected by TGAL on behalf of the Account to TIC and to other entities as reasonably directed by TIC or the Client and in any event in such manner as to enable TIC to meet its obligations under the Investment Subadvisory Agreement.

(d) For the term of this Agreement, TGAL shall provide TIC with a report of its activities hereunder on behalf of the Account and its proposed strategy as TIC may reasonably request from time to time, all in such form and detail as requested by TIC. E. Tucker Scott shall also be available to respond to inquiries from TIC or the Client as either may reasonably request.

(e) In performing its services under this Agreement, TGAL shall adhere to the Account's Investment Guidelines, as may be amended from time to time, and shall comply with the provisions of the Advisers Act and all applicable rules and regulations of the Securities and Exchange Commission (the "SEC").

(f) In carrying out its duties hereunder, TGAL shall comply with all reasonable instructions of the Account or TIC in connection therewith. Such instructions may be given by letter, telex, telefax or telephone confirmed by telex, by TIC, the Client or by any other person authorized by the Client, provided a certification of such authorization has been supplied to TGAL.

2. In performing the services described above, TGAL shall use its best efforts to obtain for the Account the most favorable price and execution available. Subject to prior authorization of appropriate policies and procedures by the Client, TGAL may, to the extent authorized by law and in accordance with the terms of the Investment Subadvisory Agreement, cause the Account to pay a broker who provides brokerage or research services, within the meaning of Section 28(e) of the Securities Exchange Act of 1934, as amended ("Section 28(e)"), an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker would have charged for effecting that transaction, in recognition of the brokerage or research services (within the meaning of Section 28(e)) provided by the broker, if TGAL determines in good faith that the amount of commission charged was reasonable in relation to the value of the brokerage or research services provided by such broker, viewed in terms either of the Account or TGAL's overall responsibilities to its discretionary accounts. To the extent authorized by applicable law, TGAL shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of such action.

TGAL shall render such reports to the Client, TIC and/or the Board of Trustees of Ivy Funds Variable Insurance Portfolios regarding the total amount and usage of all commissions generated as a result of trades executed for the Account's holdings, as well as information regarding third-party services, if any, received by TGAL as a result of trading activity with select brokers and dealers.

3. (a) TIC shall pay to TGAL a fee equal to 60% of the advisory fee paid to TIC under the Investment Subadvisory Agreement, which fee shall be payable in the U.S. dollars, on the first business day of each calendar quarter as compensation for the services to be rendered and obligations assumed by TGAL during the preceding quarter. The advisory fee under this Agreement shall be payable on the first business day of the first calendar quarter following the effective day of this Agreement and shall be reduced by the amount of any advance payments made by TIC relating to the previous quarter.

(b) If this Agreement is terminated prior to the end of any calendar quarter, the quarterly fee shall be prorated for the portion of any quarter in which this Agreement is in effect which is not a complete quarter according to the proportion which the number of calendar days in the quarter during which the Agreement is in effect bears to the total number of calendar days in the quarter, and shall be payable within 10 days after the date of termination.

4. It is understood that the services provided by TGAL are not to be deemed exclusive. TIC acknowledges that TGAL may have investment responsibilities, render investment advice, or perform other investment advisory services to other investment clients, which may invest in the same type of securities as the Account (collectively, "TGAL Advisory Clients"). TIC agrees that TGAL may give advice or exercise investment responsibility and take such other action with respect to such TGAL Advisory Clients that may differ from advice given or the timing or nature of action taken with respect to the Account. In providing services, TGAL may use information furnished by others to TIC and TGAL in providing services to other TGAL Advisory Clients.

5. TGAL shall use the same skill and care in providing services to the Account as it uses in providing services to fiduciary accounts for which it has investment responsibility .

6. During the term of this Agreement, TGAL will pay all expenses incurred by it in connection with the services to be provided by it under this Agreement other than the cost of securities (including brokerage commissions, if any) purchased for the Account. The Account and TIC will be responsible for all of their respective expenses and liabilities.

7. TGAL shall, unless otherwise expressly provided and authorized, have no authority to act for or represent TIC, the Client or the Account in any way, or in any way be deemed an agent for TIC, the Client or the Account.

8. TGAL will treat confidentially and as proprietary information of the Client and the Account all records and other information relative to the Account, and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by TIC, which approval shall not be unreasonably withheld and may not be withheld, where TGAL may be exposed to civil or criminal contempt proceedings for failure to comply when requested to divulge such information by duly constituted authorities, or when so requested by the Client or the Account.

9. This Agreement shall continue in effect until E. Tucker Scott ceases to be employed by TGAL, for whatever reason.

10. (a) Notwithstanding the foregoing, this Agreement may be terminated at any time, without the payment of any penalty, by TIC or TGAL upon not less than sixty (60) days' written notice to the other party.

(b) This Agreement shall terminate automatically in the event of any transfer or assignment thereof, as defined in the Advisers Act, and in the event of any act or event that terminates the Investment Subadvisory Agreement or the Investment Management Agreement.

11. (a) Except as may otherwise be provided by the Investment Company Act of 1940, as amended, neither TGAL nor any of its directors, officers, employees or affiliates shall be subject to liability to TIC for any error of judgment or mistake of law or any other act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security by the Account, provided that nothing herein shall be deemed to protect, or purport to protect, TGAL against any liability to the Account or its shareholders to which TGAL would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence in the performance of its duties hereunder, or by reason of TGAL's reckless disregard of its obligations and duties hereunder.

(b) Notwithstanding paragraph 11(a), to the extent that TIC is found by a court of competent jurisdiction, or the SEC or any other regulatory agency to be liable to the Client or the Account (a "liability"), for any acts undertaken by TGAL pursuant to authority delegated as described in Paragraph 11(a), TGAL shall indemnify TIC and each of its affiliates, officers, directors and employees (each an "Indemnified Party") harmless from, against, for and in respect of all losses, damages, costs and expenses incurred by an Indemnified Party with respect to such liability, together with all legal and other expenses reasonably incurred by any such Indemnified Party, in connection with such liability.

12. In compliance with the requirements of the Advisers Act, TGAL hereby agrees that all records which it maintains for the Account are the property of the Client or the Account and further agrees to surrender promptly to TIC or the Client, or to any third party at either's direction, any of such records upon the TIC's request. TGAL further agrees to preserve for periods prescribed by the Advisers Act the records required to be maintained under the Advisers Act.

13. Upon termination of TGAL's engagement under this Agreement or at the Client's direction, TGAL shall forthwith deliver to TIC, the Client, or to any third party at TIC's direction, all records, documents and books of accounts which are in the possession or control of TGAL and relate directly and exclusively to the performance by TGAL of its obligations under this Agreement; provided, however, that TGAL shall be permitted to keep such records or copies thereof for such periods of time as are necessary to comply with applicable laws, in which case TGAL shall provide TIC, the Client, or a designated third party with copies of such retained documents unless providing such copies would contravene such rules, regulations and laws.

Termination of this Agreement or of TGAL's engagement hereunder shall be without prejudice to the rights and liabilities created hereunder prior to such termination.

14. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, in whole or in part, the other provisions hereof shall remain in full force and effect. Invalid provisions shall, in accordance with the intent and purpose of this Agreement, be replaced by such valid provisions that in their economic effect come as closely as legally possible to such invalid provisions.

15. Any notice or other communication required to be given pursuant to this Agreement shall be in writing and given by personal delivery or by facsimile transmission and shall be effective upon receipt. Notices and communications shall be given:

to TGAL:	Box N-7759 Lyford Cay
	Nassau, Bahamas
	Facsimile: 242-362-4308
to TIC:	500 East Broward Boulevard
	Suite 2100
	Fort Lauderdale, Florida 33394
	Facsimile: 954-527-7329

16. This Agreement shall be interpreted in accordance with and governed by the laws of the State of Florida.

17. Notwithstanding any other provision of this Agreement, the rights and duties of TGAL shall in all cases be subject to, and TGAL shall perform its services under this Agreement in accordance with, the provisions of the Investment Subadvisory Agreement and, in the event of any conflict between the provisions of this Agreement and the provisions of the Investment Subadvisory Agreement, the provisions of the Investment Subadvisory Agreement shall prevail.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers.

TEMPLETON GLOBAL ADVISORS LIMITED

By: /s/Gregory E. McGowen

Gregory E. McGowan

Executive Vice President and

Secretary

TEMPLETON INVESTMENT COUNSEL, LLC

By: /s/Gary P. Motyl

Gary P. Motyl

President

EX-99.(D)(6)

Exhibit (d)(6)

INVESTMENT SUB-ADVISORY AGREEMENT

THIS AGREEMENT, dated as of April 15, 2009, shall become effective on April 30, 2009 and is entered into by and between Waddell & Reed Investment Management Company, a Kansas corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Adviser") and Templeton Investment Counsel, LLC, a Delaware limited liability company, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Sub-Adviser").

WHEREAS, the Adviser is the investment manager to Ivy Funds Variable Insurance Portfolios, (the "Fund"), an open-end diversified management investment company organized as a series fund, pursuant to the laws of the state of Delaware and registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with portfolio selection and related research and statistical services in connection with the Adviser's investment advisory activities on behalf of the Fund's International Value Portfolio (hereinafter "Portfolio"), and the Sub-Adviser desires to furnish such services to the Adviser;

NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, it is agreed as follows:

1. Appointment of Sub-Adviser

In accordance with and subject to the Investment Management Agreement between the Fund and the Adviser dated April 10, 2009, the Adviser hereby appoints the Sub-Adviser to perform portfolio selection services described herein for investment and reinvestment of the assets of the Portfolio, subject to the control and direction of the Fund's Board of Trustees, for the period and on the terms hereinafter set forth. The Sub-Adviser accepts such appointment and agrees to furnish the services hereinafter set forth for the compensation herein provided. The Sub-Adviser shall for all purposes herein be deemed to be an independent contractor and shall, except as expressly provided or authorized, have no authority to act for or represent the Fund or the Adviser in any way or otherwise be deemed an agent of the Fund or the Adviser.

2.	Obligations of and Services to be Provided by the Sub-Adviser
(a)	The Sub-Adviser shall provide the following services and assume the following obligations with respect to the Portfolio:
	(1)	The investment of the assets of the Portfolio shall at all times be subject to the applicable provisions of the Trust Instrument, the Bylaws, the Registration Statement, the current Prospectus and the Statement of Additional Information of the Fund and shall conform to the investment objectives, policies and restrictions of the Portfolio as set forth in such documents and as interpreted from time to time by the Board of Trustees of the Fund and by the Adviser, including diversification of the holdings of the Portfolio as a segregated asset account in accordance with Section 817 of the Internal Revenue Code, as amended (the "Code"), and Regulation Section 1.817-5 thereunder, provided that the Adviser shall be responsible for ensuring that the Fund as a whole is "adequately diversified" if and to the extent required by Section 817(h) of the Code and Regulation 1.817-5 thereunder. Within the framework of the investment objectives, policies and restrictions of the Portfolio, and subject to the supervision of the Adviser, the Sub-Adviser shall have the sole and exclusive responsibility for the making and execution of all investment decisions for the Portfolio. The Adviser agrees to promptly inform the Sub-Adviser if such objective, policies or restrictions change and to deliver to the Sub-Adviser updated documents, if prepared.
	(2)	In carrying out its obligations to manage the investments and reinvestments of the assets of the Portfolio, the Sub-Adviser shall: (1) obtain and evaluate pertinent economic, statistical, financial and other information affecting the economy generally and individual companies or industries the securities of which are included in the Portfolio or are under consideration for inclusion therein; (2) formulate and implement a continuous investment program for the Portfolio consistent with the investment objective and related investment policies for such Portfolio as set forth in the Fund's Registration Statement, as amended; and (3) take such steps as are necessary to implement the aforementioned investment program by purchase and sale of securities including the placing, or directing the placement through an affiliate of the Sub-Adviser, of orders for such purchases and sales.
	(3)	In connection with the purchase and sale of securities of the Portfolio, the Sub-Adviser shall arrange for the transmission to the Adviser (or its designee) and the Custodian for the Fund on a daily basis such confirmation, trade tickets and other documents as may be necessary to enable them to perform their administrative responsibilities with respect to the Portfolio. With respect to portfolio securities to be purchased or sold through the Depository Trust Company, the Sub-Adviser shall arrange for the automatic transmission of the I.D. confirmation of the trade to the Custodian of the Portfolio. The Sub-Adviser shall render such reports to the Adviser and/or to the Fund's Board of Trustees concerning the investment activity and portfolio composition of the Portfolio in such form and at such intervals as the Adviser or the Board may from time to time require.
	(4)	The Sub-Adviser shall, in the name of the Fund, place or direct the placement of orders for the execution of portfolio transactions in accordance with the policies with respect thereto, as set forth in the Fund's Registration Statement, as amended from time to time, and under the Securities Act of 1933, as amended (the "1933 Act") and the 1940 Act. In connection with the placement of orders for the execution of the Fund's portfolio transactions, the Sub-Adviser shall create and maintain all necessary brokerage records of the Fund in accordance with all applicable law, rules and regulations, including but not limited to, records required by Section 31(a) of the 1940 Act. All records shall be the property of the Fund and shall be available for inspection and use by the Securities and Exchange Commission, the Fund or any person retained by the Fund. Where applicable, such records shall be maintained by the Sub-Adviser for the period and in the place required by Rule 31a-2 under the 1940 Act.
	(5)	In placing orders or directing the placement of orders for the execution of portfolio transactions, the Sub-Adviser shall select brokers and dealers for the execution of the Portfolio's transactions. In selecting brokers or dealers to execute such orders, the Sub-Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services which enhance the Sub-Adviser's investment research and portfolio management capability generally. It is further understood in accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, that the Sub-Adviser may negotiate with and assign to a broker a commission which may exceed the commission which another broker would have charged for effecting the transaction if the Sub-Adviser determines in good faith that the amount of commission charged was reasonable in relation to the value of brokerage and/or research services (as defined in Section 28(e)) provided by such broker, viewed in terms either of the Portfolio or the Sub-Adviser's overall responsibilities to the Sub-Adviser's discretionary accounts.
		The Sub-Adviser shall render such reports to the Adviser and/or to the Fund's Board of Trustees regarding the total amount and usage of all commissions generated as a result of trades executed for the Portfolio's holdings, as well as information regarding third-party services, if any, received by the Sub-Adviser as a result of trading activity with select brokers and dealers.

      (b) The Sub-Adviser shall use the same skill and care in providing services to the Fund as it uses in providing services to fiduciary accounts for which it has investment responsibility. The Sub-Adviser will comply with all applicable rules and regulations of the Securities and Exchange Commission.

      (c) The Sub-Adviser shall (i)  comply with all reasonable requests of the Fund (through the Adviser) for information, including information required in connection with the Fund's filings with the Securities and Exchange Commission (the "SEC") and state securities commissions, and (ii)  provide such other services as the Sub-Adviser shall from time to time determine to be necessary or useful to the administration of the Fund.

      (d) The Sub-Adviser shall furnish to the Adviser for distribution to the Fund's Board of Trustees periodic reports on the investment performance of the Portfolio and on the performance of its obligations under this Agreement and shall supply such additional reports and information as the Fund's officers or Board of Trustees shall reasonably request.

      (e) On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as other customers, the Sub-Adviser, to the extent permitted by applicable law, may aggregate the securities to be so sold or purchased in order to obtain the best execution or lower brokerage commissions, if any. The Sub-Adviser also may purchase or sell a particular security for one or more customers in different amounts. On either occasion, and to the extent permitted by applicable law and regulations, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Sub-Adviser in the manner it considers to be the most equitable and consistent with its fiduciary obligations to the Portfolio and to such other customers. In no instance, however, will the Portfolio's assets be purchased from or sold to the Adviser, the Sub-Adviser, the Fund's principal underwriter, or any affiliated person of either the Fund, the Adviser, the Sub-Adviser or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the SEC and the 1940 Act.

      (f) Consistent with U.S. securities laws, the Sub-Adviser agrees to adopt written trade allocation procedures that are "fair and equitable" to its clients which are consistent with the investment policies set out in the prospectuses and statements of additional information (including amendments) of the Portfolio or as the Fund's Board of Trustees may direct from time to time. The Sub-Adviser also agrees to effect securities transactions in client accounts consistent with the allocation system described in such written procedures, to keep accurate records of such transactions and to fully disclose such trade allocation procedures and practices to clients.

      (g) The Sub-Adviser shall review all proxy solicitation materials and be responsible for voting and handling all proxies in relation to the securities held in the Portfolio. The Adviser shall instruct the custodian and other appropriate parties providing services to the Portfolio to promptly forward misdirected proxies to the Sub-Adviser.

      The Sub-Adviser shall provide to the Advisor a copy of Sub-Adviser's written proxy voting policies and procedures, as adopted, including policies on addressing potential conflicts of interest and a copy of any summary of the procedures, if applicable. Sub-Adviser shall also be responsible for maintaining records with respect to the proxy votes cast for the Portfolio. The records shall conform to the applicable SEC proxy regulations.

      Records of all applicable proxy voting records will be provided to the Adviser within 3 business days of any request, written or oral (voting records should be available in hard and soft copy).

      (h) The Sub-Adviser shall review all notices, including but not limited to corporate action notices, and provide and respond to all corresponding requests for information in relation to the securities held in the Portfolio. The Adviser shall instruct the custodian and other appropriate parties providing services to the Portfolio to promptly forward misdirected corporate action notices to the Sub-Adviser.

      (i) The Sub-Adviser shall promptly notify the Adviser of any financial condition that is likely to impair the Sub-Adviser's ability to fulfill its commitment under this Agreement.

      3. Delivery of Documents to the Adviser. The Sub-Adviser has furnished the Adviser with copies of each of the following documents:

      (a) The Sub-Adviser's current Form ADV and any amendments thereto, if applicable;

      (b) The Sub-Adviser's most recent audited balance sheet;

      (c) Separate lists of persons whom the Sub-Adviser wishes to have authorized to give written and/or oral instructions to the custodian and the fund accounting agent of the Fund with respect to assets of the Portfolio; and

      (d) The Code of Ethics of the Sub-Adviser as currently in effect.

      The Sub-Adviser will furnish the Adviser from time to time with copies, properly certified or otherwise authenticated, of all material amendments of or supplements to the foregoing, if any. Additionally, the Sub-Adviser will provide to the Adviser such other documents relating to its services under this Agreement as the Adviser may reasonably request on a periodic basis. Such amendments or supplements as to items (a) through (d) above will be provided within 30 days of the time such materials became available to the Sub-Adviser.

      4. Expenses

      During the terms of this Agreement, the Sub-Adviser will pay all expenses incurred by it in connection with its activities under this Agreement.

      5. Compensation

      In payment for the investment sub-advisory services to be rendered by the Sub-Adviser in respect of the Portfolio hereunder, the Adviser shall pay to the Sub-Adviser as full compensation for all services hereunder a fee computed at an annual rate which shall be a percentage of the average daily value of the net assets of the Portfolio. The fee shall be accrued daily and shall be based on the net asset values of all of the issued and outstanding shares of the Portfolio as determined as of the close of each business day pursuant to the Trust Instrument, Bylaws and currently effective Prospectus and Statement of Additional Information of the Fund. The fee shall be payable in arrears on the last day of each calendar month.

      The amount of such annual fee, as applied to the average daily value of the net assets of the Portfolio shall be as described in the schedule below:

Assets	Fee
On the first $100 million	0.50%
On the next $100 million	0.35%
On the next $250 million	0.30%
On all assets exceeding $450 million	0.25%
On the first $100 million	0.50%

      6. Renewal and Termination

      This Agreement shall continue in effect until September 30, 2009, and from year to year thereafter provided such continuance is specifically approved at least annually by a vote of the holders of the majority of the outstanding voting securities of the Portfolio, or by a vote of the majority of the Fund's Board of Trustees. And further provided that such continuance is also approved annually by a vote of the majority of the Fund's Board of Trustees who are not parties to this Agreement or interested persons of parties hereto, cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated at any time without payment of penalty: (i) by the Fund's Board of Trustees or by a vote of a majority of the outstanding voting securities of the class of capital stock of the Portfolio on sixty days' prior written notice, or (ii) by either party hereto upon sixty days' prior written notice to the other. This Agreement will terminate automatically upon any termination of the Investment Management Agreement between the Fund and the Adviser or in the event of its assignment. The terms "interested person," "assignment" and "vote of a majority of the outstanding voting securities" shall have the meanings set forth in the 1940 Act.

      7. General Provisions

      (a) The Sub-Adviser may rely on information reasonably believed by it to be accurate and reliable. Except as may otherwise be provided by the 1940 Act, neither the Sub-Adviser nor its officers, directors, employees or agents shall be subject to any liability for any error of judgment or mistake of law or for any loss arising out of any investment or other act or omission in the performance by the Sub-Adviser of its duties under this Agreement or for any loss or damage resulting from the imposition by any government or exchange control restrictions which might affect the liquidity of the Portfolio's assets, or from acts or omissions of custodians or securities depositories, or from any war or political act of any foreign government to which such assets might be exposed, provided that nothing herein shall be deemed to protect, or purport to protect, the Sub-Adviser against any liability to the Fund or to its shareholders to which the Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the Sub-Adviser's reckless disregard of its obligations and duties hereunder.

      (b) The Adviser and the Fund's Board of Trustees understand that the value of investments made for the Portfolio may go up as well as down, is not guaranteed and that investment decisions will not always be profitable. The Adviser has not made and is not making any guarantees, including any guarantee as to any specific level of performance of the Portfolio. The Adviser and the Fund's Board of Trustees acknowledge that this Portfolio is designed for the described investment objective and is not intended as a complete investment program. They also understand that investment decisions made on behalf of the Portfolio by Sub-Adviser are subject to various market and business risks.

      (c) This Agreement shall not become effective unless and until it is approved by the Board of Trustees of the Fund, including a majority of the members who are not "interested persons" to parties to this Agreement, by a vote cast in person at a meeting called for the purpose of voting such approval, and by a majority of the outstanding voting securities of the class of capital stock of the Portfolio.

      (d) The Adviser understands that the Sub-Adviser now acts, will continue to act, or may act in the future, as investment adviser to fiduciary and other managed accounts, including other investment companies, and the Adviser has no objection to the Sub-Adviser so acting, provided that the Sub-Adviser duly performs all obligations under this Agreement. The Adviser also understands that the Sub-Adviser may give advice and take action with respect to any of its other clients or for its own account which may differ from the timing or nature of action taken by the Sub-Adviser with respect to the Portfolio. Nothing in this Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell or to recommend for purchase or sale, with respect to the Fund, any security which the Sub-Adviser or its shareholders, directors, officers, employees or affiliates may purchase or sell for its or their own account(s) or for the account of any other client.

      (e) Except to the extent necessary to perform its obligations hereunder, nothing herein shall be deemed to limit or restrict the right of the Sub-Adviser, or the right of any of its officers, directors or employees who may also be an officer, director or employee of the Fund, or persons otherwise affiliated with the Fund (within the meaning of the 1940 Act) to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other trust, corporation, firm, individual or association.

      8. Confidential Treatment. It is understood that any information or recommendation supplied by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Adviser, the Portfolio or such persons as the Adviser may designate in connection with the Portfolio. It is also understood that any information supplied to the Sub-Adviser in connection with the performance of its obligations hereunder, particularly, but not limited to, any list of securities which, on a temporary basis, may not be bought or sold for the Portfolio, is to be regarded as confidential and for use only by the Sub-Adviser in connection with its obligation to provide investment advice and other services to the Portfolio.

      9. Representations and Warranties. The Sub-Adviser hereby represents and warrants as follows:

      (a) The Sub-Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and such registration is current, complete and in full compliance with all material applicable provisions of the Advisers Act and the rules and regulations thereunder;

      (b) The Sub-Adviser has all requisite authority to enter into, execute, deliver and perform the Sub-Adviser's obligations under this Agreement;

      (c) The Sub-Adviser's performance of its obligations under this Agreement does not conflict with any law, regulation or order to which the Sub-Adviser is subject; and

      (d) The Sub-Adviser has reviewed the portion of (i) the registration statement filed with the SEC, as amended from time to time, for the Portfolio ("Registration Statement"), and (ii) Portfolio's prospectuses and statements of additional information (including amendments) thereto, in each case in the form received from the Adviser with respect to the disclosure about the Sub-Adviser and the Portfolio of which the Sub-Adviser has knowledge and except as advised in writing to the Adviser such Registration Statement, prospectuses and statements of additional information (including amendments) contain, as of their respective dates, no untrue statement of any material fact of which the Sub-Adviser has knowledge and do not omit any statement of a material fact of which the Sub-Adviser has knowledge which was required to be stated therein or necessary to make the statements contained therein not misleading.

      10. Use of Names.

      (a) The Sub-Adviser acknowledges and agrees that the names Ivy Funds Variable Insurance Portfolios and Waddell & Reed Investment Management Company, and abbreviations or logos associated with those names, are the valuable property of the Adviser and its affiliates; that the Fund, the Adviser and their affiliates have the right to use such names, abbreviations and logos; and that the Sub-Adviser shall use the names Ivy Funds Variable Insurance Portfolios and Waddell & Reed Investment Management Company, and associated abbreviations and logos, only in connection with the Sub-Adviser's performance of its duties hereunder. Further, in any communication with the public and in any marketing communications of any sort, the Sub-Adviser agrees to obtain prior written approval from the Adviser before using or referring to Ivy Funds Variable Insurance Portfolios and Waddell & Reed Investment Management Company, or the Portfolio or any abbreviations or logos associated with those names; provided that nothing herein shall be deemed to prohibit the Sub-Adviser from referring to the performance of the Portfolio in the Sub-Adviser's marketing material as long as such marketing material does not constitute "sales literature" or "advertising" for the Portfolio, as those terms are used in the rules, regulations and guidelines of the SEC and the Financial Industry Regulatory Authority.

      (b) The Sub-Adviser acknowledges that the Portfolio and its agents may use the "Templeton" and "Templeton Investment Counsel, LLC" names in connection with accurately describing the activities of the Portfolio, including use with marketing and other promotional and informational material relating to the Portfolio. The Sub-Adviser hereby agrees and consents to the use of the Sub-Adviser's name upon the foregoing terms and conditions.

      11. Reports by the Sub-Adviser and Records of the Portfolio. The Sub-Adviser shall furnish the Adviser monthly, quarterly and annual reports concerning transactions and performance of the Portfolio, including information required to be disclosed in the Fund's Registration Statement, in such form as may be mutually agreed. The Sub-adviser shall permit the financial statements, books and records with respect to the Portfolio to be inspected and audited by the Fund, the Adviser or their agents at all reasonable times during normal business hours. The Sub-adviser shall immediately notify and forward to both the Adviser and legal counsel for the Fund any legal process served upon it on behalf of the Adviser or the Fund. The Sub-adviser shall promptly notify the Adviser of any changes in any information concerning the Sub-adviser of which the Sub-adviser becomes aware that would be required to be disclosed in the Fund's Registration Statement.

      In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-adviser agrees that all records it maintains for the Portfolio are the property of the Portfolio and the Fund and further agrees to surrender promptly to the Fund or the Adviser any such records upon the Fund's or the Adviser's request. The Sub-adviser further agrees to maintain for the Fund the records the Fund is required to maintain under Rule 31a-1(b) insofar as such records relate to the investment affairs of the Portfolio. The Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains for the Fund.

      12. Indemnification. The Sub-Adviser agrees to indemnify and hold harmless the Adviser, any affiliated person within the meaning of Section 2(a)(3) of the 1940 Act ("affiliated person") of the Adviser and each person, if any, who, within the meaning of Section 15 of the Securities Act of 1933, as amended (the "1933 Act"), controls ("controlling person") the Adviser, against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Adviser, the Portfolio, the Fund or such affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of the Sub-adviser's responsibilities as sub-adviser of the Portfolio (1) to the extent of and as a result of the willful misconduct, bad faith, or gross negligence of the Sub-adviser, any of the Sub-adviser's employees or representatives or any affiliate of or any person acting on behalf of the Sub-adviser, or (2) as a result of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, prospectuses or statements of additional information covering the Portfolio or the Fund or any amendment thereof or any supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission was made in reliance upon written information furnished by the Sub-adviser to the Adviser, the Fund or any affiliated person of the Adviser or the Fund expressly for use in the Fund's Registration Statement, or upon verbal information confirmed by the Sub-adviser in writing expressly for use in the Fund's Registration Statement or (3) to the extent of, and as a result of, the failure of the Sub-adviser to execute, or cause to be executed, portfolio transactions according to the standards and requirements of the 1940 Act; provided, however, that in no case is the Sub-adviser's indemnity in favor of the Adviser or any affiliated person or controlling person of the Adviser deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

      The Adviser agrees to indemnify and hold harmless the Sub-adviser against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Sub-adviser or such affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of the Adviser's responsibilities as investment manager of the Portfolio (1) to the extent of and as a result of the willful misconduct, bad faith, or gross negligence of the Adviser, any of the Adviser's employees or representatives or any affiliate of or any person acting on behalf of the Adviser, or (2) as a result of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, prospectuses or statements of additional information covering the Portfolio or the Fund or any amendment thereof or any supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission was made by the Fund other than in reliance upon written information furnished by the Sub-adviser, or any affiliated person of the Sub-adviser, expressly for use in the Fund's Registration Statement or other than upon verbal information confirmed by the Sub-adviser in writing expressly for use in the Fund's Registration Statement; provided, however, that in no case is the Adviser's indemnity in favor of the Sub-adviser deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

      13. Assignment by the Sub-adviser. This Agreement shall not be assigned by the Sub-adviser to any other person or company without the Adviser's prior written consent.

      14. Jurisdiction. The Sub-adviser irrevocably submits to the jurisdiction of any state or U.S. federal court sitting in the State of Kansas over any suit, action or proceeding arising out of or relating to this proposal and the agreement contemplated herein. The Sub-adviser irrevocably waives, to the fullest extent permitted by law, any objection which it may have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. The Sub-adviser agrees that final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding upon the Sub-adviser, and may be enforced to the extent permitted by applicable law in any court of the jurisdiction of which the Sub-adviser is subject by a suit upon such judgment.

      Nothing in this Section 14 shall affect the right of the Adviser to serve process in any manner permitted by law or limit the right of the Adviser to bring proceedings against the Sub-adviser in the courts of any jurisdiction or jurisdictions.

      15. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered or sent by pre-paid first class letter post to the following addresses or to such other address as the relevant addressee shall hereafter notify for such purpose to the others by notice in writing and shall be deemed to have been given at the time of delivery.

If to the Adviser:	WADDELL & REED INVESTMENT
	MANAGEMENT COMPANY
	6300 Lamar Avenue
	Overland Park, KS 66202, U.S.A.
	Attention: Henry J. Herrmann, President
If to the Fund or Portfolio:	IVY FUNDS VARIABLE
	INSURANCE PORTFOLIOS
	6300 Lamar Avenue
	Overland Park, KS 66202, U.S.A.
	Attention: Mara D. Herrington,
	Vice President and Secretary
If to the Sub-Adviser:	Templeton Investment Counsel, LLC
	500 East Broward Boulevard
	Suite 2100
	Fort Lauderdale, FL. 33394
	Attention: Gary Motyl, President

19. Severability. Should any part of this Agreement be held invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all such counterparts shall constitute a single instrument.

           IN WITNESS WHEREOF, the parties have duly executed this Agreement.

WADDELL & REED INVESTMENT MANAGEMENT COMPANY

By:  /s/Henry J. Herrmann

Its:  President

TEMPLETON INVESTMENT COUNSEL, LLC

By:  /s/Gary Motyl

Its:  President

EX-99.(D)(7)

Exhibit (d)(7)

INVESTMENT SUB-ADVISORY AGREEMENT

THIS AGREEMENT, dated as of April 15, 2009, shall become effective on April 30, 2009, and is entered into by and between Waddell & Reed Investment Management Company, a Kansas corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Adviser") and Wall Street Associates, a California corporation, registered as an Investment Adviser under the Investment Advisers Act of 1940 (the "Sub-Adviser").

WHEREAS, the Adviser is the investment manager to Ivy Funds Variable Insurance Portfolios, (the "Fund"), an open-end diversified management investment company organized as a series fund pursuant to the laws of the state of Delaware, registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with portfolio selection and related research and statistical services in connection with the Adviser's investment advisory activities on behalf of the Fund's Micro Cap Growth Portfolio (hereinafter "Portfolio"), and the Sub-Adviser desires to furnish such services to the Adviser;

NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, it is agreed as follows:

1. Appointment of Sub-Adviser

In accordance with and subject to the Investment Management Agreement between the Fund and the Adviser dated April 10, 2009, the Adviser hereby appoints the Sub-Adviser to perform portfolio selection services described herein for investment and reinvestment of the assets of the Portfolio, subject to the control and direction of the Fund's Board of Trustees, for the period and on the terms hereinafter set forth. The Sub-Adviser accepts such appointment and agrees to furnish the services hereinafter set forth for the compensation herein provided. The Sub-Adviser shall for all purposes herein be deemed to be an independent contractor and shall, except as expressly provided or authorized, have no authority to act for or represent the Fund or the Adviser in any way or otherwise be deemed an agent of the Fund or the Adviser.

2. Obligations of and Services to be Provided by the Sub-Adviser

(a) The Sub-Adviser shall provide the following services and assume the following obligations with respect to the Portfolio:

(1)	The investment of the assets of the Portfolio shall at all times be subject to the applicable provisions of the Trust Instrument, the Bylaws, the Registration Statement, the current Prospectus and the Statement of Additional Information of the Fund and shall conform to the investment objectives, policies and restrictions of the Portfolio as set forth in such documents and as interpreted from time to time by the Board of Trustees of the Fund and by the Adviser, including diversification of the holdings of the Portfolio as a segregated asset account in accordance with Section 817 of the Internal Revenue Code, as amended (the "Code"), and Regulation Section 1.817-5 thereunder, provided that the Adviser shall be responsible for ensuring that the Fund as a whole is "adequately diversified" if and to the extent required by Section 817(h) of the Code and Regulation 1.817-5 thereunder. Within the framework of the investment objectives, policies and restrictions of the Portfolio, and subject to the supervision of the Adviser, the Sub-Adviser shall have the sole and exclusive responsibility for the making and execution of all investment decisions for the Portfolio. The Adviser agrees to promptly inform the Sub-Adviser if such objective, policies or restrictions change and to deliver to the Sub-Adviser updated documents, if prepared.
(2)	In carrying out its obligations to manage the investments and reinvestments of the assets of the Portfolio, the Sub-Adviser shall: (1) obtain and evaluate pertinent economic, statistical, financial and other information affecting the economy generally and individual companies or industries the securities of which are included in the Portfolio or are under consideration for inclusion therein; (2) formulate and implement a continuous investment program for the Portfolio consistent with the investment objective and related investment policies for such Portfolio as set forth in the Fund's Registration Statement, as amended; and (3) take such steps as are necessary to implement the aforementioned investment program by purchase and sale of securities including the placing, or directing the placement through an affiliate of the Sub-Adviser, of orders for such purchases and sales.
(3)	In connection with the purchase and sale of securities of the Portfolio, the Sub-Adviser shall arrange for the transmission to the Adviser (or its designee) and the Custodian for the Fund on a daily basis such confirmation, trade tickets and other documents as may be necessary to enable them to perform their administrative responsibilities with respect to the Portfolio. With respect to portfolio securities to be purchased or sold through the Depository Trust Company, the Sub-Adviser shall arrange for the automatic transmission of the I.D. confirmation of the trade to the Custodian of the Portfolio. The Sub-Adviser shall render such reports to the Adviser and/or to the Fund's Board of Trustees concerning the investment activity and portfolio composition of the Portfolio in such form and at such intervals as the Adviser or the Board may from time to time require.
(4)	The Sub-Adviser shall, in the name of the Fund, place or direct the placement of orders for the execution of portfolio transactions in accordance with the policies with respect thereto, as set forth in the Fund's Registration Statement, as amended from time to time, and under the Securities Act of 1933, as amended (the "1933 Act") and the 1940 Act. In connection with the placement of orders for the execution of the Fund's portfolio transactions, the Sub-Adviser shall create and maintain all necessary brokerage records of the Fund in accordance with all applicable laws, rules and regulations, including but not limited to, records required by Section 31(a) of the 1940 Act. All records shall be the property of the Fund and shall be available for inspection and use by the Securities and Exchange Commission, the Fund or any person retained by the Fund. Where applicable, such records shall be maintained by the Sub-Adviser for the period and in the place required by Rule 31a-2 under the 1940 Act.
(5)	In placing orders or directing the placement of orders for the execution of portfolio transactions, the Sub-Adviser shall select brokers and dealers for the execution of the Portfolio's transactions. In selecting brokers or dealers to execute such orders, the Sub-Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services which enhance the Sub-Adviser's investment research and portfolio management capability generally. It is further understood in accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, that the Sub-Adviser may negotiate with and assign to a broker a commission which may exceed the commission which another broker would have charged for effecting the transaction if the Sub-Adviser determines in good faith that the amount of commission charged was reasonable in relation to the value of brokerage and/or research services (as defined in Section 28(e)) provided by such broker, viewed in terms either of the Portfolio or the Sub-Adviser's overall responsibilities to the Sub-Adviser's discretionary accounts.
	The Sub-Adviser shall render such reports to the Adviser and/or to the Fund's Board of Trustees regarding the total amount and usage of all commissions generated as a result of trades executed for the Portfolio's holdings, as well as information regarding third-party services, if any, received by the Sub-Adviser as a result of trading activity with select brokers and dealers.

(b) The Sub-Adviser shall use the same skill and care in providing services to the Fund as it uses in providing services to fiduciary accounts for which it has investment responsibility. The Sub-Adviser will comply with all applicable rules and regulations of the Securities and Exchange Commission.

(c) The Sub-Adviser shall (i)  comply with all reasonable requests of the Fund (through the Adviser) for information, including information required in connection with the Fund's filings with the Securities and Exchange Commission (the "SEC") and state securities commissions, and (ii)  provide such other services as the Sub-Adviser shall from time to time determine to be necessary or useful to the administration of the Fund.

(d) The Sub-Adviser shall furnish to the Adviser for distribution to the Fund's Board of Trustees periodic reports on the investment performance of the Portfolio and on the performance of its obligations under this Agreement and shall supply such additional reports and information as the Fund's officers or Board of Trustees shall reasonably request.

(e) On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as other customers, the Sub-Adviser, to the extent permitted by applicable law, may aggregate the securities to be so sold or purchased in order to obtain the best execution or lower brokerage commissions, if any. The Sub-Adviser also may purchase or sell a particular security for one or more customers in different amounts. On either occasion, and to the extent permitted by applicable law and regulations, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Sub-Adviser in the manner it considers to be the most equitable and consistent with its fiduciary obligations to the Portfolio and to such other customers. In no instance, however, will the Portfolio's assets be purchased from or sold to the Adviser, the Sub-Adviser, the Fund's principal underwriter, or any affiliated person of either the Fund, the Adviser, the Sub-Adviser or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the SEC and the 1940 Act.

(f) Consistent with U.S. securities laws, the Sub-Adviser agrees to adopt written trade allocation procedures that are "fair and equitable" to its clients which are consistent with the investment policies set out in the prospectuses and statements of additional information (including amendments) of the Portfolio or as the Fund's Board of Trustees may direct from time to time. The Sub-Adviser also agrees to effect securities transactions in client accounts consistent with the allocation system described in such written procedures, to keep accurate records of such transactions and to fully disclose such trade allocation procedures and practices to clients.

(g) The Sub-Adviser shall review all proxy solicitation materials and be responsible for voting and handling all proxies in relation to the securities held in the Portfolio. The Adviser shall instruct the custodian and other appropriate parties providing services to the Portfolio to promptly forward misdirected proxies to the Sub-Adviser.

The Sub-Adviser shall provide to the Advisor a copy of Sub-Adviser's written proxy voting policies and procedures, as adopted, including policies on addressing potential conflicts of interest and a copy of any summary of the procedures, if applicable. Sub-Adviser shall also be responsible for maintaining records with respect to the proxy votes cast for the Portfolio. The records shall conform to the applicable SEC proxy regulations.

Records of all applicable proxy voting records will be provided to the Adviser within 3 business days of any request, written or oral (voting records should be available in hard and soft copy).

(h) The Sub-Adviser shall review all notices, including but not limited to corporate action notices, and provide and respond to all corresponding requests for information in relation to the securities held in the Portfolio. The Adviser shall instruct the custodian and other appropriate parties providing services to the Portfolio to promptly forward misdirected corporate action notices to the Sub-Adviser.

(i) The Sub-Adviser shall promptly notify the Adviser of any financial condition that is likely to impair the Sub-Adviser's ability to fulfill its commitment under this Agreement.

3. Delivery of Documents to the Adviser. The Sub-Adviser has furnished the Adviser with copies of each of the following documents:

(a) The Sub-Adviser's current Form ADV and any amendments thereto, if applicable;

(b) The Sub-Adviser's most recent balance sheet;

(c) Separate lists of persons whom the Sub-Adviser wishes to have authorized to give written and/or oral instructions to the custodian and the fund accounting agent of the Fund with respect to assets of the Portfolio; and

(d) The Code of Ethics of the Sub-Adviser as currently in effect.

The Sub-Adviser will furnish the Adviser from time to time with copies, properly certified or otherwise authenticated, of all material amendments of or supplements to the foregoing, if any. Additionally, the Sub-Adviser will provide to the Adviser such other documents relating to its services under this Agreement as the Adviser may reasonably request on a periodic basis. Such amendments or supplements as to items (a) through (d) above will be provided within 30 days of the time such materials became available to the Sub-Adviser.

4. Expenses

During the terms of this Agreement, the Sub-Adviser will pay all expenses incurred by it in connection with its activities under this Agreement.

5. Compensation

In payment for the investment sub-advisory services to be rendered by the Sub-Adviser in respect of the Portfolio hereunder, the Adviser shall pay to the Sub-Adviser as full compensation for all services hereunder a fee computed at an annual rate which shall be a percentage of the average daily value of the net assets of the Portfolio. The fee shall be accrued daily and shall be based on the net asset values of all of the issued and outstanding shares of the Portfolio as determined as of the close of each business day pursuant to the Trust Instrument, Bylaws and currently effective Prospectus and Statement of Additional Information of the Fund. The fee shall be payable in arrears on the last day of each calendar month.

The amount of such annual fee, as applied to the average daily value of the net assets of the Portfolio shall be as described in the schedule below:

Assets	Fee
Net Portfolio Assets	..50%

6. Renewal and Termination

This Agreement shall continue in effect until September 30, 2009, and from year to year thereafter provided such continuance is specifically approved at least annually by a vote of the holders of the majority of the outstanding voting securities of the Portfolio, or by a vote of the majority of the Fund's Board of Trustees. And further provided that such continuance is also approved annually by a vote of the majority of the Fund's Board of Trustees who are not parties to this Agreement or interested persons of parties hereto, cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated at any time without payment of penalty: (i) by the Fund's Board of Trustees or by a vote of a majority of the outstanding voting securities of the class of capital stock of the Portfolio on sixty days' prior written notice, or (ii) by either party hereto upon sixty days' prior written notice to the other. This Agreement will terminate automatically upon any termination of the Investment Management Agreement between the Fund and the Adviser or in the event of its assignment. The terms "interested person," "assignment" and "vote of a majority of the outstanding voting securities" shall have the meanings set forth in the 1940 Act.

7. General Provisions

(a) The Sub-Adviser may rely on information reasonably believed by it to be accurate and reliable. Except as may otherwise be provided by the 1940 Act, neither the Sub-Adviser nor its officers, directors, employees or agents shall be subject to any liability for any error of judgment or mistake of law or for any loss arising out of any investment or other act or omission in the performance by the Sub-Adviser of its duties under this Agreement or for any loss or damage resulting from the imposition by any government or exchange control restrictions which might affect the liquidity of the Portfolio's assets, or from acts or omissions of custodians or securities depositories, or from any war or political act of any foreign government to which such assets might be exposed, provided that nothing herein shall be deemed to protect, or purport to protect, the Sub-Adviser against any liability to the Fund or to its shareholders to which the Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties hereunder, or by reason of the Sub-Adviser's reckless disregard of its obligations and duties hereunder.

(b) The Adviser and the Fund's Board of Trustees understand that the value of investments made for the Account may go up as well as down, is not guaranteed and that investment decisions will not always be profitable. The Adviser has not made and is not making any guarantees, including any guarantee as to any specific level of performance of the Portfolio. The Adviser and the Fund's Board of Trustees acknowledge that this Portfolio is designed for the described investment objective and is not intended as a complete investment program. They also understand that investment decisions made on behalf of the Portfolio by Sub-Adviser are subject to various market and business risks.

(c) This Agreement shall not become effective unless and until it is approved by the Board of Trustees of the Fund, including a majority of the members who are not "interested persons" to parties to this Agreement, by a vote cast in person at a meeting called for the purpose of voting such approval, and by a majority of the outstanding voting securities of the class of capital stock of the Portfolio.

(d) The Adviser understands that the Sub-Adviser now acts, will continue to act, or may act in the future, as investment adviser to fiduciary and other managed accounts, including other investment companies, and the Adviser has no objection to the Sub-Adviser so acting, provided that the Sub-Adviser duly performs all obligations under this Agreement. The Adviser also understands that the Sub-Adviser may give advice and take action with respect to any of its other clients or for its own account which may differ from the timing or nature of action taken by the Sub-Adviser with respect to the Portfolio. Nothing in this Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell or to recommend for purchase or sale, with respect to the Fund, any security which the Sub-Adviser or its shareholders, directors, officers, employees or affiliates may purchase or sell for its or their own account(s) or for the account of any other client.

(e) Except to the extent necessary to perform its obligations hereunder, nothing herein shall be deemed to limit or restrict the right of the Sub-Adviser, or the right of any of its officers, directors or employees who may also be an officer, director or employee of the Fund, or persons otherwise affiliated with the Fund (within the meaning of the 1940 Act) to engage in any other business or to devote time and attention to the management or other aspects of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other trust, corporation, firm, individual or association.

8. Confidential Treatment. It is understood that any information or recommendation supplied by the Sub-Adviser in connection with the performance of its obligations hereunder is to be regarded as confidential and for use only by the Adviser, the Portfolio or such persons as the Adviser may designate in connection with the Portfolio. It is also understood that any information supplied to the Sub-Adviser in connection with the performance of its obligations hereunder, particularly, but not limited to, any list of securities which, on a temporary basis, may not be bought or sold for the Portfolio, is to be regarded as confidential and for use only by the Sub-Adviser in connection with its obligation to provide investment advice and other services to the Portfolio.

9. Representations and Warranties. The Sub-Adviser hereby represents and warrants as follows:

(a) The Sub-Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and such registration is current, complete and in full compliance with all material applicable provisions of the Advisers Act and the rules and regulations thereunder;

(b) The Sub-Adviser has all requisite authority to enter into, execute, deliver and perform the Sub-Adviser's obligations under this Agreement;

(c) The Sub-Adviser's performance of its obligations under this Agreement does not conflict with any law, regulation or order to which the Sub-Adviser is subject; and

(d) The Sub-Adviser has reviewed the portion of (i) the registration statement filed with the SEC, as amended from time to time, for the Portfolio ("Registration Statement"), and (ii) Portfolio's prospectuses and statements of additional information (including amendments) thereto, in each case in the form received from the Adviser with respect to the disclosure about the Sub-Adviser and the Portfolio of which the Sub-Adviser has knowledge and except as advised in writing to the Adviser such Registration Statement, prospectuses and statements of additional information (including amendments) contain, as of their respective dates, no untrue statement of any material fact of which the Sub-Adviser has knowledge and do not omit any statement of a material fact of which the Sub-Adviser has knowledge which was required to be stated therein or necessary to make the statements contained therein not misleading.

10. Use of Names.

(a) The Sub-Adviser acknowledges and agrees that the names Ivy Funds Variable Insurance Portfolios and Waddell & Reed Investment Management Company, and abbreviations or logos associated with those names, are the valuable property of the Adviser and its affiliates; that the Fund, the Adviser and their affiliates have the right to use such names, abbreviations and logos; and that the Sub-Adviser shall use the names Ivy Funds Variable Insurance Portfolios and Waddell & Reed Investment Management Company, and associated abbreviations and logos, only in connection with the Sub-Adviser's performance of its duties hereunder. Further, in any communication with the public and in any marketing communications of any sort, the Sub-Adviser agrees to obtain prior written approval from the Adviser before using or referring to W&R Target Funds, Inc. and Waddell & Reed Investment Management Company, or the Portfolio or any abbreviations or logos associated with those names; provided that nothing herein shall be deemed to prohibit the Sub-Adviser from referring to the performance of the Portfolio in the Sub-Adviser's marketing material as long as such marketing material does not constitute "sales literature" or "advertising" for the Portfolio, as those terms are used in the rules, regulations and guidelines of the SEC and the Financial Industry Regulatory Authority.

(b) The Sub-Adviser acknowledges that the Portfolio and its agents may use the "Wall Street Associates" name in connection with accurately describing the activities of the Portfolio, including use with marketing and other promotional and informational material relating to the Portfolio. The Sub-Adviser hereby agrees and consents to the use of the Sub-Adviser's name upon the foregoing terms and conditions.

11. Reports by the Sub-Adviser and Records of the Portfolio. The Sub-Adviser shall furnish the Adviser monthly, quarterly and annual reports concerning transactions and performance of the Portfolio, including information required to be disclosed in the Fund's Registration Statement, in such form as may be mutually agreed. The Sub-adviser shall permit the financial statements, books and records with respect to the Portfolio to be inspected and audited by the Fund, the Adviser or their agents at all reasonable times during normal business hours. The Sub-adviser shall immediately notify and forward to both the Adviser and legal counsel for the Fund any legal process served upon it on behalf of the Adviser or the Fund. The Sub-adviser shall promptly notify the Adviser of any changes in any information concerning the Sub-adviser of which the Sub-adviser becomes aware that would be required to be disclosed in the Fund's Registration Statement.

      In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-adviser agrees that all records it maintains for the Portfolio are the property of the Portfolio and the Fund and further agrees to surrender promptly to the Fund or the Adviser any such records upon the Fund's or the Adviser's request. The Sub-adviser further agrees to maintain for the Fund the records the Fund is required to maintain under Rule 31a-1(b) insofar as such records relate to the investment affairs of the Portfolio. The Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains for the Fund.

12. Indemnification. The Sub-Adviser agrees to indemnify and hold harmless the Adviser, any affiliated person within the meaning of Section 2(a)(3) of the 1940 Act ("affiliated person") of the Adviser and each person, if any, who, within the meaning of Section 15 of the Securities Act of 1933, as amended (the "1933 Act"), controls ("controlling person") the Adviser, against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Adviser, the Portfolio, the Fund or such affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of the Sub-adviser's responsibilities as sub-adviser of the Portfolio (1) to the extent of and as a result of the willful misconduct, bad faith, or gross negligence of the Sub-adviser, any of the Sub-adviser's employees or representatives or any affiliate of or any person acting on behalf of the Sub-adviser, or (2) as a result of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, prospectuses or statements of additional information covering the Portfolio or the Fund or any amendment thereof or any supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission was made in reliance upon written information furnished by the Sub-adviser to the Adviser, the Fund or any affiliated person of the Adviser or the Fund expressly for use in the Fund's Registration Statement, or upon verbal information confirmed by the Sub-adviser in writing expressly for use in the Fund's Registration Statement or (3) to the extent of, and as a result of, the failure of the Sub-adviser to execute, or cause to be executed, portfolio transactions according to the standards and requirements of the 1940 Act; provided, however, that in no case is the Sub-adviser's indemnity in favor of the Adviser or any affiliated person or controlling person of the Adviser deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

      The Adviser agrees to indemnify and hold harmless the Sub-adviser against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Sub-adviser or such affiliated person or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of the Adviser's responsibilities as investment manager of the Portfolio (1) to the extent of and as a result of the willful misconduct, bad faith, or gross negligence of the Adviser, any of the Adviser's employees or representatives or any affiliate of or any person acting on behalf of the Adviser, or (2) as a result of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, prospectuses or statements of additional information covering the Portfolio or the Fund or any amendment thereof or any supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, if such a statement or omission was made by the Fund other than in reliance upon written information furnished by the Sub-adviser, or any affiliated person of the Sub-adviser, expressly for use in the Fund's Registration Statement or other than upon verbal information confirmed by the Sub-adviser in writing expressly for use in the Fund's Registration Statement; provided, however, that in no case is the Adviser's indemnity in favor of the Sub-adviser deemed to protect such person against any liability to which any such person would otherwise be subject by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement.

13. Assignment by the Sub-adviser. This Agreement shall not be assigned by the Sub-adviser to any other person or company without the Adviser's prior written consent.

14. Jurisdiction. The Sub-adviser irrevocably submits to the jurisdiction of any state or U.S. federal court sitting in the State of Kansas over any suit, action or proceeding arising out of or relating to this proposal and the agreement contemplated herein. The Sub-adviser irrevocably waives, to the fullest extent permitted by law, any objection which it may have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. The Sub-adviser agrees that final judgment in any such suit, action or proceeding brought in such a court shall be conclusive and binding upon the Sub-adviser, and may be enforced to the extent permitted by applicable law in any court of the jurisdiction of which the Sub-adviser is subject by a suit upon such judgment.

      Nothing in this Section 14 shall affect the right of the Adviser to serve process in any manner permitted by law or limit the right of the Adviser to bring proceedings against the Sub-adviser in the courts of any jurisdiction or jurisdictions.

15. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered or sent by pre-paid first class letter post to the following addresses or to such other address as the relevant addressee shall hereafter notify for such purpose to the others by notice in writing and shall be deemed to have been given at the time of delivery.

If to the Adviser:	WADDELL & REED INVESTMENT
	MANAGEMENT COMPANY
	6300 Lamar Avenue
	Overland Park, KS 66202, U.S.A.
	Attention: Henry J. Herrmann, President
If to the Fund or Portfolio:	IVY FUNDS VARIABLE INSURANCE
	PORTFOLIOS
	6300 Lamar Avenue
	Overland Park, KS 66202, U.S.A.
	Attention: Mara D. Herrington,
	Vice President and Secretary
If to the Sub-Adviser:	Wall Street Associates
	1200 Prospect Street, Suite 100
	La Jolla, California 92037
	Attention: William Jeffery III, President

19. Severability. Should any part of this Agreement be held invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all such counterparts shall constitute a single instrument.

           IN WITNESS WHEREOF, the parties have duly executed this Agreement.

WADDELL & REED INVESTMENT MANAGEMENT COMPANY

By: /s/Henry J. Herrmann

Its: President

WALL STREET ASSOCIATES

By: /s/William Jeffery III

Its: President

EX-99.(E)(1)

Exhibit (e)(1)

PARTICIPATION AGREEMENT

Ameritas Life Insurance Corp.
The Union Central Life Insurance Company

This Participation Agreement ("Agreement"), dated as of the 3rd day of November, 2008, is made by and between AMERITAS LIFE INSURANCE CORP. ("Ameritas"), THE UNION CENTRAL Life Insurance Company ("Union Central") (Ameritas and Union Central, separately and together, shall be referred to as "Company"), each on behalf of itself and each of the respective separate accounts identified on Exhibit A, which is attached hereto, as the parties hereto may amend from time to time ("Variable Accounts"), WADDELL & REED, INC. ("W&R"), distributor for Ivy Funds Variable Insurance Portfolios, Inc., and IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC. ("Ivy Funds VIP").

WHEREAS, Ivy Funds VIP is registered with the Securities and Exchange Commission ("SEC") as an open-end management investment company under the Investment Company Act of 1940, as amended ("1940 Act"), and currently consists of the separately managed series identified on Exhibit B, which is attached hereto and may be unilaterally amended from time to time by W&R and/or Ivy Funds VIP in their sole and exclusive discretion upon written notice to Company (each a "Portfolio"); and

WHEREAS, the Portfolios are currently sold to one or more separate accounts of life insurance companies to fund benefits under variable life insurance policies and/or variable annuity contacts ("Participating Insurance Companies"); and

WHEREAS, Company, W&R and Ivy Funds VIP mutually desire the inclusion of the Portfolios as underlying investment media for each of the variable life insurance policies and/or variable annuity contracts issued by Company identified on Exhibit A, which is attached hereto, as the parties hereto may amend from time to time (collectively, the "Contracts"); and

WHEREAS, the Contracts allow for the allocation of net amounts received by Company to separate sub-accounts of the Variable Accounts for investment in shares of the Portfolios and other similar funds; and

WHEREAS, selection of a particular sub-account (corresponding to a particular Portfolio) is made by the owner of a Contract ("Contract Owner") and such Contract Owner may reallocate their investment options among the sub-accounts of the Variable Accounts in accordance with the terms of the Contracts.

NOW THEREFORE, Company, W&R and Ivy Funds VIP, in consideration of the promises and undertakings described herein, agree as follows:

1.	SCOPE OF AGREEMENT. The scope of this Agreement is limited to the purchase of Portfolio shares by the Variable Accounts on behalf of purchasers of the Contracts.
2.	REPRESENTATIONS OF COMPANY.
	(a)	Company represents and warrants that the Variable Accounts have been established and are in good standing under the laws of their states of organization; and the Variable Accounts have been registered as unit investment trusts under the 1940 Act and will remain so registered, or are exempt from registration pursuant to Section 3(c)(11) of the 1940 Act;
	(b)	Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of its state of incorporation and that it has legally and validly established each Variable Account as a segregated asset account under applicable state insurance laws and the regulations thereunder.
	(c)	Company represents and warrants that (i) prior to and at the time of any issuance or sale of Portfolio shares, the Contracts will be registered under the Securities Act of 1933, as amended ("1933 Act"), unless exempt from such registration, (ii) prior to and at the time of any issuance or sale of Portfolio shares, the Contracts will be duly authorized for issuance and sold in compliance with all applicable federal and state laws, including, without limitation, the 1933 Act, the Securities Exchange Act of 1934 ("1934 Act"), the 1940 Act and the law(s) of Company's state(s) of organization and domicile, (iii) each Variable Account does and will comply in all material respects with the requirements of the 1940 Act and the rules thereunder, unless exempt from such requirements, (iv) each Variable Account's 1933 Act registration statement relating to the Contracts, together with any amendments thereto, will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder, (v) Company will amend the registration statement for its Contracts under the 1933 Act and for its Variable Accounts under the 1940 Act from time to time as required in order to effect the continuous offering of its Contracts or as may otherwise be required by applicable law, and (vi) each Variable Account prospectus, Statement of Additional Information ("SAI"), and then-current stickers, will at all times comply in all material respects with the applicable requirements of the 1933 Act and the rules thereunder.
	(d)	Company represents that each Variable Account is a "segregated asset account" and that interests in each Variable Account are offered exclusively through the purchase of a "variable contract", within the meaning of such terms under Section 817 of the Internal Revenue Code of 1986, as amended ("Code"), and Section 1.817-5(f)(2) of the Federal Tax Regulations, that it shall make every effort to continue to meet such definitional requirements, and that it shall notify W&R and Ivy Funds VIP immediately upon having a reasonable basis for believing that such requirements have ceased to be met or that they may not be met in the future.
	(e)	Company represents that the Contracts are currently, and at the time of issuance will be, treated as annuity contracts or life insurance policies, whichever is appropriate under applicable provisions of the Code, and that it shall make every effort to maintain such treatment. Company will promptly notify W&R and Ivy Funds VIP upon having a reasonable basis for believing that the Contracts have ceased to be treated as annuity contracts or life insurance polices, or that the Contracts may not be so treated in the future.
	(f)	Company represents that it has established such rules and procedures as are necessary to ensure compliance with applicable federal, state and self-regulatory requirements relating to the offering of the Contracts. W&R and Ivy Funds VIP explicitly disclaim any and all responsibility for the offer, sale, distribution and/or servicing of the Contracts, except as otherwise specified in this Agreement.
	(g)	Company shall during the term of this Agreement comply with all laws, rules and regulations applicable to it in connection with the performance of each of its obligations under this Agreement or applicable to the performance of its business, including, but not limited to, the requirements of the USA Patriot Act of 2001 (the "AML Act") and related laws, rules and regulations.
	(h)	To the extent one or more third parties are engaged by Company to offer the Contracts and/or perform services that Company is responsible for under this Agreement (such parties include, but are not limited to, affiliates of Company) ("Agents"), Company shall determine that each such Agent is capable of performing such services, shall take measures as may be necessary to ensure that Agents perform such services in accordance with the requirements of this Agreement and applicable law and shall bear full responsibility for, and assume all liability for (including any obligation for indemnification as provided in Paragraph 13 hereof), the actions and inactions of such Agents as if such services had been provided by Company.
	(i)	From time to time, W&R and/or Ivy Funds VIP may implement policies, procedures or requirements in an effort to comply with applicable legal requirements and/or avoid potential adverse effects on the Portfolios. Company agrees to cooperate in good faith with W&R and/or Ivy Funds VIP in the implementation of any such policies, procedures and/or requirements and agrees to comply with any and all requirements, restrictions and limitations described in the Portfolios' Prospectus, including any restrictions or prohibitions relating to frequent purchases and redemptions of Portfolio shares.
	(j)	Company represents that, during the term of this Agreement, it will have in force adequate insurance coverage insuring the Company against potential liabilities associated with the underwriting and distribution of the Contracts.
3.	AUTHORITY OF COMPANY. Subject to the terms and conditions of this Agreement, Company shall be authorized to, and agrees, to act as a limited agent of W&R for purposes of Rule 22c-1 under the 1940 Act and to the extent permitted by applicable law, for the sole purpose of receiving instructions for the purchase and redemption of Portfolio shares (from or on behalf of Contract Owners or participants making investment allocation decisions under the Contracts) prior to the close of business of the New York Stock Exchange ("NYSE"), normally 3:00 p.m. Central Time ("Pricing Time") each Business Day. "Business Day" shall mean any day on which the NYSE is open for trading and on which the Portfolios calculate their net asset value as set forth in the Portfolios' most recent Prospectuses and SAIs. Except as particularly stated in this paragraph, Company shall have no authority to act on behalf of W&R or Ivy Funds VIP or to incur any cost or liability on its behalf.
4.	AVAILABLE PORTFOLIOS.
	(a)	AVAILABILITY. Ivy Funds VIP will make shares of the Portfolios available to Company and its Variable Accounts for purchase and redemption at the applicable net asset value and with no sales charges on those days on which the Portfolios calculate their net asset value pursuant to the rules of the SEC, subject to the terms and conditions of this Agreement. Notwithstanding the foregoing, the Board of Directors of Ivy Funds VIP ("Board") may refuse to sell shares of any Portfolio to any person or suspend or terminate the offering of shares of any Portfolio (a) if such action is required by law or by regulatory authorities having jurisdiction, (b) if, in the sole discretion of the Board, acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, the Board deems such action to be in the best interests of the shareholders of such Portfolio, or (c) if such action is required by any policies that the Board has adopted and that apply to all Participating Insurance Companies. Further, it is acknowledged and agreed that the availability of Portfolio shares shall be subject to Ivy Funds VIP's current Prospectus and SAI and to federal and state laws, rules and regulations.
	(b)	ADDITION, DELETION OR MODIFICATION OF PORTFOLIOS. W&R and/or Ivy Funds VIP may, from time to time, add other Portfolios to provide additional funding media for the Contracts, or to delete, combine or modify existing Portfolios, by amending Exhibit B hereto. W&R and/or Ivy Funds VIP reserve the right to amend Exhibit B in their sole and exclusive discretion upon written notice to Company. W&R and/or Ivy Funds VIP will use reasonable efforts to provide written notice to Company at least thirty (30) days prior to the date of deletion of any Portfolio offered through the Contracts. Upon such amendment to Exhibit B, any applicable reference to a Portfolio, Ivy Funds VIP or its shares herein shall include a reference to any such additional Portfolio.
	(c)	NO SALES TO THE GENERAL PUBLIC. Ivy Funds VIP represents and warrants that shares of the Portfolios will be sold only to insurance companies and/or their separate accounts funding variable life insurance policies and/or variable annuity contracts or to other persons or entities permitted under Section 817 of the Code, or regulations promulgated thereunder. Ivy Funds VIP represents and warrants that no shares of any Portfolio have been or will be sold to the general public.
5.	PROCESSING OF PORTFOLIO PURCHASE AND REDEMPTION REQUESTS.
	(a)	PRICING INFORMATION. Ivy Funds VIP or its agents will use reasonable best efforts to provide closing net asset value, change in net asset value, dividend or daily accrual rate information and capital gain information by 6:00 p.m. Central Time each Business Day to Company. Company shall use this data to calculate unit values for its Variable Accounts. Unit values shall be used to process that same Business Day's Variable Account transactions. In the event adjustments to transactions previously effected on behalf of a Variable Account are required to correct any material error in the computation of the net asset value of a Portfolio's shares, Ivy Funds VIP or its agent shall notify Company promptly upon discovering the need for those adjustments which result in a reimbursement to a Variable Account in accordance with Ivy Funds VIP's then current policies on reimbursement, which Ivy Funds VIP represents are consistent with applicable SEC standards. Such notification may be oral, but shall be confirmed promptly in writing. If an adjustment is to be made in accordance with such policies to correct an error which has caused a Variable Account to receive an amount different than that to which it is entitled, Ivy Funds VIP or its agent shall make all necessary adjustments to the number of shares owned by the Variable Account and distribute to the Variable Account the amount of such underpayment for credit by the Company to affected Contract Owners. W&R and Ivy Funds VIP shall not be responsible for payment of any costs of reprocessing transactions in units issued by a Variable Account (or a sub-account of a Variable Account) under the Contracts arising out of an error in the calculation of a Portfolio's net asset value, dividends or capital gains distributions if such error is discovered and corrected within five (5) Business Days; however, in the event that the error causes the Company to incur any direct costs for reprocessing Contract accounts, such as preparing and mailing revised statements, W&R and/or Ivy Funds VIP shall reimburse the Company for all such reasonable costs. The Company agrees to use its best efforts to minimize any costs incurred under this paragraph and shall provide W&R with acceptable documentation of any such costs incurred.
	(b)	PLACING OF ORDERS BY COMPANY. All orders shall be communicated by the Company through the National Securities Clearing Corporation's ("NSCC") Fund/SERV system. The following information shall be supplied by the Company at the time each order is placed: (i) total purchases for each Portfolio (including all purchase, exchange and transfer orders received net by the Company resulting in purchases of Portfolio shares); (ii) total redemptions for each Portfolio (including all redemption, exchange and transfer orders received by the Company resulting in redemptions of Portfolio shares); and (iii) such other information required by NSCC or reasonably requested by W&R. Orders for purchases or redemptions shall be placed by Company with W&R or its specified agent in a manner and format determined by W&R no later than 8:30 a.m. Central Time on the following Business Day using the NSCC format unless an exception procedure is necessary. The Company may place purchase and/or redemption orders on the following Business Day for shares of the Portfolios that it receives prior to the Pricing Time each Business Day. The Company will not aggregate pre-Pricing Time trades with post-Pricing Time trades.
	(c)	PROCESSING OF ORDERS. To the extent permitted by applicable law, orders for shares of Portfolios received by Company prior to the Pricing Time on a Business Day and received by W&R by 8:30 a.m. Central time on the following Business Day shall be executed at the time they are received by W&R and at the net asset value price determined as of the close of trading on the previous Business Day, provided that Company represents it has received such orders prior to the close of the NYSE on the previous Business Day. In connection with this Section 5(c), Company represents and warrants that it will not submit any order for shares of a Portfolio or engage in any practice, nor will it allow any person acting on its behalf to submit any order for shares of a Portfolio or engage in any practice, that would violate or cause a violation of Section 22 of the 1940 Act or Rule 22c-1 thereunder. W&R will not accept any order made on a conditional basis or subject to any delay or contingency. Company shall only place purchase orders for shares of Portfolios on behalf of its customers whose addresses recorded on Company's books are in a state or other jurisdiction in which the Portfolios are registered or qualified for sale, or are exempt from registration or qualification as confirmed in writing by W&R.
	(d)	PAYMENT FOR SHARES. Payment for net purchases shall be settled through the NSCC. For exception settlements, the Company will wire payment for net purchases to a custodian account designated by Ivy Funds VIP by 5:00 p.m. Central Time on the same day as the order for Portfolio shares is placed, to the extent practicable. Ivy Funds VIP will wire payment for net redemptions to an account designated by Company by 5:00 p.m. Central Time on the same day as the order is placed, to the extent practicable, but in any event within five (5) calendar days after the date the order is placed in order to enable Company to pay redemption proceeds within the time specified in Section 22(e) of the 1940 Act or such period of time as may be required by law. Net purchase orders are subject to cancellation at the option of W&R and/or Ivy Funds VIP in the event that payment is not received within two (2) Business Days following receipt of the order by Ivy Funds VIP. Company shall indemnify W&R and Ivy Funds VIP for any losses incurred in connection with a cancelled order.
	(e)	DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. Dividends and capital gain distributions shall be reinvested in additional Portfolio shares at net asset value. Notwithstanding the above, W&R shall not be held responsible for providing Company with ex-date net asset value, change in net asset value, dividend or capital gain information when the NYSE is closed, when an emergency exists making the valuation of net assets not reasonably practicable, or during any period when the SEC has by order permitted the suspension of pricing shares for the protection of shareholders. Ivy Funds VIP shall furnish, on or before the ex-dividend date, but no later than receipt of the ex-dividend date net asset value, notice to Company of any income dividends or capital gain distributions payable on the shares of the Portfolios. Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Portfolio's shares in additional shares of the Portfolio. Ivy Funds VIP shall notify Company of the number of shares so issued as payment of such dividends and distributions.
	(f)	ISSUANCE OF SHARES. Issuance and transfer of Portfolio shares will be by book entry only. Share certificates will not be issued to Company for any Variable Account. Portfolio shares will be recorded in the appropriate title for each Variable Account.
	(g)	COMPANY REPORTING AND FUND TRADING RESTRICTIONS.
		(1)	The Company agrees to provide W&R and/or Ivy Funds VIP, upon written request, the taxpayer identification number ("TIN"), if known, of any or all Contract Owner(s) of the account and the amount, date, name or other identifier of any investment professional(s) associated with the Contract Owner(s) or account (if known), and transaction type (purchase, redemption, transfer, or exchange) of every purchase, redemption, transfer, or exchange of Shares held through an account maintained by the Company during the period covered by the request.
		(2)	W&R and/or Ivy Funds VIP requests for information pursuant to this section shall set forth a specific period for which transaction information is sought. W&R and/or Ivy Funds VIP may request transaction information it deems necessary, including transaction information for each trading day, to investigate compliance with policies established by W&R and/or Ivy Funds VIP for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by Ivy Funds VIP or otherwise to comply with applicable regulatory requirements ("Market Timing Policies").
		(3)	The Company agrees to transmit the requested information that is on its books and records to W&R and/or Ivy Funds VIP or its designee promptly, but in any event not later than five (5) Business Days, after receipt of a request. If the requested information is not on the Company's books and records, the Company agrees to: (i) provide or arrange to provide to W&R and/or Ivy Funds VIP the requested information from Contract Owners who hold an account with an indirect intermediary; or (ii) if directed by W&R and/or Ivy Funds VIP, block further purchases of Fund Shares from such indirect intermediary. In such instance, the Company agrees to inform W&R and/or Ivy Funds VIP whether it plans to perform (i) or (ii). Responses required by this paragraph must be communicated in writing and in a format mutually agreed upon by the parties. To the extent practicable, the format for any transaction information provided to W&R and/or Ivy Funds VIP should be consistent with the NSCC Standardized Data Reporting Format. For purposes of this provision, an "indirect intermediary" has the same meaning as in SEC Rule 22c-2 under the 1940 Act.
		(4)	W&R and/or Ivy Funds VIP agrees not to use the information received for marketing or any other similar purpose without the prior written consent of the Company.
		(5)	The Company agrees to execute written instructions from W&R and/or Ivy Funds VIP to restrict or prohibit further purchases or exchanges of Shares by a Contract Owner that has been identified by W&R and/or Ivy Funds VIP as having engaged in transactions of the Fund's Shares (directly or indirectly through the Company's account) that violate Market Timing Policies established by W&R and/or Ivy Funds VIP.
		(6)	Instructions from W&R and/or Ivy Funds VIP will include the TIN, if known, and the specific restriction(s) to be executed. If the TIN is not known, the instructions will include an equivalent identifying number of the Contract Owner(s) or account(s) or other agreed upon information to which the instruction relates.
		(7)	The Company agrees to execute instructions as soon as reasonably practicable, but not later than five (5) Business Days after receipt of the instructions by the Company.
		(8)	The Company must provide written confirmation to W&R and/or Ivy Funds VIP that instructions have been executed. The Company agrees to provide confirmation as soon as reasonably practicable, but not later than five (5) Business Days after the instructions have been executed.
		(9)	For purposes of this Section 5 (g):
				(i)	The term "Shares" means the interests of Shareholders corresponding to the redeemable securities of record issued by W&R and/or Ivy Funds VIP under the 1940 Act that are held by the Company.
				(ii)	The term "Contract Owner" means the holder of interests in a variable annuity or variable life insurance contract issued by the Company.
				(iii)	The term "written" includes electronic writings and facsimile transmissions.
6.	SERVICES AND EXPENSES. W&R shall pay or cause to be paid compensation to Company as set forth on Exhibit C for administrative services identified on Schedule A of Exhibit C. All expenses incident to the performance by Company, W&R and/or Ivy Funds VIP of their respective obligations under this Agreement shall be paid by the party subject to the obligation, as set forth on Schedule B of Exhibit C.
7.	PROSPECTUSES, SAIs, PROXIES AND REPORTS.
	(a)	DELIVERY TO COMPANY. W&R shall promptly provide Company (or its designee), or cause Company (or its designee) to be provided with:
		(1)	a camera-ready copy of the Portfolios' Prospectus and any supplements, for use by Company in producing a combined prospectus for each Contract incorporating both the Contract Prospectus and the Portfolios' Prospectus;
		(2)	a .pdf version of the Portfolios' SAI and any supplements;
		(3)	periodic reports required under the 1940 Act ("Periodic Reports") in such quantity as Company shall reasonably require for distribution to Contract Owners; and
		(4)	copies of any Portfolio proxy materials in such quantity as Company shall reasonably require for distribution to Contract Owners.
	(b)	DELIVERY TO CONTRACT OWNERS. W&R shall bear the reasonable costs of printing Portfolio proxy materials (or similar materials such as voting solicitation instructions), Periodic Reports, Prospectuses and SAIs intended for delivery to Contract Owners and for the costs of delivering such materials to Contract Owners. W&R and/or Ivy Funds VIP shall reimburse Company for reasonable costs they incur within thirty (30) days after receipt of an invoice itemizing such costs. Company assumes sole responsibility for ensuring that such materials are delivered to Contract Owners in accordance with applicable federal and state securities laws. With respect to proxy materials, Company shall provide any Contract Owner and other information to a designated third party proxy service vendor, as reasonably requested by W&R and/or Ivy Funds VIP.
	(c)	USE OF PORTFOLIO MATERIALS BY COMPANY. If Company elects to include any materials provided by W&R or Ivy Funds VIP, specifically Prospectuses, SAIs, Periodic Reports and proxy materials, on its web site or in any other computer or electronic format, Company assumes sole responsibility for maintaining such materials in the form provided by W&R or Ivy Funds VIP and for promptly replacing such materials with all updates provided by W&R or Ivy Funds VIP. W&R or Ivy Funds VIP agree to provide all such materials requested by Company in a Portable Document Format (PDF) in a timely fashion at no additional cost, together with such other formats at Company's cost as may be mutually agreed upon.
	(d)	PROXY VOTING. If and to the extent required by law, Company shall: (i) solicit voting instructions from Contract Owners; (ii) vote the Portfolio(s) shares in accordance with the instructions received from Contract Owners; and (iii) vote Portfolio(s) shares for which no instructions have been received in the same proportion as the vote of all other holders of such shares, provided however, that the Company reserves the right to vote Portfolio shares held in any segregated asset account in its own right, to the extent permitted by law. Company and its agents will in no way recommend action in connection with or oppose or interfere with the solicitation of proxies for the Portfolio shares held for the benefit of such Contract Owners.
8.	COMPANY'S USE OF PORTFOLIO INFORMATION. Company and its agents shall make no representations concerning the Portfolios or Portfolio shares except those contained in the Portfolios' then current Prospectuses, SAIs or other documents produced by W&R (or an entity on its behalf) which contain information about the Portfolios. Company agrees to submit to W&R for prior review and approval any communication with the public containing any Portfolio information. Company agrees to allow at least ten (10) Business Days for W&R to review any advertising and sales literature drafted by Company (or agents on its behalf) with respect to the Portfolios prior to using such material or submitting such material to any regulator.
9.	REPRESENTATIONS OF W&R AND/OR IVY FUNDS VIP.
	(a)	W&R represents that the Portfolios are currently qualified as regulated investment companies under Subchapter M of the Code and that Ivy Funds VIP shall make every effort to maintain such qualification. W&R shall promptly notify Company upon having a reasonable basis for believing that any of the Portfolios has ceased to so qualify, or that they may not qualify as such in the future.
	(b)	W&R represents that each of the Portfolios currently complies with the diversification requirements pursuant to Section 817(h) of the Code and Section 1.817-5(b) of the Federal Tax Regulations and that Ivy Funds VIP will make every effort to maintain the Portfolios' compliance with such diversification requirements, unless the Portfolios are otherwise exempt from Section 817(h) and/or except as otherwise disclosed in the Portfolios' Prospectus. W&R will notify Company promptly upon having a reasonable basis for believing that a Portfolio has ceased to so qualify, or that a Portfolio might not so qualify in the future.
	(c)	W&R represents and warrants that Ivy Funds VIP is duly organized and validly existing under the laws of Maryland and that each Portfolio does and will comply in all material respects with the 1940 Act and the rules and regulations thereunder.
	(d)	W&R represents and warrants that the Portfolio shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and each Portfolio shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. W&R shall amend the Portfolios' registration statement under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of Portfolio shares. Ivy Funds VIP shall register and qualify its shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by Ivy Funds VIP or W&R.
	(e)	Ivy Funds VIP represents and warrants that it, its directors, officers, employees and others dealing with the money or securities, or both, of a Portfolio shall at all times be covered by a blanket fidelity bond or similar coverage for the benefit of the Portfolio in an amount not less than the minimum coverage required by Rule 17g-1 or other regulations under the 1940 Act. Such bond shall include coverage for larceny and embezzlement and be issued by a reputable bonding company.
	(f)	W&R represents and warrants that it is currently and will continue to be a registered-broker dealer and member in good standing with the Financial Industry Regulatory Authority ("FINRA").
10.	CONFIRMATIONS. Ivy Funds VIP or its agent shall provide Company access to electronic account information, which shall confirm all transactions in Portfolio shares made during that particular quarter by a Variable Account. This is in addition to position information received daily by the Company via NSCC.
11.	MIXED AND SHARED FUNDING.
	(a)	GENERAL. The parties understand that the SEC has granted an order to Ivy Funds VIP exempting it from certain provisions of the 1940 Act and rules thereunder so that Ivy Funds VIP may be available for investment by certain other entities, including, without limitation, separate accounts funding variable annuity contracts or variable life insurance contracts, separate accounts of insurance companies unaffiliated with Company, and trustees of qualified pension and retirement plans (collectively, "Mixed and Shared Funding"). The parties recognize that the SEC has imposed terms and conditions for such orders. Ivy Funds VIP hereby notifies Company that it may be appropriate to include in the prospectus pursuant to which a Contract is offered disclosure regarding the potential risks of Mixed and Shared Funding.
	(b)	INFORMATION REQUESTED BY BOARD. Company and Ivy Funds VIP (or its agent) will at least annually submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by the provisions hereof or any exemptive order granted by the SEC to permit Mixed and Shared Funding, and said reports, materials and data will be submitted at any reasonable time deemed appropriate by the Board.
12.	TERMINATION.
	(a)	EVENTS OF TERMINATION. This Agreement shall terminate as to the sale and issuance of Portfolio(s) shares:
		(1)	at the option of Company, W&R or Ivy Funds VIP upon at least sixty (60) days advance written notice to the other;
		(2)	at any time with respect only to an applicable Portfolio(s), upon W&R's election, if Ivy Funds VIP determines that liquidation of the Portfolio(s) is in the best interest of the Portfolio(s) and its (their) beneficial owners. Reasonable advance notice of election to liquidate shall be furnished by W&R to permit the substitution of Portfolio shares with the shares of another investment company;
		(3)	if the Contracts are not treated as annuity contracts or life insurance policies by the applicable regulators or under applicable rules or regulations;
		(4)	if the Variable Accounts are not deemed "segregated asset accounts" by the applicable regulators or under applicable rules or regulations;
		(5)	with respect only to the applicable Portfolio(s), upon a decision by Company based on reasonable cause, in accordance with applicable law, to substitute such Portfolio shares with the shares of another investment company for Contracts for which the Portfolio shares have been selected to serve as the underlying investment medium. Company shall give at least sixty (60) days written notice to Ivy Funds VIP and W&R of any decision to substitute Portfolio shares; such reasonable cause shall include but not be limited to changes in the Portfolio's investment strategy, management or performance;
		(6)	upon sixty (60) days notice upon assignment of this Agreement unless such assignment is made with the written consent of each other party;
		(7)	in the event Portfolio shares are not registered, issued or sold pursuant to Federal law, or such law precludes the use of Portfolio shares as an underlying investment medium of Contracts issued or to be issued by Company. Prompt written notice shall be given by either party to the other in the event the conditions of this provision occur; and
		(8)	at the option of any party to this Agreement, upon another party's material breach of any provision of this Agreement.
	(b)	NOTICE REQUIREMENT. In the event of any termination of this Agreement at the option of one of the parties, prompt written notice of the election to terminate this Agreement shall be furnished by the party terminating the Agreement to the non-terminating parties.
	(c)	PORTFOLIOS TO REMAIN AVAILABLE; EFFECT OF TERMINATION. Notwithstanding any termination of this Agreement by Company, Ivy Funds VIP will, at the option of Company, continue to make available additional shares of any Portfolio offered under a Contract pursuant to the terms and conditions of this Agreement, for any Contract that is in effect on the effective date of termination of this Agreement and that offers the particular Portfolio(s) as an investment option under the Contract as of that date (hereinafter referred to as "Existing Contracts"), unless W&R or the Board determines that doing so would not serve the best interests of the shareholders of the affected Portfolio(s) or would be inconsistent with applicable law or regulation. Specifically, without limitation, the owners of the Existing Contracts will be permitted to reallocate investments in the Portfolio(s) (as in effect on such date), redeem investments in the Portfolio(s) and/or invest in the Portfolio(s) upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 12 will not apply to any (i) terminations under Section 11 and the effect of such terminations will be governed by Section 11 of this Agreement or (ii) any rejected purchase and/or redemption order as described in Section 2(i) hereof. If Company elects to continue to make available Portfolio shares to Contract Owners after the effective date of termination of this Agreement in accordance with this Section 12(c), all provisions of this Agreement will survive any termination of this Agreement solely with respect to transactions in such Portfolio shares under the Existing Contracts.
13.	NOTICES.
	(a)	DELIVERY. All notices sent under this Agreement shall be given in writing, and shall be delivered personally, or sent by fax, or by a nationally-recognized overnight courier, postage prepaid. All such notices shall be deemed to have been duly given when so delivered personally or sent by fax, with receipt confirmed, or one (1) business day after the date of deposit with such nationally-recognized overnight courier. All such notices to Company, W&R or Ivy Funds VIP shall be delivered to:

Ameritas Life Insurance Corp.

5900 "O" Street

Lincoln, Nebraska 68510

Attention: General Counsel

The Union Central Life Insurance Company

1876 Waycross Road

Cincinnati, Ohio 45240

Attention: General Counsel

Waddell & Reed, Inc.

6300 Lamar Avenue

Overland Park, Kansas 66202

Attention: Legal Department

Ivy Funds Variable Insurance Portfolios, Inc.

300 Lamar Avenue

Overland Park, Kansas 66202

Attention: Secretary

	All such notices to Company, W&R and Ivy Funds VIP shall be delivered to their respective addresses as listed above, or such other address as Company, W&R and/or Ivy Funds VIP may have furnished in writing to the other parties in accordance herewith.
	(b)	NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
		(1)	Ivy Funds VIP or W&R will immediately notify Company of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to Ivy Funds VIP's registration statement under the 1933 Act or Ivy Funds VIP's Prospectus, (ii) any request by the SEC for any amendment to such registration statement or Ivy Funds VIP Prospectus that may affect the offering of shares of Ivy Funds VIP, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of Ivy Funds VIP Shares, or (iv) any other action or circumstances that may prevent the lawful offer or sale of shares of any Portfolio in any state or jurisdiction, including, without limitation, any circumstances in which (a) such shares are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law, or (b) such law precludes the use of such shares as an underlying investment medium of the Contracts issued or to be issued by Company. Ivy Funds VIP and W&R will make every reasonable effort to prevent the issuance, with respect to any Portfolio, of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time.
		(2)	Company will immediately notify Ivy Funds VIP of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to each Variable Account's registration statement under the 1933 Act relating to the Contracts or each Variable Account Prospectus, (ii) any request by the SEC for any amendment to such registration statement or Variable Account Prospectus that may affect the offering of shares of Ivy Funds VIP, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of each Variable Account's interests pursuant to the Contracts, or (iv) any other action or circumstances that may prevent the lawful offer or sale of said interests in any state or jurisdiction, including, without limitation, any circumstances in which said interests are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law. Company will make every reasonable effort to prevent the issuance of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time.
14.	INDEMNIFICATION.
	(a)	INDEMNIFICATION BY COMPANY.
		(1)	Company agrees to reimburse and/or indemnify and hold harmless W&R, Ivy Funds VIP, and each of their directors, officers, employees, agents and each person, if any, who controls or is controlled by W&R within the meaning of the 1933 Act (collectively, "Affiliated Party") against any losses, claims, damages or liabilities ("Losses") to which W&R or any such Affiliated Party may become subject, under the 1933 Act or otherwise, insofar as such Losses arise out of or are based upon, but not limited to:
			(i)	any untrue statement or alleged untrue statement of any material fact contained in information furnished by Company;
			(ii)	the omission or the alleged omission to state in the Registration Statements or Prospectuses of the Variable Accounts, or Contract, or in any sales literature or other public communication generated by Company on behalf of the Variable Accounts or Contracts, a material fact required to be stated therein or necessary to make the statements therein not misleading;
			(iii)	statements or representations of Company or its agents or third parties, with respect to the offer, sale or distribution of Contracts for which Portfolio shares are an underlying investment, or negligent or wrongful conduct of Company or its agents or third parties with respect to offers or sales of Contracts or Portfolio shares;
			(iv)	the failure of Company to comply with applicable legal or self-regulatory requirements to which it is subject;
			(v)	a material breach of this Agreement or of any of the representations or warranties contained herein; or
			(vi)	any failure to register the Contracts or the Variable Accounts under federal or state securities laws, state insurance laws or to otherwise comply with such laws, rules, regulations or orders.
		(2)	Provided however, that Company shall not be liable in any such case to the extent any such Losses arise out of or are based upon an act, statement, omission or representation or alleged act, alleged statement, alleged omission or alleged representation which was made in reliance upon and in conformity with written information furnished to Company by or on behalf of W&R specifically for its use.
		(3)	Company shall reimburse any legal or other expenses reasonably incurred by W&R, Ivy Funds VIP, or any Affiliated Party in connection with investigating or defending any such Losses, provided, however, that Company shall have prior approval of the use of said counsel or the expenditure of said fees.
		(4)	This indemnity agreement shall be in addition to any liability which Company may otherwise have and shall survive termination of this Agreement.
	(b)	INDEMNIFICATION BY W&R AND/OR IVY FUNDS VIP.
		(1)	W&R and/or Ivy Funds VIP, as applicable, agree to indemnify and hold harmless Company and each of its directors, officers, employees, agents and each person, (collectively, "Company Affiliated Party"), who controls Company within the meaning of the 1933 Act against any Losses to which Company or any such Company Affiliated Party may become subject, under the 1933 Act or otherwise, insofar as such Losses arise out of or are based upon; but not limited to:
			(i)	any untrue statement or alleged untrue statement of any material fact contained in any information furnished by W&R or Ivy Funds VIP, including but not limited to, the Registration Statements, Prospectuses or sales literature of the Portfolios;
			(ii)	the omission or the alleged omission to state in the Registration Statements or Prospectuses of the Portfolios or in any sales literature generated by W&R, Ivy Funds VIP or their affiliates a material fact required to be stated therein or necessary to make the statements therein not misleading;
			(iii)	W&R's failure to keep the Portfolios fully diversified and qualified as regulated investment companies as required by the applicable provisions of the Code, the 1940 Act, and the applicable regulations promulgated thereunder;
			(iv)	the failure of W&R or Ivy Funds VIP to comply with applicable legal or self-regulatory requirements to which they are subject;
			(v)	a material breach of this Agreement or of any of the representations or warranties contained herein; or
			(vi)	any failure to register the Portfolios under federal or state securities laws or to otherwise comply with such laws, rules, regulations or orders.
		(2)	Provided however, that W&R and Ivy Funds VIP shall not be liable in any such case to the extent that any such Losses arise out of or are based upon an act, statement, omission or representation or alleged act, alleged statement, alleged omission or alleged representation which was made in reliance upon or in conformity with written information furnished to W&R or Ivy Funds VIP by Company specifically for their use.
		(3)	W&R and/or Ivy Funds VIP, as applicable, shall reimburse any reasonable legal or other expenses reasonably incurred by Company or any Company Affiliated Party in connection with investigating or defending any such Losses, provided, however, that W&R and Ivy Funds VIP shall have prior approval of the use of said counsel or the expenditure of said fees.
		(4)	This indemnity agreement will be in addition to any liability which W&R and/or Ivy Funds VIP, as applicable, may otherwise have and shall survive termination of this Agreement.
	(c)	NOTICE AND DEFENSE OF CLAIMS. Each party shall promptly notify the other party(ies) in writing of any situation which presents or appears to involve a claim which may be the subject of indemnification under this Agreement and the indemnifying party shall have the option to defend against any such claim. In the event the indemnifying party so elects, it shall notify the indemnified party and shall assume the defense of such claim, and the indemnified party shall cooperate fully with the indemnifying party, at the indemnifying party's expense, in the defense of such claim. Notwithstanding the foregoing, the indemnified party shall be entitled to participate in the defense of such claim at its own expense through counsel of its own choosing. Neither party shall admit to wrong-doing nor make any compromise in any action or proceeding which may result in a finding of wrongdoing by the other party without the other party's prior written consent, which shall not be unreasonably withheld. Any notice given by the indemnifying party to an indemnified party or participation in or control of the litigation of any such claim by the indemnifying party shall in no event be deemed to be an admission by the indemnifying party of culpability, and the indemnifying party shall be free to contest liability among the parties with respect to the claim.
15.	SUBSTITUTION APPLICATIONS. Subject to Section 12(a)(5) of this Agreement, W&R may request or Company may initiate the filing of a substitution application pursuant to Section 26(c) of the 1940 Act to substitute shares of a Portfolio held by a Company Variable Account for another investment media ("Substitution Application"). The costs associated with a Substitution Application shall be allocated as follows:
	(a)	In the event W&R requests Company to submit a Substitution Application, W&R shall reimburse Company for all reasonable costs incurred by Company in preparing and filing the Substitution Application and any amendment thereto. W&R shall be obligated to reimburse Company under this provision irrespective of whether the Substitution Application requested by W&R is granted by the SEC or the substitution is effectuated. W&R shall not have any liability to reimburse any other costs or expenses incurred in connection with effecting the substitution.
	(b)	In the event Company initiates a Substitution Application, Company shall bear all costs associated with the Substitution Application irrespective of whether the Substitution Application is granted or the substitution is effectuated.
	(c)	In the event Company initiates a Substitution Application in accordance with Section 12(a)(5), Company shall bear the costs incurred in the transfer.
16.	CONFIDENTIALITY.
	(a)	COMPANY. Ivy Funds VIP acknowledges that the identities of the customers of Company or any of its affiliates (collectively, the "the Company Protected Parties" for purposes of this Section 16), information maintained regarding those customers, and all computer programs and procedures or other information developed by the Company Protected Parties or any of their employees or agents in connection with Company's performance of its duties under this Agreement are the valuable property of the Company Protected Parties. Ivy Funds VIP agrees that if it comes into possession of any list or compilation of the identities of or other information about the Company Protected Parties' customers, or any other information or property of the Company Protected Parties, other than such information as may be independently developed or compiled by Ivy Funds VIP from information supplied to it by the Company Protected Parties' customers who also maintain accounts directly with Ivy Funds VIP, Ivy Funds VIP will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with Company's prior written consent; or (b) as required by law or judicial process.
	(b)	IVY FUNDS VIP. Company acknowledges that the identities of the customers of Ivy Funds VIP or any of its affiliates (collectively, the "Ivy Funds VIP Protected Parties" for purposes of this Section 16), information maintained regarding those customers, and all computer programs and procedures or other information developed by the Ivy Funds VIP Protected Parties or any of their employees or agents in connection with Ivy Funds VIP's performance of its duties under this Agreement are the valuable property of the Ivy Funds VIP Protected Parties. Company agrees that if it comes into possession of any list or compilation of the identities of or other information about the Ivy Funds VIP Protected Parties' customers or any other information or property of the Ivy Funds VIP Protected Parties, other than such information as may be independently developed or compiled by Company from information supplied to it by the Ivy Funds VIP Protected Parties' customers who also maintain accounts directly with Company, Company will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with Ivy Funds VIP's prior written consent; or (b) as required by law or judicial process.
	(c)	BOTH PARTIES. Each party acknowledges that any breach of the agreements in this Section 16 would result in immediate and irreparable harm to the other parties for which there would be no adequate remedy at law and agree that in the event of such a breach, the other parties will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate.
17.	TRADEMARKS AND FUND NAMES.
	(a)	Except as may otherwise be provided in Section 8 of this Agreement, or in any license agreement entered into among Ivy Funds VIP and Company, neither Company or any of its respective affiliates, shall use any trademark, trade name, service mark or logo of W&R, Ivy Funds VIP or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without W&R's or Ivy Funds VIP's prior written consent, as applicable, the granting of which shall be at the sole option of W&R or Ivy Funds VIP, as applicable.
	(b)	Except as otherwise expressly provided in this Agreement, neither Ivy Funds VIP, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of Company or any of its affiliates, or any variation of any such trademark, trade name, service mark or logo, without Company's prior written consent, the granting of which shall be at Company's sole option.
18.	FORCE MAJEURE. Each party shall be excused from the performance of any of its obligations to the other where such nonperformance is occasioned by any event beyond its control which shall include, without limitation, any applicable order, rule or regulation of any federal, state or local body, agency or instrumentality with jurisdiction, work stoppage, accident, natural disaster, war, acts of terrorism or civil disorder, provided that the party so excused shall use all reasonable efforts to minimize its nonperformance and overcome, remedy, cure or remove such event as soon as is reasonably practicable, and such performance shall be excused only for so long as, in any given case, the force or circumstances making performance impossible shall exist.
19.	NO WAIVER. The forbearance or neglect of any party to insist upon strict compliance by another party with any of the provisions of this Agreement, whether continuing or not, or to declare a forfeiture of termination against the other parties, shall not be construed as a waiver of any of the rights or privileges of any party hereunder. No waiver of any right or privilege of any party arising from any default or failure of performance by any party shall affect the rights or privileges of the other parties in the event of a further default or failure of performance.
20.	GOVERNING LAW AND VENUE. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of Kansas, without respect to its choice of law provisions and in accordance with the 1940 Act. In the case of any conflict, the 1940 Act shall control. Any civil action commenced in connection with this Agreement shall be brought, and venue shall only be proper, in District Court for Johnson County, Kansas.
21.	AUTHORIZATION. Each party hereby represents and warrants to the other that the persons executing this Agreement on its behalf are duly authorized and empowered to execute and deliver the Agreement and that the Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. Except as particularly set forth herein, neither party assumes any responsibility hereunder, and will not be liable to the other for any damage, loss of data, delay or any other loss whatsoever caused by events beyond its reasonable control.
22.	RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed to create a partnership or joint venture by and among the parties hereto.
23.	ENTIRE AGREEMENT AND AMENDMENT. This Agreement, including all exhibits hereto, constitutes the entire agreement and understanding between the parties with respect to the matters addressed herein. Except to amend Exhibit B, which may be amended unilaterally by W&R and/or Ivy Funds VIP in its sole discretion, or as otherwise provided in this Agreement, this Agreement may not be amended or modified except by a written amendment executed by each of the parties.
24.	COOPERATION. Each party shall cooperate with each other party and all appropriate government authorities (including without limitation the SEC, FINRA and state securities and insurance regulators) and shall permit such authorities having jurisdiction reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby.
25.	NON-EXCLUSIVE AGREEMENT. The parties of this Agreement acknowledge and agree that this Agreement shall not be exclusive in any respect.
26.	COUNTERPARTS. This Agreement may be executed by facsimile or other electronic signature and it may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
	IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

AMERITAS LIFE INSURANCE CORP.
/s/Robert S. Barth
By:	Robert S. Barth
Title:	Senior Vice President and
	Chief Financial Officer
THE UNION CENTRAL LIFE INSURANCE COMPANY
/s/Angelo de Jesus
By:	Angelo de Jesus
Title:	Second Vice President ______
WADDELL & REED, INC.
/s/Thomas W. Butch
By:	Thomas W. Butch
Title:	President
IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, Inc.
/s/Henry J. Herrmann
By:	Henry J. Herrmann
Title:	President

EXHIBIT A

Variable Accounts of Companies

Ameritas Life Insurance Corp.

Name	SEC File No.
Ameritas Variable Separate Account V	811-04473
Ameritas Variable Separate Account VA-2	811-05192
Ameritas Life Insurance Corp. Separate Account LLVL	811-08868
Ameritas Life Insurance Corp. Separate Account LLVA	811-07661

The Union Central Life Insurance Company

Name	SEC File No.
Carillon Life Account	811-09076
Carillon Account	811-04063

Variable Life Insurance Policies/Variable Annuity Contracts
Funded by the Separate Accounts

Portfolios of the Ivy Funds Variable Insurance Portfolios, Inc. listed on Exhibit B may be available as variable investment options ("Subaccounts") offered through any individual variable life insurance policy or individual variable annuity contract issued by Ameritas Life Insurance Corp. or The Union Central Life Insurance Company under the above-listed variable accounts and registered with the Securities and Exchange Commission under the Securities Act of 1933.

EXHIBIT B


Ivy Funds Variable Insurance Portfolios, Inc.

Portfolios Available to Variable Accounts

Science and Technology

EXHIBIT C


Fees or Other Compensation

           Company shall provide the administrative services set out in Schedule A hereto and made a part hereof, as the same may be amended from time to time. For such services, W&R agrees to pay to Company as follows:

(a)

Assets Under Management. Each quarter, W&R shall calculate and pay to Company a fee that shall be equal to 0.25%, or Twenty-Five (_25__) basis points, on an annualized basis, of the average daily account value of all assets in the Portfolios in connection with the Contracts ("Aggregated Assets"), provided, however, that the fee is subject to change pursuant to Paragraph (b) below. The fee (the "Total Fee") shall include and not be in addition to the payment by W&R of the 12b-1 fees received by W&R from Ivy Funds VIP relating to the Aggregated Assets.

(b)

Changes in Law. If a change in the law requires a reduction in the fees paid by a pooled investment vehicle pursuant to Rule 12b-1 of the Investment Company Act of 1940 (or its functional equivalent), and if Ivy Funds VIP is required to reduce the 12b-1 fees it pays that are based upon the value of the Aggregated Assets as a result of such change in the law, then there shall be a corresponding reduction in the amount of the Total Fee due pursuant to above.

The parties to this Agreement recognize and agree that W&R's payments hereunder are for administrative services and personal Contract Owner services (as described in Schedule A) only and do not constitute payment in any manner for investment advisory services or for costs of distribution of Contracts or of Portfolio shares, and are not otherwise related to investment advisory or distribution services or expenses. The Company represents and warrants that the fees to be paid by W&R for services to be rendered by Company pursuant to the terms of this Agreement are to compensate Company for providing administrative services to Ivy Funds VIP and for providing personal services to Contract Owners as described in Schedule A, and are not designed to reimburse or compensate Company for providing any other services with respect to the Contracts or any Variable Account.

Expenses for the respective obligations of each party incident to its performance under the Agreement shall be as set forth in SCHEDULE B, attached.

SCHEDULE A

ADMINISTRATIVE SERVICES FOR
IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC.

Company shall provide certain administrative services respecting the operations of Ivy Funds VIP and certain personal services to Contract Owners investing in Ivy Funds VIP, as set forth below. This Schedule, which may be amended from time to time as mutually agreed upon by Company and W&R, constitutes an integral part of the Agreement to which it is attached. Capitalized terms used herein shall, unless otherwise noted, have the same meaning as the defined terms in the Agreement to which this Schedule relates.

A.	Records of Portfolio Share Transactions; Miscellaneous Records.
	1.	Company shall maintain master accounts with Ivy Funds VIP, on behalf of each Portfolio, which accounts shall bear the name of Company as the record owner of Portfolio shares on behalf of each Variable Account investing in the Portfolio.
	2.	Company shall maintain a daily journal setting out the number of shares of each Portfolio purchased, redeemed or exchanged by Contract Owners each day, to, among other things, assist W&R, Ivy Funds VIP and/or Ivy Funds VIP's transfer agent in tracking and recording Portfolio share transactions, and to facilitate the computation of each Portfolio's net asset value per share. Company shall daily provide W&R, Ivy Funds VIP and Ivy Funds VIP's transfer agent with a copy of such journal entries or information appearing thereon in such format as may be reasonably requested by W&R. Company shall provide such other assistance to W&R, Ivy Funds VIP and Ivy Funds VIP's transfer agent as may be necessary to cause various Portfolio share transactions effected by Contract Owners to be properly reflected on the books and records of Ivy Funds VIP.
	3.	In addition to the foregoing records, and without limitation, Company shall maintain and preserve all records as required by law to be maintained and preserved in connection with providing administrative services hereunder.
B.	Order Placement and Payment.
	1.	Company shall determine the net amount to be transmitted to the Variable Accounts as a result of redemptions of each Portfolio's shares based on Contract Owner redemption requests and shall disburse or credit to the Variable Accounts all proceeds of redemptions of Portfolio shares. Company shall notify Ivy Funds VIP of the cash required to meet redemption payments.
	2.	Company shall determine the net amount to be transmitted to Ivy Funds VIP as a result of purchases of Portfolio shares based on Contract Owner purchase payments and transfers allocated to the Variable Accounts investing in each Portfolio. Company shall transmit net purchase payments to Ivy Funds VIP's custodian.
C.	Accounting Services. Company shall perform miscellaneous accounting services as may be reasonably requested from time to time by W&R, which services shall relate to the business contemplated by this Agreement, as amended from time to time. Such services shall include, without limitation, periodic reconciliation and balancing of Company's books and records with those of Ivy Funds VIP with respect to such matters as cash accounts, Portfolio share purchase and redemption orders placed with Ivy Funds VIP, dividend and distribution payments by Ivy Funds VIP, and such other accounting matters that may arise from time to time in connection with the operations of Ivy Funds VIP as related to the business contemplated by this Agreement.
D.	BOARD Reports. Company acknowledges that W&R may, from time to time, be called upon by the Board, to provide various types of information pertaining to the operations of Ivy Funds VIP and related matters, and that W&R also may, from time to time, decide to provide such information to the Board in its own discretion. Accordingly, Company agrees to provide W&R with such assistance as W&R may reasonably request so that W&R can report such information to the Ivy Funds VIP's Board in a timely manner. Company acknowledges that such information and assistance shall be in addition to the information and assistance required of Company pursuant to Ivy Funds VIP's mixed and shared funding SEC exemptive order, described in Section 11 of this Agreement.
	Company further agrees to provide W&R with such assistance as W&R may reasonably request with respect to the preparation and submission of reports and other documents pertaining to Ivy Funds VIP to appropriate regulatory bodies and third party reporting services.
E.	IVY FUNDS VIP-Related Contract Owner Services. Company agrees to provide telephonic support for Contract Owners, including, without limitation, advice with respect to inquiries about Ivy Funds VIP and each Portfolio (not including information about performance or related to sales), communicating with Contract Owners about Ivy Funds VIP (and Variable Account) performance, and assisting with proxy solicitations, specifically with respect to soliciting voting instructions from Contract Owners.

SCHEDULE B

EXPENSE ALLOCATIONS

ITEM	FUNCTION	PARTY RESPONSIBLE FOR EXPENSE
IVY FUNDS VIP PROSPECTUS
Update	Typesetting	W&R and/or Ivy Funds VIP
New Sales:	Printing Distribution	Company Company
Existing Owners:	Printing Distribution	W&R and/or Ivy Funds VIP W&R and/or Ivy Funds VIP
IVY FUNDS VIP STATEMENTS OF ADDITIONAL INFORMATION	Same as Fund Prospectus	Same as Fund Prospectus
PROXY MATERIALS OF Ivy Funds VIP	Typesetting Printing Distribution Sending Information tape to vendor	W&R and/or Ivy Funds VIP W&R and/or Ivy Funds VIP W&R and/or Ivy Funds VIP Company
ANNUAL REPORTS AND OTHER COMMUNICATIONS WITH SHAREHOLDERS OF IVY FUNDS VIP
All	Typesetting	W&R and/or Ivy Funds VIP
Marketing	Printing Distribution	Company Company
Existing Owners:	Printing Distribution	W&R and/or Ivy Funds VIP W&R and/or Ivy Funds VIP
OPERATIONS OF IVY FUNDS VIP	All operations and related expenses, including the cost of registration and qualification of the Fund's shares, preparation and filing of the Fund's prospectus and registration statement, proxy materials and reports, the preparation of all statements and notices required by any federal or state law and all taxes on the issuance of the Fund's shares, and all costs of management of the business affairs of the Fund.	W&R and/or Ivy Funds VIP

EX-99.(E)(2)

Exhibit (e)(2)

PARTICIPATION AGREEMENT

The Ohio National Life Insurance Company

Ohio National Life Assurance Corporation

This Participation Agreement ("Agreement"), dated as of the 22 day of September, 2008, is made by and between THE OHIO NATIONAL Life Insurance Company and OHIO NATIONAL LIFE ASSURANCE CORPORATION (collectively, the "Company"), on behalf of itself and each of the separate accounts identified on Exhibit A, which is attached hereto, as the parties hereto may amend from time to time ("Variable Accounts"), WADDELL & REED, INC. ("W&R"), distributor for Ivy Funds Variable Insurance Portfolios, Inc., and IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC. ("Ivy Funds VIP").

WHEREAS, Ivy Funds VIP is registered with the Securities and Exchange Commission ("SEC") as an open-end management investment company under the Investment Company Act of 1940, as amended ("1940 Act"), and currently consists of the separately managed series identified on Exhibit B, which is attached hereto and may be unilaterally amended from time to time by W&R and/or Ivy Funds VIP in their sole and exclusive discretion upon written notice to Company (each a "Portfolio"); and

WHEREAS, the Portfolios are currently sold to one or more separate accounts of life insurance companies to fund benefits under variable life insurance policies and/or variable annuity contacts ("Participating Insurance Companies"); and

WHEREAS, Company, W&R and Ivy Funds VIP mutually desire the inclusion of the Portfolios as underlying investment media for each of the variable life insurance policies and/or variable annuity contracts issued by Company identified on Exhibit A, which is attached hereto, as the parties hereto may amend from time to time (collectively, the "Contracts"); and

WHEREAS, the Contracts allow for the allocation of net amounts received by Company to separate sub-accounts of the Variable Accounts for investment in shares of the Portfolios and other similar funds; and

WHEREAS, selection of a particular sub-account (corresponding to a particular Portfolio) is made by the owner of a Contract ("Contract Owner") and such Contract Owner may reallocate their investment options among the sub-accounts of the Variable Accounts in accordance with the terms of the Contracts.

NOW THEREFORE, Company, W&R and Ivy Funds VIP, in consideration of the promises and undertakings described herein, agree as follows:

1.	SCOPE OF AGREEMENT. The scope of this Agreement is limited to the purchase of Portfolio shares by the Variable Accounts on behalf of purchasers of the Contracts.
2.	REPRESENTATIONS OF COMPANY.
	(a)	Company represents and warrants that the Variable Accounts have been established and are in good standing under the laws of their states of organization; and the Variable Accounts have been registered as unit investment trusts under the 1940 Act and will remain so registered, or are exempt from registration pursuant to Section 3(c)(11) of the 1940 Act;
	(b)	Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of its state of incorporation and that it has legally and validly established each Variable Account as a segregated asset account under applicable state insurance laws and the regulations thereunder.
	(c)	Company represents and warrants that (i) prior to and at the time of any issuance or sale of Portfolio shares, the Contracts will be registered under the Securities Act of 1933, as amended ("1933 Act"), unless exempt from such registration, (ii) prior to and at the time of any issuance or sale of Portfolio shares, the Contracts will be duly authorized for issuance and sold in all material respects in compliance with all applicable federal and state laws, including, without limitation, the 1933 Act, the Securities Exchange Act of 1934 ("1934 Act"), the 1940 Act and the law(s) of Company's state(s) of organization and domicile, (iii) each Variable Account does and will comply in all material respects with the requirements of the 1940 Act and the rules thereunder, unless exempt from such requirements, (iv) each Variable Account's 1933 Act registration statement relating to the Contracts, together with any amendments thereto, will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder, (v) Company will amend the registration statement for its Contracts under the 1933 Act and for its Variable Accounts under the 1940 Act from time to time as required in order to effect the continuous offering of its Contracts or as may otherwise be required by applicable law, and (vi) each Variable Account prospectus, Statement of Additional Information ("SAI"), and then-current stickers, will at all times comply in all material respects with the applicable requirements of the 1933 Act and the rules thereunder.
	(d)	Company represents that each Variable Account is a "segregated asset account" and that interests in each Variable Account are offered exclusively through the purchase of a "variable contract", within the meaning of such terms under Section 817 of the Internal Revenue Code of 1986, as amended ("Code"), and Section 1.817-5(f)(2) of the Federal Tax Regulations, that it shall make every effort to continue to meet such definitional requirements, and that it shall notify W&R and Ivy Funds VIP immediately upon having a reasonable basis for believing that such requirements have ceased to be met or that they may not be met in the future.
	(e)	Company represents that the Contracts are currently, and at the time of issuance will be, treated as annuity contracts or life insurance policies, whichever is appropriate under applicable provisions of the Code, and that it shall make every effort to maintain such treatment. Company will promptly notify W&R and Ivy Funds VIP upon having a reasonable basis for believing that the Contracts have ceased to be treated as annuity contracts or life insurance polices, or that the Contracts may not be so treated in the future.
	(f)	Company represents that it has established such rules and procedures as are necessary to ensure compliance with applicable federal, state and self-regulatory requirements relating to the offering of the Contracts. W&R and Ivy Funds VIP explicitly disclaim any and all responsibility for the offer, sale, distribution and/or servicing of the Contracts, except as otherwise specified in this Agreement.
	(g)	Company shall during the term of this Agreement comply in all material respects with all laws, rules and regulations applicable to it in connection with the performance of each of its obligations under this Agreement or applicable to the performance of its business, including, but not limited to, the requirements of the USA Patriot Act of 2001 (the "AML Act") and related laws, rules and regulations.
	(h)	To the extent one or more third parties are engaged by Company to offer the Contracts and/or perform services that Company is responsible for under this Agreement (such parties include, but are not limited to, affiliates of Company) ("Agents"), Company shall determine that each such Agent is capable of performing such services, shall take measures as may be necessary to ensure that Agents perform such services in accordance with the requirements of this Agreement and applicable law and shall bear full responsibility for, and assume all liability for (including any obligation for indemnification as provided in Paragraph 13 hereof), the actions and inactions of such Agents as if such services had been provided by Company.
	(i)	From time to time, W&R and/or Ivy Funds VIP may implement policies, procedures or requirements in an effort to comply with applicable legal requirements and/or avoid potential adverse effects on the Portfolios. Company agrees to cooperate in good faith with W&R and/or Ivy Funds VIP in the implementation of any such policies, procedures and/or requirements and agrees to comply with any and all requirements, restrictions and limitations described in the Portfolios' Prospectus, including any restrictions or prohibitions relating to frequent purchases and redemptions of Portfolio shares. Such cooperation shall include, but not be limited to, providing in accordance with the procedures set forth in Exhibit D, promptly upon request by W&R and/or Ivy Funds VIP, names, taxpayer identification numbers and transaction information relating to Contract Owners issuing instructions to the Company resulting in the purchase, redemption, transfer or exchange of Portfolio shares, executing any instructions in accordance with the procedures set forth in Exhibit D from W&R and/or Ivy Funds VIP to restrict or prohibit any further purchases or exchanges of Portfolio shares relating to any Contract Owner who has been identified by or on behalf of Ivy Funds VIP as having engaged in transactions of Portfolio shares that violate policies established by Ivy Funds VIP for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the Portfolio and taking such other remedial steps as are requested by W&R and/or Ivy Funds VIP, all to the extent permitted or required by applicable law.
	(j)	Company represents that, during the term of this Agreement, it will have in force adequate insurance coverage insuring the Company against potential liabilities associated with the underwriting and distribution of the Contracts.
3.	AUTHORITY OF COMPANY. Subject to the terms and conditions of this Agreement, Company shall be authorized to, and agrees, to act as a limited agent of W&R for purposes of Rule 22c-1 under the 1940 Act and to the extent permitted by applicable law, for the sole purpose of receiving instructions for the purchase and redemption of Portfolio shares (from Contract Owners or participants making investment allocation decisions under the Contracts) prior to the close of business of the New York Stock Exchange ("NYSE"), normally 3:00 p.m. Central Time ("Pricing Time") each Business Day. "Business Day" shall mean any day on which the NYSE is open for trading and on which the Portfolios calculate their net asset value as set forth in the Portfolios' most recent Prospectuses and SAIs. Except as particularly stated in this paragraph, Company shall have no authority to act on behalf of W&R or Ivy Funds VIP or to incur any cost or liability on its behalf.
4.	AVAILABLE PORTFOLIOS.
	(a)	AVAILABILITY. Ivy Funds VIP will make shares of the Portfolios available to Company and its Variable Accounts for purchase and redemption at the applicable net asset value and with no sales charges on those days on which the Portfolios calculate their net asset value pursuant to the rules of the SEC, subject to the terms and conditions of this Agreement. Notwithstanding the foregoing, the Board of Directors of Ivy Funds VIP ("Board") may refuse to sell shares of any Portfolio to any person or suspend or terminate the offering of shares of any Portfolio (a) if such action is required by law or by regulatory authorities having jurisdiction, (b) if, in the sole discretion of the Board, acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, the Board deems such action to be in the best interests of the shareholders of such Portfolio, or (c) if such action is required by any policies that the Board has adopted and that apply to all Participating Insurance Companies. Further, it is acknowledged and agreed that the availability of Portfolio shares shall be subject to Ivy Funds VIP's current Prospectus and SAI and to federal and state laws, rules and regulations.
	(b)	ADDITION, DELETION OR MODIFICATION OF PORTFOLIOS. W&R and/or Ivy Funds VIP may, from time to time, add other Portfolios to provide additional funding media for the Contracts, or to delete, combine or modify existing Portfolios, by amending Exhibit B hereto. W&R and/or Ivy Funds VIP reserve the right to amend Exhibit B in their sole and exclusive discretion upon written notice to Company. Upon such amendment to Exhibit B, any applicable reference to a Portfolio, Ivy Funds VIP or its shares herein shall include a reference to any such additional Portfolio.
	(c)	NO SALES TO THE GENERAL PUBLIC. Ivy Funds VIP represents and warrants that shares of the Portfolios will be sold only to insurance companies and/or their separate accounts funding variable life insurance policies and/or variable annuity contracts or to other persons or entities permitted under Section 817 of the Code, or regulations promulgated thereunder. Ivy Funds VIP represents and warrants that no shares of any Portfolio have been or will be sold to the general public.
5.	PROCESSING OF PORTFOLIO PURCHASE AND REDEMPTION REQUESTS.
	(a)	PRICING INFORMATION. Ivy Funds VIP or its agents will use reasonable best efforts to provide closing net asset value, change in net asset value, dividend or daily accrual rate information and capital gain information by 6:00 p.m. Central Time each Business Day to Company. Company shall use this data to calculate unit values for its Variable Accounts. Unit values shall be used to process that same Business Day's Variable Account transactions. In the event adjustments to transactions previously effected on behalf of a Variable Account are required to correct any material error in the computation of the net asset value of a Portfolio's shares, Ivy Funds VIP or its agent shall notify Company as soon as practicable after discovering the need for those adjustments which result in a reimbursement to a Variable Account in accordance with Ivy Funds VIP's then current policies on reimbursement, which Ivy Funds VIP represents are consistent with applicable SEC standards. If an adjustment is to be made in accordance with such policies to correct an error which has caused a Variable Account to receive an amount different than that to which it is entitled, Ivy Funds VIP or its agent shall make all necessary adjustments to the number of shares owned in the Variable Account and distribute to the Variable Account the amount of such underpayment for credit by the Company to affected Contract Owners. The Company agrees to use its best efforts to minimize any costs incurred under this paragraph and shall provide W&R with acceptable documentation of any such costs incurred.
	(b)	PLACING OF ORDERS BY COMPANY. Orders for purchases or redemptions shall be placed by Company with W&R or its specified agent in a manner and format determined by W&R no later than 8:30 a.m. Central Time on the following Business Day. The Company may place purchase and/or redemption orders on the following Business Day for shares of the Portfolios that it receives prior to the Pricing Time each Business Day. The Company will not aggregate pre-Pricing Time trades with post-Pricing Time trades. All orders shall be communicated by the Company through the National Securities Clearing Corporation's ("NSCC") Fund/SERV system or via facsimile. The following information shall be supplied by the Company at the time each order is placed: (i) total purchases for each Portfolio (including all purchase, exchange and transfer orders received by the Company resulting in purchases of Portfolio shares); (ii) total redemptions for each Portfolio (including all redemption, exchange and transfer orders received by the Company resulting in redemptions of Portfolio shares); and (iii) such other information required by NSCC or reasonably requested by W&R.
	(c)	PROCESSING OF ORDERS. To the extent permitted by applicable law, orders for shares of Portfolios received by Company prior to the Pricing Time on a Business Day and received by W&R by 8:30 a.m. Central time on the following Business Day shall be executed at the time they are received by W&R and at the net asset value price determined as of the close of trading on the previous Business Day, provided that Company represents it has received such orders prior to the close of the NYSE on the previous Business Day. In connection with this Section 5(c), Company represents and warrants that it will not submit any order for shares of a Portfolio or engage in any practice, nor will it allow any person acting on its behalf to submit any order for shares of a Portfolio or engage in any practice, that would violate or cause a violation of Section 22 of the 1940 Act or Rule 22c-1 thereunder. W&R will not accept any order made on a conditional basis or subject to any delay or contingency. Company shall only place purchase orders for shares of Portfolios on behalf of its customers whose addresses recorded on Company's books are in a state or other jurisdiction in which the Portfolios are registered or qualified for sale, or are exempt from registration or qualification as confirmed in writing by W&R.
	(d)	PAYMENT FOR SHARES. Payment for net purchases shall be settled via NSCC Fund/SERV or wired to a custodial account designated in writing by W&R and payment for net redemptions will be wired to an account designated in writing by Company. Company will settle via NSCC Fund/SERV or wire payment for net purchases to a custodian account designated by Ivy Funds VIP by 5:00 p.m. Central Time on the same day as the order for Portfolio shares is placed, to the extent practicable. Ivy Funds VIP will wire payment for net redemptions to an account designated by Company by 5:00 p.m. Central Time on the same day as the order is placed, to the extent practicable, but in any event within five (5) calendar days after the date the order is placed in order to enable Company to pay redemption proceeds within the time specified in Section 22(e) of the 1940 Act or such period of time as may be required by law. Net purchase orders are subject to cancellation at the option of W&R and/or Ivy Funds VIP in the event that payment is not received within two (2) business days following receipt of the order by Ivy Funds VIP. Company shall indemnify W&R and Ivy Funds VIP for any losses incurred in connection with a cancelled order.
	(e)	DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. Dividends and capital gain distributions shall be reinvested in additional Portfolio shares at net asset value. Notwithstanding the above, W&R shall not be held responsible for providing Company with ex-date net asset value, change in net asset value, dividend or capital gain information when the NYSE is closed, when an emergency exists making the valuation of net assets not reasonably practicable, or during any period when the SEC has by order permitted the suspension of pricing shares for the protection of shareholders. Ivy Funds VIP shall furnish, on or before the ex-dividend date, notice to Company of any income dividends or capital gain distributions payable on the shares of the Portfolios. Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Portfolio's shares in additional shares of the Portfolio. Ivy Funds VIP shall notify Company of the number of shares so issued as payment of such dividends and distributions.
	(f)	ISSUANCE OF SHARES. Issuance and transfer of Portfolio shares will be by book entry only. Share certificates will not be issued to Company for any Variable Account. Portfolio shares will be recorded in the appropriate title for each Variable Account.
	(g)	COMPANY REPORTING. Company shall use reasonable efforts to provide W&R with monthly reports in a manner and format determined by W&R no later than ten (10) calendar days following the end of each month during the term of this Agreement. Such reports will set forth a listing of each order received from Contract Owners during the month resulting in the purchase or sale of Portfolio shares, including the following information with respect to each such order and such additional information as W&R shall reasonably request: (i) the transaction date, which shall be the Business Day the order was received by the Company, if the order was received prior to the Pricing Time, or the Business Day following the Business Day the order was received by the Company, if the order was received after the Pricing Time; (ii) the transaction type (e.g., purchase, redemption, exchange, transfer, etc.); (iii) the Portfolio CUSIP number; (iv) the dollar amount of the transaction; (v) the name of the agent assigned to the Contract Owner's account/policy; and (vi) the agent's branch office number, city, state and zip code. Company agrees to provide W&R, upon reasonable request, written reports indicating the number of Contract Owners and such other information (including books and records) and in such format as W&R may reasonably request or as may be necessary or advisable to enable it to comply with any law, regulation or order.
6.	EXPENSES. All expenses incident to the performance by Company, W&R and/or Ivy Funds VIP of their respective obligations under this Agreement shall be paid by the party subject to the obligation. W&R shall pay compensation to Company under this Agreement as provided on Exhibit C.
7.	PROSPECTUSES, SAIs, PROXIES AND REPORTS.
	a.	DELIVERY TO COMPANY. W&R shall promptly provide Company (or its designee), or cause Company (or its designee) to be provided with:
		(1)	a camera-ready copy of the Portfolios' Prospectus and any supplements, for use by Company in producing a combined prospectus for each Contract incorporating both the Contract Prospectus and the Portfolios' Prospectus;
		(2)	a .pdf version of the Portfolios' SAI and any supplements;
		(3)	periodic reports required under the 1940 Act ("Periodic Reports") in such quantity as Company shall reasonably require for distribution to Contract Owners; and
		(4)	copies of any Portfolio proxy materials in such quantity as Company shall reasonably require for distribution to Contract Owners.
	(b)	DELIVERY TO CONTRACT OWNERS. Company shall bear the costs of printing Portfolio proxy materials (or similar materials such as voting solicitation instructions), Periodic Reports, Prospectuses and SAIs intended for delivery to Contract Owners and for the costs of delivering such materials to Contract Owners. Company shall reimburse W&R and/or Ivy Funds VIP for any such costs they incur within thirty (30) days after receipt of an invoice itemizing such costs. Company assumes sole responsibility for ensuring that such materials are delivered to Contract Owners in accordance with applicable federal and state securities laws.
	(c)	USE OF PORTFOLIO MATERIALS BY COMPANY. If Company elects to include any materials provided by W&R or Ivy Funds VIP, specifically Prospectuses, SAIs, Periodic Reports and proxy materials, on its web site or in any other computer or electronic format, Company assumes sole responsibility for maintaining such materials in the form provided by W&R or Ivy Funds VIP and for promptly replacing such materials with all updates provided by W&R or Ivy Funds VIP. W&R or Ivy Funds VIP agree to provide all such materials requested by Company in a Portable Document Format (PDF) in a timely fashion at no additional cost, together with such other formats at Company's cost as may be mutually agreed upon.
	(d)	PROXY VOTING. If and to the extent required by law, Company shall: (i) solicit voting instructions from Contract Owners; (ii) vote the Portfolio(s) shares in accordance with the instructions received from Contract Owners; and (iii) vote Portfolio(s) shares for which no instructions have been received in the same proportion as the vote of all other holders of such shares, provided however, that the Company reserves the right to vote Portfolio shares held in any segregated asset account in its own right, to the extent permitted by law. Company and its agents will in no way recommend action in connection with or oppose or interfere with the solicitation of proxies for the Portfolio shares held for the benefit of such Contract Owners.
8.	COMPANY'S USE OF PORTFOLIO INFORMATION. Company and its agents shall make no representations concerning the Portfolios or Portfolio shares except those contained in the Portfolios' then current Prospectuses, SAIs or other documents produced by W&R (or an entity on its behalf) which contain information about the Portfolios. Company agrees to submit to W&R for prior review and approval any communication with the public containing any Portfolio information. Company agrees to allow at least ten (10) Business Days for W&R to review any advertising and sales literature drafted by Company (or agents on its behalf) with respect to the Portfolios prior to using such material or submitting such material to any regulator.
9.	REPRESENTATIONS OF W&R AND/OR IVY FUNDS VIP.
	(a)	W&R represents that the Portfolios are currently qualified as regulated investment companies under Subchapter M of the Code and that Ivy Funds VIP shall make every effort to maintain such qualification. W&R shall promptly notify Company upon having a reasonable basis for believing that any of the Portfolios has ceased to so qualify, or that they may not qualify as such in the future.
	(b)	W&R represents that each of the Portfolios currently complies with the diversification requirements pursuant to Section 817(h) of the Code and Section 1.817-5(b) of the Federal Tax Regulations and that Ivy Funds VIP will make every effort to maintain the Portfolios' compliance with such diversification requirements, unless the Portfolios are otherwise exempt from Section 817(h) and/or except as otherwise disclosed in the Portfolios' Prospectus. W&R will notify Company promptly upon having a reasonable basis for believing that a Portfolio has ceased to so qualify, or that a Portfolio might not so qualify in the future.
	(c)	W&R represents and warrants that Ivy Funds VIP is duly organized and validly existing under the laws of Maryland and that each Portfolio does and will comply in all material respects with the 1940 Act and the rules and regulations thereunder.
	(d)	W&R represents and warrants that the Portfolio shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and each Portfolio shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. W&R shall amend the Portfolios' registration statement under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of Portfolio shares. Ivy Funds VIP shall register and qualify its shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by Ivy Funds VIP or W&R.
	(e)	Ivy Funds VIP represents and warrants that it, its directors, officers, employees and others dealing with the money or securities, or both, of a Portfolio shall at all times be covered by a blanket fidelity bond or similar coverage for the benefit of the Portfolio in an amount not less than the minimum coverage required by Rule 17g-1 or other regulations under the 1940 Act. Such bond shall include coverage for larceny and embezzlement and be issued by a reputable bonding company.
	(f)	W&R represents and warrants that it is currently and will continue to be a registered-broker dealer and member in good standing with the Financial Industry Regulatory Authority ("FINRA").
10.	CONFIRMATIONS. Ivy Funds VIP or its agent shall provide Company access to electronic account information, which shall confirm all transactions in Portfolio shares made during that particular quarter by a Variable Account.
11.	MIXED AND SHARED FUNDING.
	(a)	GENERAL. The parties understand that the SEC has granted an order to Ivy Funds VIP exempting it from certain provisions of the 1940 Act and rules thereunder so that Ivy Funds VIP may be available for investment by certain other entities, including, without limitation, separate accounts funding variable annuity contracts or variable life insurance contracts, separate accounts of insurance companies unaffiliated with Company, and trustees of qualified pension and retirement plans (collectively, "Mixed and Shared Funding"). The parties recognize that the SEC has imposed terms and conditions for such orders. Ivy Funds VIP hereby notifies Company that it may be appropriate to include in the prospectus pursuant to which a Contract is offered disclosure regarding the potential risks of Mixed and Shared Funding.
	(b)	INFORMATION REQUESTED BY BOARD. Company and Ivy Funds VIP (or its agent) will at least annually submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by the provisions hereof or any exemptive order granted by the SEC to permit Mixed and Shared Funding, and said reports, materials and data will be submitted at any reasonable time deemed appropriate by the Board.
12.	TERMINATION.
	(a)	EVENTS OF TERMINATION. This Agreement shall terminate as to the sale and issuance of Portfolio(s) shares:
		(1)	at the option of Company, W&R or Ivy Funds VIP upon at least sixty (60) days advance written notice to the other;
		(2)	at any time with respect only to an applicable Portfolio(s), upon W&R's election, if Ivy Funds VIP determines that liquidation of the Portfolio(s) is in the best interest of the Portfolio(s) and its (their) beneficial owners. Reasonable advance notice of election to liquidate shall be furnished by W&R to permit the substitution of Portfolio shares with the shares of another investment company;
		(3)	if the Contracts are not treated as annuity contracts or life insurance policies by the applicable regulators or under applicable rules or regulations;
		(4)	if the Variable Accounts are not deemed "segregated asset accounts" by the applicable regulators or under applicable rules or regulations;
		(5)	with respect only to the applicable Portfolio(s), upon a decision by Company based on reasonable cause, in accordance with applicable law, to substitute such Portfolio shares with the shares of another investment company for Contracts for which the Portfolio shares have been selected to serve as the underlying investment medium. Company shall give at least sixty (60) days written notice to Ivy Funds VIP and W&R of any decision to substitute Portfolio shares;
		(6)	upon sixty (60) days notice upon assignment of this Agreement unless such assignment is made with the written consent of each other party;
		(7)	in the event Portfolio shares are not registered, issued or sold pursuant to Federal law, or such law precludes the use of Portfolio shares as an underlying investment medium of Contracts issued or to be issued by Company. Prompt written notice shall be given by either party to the other in the event the conditions of this provision occur; and
		(8)	at the option of any party to this Agreement, upon another party's material breach of any provision of this Agreement.
	(b)	NOTICE REQUIREMENT. In the event of any termination of this Agreement at the option of one of the parties, prompt written notice of the election to terminate this Agreement shall be furnished by the party terminating the Agreement to the non-terminating parties.
	(c)	PORTFOLIOS TO REMAIN AVAILABLE; EFFECT OF TERMINATION. Notwithstanding any termination of this Agreement by Company, Ivy Funds VIP will, at the option of Company, continue to make available additional shares of any Portfolio offered under a Contract pursuant to the terms and conditions of this Agreement, for any Contract that is in effect on the effective date of termination of this Agreement and that offers the particular Portfolio(s) as an investment option under the Contract as of that date (hereinafter referred to as "Existing Contracts"), unless W&R or the Board determines that doing so would not serve the best interests of the shareholders of the affected Portfolio(s) or would be inconsistent with applicable law or regulation. Specifically, without limitation, the owners of the Existing Contracts will be permitted to reallocate investments in the Portfolio(s) (as in effect on such date), redeem investments in the Portfolio(s) and/or invest in the Portfolio(s) upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 12 will not apply to any (i) terminations under Section 11 and the effect of such terminations will be governed by Section 11 of this Agreement or (ii) any rejected purchase and/or redemption order as described in Section 2(i) hereof. If Company elects to continue to make available Portfolio shares to Contract Owners after the effective date of termination of this Agreement in accordance with this Section 12(c), all provisions of this Agreement will survive any termination of this Agreement solely with respect to transactions in such Portfolio shares under the Existing Contracts.
13.	NOTICES.
	(a)	DELIVERY. All notices sent under this Agreement shall be given in writing, and shall be delivered personally, or sent by fax, or by a nationally-recognized overnight courier, postage prepaid. All such notices shall be deemed to have been duly given when so delivered personally or sent by fax, with receipt confirmed, or one (1) business day after the date of deposit with such nationally-recognized overnight courier. All such notices to Company, W&R or Ivy Funds VIP shall be delivered to:
		The Ohio National Life Insurance Company
		One Financial Way
		Cincinnati, Ohio 45242
		Attention: Legal Department
		Ohio National Life Assurance Corporation
		One Financial Way
		Cincinnati, Ohio 45242
		Attention: Legal Department
		Waddell & Reed, Inc.
		6300 Lamar Avenue
		Overland Park, Kansas 66202
		Attention: Legal Department
		Ivy Funds Variable Insurance Portfolios, Inc.
		6300 Lamar Avenue
		Overland Park, Kansas 66202
		Attention: Secretary
		All such notices to Company, W&R and Ivy Funds VIP shall be delivered to their respective addresses as listed above, or such other address as Company, W&R and/or Ivy Funds VIP may have furnished in writing to the other parties in accordance herewith.
	(b)	NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
		(1)	Ivy Funds VIP or W&R will immediately notify Company of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to Ivy Funds VIP's registration statement under the 1933 Act or Ivy Funds VIP's Prospectus, (ii) any request by the SEC for any amendment to such registration statement or Ivy Funds VIP Prospectus that may affect the offering of shares of Ivy Funds VIP, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of Ivy Funds VIP Shares, or (iv) any other action or circumstances that may prevent the lawful offer or sale of shares of any Portfolio in any state or jurisdiction, including, without limitation, any circumstances in which (a) such shares are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law, or (b) such law precludes the use of such shares as an underlying investment medium of the Contracts issued or to be issued by Company. Ivy Funds VIP and W&R will make every reasonable effort to prevent the issuance, with respect to any Portfolio, of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time.
		(2)	Company will immediately notify Ivy Funds VIP of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to each Variable Account's registration statement under the 1933 Act relating to the Contracts or each Variable Account Prospectus, (ii) any request by the SEC for any amendment to such registration statement or Variable Account Prospectus that may affect the offering of shares of Ivy Funds VIP, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of each Variable Account's interests pursuant to the Contracts, or (iv) any other action or circumstances that may prevent the lawful offer or sale of said interests in any state or jurisdiction, including, without limitation, any circumstances in which said interests are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law. Company will make every reasonable effort to prevent the issuance of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time.
14.	INDEMNIFICATION.
	(a)	INDEMNIFICATION BY COMPANY.
		(1)	Company agrees to reimburse and/or indemnify and hold harmless W&R, Ivy Funds VIP, and each of their directors, officers, employees, agents and each person, if any, who controls or is controlled by W&R within the meaning of the 1933 Act (collectively, "Affiliated Party") against any losses, claims, damages or liabilities ("Losses") to which W&R or any such Affiliated Party may become subject, under the 1933 Act or otherwise, insofar as such Losses arise out of or are based upon, but not limited to:
			(i)	any untrue statement or alleged untrue statement of any material fact contained in information furnished by Company;
			(ii)	the omission or the alleged omission to state in the Registration Statements or Prospectuses of the Variable Accounts, or Contract, or in any sales literature or other public communication generated by Company on behalf of the Variable Accounts or Contracts, a material fact required to be stated therein or necessary to make the statements therein not misleading;
			(iii)	statements or representations of Company or its agents or third parties, with respect to the offer, sale or distribution of Contracts for which Portfolio shares are an underlying investment, or negligent or wrongful conduct of Company or its agents or third parties with respect to offers or sales of Contracts or Portfolio shares;
			(iv)	the failure of Company to comply with applicable legal or self-regulatory requirements to which it is subject;
			(v)	a material breach of this Agreement or of any of the representations or warranties contained herein; or
			(vi)	any failure to register the Contracts or the Variable Accounts under federal or state securities laws, state insurance laws or to otherwise comply with such laws, rules, regulations or orders.
		(2)	Provided however, that Company shall not be liable in any such case to the extent any such Losses arise out of or are based upon an act, statement, omission or representation or alleged act, alleged statement, alleged omission or alleged representation which was made in reliance upon and in conformity with written information furnished to Company by or on behalf of W&R specifically for its use.
		(3)	Company shall reimburse any legal or other expenses reasonably incurred by W&R, Ivy Funds VIP, or any Affiliated Party in connection with investigating or defending any such Losses, provided, however, that Company shall have prior approval of the use of said counsel or the expenditure of said fees.
		(4)	This indemnity agreement shall be in addition to any liability which Company may otherwise have and shall survive termination of this Agreement.
	(b)	INDEMNIFICATION BY W&R AND/OR IVY FUNDS VIP.
		(1)	W&R and/or Ivy Funds VIP, as applicable, agree to indemnify and hold harmless Company and each of its directors, officers, employees, agents and each person, (collectively, "Company Affiliated Party"), who controls Company within the meaning of the 1933 Act against any Losses to which Company or any such Company Affiliated Party may become subject, under the 1933 Act or otherwise, insofar as such Losses arise out of or are based upon; but not limited to:
			(i)	any untrue statement or alleged untrue statement of any material fact contained in any information furnished by W&R or Ivy Funds VIP, including but not limited to, the Registration Statements, Prospectuses or sales literature of the Portfolios;
			(ii)	the omission or the alleged omission to state in the Registration Statements or Prospectuses of the Portfolios or in any sales literature generated by W&R, Ivy Funds VIP or their affiliates a material fact required to be stated therein or necessary to make the statements therein not misleading;
			(iii)	W&R's failure to keep the Portfolios fully diversified and qualified as regulated investment companies as required by the applicable provisions of the Code, the 1940 Act, and the applicable regulations promulgated thereunder;
			(iv)	the failure of W&R or Ivy Funds VIP to comply with applicable legal or self-regulatory requirements to which they are subject;
			(v)	a material breach of this Agreement or of any of the representations or warranties contained herein; or
			(vi)	any failure to register the Portfolios under federal or state securities laws or to otherwise comply with such laws, rules, regulations or orders.
		(2)	Provided however, that W&R and Ivy Funds VIP shall not be liable in any such case to the extent that any such Losses arise out of or are based upon an act, statement, omission or representation or alleged act, alleged statement, alleged omission or alleged representation which was made in reliance upon or in conformity with written information furnished to W&R or Ivy Funds VIP by Company specifically for their use.
		(3)	W&R and/or Ivy Funds VIP, as applicable, shall reimburse any legal or other expenses reasonably incurred by Company or any Company Affiliated Party in connection with investigating or defending any such Losses, provided, however, that W&R and Ivy Funds VIP shall have prior approval of the use of said counsel or the expenditure of said fees.
		(4)	This indemnity agreement will be in addition to any liability which W&R and/or Ivy Funds VIP, as applicable, may otherwise have and shall survive termination of this Agreement.
	(c)	NOTICE AND DEFENSE OF CLAIMS. Each party shall promptly notify the other party(ies) in writing of any situation which presents or appears to involve a claim which may be the subject of indemnification under this Agreement and the indemnifying party shall have the option to defend against any such claim. In the event the indemnifying party so elects, it shall notify the indemnified party and shall assume the defense of such claim, and the indemnified party shall cooperate fully with the indemnifying party, at the indemnifying party's expense, in the defense of such claim. Notwithstanding the foregoing, the indemnified party shall be entitled to participate in the defense of such claim at its own expense through counsel of its own choosing. Neither party shall admit to wrong-doing nor make any compromise in any action or proceeding which may result in a finding of wrongdoing by the other party without the other party's prior written consent, which shall not be unreasonably withheld. Any notice given by the indemnifying party to an indemnified party or participation in or control of the litigation of any such claim by the indemnifying party shall in no event be deemed to be an admission by the indemnifying party of culpability, and the indemnifying party shall be free to contest liability among the parties with respect to the claim.
15.	SUBSTITUTION APPLICATIONS. Subject to Section 10(e) of this Agreement, W&R may request or Company may initiate the filing of a substitution application pursuant to Section 26(c) of the 1940 Act to substitute shares of a Portfolio held by a Company Variable Account for another investment media ("Substitution Application"). The costs associated with a Substitution Application shall be allocated as follows:
	(a)	In the event W&R requests Company to submit a Substitution Application, W&R shall reimburse Company for all reasonable costs incurred by Company in preparing and filing the Substitution Application and any amendment thereto. W&R shall be obligated to reimburse Company under this provision irrespective of whether the Substitution Application requested by W&R is granted by the SEC or the substitution is effectuated. W&R shall not have any liability to reimburse any other costs or expenses incurred in connection with effecting the substitution.
	(b)	In the event Company initiates a Substitution Application, Company shall bear all costs associated with the Substitution Application irrespective of whether the Substitution Application is granted or the substitution is effectuated.
	(c)	In the event Company initiates a Substitution Application in accordance with Section 12(a)(5), Company shall bear the costs incurred in the transfer.
16.	CONFIDENTIALITY.
	(a)	COMPANY. Ivy Funds VIP acknowledges that the identities of the customers of Company or any of its affiliates (collectively, the "the Company Protected Parties" for purposes of this Section 16), information maintained regarding those customers, and all computer programs and procedures or other information developed by the Company Protected Parties or any of their employees or agents in connection with Company's performance of its duties under this Agreement are the valuable property of the Company Protected Parties. Ivy Funds VIP agrees that if it comes into possession of any list or compilation of the identities of or other information about the Company Protected Parties' customers, or any other information or property of the Company Protected Parties, other than such information as may be independently developed or compiled by Ivy Funds VIP from information supplied to it by the Company Protected Parties' customers who also maintain accounts directly with Ivy Funds VIP, Ivy Funds VIP will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with Company's prior written consent; or (b) as required by law or judicial process.
	(b)	IVY FUNDS VIP. Company acknowledges that the identities of the customers of Ivy Funds VIP or any of its affiliates (collectively, the "Ivy Funds VIP Protected Parties" for purposes of this Section 16), information maintained regarding those customers, and all computer programs and procedures or other information developed by the Ivy Funds VIP Protected Parties or any of their employees or agents in connection with Ivy Funds VIP's performance of its duties under this Agreement are the valuable property of the Ivy Funds VIP Protected Parties. Company agrees that if it comes into possession of any list or compilation of the identities of or other information about the Ivy Funds VIP Protected Parties' customers or any other information or property of the Ivy Funds VIP Protected Parties, other than such information as may be independently developed or compiled by Company from information supplied to it by the Ivy Funds VIP Protected Parties' customers who also maintain accounts directly with Company, Company will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with Ivy Funds VIP's prior written consent; or (b) as required by law or judicial process.
	(c)	BOTH PARTIES. Each party acknowledges that any breach of the agreements in this Section 16 would result in immediate and irreparable harm to the other parties for which there would be no adequate remedy at law and agree that in the event of such a breach, the other parties will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate.
17.	TRADEMARKS AND FUND NAMES.
	(a)	Except as may otherwise be provided in a license agreement among Ivy Funds VIP and Company, neither Company or any of its respective affiliates, shall use any trademark, trade name, service mark or logo of W&R, Ivy Funds VIP or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without W&R's or Ivy Funds VIP's prior written consent, as applicable, the granting of which shall be at the sole option of W&R or Ivy Funds VIP, as applicable.
	(b)	Except as otherwise expressly provided in this Agreement, neither Ivy Funds VIP, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of Company or any of its affiliates, or any variation of any such trademark, trade name, service mark or logo, without Company's prior written consent, the granting of which shall be at Company's sole option.
18.	FORCE MAJEURE. Each party shall be excused from the performance of any of its obligations to the other where such nonperformance is occasioned by any event beyond its control which shall include, without limitation, any applicable order, rule or regulation of any federal, state or local body, agency or instrumentality with jurisdiction, work stoppage, accident, natural disaster, war, acts of terrorism or civil disorder, provided that the party so excused shall use all reasonable efforts to minimize its nonperformance and overcome, remedy, cure or remove such event as soon as is reasonably practicable, and such performance shall be excused only for so long as, in any given case, the force or circumstances making performance impossible shall exist.
19.	NO WAIVER. The forbearance or neglect of any party to insist upon strict compliance by another party with any of the provisions of this Agreement, whether continuing or not, or to declare a forfeiture of termination against the other parties, shall not be construed as a waiver of any of the rights or privileges of any party hereunder. No waiver of any right or privilege of any party arising from any default or failure of performance by any party shall affect the rights or privileges of the other parties in the event of a further default or failure of performance.
20.	GOVERNING LAW AND VENUE. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of Kansas, without respect to its choice of law provisions and in accordance with the 1940 Act. In the case of any conflict, the 1940 Act shall control.
21.	AUTHORIZATION. Each party hereby represents and warrants to the other that the persons executing this Agreement on its behalf are duly authorized and empowered to execute and deliver the Agreement and that the Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. Except as particularly set forth herein, neither party assumes any responsibility hereunder, and will not be liable to the other for any damage, loss of data, delay or any other loss whatsoever caused by events beyond its reasonable control.
22.	RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed to create a partnership or joint venture by and among the parties hereto.
23.	ENTIRE AGREEMENT AND AMENDMENT. This Agreement, including all exhibits hereto, constitutes the entire agreement and understanding between the parties with respect to the matters addressed herein. Except to amend Exhibit B, which may be amended unilaterally by W&R and/or Ivy Funds VIP in its sole discretion, or as otherwise provided in this Agreement, this Agreement may not be amended or modified except by a written amendment executed by each of the parties.
24.	COOPERATION. Each party shall cooperate with each other party and all appropriate government authorities (including without limitation the SEC, FINRA and state securities and insurance regulators) and shall permit such authorities having jurisdiction reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby.
25.	NON-EXCLUSIVE AGREEMENT. The parties of this Agreement acknowledge and agree that this Agreement shall not be exclusive in any respect.
26.	COUNTERPARTS. This Agreement may be executed by facsimile or other electronic signature and it may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

THE OHIO NATIONAL LIFE INSURANCE COMPANY
/s/Thomas A. Barefield
By:	Thomas A. Barefield
Title:	Executive Vice President
OHIO NATIONAL LIFE ASSURANCE CORPORATION
/s/Thomas A. Barefield
By:	Thomas A. Barefield
Title:	Executive Vice President
WADDELL & REED, INC.
/s/Thomas W. Butch
By:	Thomas W. Butch
Title:	President
IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, Inc.
/s/Henry J. Herrmann
By:	Henry J. Herrmann
Title:	President

EXHIBIT A

Variable Accounts of Company

Name	SEC File No.
Ohio National Variable Account A	811-1978
Ohio National Variable Account B	811-1979
Ohio National Variable Account R	811-4320

Variable Life Insurance Policies/Variable Annuity Contracts

Name	SEC File No.
ONcore Xtra	333-86603
ONcore Value	333-43513
ONcore Premier	333-43515
ONcore Lite	333-52006
ONcore Flex	333-43511
ONcore Ultra	333-134288
ONcore Wrap	333-134982
Top Plus A	33-62282
Top Explorer	333-05848
Top Tradition A	2-91213
Investar Vision/Top Spectrum	333-10907
Top 1 A	2-78652
Top Plus B	33-62284
Top Tradition B	2-91214
Top 1 B	2-78653
Vari-Vest I	2-98266
Vari-Vest II	2-98265
Vari-Vest III	33-9520
Vari-Vest IV	33-53350
Vari-Vest V	333-16133
Vari-Vest Asset Builder	333-40724
Vari-Vest Survivor	333-40636
GP VUL	333-109900
Virtus VUL	333-153020

EXHIBIT B

Ivy Funds Variable Insurance Portfolios, Inc.

Portfolios Available to Variable Accounts

Asset Strategy
Global Natural Resources
Science and Technology

EXHIBIT C

Fees or Other Compensation

           Company shall provide the administrative services set out in Schedule A hereto and made a part hereof, as the same may be amended from time to time. For such services, W&R agrees to pay to Company as follows:

(a)

Assets Under Management. Each quarter, W&R shall calculate and pay to Company a fee that shall be equal to forty basis points (.40 bps), on an annualized basis, of the average daily account value of all assets in the Portfolios in connection with the Contracts ("Aggregated Assets"), provided, however, that the fee is subject to change pursuant to Paragraph (b) below. The fee (the "Total Fee") shall include and not be in addition to the payment by W&R of the 12b-1 fees received by W&R from Ivy Funds VIP relating to the Aggregated Assets.

(b)

Changes in Law. If a change in the law requires a reduction in the fees paid by a pooled investment vehicle pursuant to Rule 12b-1 of the Investment Company Act of 1940 (or its functional equivalent), and if Ivy Funds VIP is required to reduce the 12b-1 fees it pays that are based upon the value of the Aggregated Assets as a result of such change in the law, then there shall be a corresponding reduction in the amount of the Total Fee due pursuant to above.

The parties to this Agreement recognize and agree that W&R's payments hereunder are for administrative services and personal Contract Owner services (as described in Schedule A) only and do not constitute payment in any manner for investment advisory services or for costs of distribution of Contracts or of Portfolio shares, and are not otherwise related to investment advisory or distribution services or expenses. The Company represents and warrants that the fees to be paid by W&R for services to be rendered by Company pursuant to the terms of this Agreement are to compensate Company for providing administrative services to Ivy Funds VIP and for providing personal services to Contract Owners as described in Schedule A, and are not designed to reimburse or compensate Company for providing any other services with respect to the Contracts or any Variable Account.

EXHIBIT D

RULE 22c-2 PROCEDURES

Company, W&R and Ivy Funds VIP agree to the following terms and conditions regarding the provision of information pursuant to Rule 22c-2 of the 1940 Act:

1.	Shareholder Information.
	(a)	Agreement to Provide Information. Company agrees to provide W&R and/or Ivy Funds VIP, or its designee, upon written request (which may include electronic writings and facsimile transmissions, a "Request"), the taxpayer identification number (the "TIN"), the Individual/International Taxpayer Identification Number ("ITIN") or other government-issued identifier ("GII") and the Contract owner number or participant account number associated with the Shareholder, if known, of any or all Shareholder(s) of Shares held through an account with Company (an "Account"), and the amount, date and transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Shares held through the Account during the period covered by the Request. Unless otherwise specifically requested by W&R and/or Ivy Funds VIP, Company shall only be required to provide information relating to Shareholder-Initiated Transfer Purchases or Shareholder-Initiated Transfer Redemptions.
		(i)	Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request, for which transaction information is sought. W&R and/or Ivy Funds VIP may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by Ivy Funds VIP for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by Ivy Funds VIP.
		(ii)	Timing of Requests. Requests for Shareholder information shall be made no more frequently than quarterly except as W&R and/or Ivy Funds VIP deem necessary to investigate compliance with policies established by Ivy Funds VIP for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by Ivy Funds VIP.
		(iii)	Form and Timing of Response.
			(A) Company agrees to provide, promptly upon Request of W&R and/or Ivy Funds VIP, or its designee, the requested information specified in Section 1(a) of this Exhibit D. If Requested by W&R and/or Ivy Funds VIP or its designee, Company agrees to use best efforts to determine promptly, but not later than five business days after receipt of the Request by Company, whether any specific person or entity about whom W&R and/or Ivy Funds VIP has received information pursuant to Section 1(a) of this Agreement is an "indirect intermediary" ("Indirect Intermediary") as defined in Rule 22c-2 (the "Rule") under the 1940 Act, and, upon further Request of W&R and/or Ivy Funds VIP or its designee, promptly (but not later than five business days after receipt of such Request) either: (I) provide (or arrange to have provided) the identification and transaction information set forth in Section 1(a) of this Exhibit D for Shareholders who hold Shares through the Indirect Intermediary; or (II) restrict or prohibit the Indirect Intermediary from purchasing, in nominee name on behalf of other persons, securities issued by W&R and/or Ivy Funds VIP. Company agrees to inform W&R and/or Ivy Funds VIP whether it plans to perform (I) or (II) above.
			(B) Responses required by this Section 1(a)(ii) of this Exhibit D must be communicated in writing and in a format mutually agreed upon by W&R and/or Ivy Funds VIP and Company.
			(C) To the extent practicable, the format for any transaction information provided to W&R and/or Ivy Funds VIP should be consistent with the National Securities Clearing Corporation Standardized Data Report Format.
		(iii)	Limitations on Use of Information. W&R and/or Ivy Funds VIP agree not to use the information received pursuant to this Exhibit D for any purpose other than as necessary to comply with the provisions of the Rule or to fulfill other regulatory or legal requirements, subject to the privacy provisions of Title V of the Gramm-Leach-Bliley Act and comparable state laws.
	(b)	Agreement to Restrict Trading. Company agrees to execute a Request from W&R and/or Ivy Funds VIP or its designee to restrict or prohibit further purchases or exchanges of Shares by a Shareholder that has been identified by or on behalf of Ivy Funds VIP as having engaged in transactions in Shares (directly or indirectly through an Account) that violate policies established by Ivy Funds VIP for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by Ivy Funds VIP. Unless otherwise directed by or on behalf of Ivy Funds VIP or as otherwise provided in Section 1(a)(ii)(A) of this Agreement, any such restrictions or prohibitions shall only apply to Shareholder-Initiated Transfer Purchases or Shareholder-Initiated Transfer Redemptions that are effected directly or indirectly through Company. Instructions must be received by Company at such address that Company may communicate to W&R and/or Ivy Funds VIP in writing from time to time, including, if applicable, an e-mail and/or facsimile telephone number.
		(i)	Form of Instructions. Such Request must include the TIN, ITIN or GII and the specific individual Contract owner number or participant account number associated with the Shareholder, if known, and the specific restriction(s) to be executed, including how long the restriction(s) is (are) to remain in place. If the TIN, ITIN or GII or the specific individual Contract owner number or participant account number associated with the Shareholder is not known, the instructions must include an equivalent identifying number of the Shareholder(s) or account(s) or other agreed upon information to which the instruction relates.
		(ii)	Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five business days after receipt of the instructions by Company.
		(iii)	Confirmation by Company. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 business days after the Request has been executed.
2.	Definitions.
	(a)	The term "Shares" means the interests of Shareholders corresponding to the redeemable securities of record issued by Ivy Funds VIP under the 1940 Act that are held by Company.
	(b)	The term "Shareholder" means the holder of interests in Contract or a participant in an employee benefit plan with a beneficial interest in a Contract.
	(c)	The term "Shareholder-Initiated Transfer Purchase" means a transaction that is initiated or directed by a Shareholder or a plan or pursuant to an asset allocation, automatic rebalancing or similar program that results in a transfer of assets within a Contract to Ivy Funds VIP, but does not include transactions that are executed: (i) automatically pursuant to a contractual or systematic program or enrollment such as transfer of assets within a Contract to Ivy Funds VIP as a result of "dollar cost averaging" programs, insurance company approved asset allocation programs (provided that such programs are reasonably designed to prevent the types of abusive trading that the Fund's market timing policies are intended to prevent), or automatic rebalancing programs; (ii) pursuant to a Contract death benefit; (iii) one-time step-up in Contract value pursuant to a Contract death benefit; (iv) allocation of assets to Ivy Funds VIP through a Contract as a result of payments such as loan repayments, scheduled contributions, retirement plan salary reduction contributions, or planned premium payments to the Contract; or (v) pre-arranged transfers at the conclusion of a required free look period.
	(d)	The term "Shareholder-Initiated Transfer Redemption" means a transaction that is initiated or directed by a Shareholder or a plan or pursuant to an asset allocation, automatic rebalancing or similar program that results in a transfer of assets within a Contract out of Ivy Funds VIP, but does not include transactions that are executed: (i) automatically pursuant to a contractual or systematic programs or enrollments such as transfers of assets within a Contract out of Ivy Funds VIP as a result of annuity payouts, loans, systematic withdrawal programs, insurance company approved asset allocation programs (provided that such programs are reasonably designed to prevent the types of abusive trading that the Fund's market timing policies are intended to prevent) and automatic rebalancing programs; (ii) as a result of any deduction of charges or fees under a Contract; (iii) within a Contract out of Ivy Funds VIP as a result of scheduled withdrawals or surrenders from a Contract; or (iv) as a result of payment of a death benefit from a Contract.

SCHEDULE A

ADMINISTRATIVE SERVICES FOR
IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC.

Company shall provide certain administrative services respecting the operations of Ivy Funds VIP and certain personal services to Contract Owners investing in Ivy Funds VIP, as set forth below. This Schedule, which may be amended from time to time as mutually agreed upon by Company and W&R, constitutes an integral part of the Agreement to which it is attached. Capitalized terms used herein shall, unless otherwise noted, have the same meaning as the defined terms in the Agreement to which this Schedule relates.

A.	Records of Portfolio Share Transactions; Miscellaneous Records.
	1.	Company shall maintain master accounts with Ivy Funds VIP, on behalf of each Portfolio, which accounts shall bear the name of Company as the record owner of Portfolio shares on behalf of each Variable Account investing in the Portfolio.
	2.	Company shall maintain a daily journal setting out the number of shares of each Portfolio purchased, redeemed or exchanged by Contract Owners each day, to, among other things, assist W&R, Ivy Funds VIP and/or Ivy Funds VIP's transfer agent in tracking and recording Portfolio share transactions, and to facilitate the computation of each Portfolio's net asset value per share. Company shall daily provide W&R, Ivy Funds VIP and Ivy Funds VIP's transfer agent with a copy of such journal entries or information appearing thereon in such format as may be reasonably requested by W&R. Company shall provide such other assistance to W&R, Ivy Funds VIP and Ivy Funds VIP's transfer agent as may be necessary to cause various Portfolio share transactions effected by Contract Owners to be properly reflected on the books and records of Ivy Funds VIP.
	3.	In addition to the foregoing records, and without limitation, Company shall maintain and preserve all records as required by law to be maintained and preserved in connection with providing administrative services hereunder.
B.	Order Placement and Payment.
	1.	Company shall determine the net amount to be transmitted to the Variable Accounts as a result of redemptions of each Portfolio's shares based on Contract Owner redemption requests and shall disburse or credit to the Variable Accounts all proceeds of redemptions of Portfolio shares. Company shall notify Ivy Funds VIP of the cash required to meet redemption payments.
	2.	Company shall determine the net amount to be transmitted to Ivy Funds VIP as a result of purchases of Portfolio shares based on Contract Owner purchase payments and transfers allocated to the Variable Accounts investing in each Portfolio. Company shall transmit net purchase payments to Ivy Funds VIP's custodian.
C.	Accounting Services. Company shall perform miscellaneous accounting services as may be reasonably requested from time to time by W&R, which services shall relate to the business contemplated by this Agreement, as amended from time to time. Such services shall include, without limitation, periodic reconciliation and balancing of Company's books and records with those of Ivy Funds VIP with respect to such matters as cash accounts, Portfolio share purchase and redemption orders placed with Ivy Funds VIP, dividend and distribution payments by Ivy Funds VIP, and such other accounting matters that may arise from time to time in connection with the operations of Ivy Funds VIP as related to the business contemplated by this Agreement.
D.	BOARD Reports. Company acknowledges that W&R may, from time to time, be called upon by the Board, to provide various types of information pertaining to the operations of Ivy Funds VIP and related matters, and that W&R also may, from time to time, decide to provide such information to the Board in its own discretion. Accordingly, Company agrees to provide W&R with such assistance as W&R may reasonably request so that W&R can report such information to the Ivy Funds VIP's Board in a timely manner. Company acknowledges that such information and assistance shall be in addition to the information and assistance required of Company pursuant to Ivy Funds VIP's mixed and shared funding SEC exemptive order, described in Section 11 of this Agreement.
	Company further agrees to provide W&R with such assistance as W&R may reasonably request with respect to the preparation and submission of reports and other documents pertaining to Ivy Funds VIP to appropriate regulatory bodies and third party reporting services.
E.	IVY FUNDS VIP-Related Contract Owner Services. Company agrees to print and distribute, in a timely manner, Prospectuses, SAIs, supplements thereto, Periodic Reports and any other materials of Ivy Funds VIP required by law or otherwise to be given to its shareholders, including, without limitation, Contract Owners investing in Portfolio shares, and to bear the expenses associated with such printing and distribution. In addition, Company shall bear the expenses associated with (i) printing, mailing, distributing, and tabulating proxy materials, including voting instruction solicitation materials, sent to Contract Owners with respect to proxy solicitations related to the Variable Account or related to matters requested by Company and agreed to by Ivy Funds VIP, (ii) making typesetting and other customization changes to Ivy Funds VIP proxy materials, which changes are requested by Company and agreed to by Ivy Funds VIP, and (iii) mailing and distributing Ivy Funds VIP proxy materials. Company further agrees to provide telephonic support for Contract Owners, including, without limitation, advice with respect to inquiries about Ivy Funds VIP and each Portfolio (not including information about performance or related to sales), communicating with Contract Owners about Ivy Funds VIP (and Variable Account) performance, and assisting with proxy solicitations, specifically with respect to soliciting voting instructions from Contract Owners.

EX-99.(E)(3)

Exhibit (e)(3)

PARTICIPATION AGREEMENT

National Security Life and Annuity Company

This Participation Agreement ("Agreement"), dated as of the 22 day of September, 2008, is made by and between NATIONAL SECURITY LIFE AND ANNUITY COMPANY (the "Company"), on behalf of itself and each of the separate accounts identified on Exhibit A, which is attached hereto, as the parties hereto may amend from time to time ("Variable Accounts"), WADDELL & REED, INC. ("W&R"), distributor for Ivy Funds Variable Insurance Portfolios, Inc., and IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC. ("Ivy Funds VIP").

WHEREAS, Ivy Funds VIP is registered with the Securities and Exchange Commission ("SEC") as an open-end management investment company under the Investment Company Act of 1940, as amended ("1940 Act"), and currently consists of the separately managed series identified on Exhibit B, which is attached hereto and may be unilaterally amended from time to time by W&R and/or Ivy Funds VIP in their sole and exclusive discretion upon written notice to Company (each a "Portfolio"); and

WHEREAS, the Portfolios are currently sold to one or more separate accounts of life insurance companies to fund benefits under variable life insurance policies and/or variable annuity contacts ("Participating Insurance Companies"); and

WHEREAS, Company, W&R and Ivy Funds VIP mutually desire the inclusion of the Portfolios as underlying investment media for each of the variable life insurance policies and/or variable annuity contracts issued by Company identified on Exhibit A, which is attached hereto, as the parties hereto may amend from time to time (collectively, the "Contracts"); and

WHEREAS, the Contracts allow for the allocation of net amounts received by Company to separate sub-accounts of the Variable Accounts for investment in shares of the Portfolios and other similar funds; and

WHEREAS, selection of a particular sub-account (corresponding to a particular Portfolio) is made by the owner of a Contract ("Contract Owner") and such Contract Owner may reallocate their investment options among the sub-accounts of the Variable Accounts in accordance with the terms of the Contracts.

NOW THEREFORE, Company, W&R and Ivy Funds VIP, in consideration of the promises and undertakings described herein, agree as follows:

1.	SCOPE OF AGREEMENT. The scope of this Agreement is limited to the purchase of Portfolio shares by the Variable Accounts on behalf of purchasers of the Contracts.
2.	REPRESENTATIONS OF COMPANY.
	(a)	Company represents and warrants that the Variable Accounts have been established and are in good standing under the laws of their states of organization; and the Variable Accounts have been registered as unit investment trusts under the 1940 Act and will remain so registered, or are exempt from registration pursuant to Section 3(c)(11) of the 1940 Act;
	(b)	Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of its state of incorporation and that it has legally and validly established each Variable Account as a segregated asset account under applicable state insurance laws and the regulations thereunder.
	(c)	Company represents and warrants that (i) prior to and at the time of any issuance or sale of Portfolio shares, the Contracts will be registered under the Securities Act of 1933, as amended ("1933 Act"), unless exempt from such registration, (ii) prior to and at the time of any issuance or sale of Portfolio shares, the Contracts will be duly authorized for issuance and sold in all material respects in compliance with all applicable federal and state laws, including, without limitation, the 1933 Act, the Securities Exchange Act of 1934 ("1934 Act"), the 1940 Act and the law(s) of Company's state(s) of organization and domicile, (iii) each Variable Account does and will comply in all material respects with the requirements of the 1940 Act and the rules thereunder, unless exempt from such requirements, (iv) each Variable Account's 1933 Act registration statement relating to the Contracts, together with any amendments thereto, will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder, (v) Company will amend the registration statement for its Contracts under the 1933 Act and for its Variable Accounts under the 1940 Act from time to time as required in order to effect the continuous offering of its Contracts or as may otherwise be required by applicable law, and (vi) each Variable Account prospectus, Statement of Additional Information ("SAI"), and then-current stickers, will at all times comply in all material respects with the applicable requirements of the 1933 Act and the rules thereunder.
	(d)	Company represents that each Variable Account is a "segregated asset account" and that interests in each Variable Account are offered exclusively through the purchase of a "variable contract", within the meaning of such terms under Section 817 of the Internal Revenue Code of 1986, as amended ("Code"), and Section 1.817-5(f)(2) of the Federal Tax Regulations, that it shall make every effort to continue to meet such definitional requirements, and that it shall notify W&R and Ivy Funds VIP immediately upon having a reasonable basis for believing that such requirements have ceased to be met or that they may not be met in the future.
	(e)	Company represents that the Contracts are currently, and at the time of issuance will be, treated as annuity contracts or life insurance policies, whichever is appropriate under applicable provisions of the Code, and that it shall make every effort to maintain such treatment. Company will promptly notify W&R and Ivy Funds VIP upon having a reasonable basis for believing that the Contracts have ceased to be treated as annuity contracts or life insurance polices, or that the Contracts may not be so treated in the future.
	(f)	Company represents that it has established such rules and procedures as are necessary to ensure compliance with applicable federal, state and self-regulatory requirements relating to the offering of the Contracts. W&R and Ivy Funds VIP explicitly disclaim any and all responsibility for the offer, sale, distribution and/or servicing of the Contracts, except as otherwise specified in this Agreement.
	(g)	Company shall during the term of this Agreement comply in all material respects with all laws, rules and regulations applicable to it in connection with the performance of each of its obligations under this Agreement or applicable to the performance of its business, including, but not limited to, the requirements of the USA Patriot Act of 2001 (the "AML Act") and related laws, rules and regulations.
	(h)	To the extent one or more third parties are engaged by Company to offer the Contracts and/or perform services that Company is responsible for under this Agreement (such parties include, but are not limited to, affiliates of Company) ("Agents"), Company shall determine that each such Agent is capable of performing such services, shall take measures as may be necessary to ensure that Agents perform such services in accordance with the requirements of this Agreement and applicable law and shall bear full responsibility for, and assume all liability for (including any obligation for indemnification as provided in Paragraph 13 hereof), the actions and inactions of such Agents as if such services had been provided by Company.
	(i)	From time to time, W&R and/or Ivy Funds VIP may implement policies, procedures or requirements in an effort to comply with applicable legal requirements and/or avoid potential adverse effects on the Portfolios. Company agrees to cooperate in good faith with W&R and/or Ivy Funds VIP in the implementation of any such policies, procedures and/or requirements and agrees to comply with any and all requirements, restrictions and limitations described in the Portfolios' Prospectus, including any restrictions or prohibitions relating to frequent purchases and redemptions of Portfolio shares. Such cooperation shall include, but not be limited to, providing in accordance with the procedures set forth in Exhibit D, promptly upon request by W&R and/or Ivy Funds VIP, names, taxpayer identification numbers and transaction information relating to Contract Owners issuing instructions to the Company resulting in the purchase, redemption, transfer or exchange of Portfolio shares, executing any instructions in accordance with the procedures set forth in Exhibit D from W&R and/or Ivy Funds VIP to restrict or prohibit any further purchases or exchanges of Portfolio shares relating to any Contract Owner who has been identified by or on behalf of Ivy Funds VIP as having engaged in transactions of Portfolio shares that violate policies established by Ivy Funds VIP for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the Portfolio and taking such other remedial steps as are requested by W&R and/or Ivy Funds VIP, all to the extent permitted or required by applicable law.
	(j)	Company represents that, during the term of this Agreement, it will have in force adequate insurance coverage insuring the Company against potential liabilities associated with the underwriting and distribution of the Contracts.
3.	AUTHORITY OF COMPANY. Subject to the terms and conditions of this Agreement, Company shall be authorized to, and agrees, to act as a limited agent of W&R for purposes of Rule 22c-1 under the 1940 Act and to the extent permitted by applicable law, for the sole purpose of receiving instructions for the purchase and redemption of Portfolio shares (from Contract Owners or participants making investment allocation decisions under the Contracts) prior to the close of business of the New York Stock Exchange ("NYSE"), normally 3:00 p.m. Central Time ("Pricing Time") each Business Day. "Business Day" shall mean any day on which the NYSE is open for trading and on which the Portfolios calculate their net asset value as set forth in the Portfolios' most recent Prospectuses and SAIs. Except as particularly stated in this paragraph, Company shall have no authority to act on behalf of W&R or Ivy Funds VIP or to incur any cost or liability on its behalf.
4.	AVAILABLE PORTFOLIOS.
	(a)	AVAILABILITY. Ivy Funds VIP will make shares of the Portfolios available to Company and its Variable Accounts for purchase and redemption at the applicable net asset value and with no sales charges on those days on which the Portfolios calculate their net asset value pursuant to the rules of the SEC, subject to the terms and conditions of this Agreement. Notwithstanding the foregoing, the Board of Directors of Ivy Funds VIP ("Board") may refuse to sell shares of any Portfolio to any person or suspend or terminate the offering of shares of any Portfolio (a) if such action is required by law or by regulatory authorities having jurisdiction, (b) if, in the sole discretion of the Board, acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, the Board deems such action to be in the best interests of the shareholders of such Portfolio, or (c) if such action is required by any policies that the Board has adopted and that apply to all Participating Insurance Companies. Further, it is acknowledged and agreed that the availability of Portfolio shares shall be subject to Ivy Funds VIP's current Prospectus and SAI and to federal and state laws, rules and regulations.
	(b)	ADDITION, DELETION OR MODIFICATION OF PORTFOLIOS. W&R and/or Ivy Funds VIP may, from time to time, add other Portfolios to provide additional funding media for the Contracts, or to delete, combine or modify existing Portfolios, by amending Exhibit B hereto. W&R and/or Ivy Funds VIP reserve the right to amend Exhibit B in their sole and exclusive discretion upon written notice to Company. Upon such amendment to Exhibit B, any applicable reference to a Portfolio, Ivy Funds VIP or its shares herein shall include a reference to any such additional Portfolio.
	(c)	NO SALES TO THE GENERAL PUBLIC. Ivy Funds VIP represents and warrants that shares of the Portfolios will be sold only to insurance companies and/or their separate accounts funding variable life insurance policies and/or variable annuity contracts or to other persons or entities permitted under Section 817 of the Code, or regulations promulgated thereunder. Ivy Funds VIP represents and warrants that no shares of any Portfolio have been or will be sold to the general public.
5.	PROCESSING OF PORTFOLIO PURCHASE AND REDEMPTION REQUESTS.
	(a)	PRICING INFORMATION. Ivy Funds VIP or its agents will use reasonable best efforts to provide closing net asset value, change in net asset value, dividend or daily accrual rate information and capital gain information by 6:00 p.m. Central Time each Business Day to Company. Company shall use this data to calculate unit values for its Variable Accounts. Unit values shall be used to process that same Business Day's Variable Account transactions. In the event adjustments to transactions previously effected on behalf of a Variable Account are required to correct any material error in the computation of the net asset value of a Portfolio's shares, Ivy Funds VIP or its agent shall notify Company as soon as practicable after discovering the need for those adjustments which result in a reimbursement to a Variable Account in accordance with Ivy Funds VIP's then current policies on reimbursement, which Ivy Funds VIP represents are consistent with applicable SEC standards. If an adjustment is to be made in accordance with such policies to correct an error which has caused a Variable Account to receive an amount different than that to which it is entitled, Ivy Funds VIP or its agent shall make all necessary adjustments to the number of shares owned in the Variable Account and distribute to the Variable Account the amount of such underpayment for credit by the Company to affected Contract Owners. The Company agrees to use its best efforts to minimize any costs incurred under this paragraph and shall provide W&R with acceptable documentation of any such costs incurred.
	(b)	PLACING OF ORDERS BY COMPANY. Orders for purchases or redemptions shall be placed by Company with W&R or its specified agent in a manner and format determined by W&R no later than 8:30 a.m. Central Time on the following Business Day. The Company may place purchase and/or redemption orders on the following Business Day for shares of the Portfolios that it receives prior to the Pricing Time each Business Day. The Company will not aggregate pre-Pricing Time trades with post-Pricing Time trades. All orders shall be communicated by the Company through the National Securities Clearing Corporation's ("NSCC") Fund/SERV system or via facsimile. The following information shall be supplied by the Company at the time each order is placed: (i) total purchases for each Portfolio (including all purchase, exchange and transfer orders received by the Company resulting in purchases of Portfolio shares); (ii) total redemptions for each Portfolio (including all redemption, exchange and transfer orders received by the Company resulting in redemptions of Portfolio shares); and (iii) such other information required by NSCC or reasonably requested by W&R.
	(c)	PROCESSING OF ORDERS. To the extent permitted by applicable law, orders for shares of Portfolios received by Company prior to the Pricing Time on a Business Day and received by W&R by 8:30 a.m. Central time on the following Business Day shall be executed at the time they are received by W&R and at the net asset value price determined as of the close of trading on the previous Business Day, provided that Company represents it has received such orders prior to the close of the NYSE on the previous Business Day. In connection with this Section 5(c), Company represents and warrants that it will not submit any order for shares of a Portfolio or engage in any practice, nor will it allow any person acting on its behalf to submit any order for shares of a Portfolio or engage in any practice, that would violate or cause a violation of Section 22 of the 1940 Act or Rule 22c-1 thereunder. W&R will not accept any order made on a conditional basis or subject to any delay or contingency. Company shall only place purchase orders for shares of Portfolios on behalf of its customers whose addresses recorded on Company's books are in a state or other jurisdiction in which the Portfolios are registered or qualified for sale, or are exempt from registration or qualification as confirmed in writing by W&R.
	(d)	PAYMENT FOR SHARES. Payment for net purchases shall be settled via NSCC Fund/SERV or wired to a custodial account designated in writing by W&R and payment for net redemptions will be wired to an account designated in writing by Company. Company will settle via NSCC Fund/SERV or wire payment for net purchases to a custodian account designated by Ivy Funds VIP by 5:00 p.m. Central Time on the same day as the order for Portfolio shares is placed, to the extent practicable. Ivy Funds VIP will wire payment for net redemptions to an account designated by Company by 5:00 p.m. Central Time on the same day as the order is placed, to the extent practicable, but in any event within five (5) calendar days after the date the order is placed in order to enable Company to pay redemption proceeds within the time specified in Section 22(e) of the 1940 Act or such period of time as may be required by law. Net purchase orders are subject to cancellation at the option of W&R and/or Ivy Funds VIP in the event that payment is not received within two (2) business days following receipt of the order by Ivy Funds VIP. Company shall indemnify W&R and Ivy Funds VIP for any losses incurred in connection with a cancelled order.
	(e)	DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. Dividends and capital gain distributions shall be reinvested in additional Portfolio shares at net asset value. Notwithstanding the above, W&R shall not be held responsible for providing Company with ex-date net asset value, change in net asset value, dividend or capital gain information when the NYSE is closed, when an emergency exists making the valuation of net assets not reasonably practicable, or during any period when the SEC has by order permitted the suspension of pricing shares for the protection of shareholders. Ivy Funds VIP shall furnish, on or before the ex-dividend date, notice to Company of any income dividends or capital gain distributions payable on the shares of the Portfolios. Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Portfolio's shares in additional shares of the Portfolio. Ivy Funds VIP shall notify Company of the number of shares so issued as payment of such dividends and distributions.
	(f)	ISSUANCE OF SHARES. Issuance and transfer of Portfolio shares will be by book entry only. Share certificates will not be issued to Company for any Variable Account. Portfolio shares will be recorded in the appropriate title for each Variable Account.
	(g)	COMPANY REPORTING. Company shall use reasonable efforts to provide W&R with monthly reports in a manner and format determined by W&R no later than ten (10) calendar days following the end of each month during the term of this Agreement. Such reports will set forth a listing of each order received from Contract Owners during the month resulting in the purchase or sale of Portfolio shares, including the following information with respect to each such order and such additional information as W&R shall reasonably request: (i) the transaction date, which shall be the Business Day the order was received by the Company, if the order was received prior to the Pricing Time, or the Business Day following the Business Day the order was received by the Company, if the order was received after the Pricing Time; (ii) the transaction type (e.g., purchase, redemption, exchange, transfer, etc.); (iii) the Portfolio CUSIP number; (iv) the dollar amount of the transaction; (v) the name of the agent assigned to the Contract Owner's account/policy; and (vi) the agent's branch office number, city, state and zip code. Company agrees to provide W&R, upon reasonable request, written reports indicating the number of Contract Owners and such other information (including books and records) and in such format as W&R may reasonably request or as may be necessary or advisable to enable it to comply with any law, regulation or order.
6.	EXPENSES. All expenses incident to the performance by Company, W&R and/or Ivy Funds VIP of their respective obligations under this Agreement shall be paid by the party subject to the obligation. W&R shall pay compensation to Company under this Agreement as provided on Exhibit C.
7.	PROSPECTUSES, SAIs, PROXIES AND REPORTS.
	(a)	DELIVERY TO COMPANY. W&R shall promptly provide Company (or its designee), or cause Company (or its designee) to be provided with:
		(1)	a camera-ready copy of the Portfolios' Prospectus and any supplements, for use by Company in producing a combined prospectus for each Contract incorporating both the Contract Prospectus and the Portfolios' Prospectus;
		(2)	a .pdf version of the Portfolios' SAI and any supplements;
		(3)	periodic reports required under the 1940 Act ("Periodic Reports") in such quantity as Company shall reasonably require for distribution to Contract Owners; and
		(4)	copies of any Portfolio proxy materials in such quantity as Company shall reasonably require for distribution to Contract Owners.
	(b)	DELIVERY TO CONTRACT OWNERS. Company shall bear the costs of printing Portfolio proxy materials (or similar materials such as voting solicitation instructions), Periodic Reports, Prospectuses and SAIs intended for delivery to Contract Owners and for the costs of delivering such materials to Contract Owners. Company shall reimburse W&R and/or Ivy Funds VIP for any such costs they incur within thirty (30) days after receipt of an invoice itemizing such costs. Company assumes sole responsibility for ensuring that such materials are delivered to Contract Owners in accordance with applicable federal and state securities laws.
(c)	USE OF PORTFOLIO MATERIALS BY COMPANY. If Company elects to include any materials provided by W&R or Ivy Funds VIP, specifically Prospectuses, SAIs, Periodic Reports and proxy materials, on its web site or in any other computer or electronic format, Company assumes sole responsibility for maintaining such materials in the form provided by W&R or Ivy Funds VIP and for promptly replacing such materials with all updates provided by W&R or Ivy Funds VIP. W&R or Ivy Funds VIP agree to provide all such materials requested by Company in a Portable Document Format (PDF) in a timely fashion at no additional cost, together with such other formats at Company's cost as may be mutually agreed upon.
	(d)	PROXY VOTING. If and to the extent required by law, Company shall: (i) solicit voting instructions from Contract Owners; (ii) vote the Portfolio(s) shares in accordance with the instructions received from Contract Owners; and (iii) vote Portfolio(s) shares for which no instructions have been received in the same proportion as the vote of all other holders of such shares, provided however, that the Company reserves the right to vote Portfolio shares held in any segregated asset account in its own right, to the extent permitted by law. Company and its agents will in no way recommend action in connection with or oppose or interfere with the solicitation of proxies for the Portfolio shares held for the benefit of such Contract Owners.
8.	COMPANY'S USE OF PORTFOLIO INFORMATION. Company and its agents shall make no representations concerning the Portfolios or Portfolio shares except those contained in the Portfolios' then current Prospectuses, SAIs or other documents produced by W&R (or an entity on its behalf) which contain information about the Portfolios. Company agrees to submit to W&R for prior review and approval any communication with the public containing any Portfolio information. Company agrees to allow at least ten (10) Business Days for W&R to review any advertising and sales literature drafted by Company (or agents on its behalf) with respect to the Portfolios prior to using such material or submitting such material to any regulator.
9.	REPRESENTATIONS OF W&R AND/OR IVY FUNDS VIP.
	(a)	W&R represents that the Portfolios are currently qualified as regulated investment companies under Subchapter M of the Code and that Ivy Funds VIP shall make every effort to maintain such qualification. W&R shall promptly notify Company upon having a reasonable basis for believing that any of the Portfolios has ceased to so qualify, or that they may not qualify as such in the future.
	(b)	W&R represents that each of the Portfolios currently complies with the diversification requirements pursuant to Section 817(h) of the Code and Section 1.817-5(b) of the Federal Tax Regulations and that Ivy Funds VIP will make every effort to maintain the Portfolios' compliance with such diversification requirements, unless the Portfolios are otherwise exempt from Section 817(h) and/or except as otherwise disclosed in the Portfolios' Prospectus. W&R will notify Company promptly upon having a reasonable basis for believing that a Portfolio has ceased to so qualify, or that a Portfolio might not so qualify in the future.
	(c)	W&R represents and warrants that Ivy Funds VIP is duly organized and validly existing under the laws of Maryland and that each Portfolio does and will comply in all material respects with the 1940 Act and the rules and regulations thereunder.
	(d)	W&R represents and warrants that the Portfolio shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and each Portfolio shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. W&R shall amend the Portfolios' registration statement under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of Portfolio shares. Ivy Funds VIP shall register and qualify its shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by Ivy Funds VIP or W&R.
	(e)	Ivy Funds VIP represents and warrants that it, its directors, officers, employees and others dealing with the money or securities, or both, of a Portfolio shall at all times be covered by a blanket fidelity bond or similar coverage for the benefit of the Portfolio in an amount not less than the minimum coverage required by Rule 17g-1 or other regulations under the 1940 Act. Such bond shall include coverage for larceny and embezzlement and be issued by a reputable bonding company.
	(f)	W&R represents and warrants that it is currently and will continue to be a registered-broker dealer and member in good standing with the Financial Industry Regulatory Authority ("FINRA").
10.	CONFIRMATIONS. Ivy Funds VIP or its agent shall provide Company access to electronic account information, which shall confirm all transactions in Portfolio shares made during that particular quarter by a Variable Account.
11.	MIXED AND SHARED FUNDING.
	(a)	GENERAL. The parties understand that the SEC has granted an order to Ivy Funds VIP exempting it from certain provisions of the 1940 Act and rules thereunder so that Ivy Funds VIP may be available for investment by certain other entities, including, without limitation, separate accounts funding variable annuity contracts or variable life insurance contracts, separate accounts of insurance companies unaffiliated with Company, and trustees of qualified pension and retirement plans (collectively, "Mixed and Shared Funding"). The parties recognize that the SEC has imposed terms and conditions for such orders. Ivy Funds VIP hereby notifies Company that it may be appropriate to include in the prospectus pursuant to which a Contract is offered disclosure regarding the potential risks of Mixed and Shared Funding.
	(b)	INFORMATION REQUESTED BY BOARD. Company and Ivy Funds VIP (or its agent) will at least annually submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by the provisions hereof or any exemptive order granted by the SEC to permit Mixed and Shared Funding, and said reports, materials and data will be submitted at any reasonable time deemed appropriate by the Board.
12.	TERMINATION.
	(a)	EVENTS OF TERMINATION. This Agreement shall terminate as to the sale and issuance of Portfolio(s) shares:
		(1)	at the option of Company, W&R or Ivy Funds VIP upon at least sixty (60) days advance written notice to the other;
		(2)	at any time with respect only to an applicable Portfolio(s), upon W&R's election, if Ivy Funds VIP determines that liquidation of the Portfolio(s) is in the best interest of the Portfolio(s) and its (their) beneficial owners. Reasonable advance notice of election to liquidate shall be furnished by W&R to permit the substitution of Portfolio shares with the shares of another investment company;
		(3)	if the Contracts are not treated as annuity contracts or life insurance policies by the applicable regulators or under applicable rules or regulations;
		(4)	if the Variable Accounts are not deemed "segregated asset accounts" by the applicable regulators or under applicable rules or regulations;
		(5)	with respect only to the applicable Portfolio(s), upon a decision by Company based on reasonable cause, in accordance with applicable law, to substitute such Portfolio shares with the shares of another investment company for Contracts for which the Portfolio shares have been selected to serve as the underlying investment medium. Company shall give at least sixty (60) days written notice to Ivy Funds VIP and W&R of any decision to substitute Portfolio shares;
		(6)	upon sixty (60) days notice upon assignment of this Agreement unless such assignment is made with the written consent of each other party;
		(7)	in the event Portfolio shares are not registered, issued or sold pursuant to Federal law, or such law precludes the use of Portfolio shares as an underlying investment medium of Contracts issued or to be issued by Company. Prompt written notice shall be given by either party to the other in the event the conditions of this provision occur; and
		(8)	at the option of any party to this Agreement, upon another party's material breach of any provision of this Agreement.
	(b)	NOTICE REQUIREMENT. In the event of any termination of this Agreement at the option of one of the parties, prompt written notice of the election to terminate this Agreement shall be furnished by the party terminating the Agreement to the non-terminating parties.
	(c)	PORTFOLIOS TO REMAIN AVAILABLE; EFFECT OF TERMINATION. Notwithstanding any termination of this Agreement by Company, Ivy Funds VIP will, at the option of Company, continue to make available additional shares of any Portfolio offered under a Contract pursuant to the terms and conditions of this Agreement, for any Contract that is in effect on the effective date of termination of this Agreement and that offers the particular Portfolio(s) as an investment option under the Contract as of that date (hereinafter referred to as "Existing Contracts"), unless W&R or the Board determines that doing so would not serve the best interests of the shareholders of the affected Portfolio(s) or would be inconsistent with applicable law or regulation. Specifically, without limitation, the owners of the Existing Contracts will be permitted to reallocate investments in the Portfolio(s) (as in effect on such date), redeem investments in the Portfolio(s) and/or invest in the Portfolio(s) upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 12 will not apply to any (i) terminations under Section 11 and the effect of such terminations will be governed by Section 11 of this Agreement or (ii) any rejected purchase and/or redemption order as described in Section 2(i) hereof. If Company elects to continue to make available Portfolio shares to Contract Owners after the effective date of termination of this Agreement in accordance with this Section 12(c), all provisions of this Agreement will survive any termination of this Agreement solely with respect to transactions in such Portfolio shares under the Existing Contracts.
13.	NOTICES.
	(a)	DELIVERY. All notices sent under this Agreement shall be given in writing, and shall be delivered personally, or sent by fax, or by a nationally-recognized overnight courier, postage prepaid. All such notices shall be deemed to have been duly given when so delivered personally or sent by fax, with receipt confirmed, or one (1) business day after the date of deposit with such nationally-recognized overnight courier. All such notices to Company, W&R or Ivy Funds VIP shall be delivered to:
		National Security Life and Annuity Company
		One Financial Way
		Cincinnati, Ohio 45242
		Attention: Legal Department
		Waddell & Reed, Inc.
		6300 Lamar Avenue
		Overland Park, Kansas 66202
		Attention: Legal Department
		Ivy Funds Variable Insurance Portfolios, Inc.
		6300 Lamar Avenue
		Overland Park, Kansas 66202
		Attention: Secretary
		All such notices to Company, W&R and Ivy Funds VIP shall be delivered to their respective addresses as listed above, or such other address as Company, W&R and/or Ivy Funds VIP may have furnished in writing to the other parties in accordance herewith.
	(b)	NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
		(1)	Ivy Funds VIP or W&R will immediately notify Company of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to Ivy Funds VIP's registration statement under the 1933 Act or Ivy Funds VIP's Prospectus, (ii) any request by the SEC for any amendment to such registration statement or Ivy Funds VIP Prospectus that may affect the offering of shares of Ivy Funds VIP, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of Ivy Funds VIP Shares, or (iv) any other action or circumstances that may prevent the lawful offer or sale of shares of any Portfolio in any state or jurisdiction, including, without limitation, any circumstances in which (a) such shares are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law, or (b) such law precludes the use of such shares as an underlying investment medium of the Contracts issued or to be issued by Company. Ivy Funds VIP and W&R will make every reasonable effort to prevent the issuance, with respect to any Portfolio, of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time.
		(2)	Company will immediately notify Ivy Funds VIP of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to each Variable Account's registration statement under the 1933 Act relating to the Contracts or each Variable Account Prospectus, (ii) any request by the SEC for any amendment to such registration statement or Variable Account Prospectus that may affect the offering of shares of Ivy Funds VIP, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of each Variable Account's interests pursuant to the Contracts, or (iv) any other action or circumstances that may prevent the lawful offer or sale of said interests in any state or jurisdiction, including, without limitation, any circumstances in which said interests are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law. Company will make every reasonable effort to prevent the issuance of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time.
14.	INDEMNIFICATION.
	(a)	INDEMNIFICATION BY COMPANY.
		(1)	Company agrees to reimburse and/or indemnify and hold harmless W&R, Ivy Funds VIP, and each of their directors, officers, employees, agents and each person, if any, who controls or is controlled by W&R within the meaning of the 1933 Act (collectively, "Affiliated Party") against any losses, claims, damages or liabilities ("Losses") to which W&R or any such Affiliated Party may become subject, under the 1933 Act or otherwise, insofar as such Losses arise out of or are based upon, but not limited to:
			(i)	any untrue statement or alleged untrue statement of any material fact contained in information furnished by Company;
			(ii)	the omission or the alleged omission to state in the Registration Statements or Prospectuses of the Variable Accounts, or Contract, or in any sales literature or other public communication generated by Company on behalf of the Variable Accounts or Contracts, a material fact required to be stated therein or necessary to make the statements therein not misleading;
			(iii)	statements or representations of Company or its agents or third parties, with respect to the offer, sale or distribution of Contracts for which Portfolio shares are an underlying investment, or negligent or wrongful conduct of Company or its agents or third parties with respect to offers or sales of Contracts or Portfolio shares;
			(iv)	the failure of Company to comply with applicable legal or self-regulatory requirements to which it is subject;
			(v)	a material breach of this Agreement or of any of the representations or warranties contained herein; or
			(vi)	any failure to register the Contracts or the Variable Accounts under federal or state securities laws, state insurance laws or to otherwise comply with such laws, rules, regulations or orders.
		(2)	Provided however, that Company shall not be liable in any such case to the extent any such Losses arise out of or are based upon an act, statement, omission or representation or alleged act, alleged statement, alleged omission or alleged representation which was made in reliance upon and in conformity with written information furnished to Company by or on behalf of W&R specifically for its use.
		(3)	Company shall reimburse any legal or other expenses reasonably incurred by W&R, Ivy Funds VIP, or any Affiliated Party in connection with investigating or defending any such Losses, provided, however, that Company shall have prior approval of the use of said counsel or the expenditure of said fees.
		(4)	This indemnity agreement shall be in addition to any liability which Company may otherwise have and shall survive termination of this Agreement.
	(b)	INDEMNIFICATION BY W&R AND/OR IVY FUNDS VIP.
		(1)	W&R and/or Ivy Funds VIP, as applicable, agree to indemnify and hold harmless Company and each of its directors, officers, employees, agents and each person, (collectively, "Company Affiliated Party"), who controls Company within the meaning of the 1933 Act against any Losses to which Company or any such Company Affiliated Party may become subject, under the 1933 Act or otherwise, insofar as such Losses arise out of or are based upon; but not limited to:
			(i)	any untrue statement or alleged untrue statement of any material fact contained in any information furnished by W&R or Ivy Funds VIP, including but not limited to, the Registration Statements, Prospectuses or sales literature of the Portfolios;
			(ii)	the omission or the alleged omission to state in the Registration Statements or Prospectuses of the Portfolios or in any sales literature generated by W&R, Ivy Funds VIP or their affiliates a material fact required to be stated therein or necessary to make the statements therein not misleading;
			(iii)	W&R's failure to keep the Portfolios fully diversified and qualified as regulated investment companies as required by the applicable provisions of the Code, the 1940 Act, and the applicable regulations promulgated thereunder;
			(iv)	the failure of W&R or Ivy Funds VIP to comply with applicable legal or self-regulatory requirements to which they are subject;
			(v)	a material breach of this Agreement or of any of the representations or warranties contained herein; or
			(vi)	any failure to register the Portfolios under federal or state securities laws or to otherwise comply with such laws, rules, regulations or orders.
		(2)	Provided however, that W&R and Ivy Funds VIP shall not be liable in any such case to the extent that any such Losses arise out of or are based upon an act, statement, omission or representation or alleged act, alleged statement, alleged omission or alleged representation which was made in reliance upon or in conformity with written information furnished to W&R or Ivy Funds VIP by Company specifically for their use.
		(3)	W&R and/or Ivy Funds VIP, as applicable, shall reimburse any legal or other expenses reasonably incurred by Company or any Company Affiliated Party in connection with investigating or defending any such Losses, provided, however, that W&R and Ivy Funds VIP shall have prior approval of the use of said counsel or the expenditure of said fees.
		(4)	This indemnity agreement will be in addition to any liability which W&R and/or Ivy Funds VIP, as applicable, may otherwise have and shall survive termination of this Agreement.
	(c)	NOTICE AND DEFENSE OF CLAIMS. Each party shall promptly notify the other party(ies) in writing of any situation which presents or appears to involve a claim which may be the subject of indemnification under this Agreement and the indemnifying party shall have the option to defend against any such claim. In the event the indemnifying party so elects, it shall notify the indemnified party and shall assume the defense of such claim, and the indemnified party shall cooperate fully with the indemnifying party, at the indemnifying party's expense, in the defense of such claim. Notwithstanding the foregoing, the indemnified party shall be entitled to participate in the defense of such claim at its own expense through counsel of its own choosing. Neither party shall admit to wrong-doing nor make any compromise in any action or proceeding which may result in a finding of wrongdoing by the other party without the other party's prior written consent, which shall not be unreasonably withheld. Any notice given by the indemnifying party to an indemnified party or participation in or control of the litigation of any such claim by the indemnifying party shall in no event be deemed to be an admission by the indemnifying party of culpability, and the indemnifying party shall be free to contest liability among the parties with respect to the claim.
15.	SUBSTITUTION APPLICATIONS. Subject to Section 10(e) of this Agreement, W&R may request or Company may initiate the filing of a substitution application pursuant to Section 26(c) of the 1940 Act to substitute shares of a Portfolio held by a Company Variable Account for another investment media ("Substitution Application"). The costs associated with a Substitution Application shall be allocated as follows:
	(a)	In the event W&R requests Company to submit a Substitution Application, W&R shall reimburse Company for all reasonable costs incurred by Company in preparing and filing the Substitution Application and any amendment thereto. W&R shall be obligated to reimburse Company under this provision irrespective of whether the Substitution Application requested by W&R is granted by the SEC or the substitution is effectuated. W&R shall not have any liability to reimburse any other costs or expenses incurred in connection with effecting the substitution.
	(b)	In the event Company initiates a Substitution Application, Company shall bear all costs associated with the Substitution Application irrespective of whether the Substitution Application is granted or the substitution is effectuated.
	(c)	In the event Company initiates a Substitution Application in accordance with Section 12(a)(5), Company shall bear the costs incurred in the transfer.
16.	CONFIDENTIALITY.
	(a)	COMPANY. Ivy Funds VIP acknowledges that the identities of the customers of Company or any of its affiliates (collectively, the "the Company Protected Parties" for purposes of this Section 16), information maintained regarding those customers, and all computer programs and procedures or other information developed by the Company Protected Parties or any of their employees or agents in connection with Company's performance of its duties under this Agreement are the valuable property of the Company Protected Parties. Ivy Funds VIP agrees that if it comes into possession of any list or compilation of the identities of or other information about the Company Protected Parties' customers, or any other information or property of the Company Protected Parties, other than such information as may be independently developed or compiled by Ivy Funds VIP from information supplied to it by the Company Protected Parties' customers who also maintain accounts directly with Ivy Funds VIP, Ivy Funds VIP will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with Company's prior written consent; or (b) as required by law or judicial process.
	(b)	IVY FUNDS VIP. Company acknowledges that the identities of the customers of Ivy Funds VIP or any of its affiliates (collectively, the "Ivy Funds VIP Protected Parties" for purposes of this Section 16), information maintained regarding those customers, and all computer programs and procedures or other information developed by the Ivy Funds VIP Protected Parties or any of their employees or agents in connection with Ivy Funds VIP's performance of its duties under this Agreement are the valuable property of the Ivy Funds VIP Protected Parties. Company agrees that if it comes into possession of any list or compilation of the identities of or other information about the Ivy Funds VIP Protected Parties' customers or any other information or property of the Ivy Funds VIP Protected Parties, other than such information as may be independently developed or compiled by Company from information supplied to it by the Ivy Funds VIP Protected Parties' customers who also maintain accounts directly with Company, Company will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with Ivy Funds VIP's prior written consent; or (b) as required by law or judicial process.
	(c)	BOTH PARTIES. Each party acknowledges that any breach of the agreements in this Section 16 would result in immediate and irreparable harm to the other parties for which there would be no adequate remedy at law and agree that in the event of such a breach, the other parties will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate.
17.	TRADEMARKS AND FUND NAMES.
	(a)	Except as may otherwise be provided in a license agreement among Ivy Funds VIP and Company, neither Company or any of its respective affiliates, shall use any trademark, trade name, service mark or logo of W&R, Ivy Funds VIP or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without W&R's or Ivy Funds VIP's prior written consent, as applicable, the granting of which shall be at the sole option of W&R or Ivy Funds VIP, as applicable.
	(b)	Except as otherwise expressly provided in this Agreement, neither Ivy Funds VIP, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of Company or any of its affiliates, or any variation of any such trademark, trade name, service mark or logo, without Company's prior written consent, the granting of which shall be at Company's sole option.
18.	FORCE MAJEURE. Each party shall be excused from the performance of any of its obligations to the other where such nonperformance is occasioned by any event beyond its control which shall include, without limitation, any applicable order, rule or regulation of any federal, state or local body, agency or instrumentality with jurisdiction, work stoppage, accident, natural disaster, war, acts of terrorism or civil disorder, provided that the party so excused shall use all reasonable efforts to minimize its nonperformance and overcome, remedy, cure or remove such event as soon as is reasonably practicable, and such performance shall be excused only for so long as, in any given case, the force or circumstances making performance impossible shall exist.
19.	NO WAIVER. The forbearance or neglect of any party to insist upon strict compliance by another party with any of the provisions of this Agreement, whether continuing or not, or to declare a forfeiture of termination against the other parties, shall not be construed as a waiver of any of the rights or privileges of any party hereunder. No waiver of any right or privilege of any party arising from any default or failure of performance by any party shall affect the rights or privileges of the other parties in the event of a further default or failure of performance.
20.	GOVERNING LAW AND VENUE. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of Kansas, without respect to its choice of law provisions and in accordance with the 1940 Act. In the case of any conflict, the 1940 Act shall control.
21.	AUTHORIZATION. Each party hereby represents and warrants to the other that the persons executing this Agreement on its behalf are duly authorized and empowered to execute and deliver the Agreement and that the Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. Except as particularly set forth herein, neither party assumes any responsibility hereunder, and will not be liable to the other for any damage, loss of data, delay or any other loss whatsoever caused by events beyond its reasonable control.
22.	RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed to create a partnership or joint venture by and among the parties hereto.
23.	ENTIRE AGREEMENT AND AMENDMENT. This Agreement, including all exhibits hereto, constitutes the entire agreement and understanding between the parties with respect to the matters addressed herein. Except to amend Exhibit B, which may be amended unilaterally by W&R and/or Ivy Funds VIP in its sole discretion, or as otherwise provided in this Agreement, this Agreement may not be amended or modified except by a written amendment executed by each of the parties.
24.	COOPERATION. Each party shall cooperate with each other party and all appropriate government authorities (including without limitation the SEC, FINRA and state securities and insurance regulators) and shall permit such authorities having jurisdiction reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby.
25.	NON-EXCLUSIVE AGREEMENT. The parties of this Agreement acknowledge and agree that this Agreement shall not be exclusive in any respect.
26.	COUNTERPARTS. This Agreement may be executed by facsimile or other electronic signature and it may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

NATIONAL SECURITY LIFE AND ANNUITY COMPANY
/s/Thomas A. Barefield
By:	Thomas A. Barefield
Title:	Vice President
WADDELL & REED, INC.
/s/Thomas W. Butch
By:	Thomas W. Butch
Title:	President
IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC.
/s/Henry J. Herrmann
By:	Henry J. Herrmann
Title:	President

EXHIBIT A

Variable Accounts of Company

Name	SEC File No.
National Security Variable Account N	811-10619

Variable Life Insurance Policies/Variable Annuity Contracts

Name	SEC File No.
NScore Premier	333-125856
NScore Xtra	333-76350
NScore Lite	333-76352
NScore Value	333-131513

EXHIBIT B

Ivy Funds Variable Insurance Portfolios, Inc.

Portfolios Available to Variable Accounts

Asset Strategy
Global Natural Resources
Science and Technology

EXHIBIT C

Fees or Other Compensation

Company shall provide the administrative services set out in Schedule A hereto and made a part hereof, as the same may be amended from time to time. For such services, W&R agrees to pay to Company as follows:

(a)

Assets Under Management. Each quarter, W&R shall calculate and pay to Company a fee that shall be equal to forty basis points (.40 bps), on an annualized basis, of the average daily account value of all assets in the Portfolios in connection with the Contracts ("Aggregated Assets"), provided, however, that the fee is subject to change pursuant to Paragraph (b) below. The fee (the "Total Fee") shall include and not be in addition to the payment by W&R of the 12b-1 fees received by W&R from Ivy Funds VIP relating to the Aggregated Assets.

(b)

Changes in Law. If a change in the law requires a reduction in the fees paid by a pooled investment vehicle pursuant to Rule 12b-1 of the Investment Company Act of 1940 (or its functional equivalent), and if Ivy Funds VIP is required to reduce the 12b-1 fees it pays that are based upon the value of the Aggregated Assets as a result of such change in the law, then there shall be a corresponding reduction in the amount of the Total Fee due pursuant to above.

The parties to this Agreement recognize and agree that W&R's payments hereunder are for administrative services and personal Contract Owner services (as described in Schedule A) only and do not constitute payment in any manner for investment advisory services or for costs of distribution of Contracts or of Portfolio shares, and are not otherwise related to investment advisory or distribution services or expenses. The Company represents and warrants that the fees to be paid by W&R for services to be rendered by Company pursuant to the terms of this Agreement are to compensate Company for providing administrative services to Ivy Funds VIP and for providing personal services to Contract Owners as described in Schedule A, and are not designed to reimburse or compensate Company for providing any other services with respect to the Contracts or any Variable Account.

EXHIBIT D

RULE 22c-2 PROCEDURES

Company, W&R and Ivy Funds VIP agree to the following terms and conditions regarding the provision of information pursuant to Rule 22c-2 of the 1940 Act:

1.	Shareholder Information.
	(a)	Agreement to Provide Information. Company agrees to provide W&R and/or Ivy Funds VIP, or its designee, upon written request (which may include electronic writings and facsimile transmissions, a "Request"), the taxpayer identification number (the "TIN"), the Individual/International Taxpayer Identification Number ("ITIN") or other government-issued identifier ("GII") and the Contract owner number or participant account number associated with the Shareholder, if known, of any or all Shareholder(s) of Shares held through an account with Company (an "Account"), and the amount, date and transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Shares held through the Account during the period covered by the Request. Unless otherwise specifically requested by W&R and/or Ivy Funds VIP, Company shall only be required to provide information relating to Shareholder-Initiated Transfer Purchases or Shareholder-Initiated Transfer Redemptions.
		(i)	Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request, for which transaction information is sought. W&R and/or Ivy Funds VIP may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by Ivy Funds VIP for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by Ivy Funds VIP.
		(ii)	Timing of Requests. Requests for Shareholder information shall be made no more frequently than quarterly except as W&R and/or Ivy Funds VIP deem necessary to investigate compliance with policies established by Ivy Funds VIP for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by Ivy Funds VIP.
		(iii)	Form and Timing of Response.
			(A)	Company agrees to provide, promptly upon Request of W&R and/or Ivy Funds VIP, or its designee, the requested information specified in Section 1(a) of this Exhibit D. If Requested by W&R and/or Ivy Funds VIP or its designee, Company agrees to use best efforts to determine promptly, but not later than five business days after receipt of the Request by Company, whether any specific person or entity about whom W&R and/or Ivy Funds VIP has received information pursuant to Section 1(a) of this Agreement is an "indirect intermediary" ("Indirect Intermediary") as defined in Rule 22c-2 (the "Rule") under the 1940 Act, and, upon further Request of W&R and/or Ivy Funds VIP or its designee, promptly (but not later than five business days after receipt of such Request) either: (I) provide (or arrange to have provided) the identification and transaction information set forth in Section 1(a) of this Exhibit D for Shareholders who hold Shares through the Indirect Intermediary; or (II) restrict or prohibit the Indirect Intermediary from purchasing, in nominee name on behalf of other persons, securities issued by W&R and/or Ivy Funds VIP. Company agrees to inform W&R and/or Ivy Funds VIP whether it plans to perform (I) or (II) above.
			(B)	Responses required by this Section 1(a)(ii) of this Exhibit D must be communicated in writing and in a format mutually agreed upon by W&R and/or Ivy Funds VIP and Company.
			(C)	To the extent practicable, the format for any transaction information provided to W&R and/or Ivy Funds VIP should be consistent with the National Securities Clearing Corporation Standardized Data Report Format.
		(iii)	Limitations on Use of Information. W&R and/or Ivy Funds VIP agree not to use the information received pursuant to this Exhibit D for any purpose other than as necessary to comply with the provisions of the Rule or to fulfill other regulatory or legal requirements, subject to the privacy provisions of Title V of the Gramm-Leach-Bliley Act and comparable state laws.
	(b)	Agreement to Restrict Trading. Company agrees to execute a Request from W&R and/or Ivy Funds VIP or its designee to restrict or prohibit further purchases or exchanges of Shares by a Shareholder that has been identified by or on behalf of Ivy Funds VIP as having engaged in transactions in Shares (directly or indirectly through an Account) that violate policies established by Ivy Funds VIP for the purpose of eliminating or reducing any dilution of the value of the outstanding shares issued by Ivy Funds VIP. Unless otherwise directed by or on behalf of Ivy Funds VIP or as otherwise provided in Section 1(a)(ii)(A) of this Agreement, any such restrictions or prohibitions shall only apply to Shareholder-Initiated Transfer Purchases or Shareholder-Initiated Transfer Redemptions that are effected directly or indirectly through Company. Instructions must be received by Company at such address that Company may communicate to W&R and/or Ivy Funds VIP in writing from time to time, including, if applicable, an e-mail and/or facsimile telephone number.
		(i)	Form of Instructions. Such Request must include the TIN, ITIN or GII and the specific individual Contract owner number or participant account number associated with the Shareholder, if known, and the specific restriction(s) to be executed, including how long the restriction(s) is (are) to remain in place. If the TIN, ITIN or GII or the specific individual Contract owner number or participant account number associated with the Shareholder is not known, the instructions must include an equivalent identifying number of the Shareholder(s) or account(s) or other agreed upon information to which the instruction relates.
		(ii)	Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five business days after receipt of the instructions by Company.
		(iii)	Confirmation by Company. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 business days after the Request has been executed.
2.	Definitions.
	(a)	The term "Shares" means the interests of Shareholders corresponding to the redeemable securities of record issued by Ivy Funds VIP under the 1940 Act that are held by Company.
	(b)	The term "Shareholder" means the holder of interests in Contract or a participant in an employee benefit plan with a beneficial interest in a Contract.
	(c)	The term "Shareholder-Initiated Transfer Purchase" means a transaction that is initiated or directed by a Shareholder or a plan or pursuant to an asset allocation, automatic rebalancing or similar program that results in a transfer of assets within a Contract to Ivy Funds VIP, but does not include transactions that are executed: (i) automatically pursuant to a contractual or systematic program or enrollment such as transfer of assets within a Contract to Ivy Funds VIP as a result of "dollar cost averaging" programs, insurance company approved asset allocation programs (provided that such programs are reasonably designed to prevent the types of abusive trading that the Fund's market timing policies are intended to prevent), or automatic rebalancing programs; (ii) pursuant to a Contract death benefit; (iii) one-time step-up in Contract value pursuant to a Contract death benefit; (iv) allocation of assets to Ivy Funds VIP through a Contract as a result of payments such as loan repayments, scheduled contributions, retirement plan salary reduction contributions, or planned premium payments to the Contract; or (v) pre-arranged transfers at the conclusion of a required free look period.
	(d)	The term "Shareholder-Initiated Transfer Redemption" means a transaction that is initiated or directed by a Shareholder or a plan or pursuant to an asset allocation, automatic rebalancing or similar program that results in a transfer of assets within a Contract out of Ivy Funds VIP, but does not include transactions that are executed: (i) automatically pursuant to a contractual or systematic programs or enrollments such as transfers of assets within a Contract out of Ivy Funds VIP as a result of annuity payouts, loans, systematic withdrawal programs, insurance company approved asset allocation programs (provided that such programs are reasonably designed to prevent the types of abusive trading that the Fund's market timing polices are intended to prevent) and automatic rebalancing programs; (ii) as a result of any deduction of charges or fees under a Contract; (iii) within a Contract out of Ivy Funds VIP as a result of scheduled withdrawals or surrenders from a Contract; or (iv) as a result of payment of a death benefit from a Contract.

SCHEDULE A

ADMINISTRATIVE SERVICES FOR

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC.

Company shall provide certain administrative services respecting the operations of Ivy Funds VIP and certain personal services to Contract Owners investing in Ivy Funds VIP, as set forth below. This Schedule, which may be amended from time to time as mutually agreed upon by Company and W&R, constitutes an integral part of the Agreement to which it is attached. Capitalized terms used herein shall, unless otherwise noted, have the same meaning as the defined terms in the Agreement to which this Schedule relates.

A.	Records of Portfolio Share Transactions; Miscellaneous Records.
	1.	Company shall maintain master accounts with Ivy Funds VIP, on behalf of each Portfolio, which accounts shall bear the name of Company as the record owner of Portfolio shares on behalf of each Variable Account investing in the Portfolio.
	2.	Company shall maintain a daily journal setting out the number of shares of each Portfolio purchased, redeemed or exchanged by Contract Owners each day, to, among other things, assist W&R, Ivy Funds VIP and/or Ivy Funds VIP's transfer agent in tracking and recording Portfolio share transactions, and to facilitate the computation of each Portfolio's net asset value per share. Company shall daily provide W&R, Ivy Funds VIP and Ivy Funds VIP's transfer agent with a copy of such journal entries or information appearing thereon in such format as may be reasonably requested by W&R. Company shall provide such other assistance to W&R, Ivy Funds VIP and Ivy Funds VIP's transfer agent as may be necessary to cause various Portfolio share transactions effected by Contract Owners to be properly reflected on the books and records of Ivy Funds VIP.
	3.	In addition to the foregoing records, and without limitation, Company shall maintain and preserve all records as required by law to be maintained and preserved in connection with providing administrative services hereunder.
B.	Order Placement and Payment.
	1.	Company shall determine the net amount to be transmitted to the Variable Accounts as a result of redemptions of each Portfolio's shares based on Contract Owner redemption requests and shall disburse or credit to the Variable Accounts all proceeds of redemptions of Portfolio shares. Company shall notify Ivy Funds VIP of the cash required to meet redemption payments.
	2.	Company shall determine the net amount to be transmitted to Ivy Funds VIP as a result of purchases of Portfolio shares based on Contract Owner purchase payments and transfers allocated to the Variable Accounts investing in each Portfolio. Company shall transmit net purchase payments to Ivy Funds VIP's custodian.
C.	Accounting Services. Company shall perform miscellaneous accounting services as may be reasonably requested from time to time by W&R, which services shall relate to the business contemplated by this Agreement, as amended from time to time. Such services shall include, without limitation, periodic reconciliation and balancing of Company's books and records with those of Ivy Funds VIP with respect to such matters as cash accounts, Portfolio share purchase and redemption orders placed with Ivy Funds VIP, dividend and distribution payments by Ivy Funds VIP, and such other accounting matters that may arise from time to time in connection with the operations of Ivy Funds VIP as related to the business contemplated by this Agreement.
D.	BOARD Reports. Company acknowledges that W&R may, from time to time, be called upon by the Board, to provide various types of information pertaining to the operations of Ivy Funds VIP and related matters, and that W&R also may, from time to time, decide to provide such information to the Board in its own discretion. Accordingly, Company agrees to provide W&R with such assistance as W&R may reasonably request so that W&R can report such information to the Ivy Funds VIP's Board in a timely manner. Company acknowledges that such information and assistance shall be in addition to the information and assistance required of Company pursuant to Ivy Funds VIP's mixed and shared funding SEC exemptive order, described in Section 11 of this Agreement.
	Company further agrees to provide W&R with such assistance as W&R may reasonably request with respect to the preparation and submission of reports and other documents pertaining to Ivy Funds VIP to appropriate regulatory bodies and third party reporting services.
E.	IVY FUNDS VIP-Related Contract Owner Services. Company agrees to print and distribute, in a timely manner, Prospectuses, SAIs, supplements thereto, Periodic Reports and any other materials of Ivy Funds VIP required by law or otherwise to be given to its shareholders, including, without limitation, Contract Owners investing in Portfolio shares, and to bear the expenses associated with such printing and distribution. In addition, Company shall bear the expenses associated with (i) printing, mailing, distributing, and tabulating proxy materials, including voting instruction solicitation materials, sent to Contract Owners with respect to proxy solicitations related to the Variable Account or related to matters requested by Company and agreed to by Ivy Funds VIP, (ii) making typesetting and other customization changes to Ivy Funds VIP proxy materials, which changes are requested by Company and agreed to by Ivy Funds VIP, and (iii) mailing and distributing Ivy Funds VIP proxy materials. Company further agrees to provide telephonic support for Contract Owners, including, without limitation, advice with respect to inquiries about Ivy Funds VIP and each Portfolio (not including information about performance or related to sales), communicating with Contract Owners about Ivy Funds VIP (and Variable Account) performance, and assisting with proxy solicitations, specifically with respect to soliciting voting instructions from Contract Owners.

EX-99.(E)(4)

Exhibit (e)(4)

License Agreement

This Agreement, dated as of April 15, 2009, is entered into by and among Ivy Funds Distributor, Inc. ("IFDI"), Waddell & Reed, Inc. ("WRI"), and Ivy Funds Variable Insurance Portfolios (the "Funds").

WHEREAS, WRI acts as the principal underwriter and distributor of the Funds; and

WHEREAS, IFDI is the owner of the "Ivy Funds" brand name and associated trademarks and/or service marks (together, the "Marks"); and

WHEREAS, WRI and the Funds (each, a "Licensee") desire to use such Marks in connection with Fund-related business and IFDI is willing to grant to WRI and the Funds a license to so use the Marks.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1.	Trademarks.
	a.	Trademark License. IFDI grants each Licensee a limited nonexclusive, nontransferable license to use the Marks in connection with Fund-related business (such as in registration statements, proxies and other regulatory filings, and in connection with the marketing, public offering, management and operation of the Funds) in a manner that will preserve and enhance the goodwill associated with the Marks; provided that each Licensee: (i) shall not create a unitary composite mark involving a Mark without prior written approval from IFDI; and (ii) shall display symbols and notices clearly and sufficiently indicating the trademark status and ownership of the Marks in accordance with applicable trademark law and practice. Each Licensee shall cease using a particular Mark upon written request of IFDI, and must obtain the written approval of IFDI prior to using the Marks for any purpose other than for Fund-related business.
	b.	Ownership of Trademarks. Each Licensee acknowledges the ownership of IFDI in the Marks. Each Licensee agrees that its use of the Marks will not create in it, nor will it represent it has, any right, title, or interest in or to such Marks other than the licenses expressly granted herein. Each Licensee agrees not to do anything contesting or impairing the trademark rights of IFDI.
	c.	Infringement Proceedings. Each Licensee agrees to promptly notify IFDI in writing of any unauthorized use of the Marks of which it has actual knowledge. IFDI shall have the sole right and discretion to bring proceedings alleging infringement of its Marks or unfair competition related thereto; provided, however, that the Licensees agree to provide IFDI with its reasonable cooperation and assistance with respect to any such infringement proceedings.
2.	Indemnifications and Protections.
	a.	IFDI agrees to defend at its own expense and hold each Licensee harmless against any loss, damage, liability, claim, demand, suit, judgment, and expense (including reasonable attorney's fees) brought or alleged against the Licensee which may be incurred by any claim, suit or proceeding based upon any claims that the use of the Marks by Licensee constitutes an infringement of title, copyright, trademark or other intellectual property rights of a third party, or piracy, plagiarism, or unfair competition or idea misappropriation under implied or express contract, or any other cause of action in any way related to the Marks; provided, however, that the Licensee shall give IFDI prompt written notice of the institution of such action, permit IFDI to defend the same, and give IFDI all available information, assistance, and authority in connection therewith. IFDI shall have control of the defense of any such action, including appeals, and of all negotiations for, including the right to effect, the settlement or compromise thereof.
		IFDI's obligation to so defend, indemnify and hold the Licensee harmless shall not apply in those circumstances where such claim, suit or proceeding is brought as a result of the Licensee's negligent or intentional acts, omissions, or other wrongful conduct.
3.	Termination of License.
	This license shall remain in effect until such time that it is revoked by IFDI's written request; unless terminated by agreement of the parties to this Agreement. Following termination of the license: (i) all rights, licenses, and privileges granted to the Licensees hereunder shall automatically revert to IFDI; (ii) each Licensee shall execute any and all documents requested by IFDI evidencing such automatic reversion; and (iii) each Licensee may retain marketing and other materials created during the term of the license, however, the Licensees may not use the Marks in new marketing materials.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their authorized officers as of the day and year first written above.

IVY FUNDS DISTRIBUTOR, INC.		WADDELL & REED, INC.
By:	/s/ Thomas W. Butch	By:	/s/ Thomas W. Butch
Title:	President	Title:	President

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS
By:	/s/ Henry J. Herrmann
Title:	President

EX-99.(E)(5)

Exhibit (e)(5)

UNDERWRITING AGREEMENT

THIS AGREEMENT, dated as of April 15, 2009, is entered into by and between Ivy Funds Variable Insurance Portfolios (hereinafter the "Trust"), a Delaware statutory trust, and Waddell & Reed, Inc. (hereinafter "W&R"), a Delaware corporation.

WHEREAS, the Trust is registered with the Securities and Exchange Commission ("SEC") as an open-end management investment company under the Investment Company Act of 1940, as amended ("1940 Act"), and currently consists of the separately managed series identified on Schedule A (the "Portfolios"); and

WHEREAS, the Trust's shareholders are and are anticipated to be separate accounts in unit investment trust form ("Eligible Separate Accounts") of insurance companies ("Participating Insurance Companies"); and

WHEREAS, such Participating Insurance Companies issue, among other products, variable life insurance and annuity products ("Variable Products") whose net premiums, contributions or

other consideration may be allocated to Eligible Separate Accounts for investment in the Trust; and

WHEREAS, the Trust's shares will not be sold except in connection with such Variable Products or directly to qualified pension and retirement plans ("Qualified Plans") or to other eligible investors outside the separate account context ("Eligible Shareholders"); and

WHEREAS, the Trust has adopted a service plan with respect to certain Portfolios as set forth on Schedule A pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plans");

WHEREAS, the Trust desires W&R to act as principal underwriter and distributor of the shares of the Trust; and

WHEREAS, W&R is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended ("Securities Exchange Act"), and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"); and

NOW THEREFORE, W&R and the Trust, in consideration of the promises and undertakings described herein, agree as follows:

I.	APPOINTMENT
The Trust hereby appoints W&R as principal underwriter and distributor of the shares of the Trust, and W&R hereby accepts that appointment.
II.	PARTICIPATION AGREEMENTS
The Portfolios are currently sold to Participating Insurance Companies pursuant to Participation Agreements between and among the Participating Insurance Companies, the Trust and W&R. W&R agrees to act in a manner consistent with the Participation Agreements as currently in effect, as amended or superseded or entered into after the effective date of this Agreement, so long as W&R serves as the principal underwriter of the Trust.
III.	MARKETING AGREEMENTS
W&R may engage in marketing and other promotional activities intended to result in the inclusion of shares of the Trust as investment options under Variable Products and the sale ofshares of the Trust in connection with investments made under such Variable Products. W&R may enter into such agreements as it deems appropriate in connection with such marketing and promotional activities, provided, however, W&R may enter into such agreements only with such broker-dealers and financial intermediaries that are, and whose respective agents or representatives are, duly and appropriately licensed, registered or otherwise qualified for the sale of variable products under any applicable insurance laws and any applicable securities laws of one or more states or other jurisdictions in which variable products may be lawfully sold. W&R's agreement with any such broker-dealer or financial intermediary shall provide, in substance, that the broker-dealer or financial intermediary shall, when required by law, be both registered as a broker-dealer under the Securities Exchange Act and a member of FINRA and shall also agree to comply with all laws and regulations, whether federal or state, and whether relating to insurance, securities or other general areas, including but not limited to the recordkeeping and sales supervision requirements of such laws and regulations.
IV.	COMPENSATION
For services rendered as principal underwriter and distributor, W&R shall receive no compensation from the Trust other than the fees payable by the Trust on behalf of certain Portfolios to W&R pursuant to the 12b-l Plans. W&R may, but need not, pay or charge broker-dealers or financial intermediaries pursuant to the marketing agreements described in Section III hereof.
V.	OBLIGATIONS
	A.	Trust agrees:
		1)	to use its best efforts to register from time to time under the Securities Act of 1933 (the "Securities Act") adequate amounts of its shares for sale to the public through Participating Insurance Companies or directly to Eligible Shareholders and to qualify or to permit W&R to qualify such shares for offering to the public through Participating Insurance Companies or directly to Eligible Shareholders in such states as may from time to time be agreed upon by the Trust and W&R;
		2)	to issue its shares subject to the provisions of its Trust Instrument and By-laws as ordered, as soon as reasonably possible after receipt of the orders, and against payment of the consideration to be received by the Trust from W&R;
		3)	to pay or cause to be paid all expenses incident to the issuance, transfer, registration and delivery of its shares, all taxes in connection therewith, costs and expenses incident to preparing and filing any registration statements and prospectuses and any amendments or supplements to a registration statement or a prospectus, statutory fees incidental to the registration of additional shares with the SEC, statutory fees and expenses incurred in connection with any Blue Sky law qualifications undertaken by or at the request of W&R, and the fees and expenses of the Trust's counsel, accountants or any other experts used in connection with the foregoing; and
		4)	not without the consent of W&R to offer any of its shares for sale directly or to any persons other than W&R, except only
			a)	the reinvestment of dividends and/or distributions or their declaration in shares of the Portfolios, in optional form or otherwise;
			b)	the issuance of additional shares to stock splits or stock dividends;
			c)	sale of shares to another investment or securities holding company in the process of purchasing all or a portion of its assets;
			d)	in connection with an exchange of shares of the Portfolios for shares in another investment or securities holding company;
			e)	Participating Insurance Companies with which the Trust and W&R have entered into Participation Agreements; or
			f)	in connection with the exchange of one Portfolio's shares for shares of another Portfolio of the Trust.
	B.	W&R agrees:
		1)	to remain, during the term of this Agreement, duly qualified to offer shares of the Trust in all states in which the shares are currently qualified or otherwise authorized for sale;
		2)	in offering shares to comply with the provisions of the Trust Instrument and By-laws of the Trust and with the provisions stated in the Trust's then current prospectus and statement of additional information;
		3)	to timely inform the Trust of any action or proceeding to terminate, revoke or suspend W&R's registration as a broker-dealer with the SEC, membership in FINRA, or authority with any state securities commission to offer Trust shares; and
		4)	to pay the cost of all sales literature, advertising and other materials which it may at its discretion use in connection with the sale of shares of the Trust, including the cost of reports to the shareholders of the Trust in excess of the cost of reports to existing shareholders and the cost of printing the prospectus(es) furnished to it by the Trust.
VI.	ANTI-MONEY LAUNDERING DELEGATION
	The Bank Secrecy Act, as amended by the USA PATRIOT ACT, requires the Trust to develop, implement and institute an anti-money laundering program ("AML Program"), and the Trust has adopted the AML Program set forth in Schedule 1 hereto; W&R also maintains an anti-money laundering program ("AMLP") to satisfy applicable anti-money laundering requirements relating to broker-dealers, and the Trust wishes to delegate certain aspects of the implementation and operation of the Trust's AML Program to W&R; and W&R desires to accept such delegation.
	A.	Delegation. The Trust hereby delegates to W&R, as agent for the Trust, responsibility for the implementation and operation of the following policies and procedures in connection with the Trust's AML Program, as applicable to W&R's functions as defined in the Agreement: (i) know-your-customer policies; (ii) monitoring accounts and identifying high risk accounts; (iii) policies and procedures for reliance on third parties; (iv) policies and procedures for correspondent accounts for foreign financial institutions and for private banking accounts for non-U.S. persons; (v) no cash policy; (vi) detecting and reporting suspicious activity; and (vii) all related recordkeeping requirements, and W&R accepts such delegation. W&R further agrees to cooperate with the Trust's AML Compliance Officer in the performance of W&R's responsibilities under the AML Program.
	B.	The AML Program. W&R hereby represents and warrants that W&R has received a copy of the Trust's AML Program and undertakes to perform all responsibilities imposed on W&R as a "Service Provider" thereunder. The Trust hereby agrees to provide to W&R any amendment(s) to the AML Program promptly after adoption of any such amendment(s) by the Trust.
	C.	Consent to Examination. W&R hereby consents to: (a) provide to federal examination authorities information and records relating to the AML Program maintained by W&R; and (b) the inspection of W&R by federal examination authorities for purposes of the AML Program.
	D,	Anti-Money Laundering Program. W&R hereby represents and warrants that W&R has implemented and enforces an AMLP reasonably designed to comply with laws, regulations and regulatory guidance applicable to the Trust and W&R, and includes, if applicable:
		1)	know-your-customer policies;
		2)	due diligence policies for correspondent accounts for foreign financial institutions and for private banking accounts for non-U.S. persons;
		3)	reasonable internal procedures and controls to detect and report suspicious activities;
		4)	monitoring accounts and identifying high-risk accounts;
		5)	a compliance officer or committee with responsibility for the anti-money laundering program;
		6)	employee training, including that: (i) new employees receive AML training upon the commencement of their employment; and (ii) existing employees receive AML training at the time such employees assume duties that bring them into contact with possible money laundering activities;
		7)	an independent audit function; and
		8)	recordkeeping requirements.
	E.	Delivery of Documents. W&R agrees to furnish to the Trust the following documents:
		1)	a copy of W&R's AMLP as in effect on the date hereof, and any material amendment thereto promptly after the adoption of any such amendment;
		2)	a copy of any deficiency letter sent by federal examination authorities concerning W&R's AMLP; and
		3)	no less frequently than annually, a report on W&R's AMLP that includes a certification to the Trust concerning W&R's implementation of, and ongoing compliance with, its AMLP and a copy of any audit report prepared with respect to W&R's AMLP.
	F.	Reports. W&R will provide periodic reports concerning W&R's compliance with W&R's AMLP and/or the Trust's AML Program at such times as may be reasonably requested by the Trust's Board of Trustees or the Anti-Money Laundering Compliance Officer.
VII.	INDEMNIFICATION
	A.	The Trust agrees with W&R for the benefit of W&R and each person, if any, who controls W&R within the meaning of Section 15 of the Securities Act and each and all and any of them, to indemnify and hold harmless W&R and any such controlling person from and against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, under any other statute, at common law or otherwise, and to reimburse W&R and such controlling persons, if any, for any legal or other expenses (including the cost of any investigation and preparation) reasonably incurred by them or any of them in connection with any litigation whether or not resulting in any liability, insofar as such losses, claims, damages, liabilities or litigation arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or any prospectus or any amendment thereof or supplement thereto or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this indemnity agreement shall not apply to amounts paid in settlement of any such litigation if such settlement is effected without the consent of the Trust or to any such losses, claims, damages, liabilities or litigation arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus or any amendment thereof or supplement thereto, or arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which statement or omission was made in reliance upon information furnished in writing to the Trust by W&R, or any affiliate, agent or representative of W&R, for inclusion in any registration statement or any prospectus or any amendment thereof or supplement thereto. W&R and each such controlling person shall promptly, after the complaint shall have been served upon W&R or such controlling person in any litigation against W&R or such controlling person in respect of which indemnity may be sought from the Trust on account of its agreement contained in this paragraph, notify the Trust in writing of the commencement thereof. The omission of W&R or such controlling person so to notify the Trust of any such litigation shall relieve the Trust from any liability which it may have to W&R or such controlling person on account of the indemnity agreement contained in this paragraph but shall not relieve the Trust from any liability which it may have to W&R or controlling person otherwise than on account of the indemnity agreement contained in this paragraph. In case any such litigation shall be brought against W&R or any such controlling person and W&R or such controlling person shall notify the Trust of the commencement thereof, the Trust shall be entitled to participate in (and, to the extent that it shall wish, to direct) the defense thereof at its own expense but such defense shall be conducted by counsel of good standing and satisfactory to W&R or such controlling person or persons, defendant or defendants in the litigation. The indemnity agreement of the Trust contained in this paragraph shall remain operative and in full force and effect regardless of any investigation made by or on behalf of W&R or any such controlling person and shall survive any delivery of shares of the Trust. The Trust agrees to notify W&R promptly of the commencement of any litigation or proceeding against it or any of its officers or directors of which it may be advised in connection with the issue and sale of its shares.
	B.	Anything herein to the contrary notwithstanding, the agreement in Section A of this Article VII, insofar as it constitutes a basis for reimbursement by the Trust for liabilities (other than payment by the Trust of expenses incurred or paid in the successful defense of any action, suit or proceeding) arising under the Securities Act, shall not extend to the extent of any interest therein of any person who is an underwriter or a partner or controlling person of an underwriter within the meaning of Section 15 of the Securities Act or who, at the date of this Agreement, is a director of the Trust, except to the extent that an interest of such character shall have been determined by a court of appropriate jurisdiction the question of whether or not such interest is against public policy as expressed in the Securities Act.
	C.	W&R agrees to indemnify and hold harmless the Trust and its trustees and such officers as shall have signed any registration statement from and against any and all losses, claims, damages or liabilities, joint or several, to which the Trust or such directors or officers may become subject under the Securities Act, under any other statute, at common law or otherwise, and will reimburse the Trust or such directors or officers for any legal or other expenses (including the cost of any investigation and preparation) reasonably incurred by it or them or any of them in connection with any litigation, whether or not resulting in any liability insofar as such losses, claims, damages, liabilities or litigation arise out of, or are based upon, any untrue statement or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which statement or omission was made in reliance upon information furnished in writing to the Trust by W&R for inclusion in any registration statement or any prospectus, or any amendment thereof or supplement thereto, or which statement was made in, or the alleged omission was from, any advertising or sales literature (including any reports to shareholders used as such) which relate to the Trust. W&R shall not be liable for amounts paid in settlement of any such litigation if such settlement was effected without its consent. The Trust and its trustees and such officers, defendant or defendants, in any such litigation shall, promptly after the complaint shall have been served upon the Trust or any such trustee or officer in any litigation against the Trust or any such trustee or officer in respect of which indemnity may be sought from W&R on account of its agreement contained in this paragraph, notify W&R in writing of the commencement thereof. The omission of the Trust or such trustee or officer to notify W&R of any such litigation shall relieve W&R from any liability which it may have to the Trust or such trustee or officer on account of the indemnity agreement contained in this paragraph, but shall not relieve W&R from any liability which it may have to the Trust or such trustee or officer otherwise than on account of the indemnity agreement contained in this paragraph. In case any such litigation shall be brought against the Trust or any such officer or trustee and notice of the commencement thereof shall have been so given to W&R, W&R shall be entitled to participate in (and, to the extent that it shall wish, to direct) the defense thereof at its own expense, but such defense shall be conducted by counsel of good standing and satisfactory to the Trust. The indemnity agreement of W&R contained in this paragraph shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Trust and shall survive any delivery of shares of the Trust. W&R agrees to notify the Trust promptly of the commencement of any litigation or proceeding against it or any of its officers or trustees or against any such controlling person of which it may be advised, in connection with the issue and sale of the Trust's shares.
	D.	Notwithstanding any provision contained in this Agreement, no party hereto and no person or persons in control of any party hereto shall be protected against any liability to the Trust or its security holders to which they would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of their duties or by reason of their reckless disregard of their obligations and duties under this Agreement.
VIII.	OTHER TERMS
	A.	This Agreement shall not be deemed to limit W&R from acting as underwriter, distributor and/or dealer for any other mutual fund, from engaging in any other aspects of the securities business, whether or not such may be deemed in competition with the sale of shares of the Trust, and to carry on any other lawful business whatsoever.
	B.	Except as expressly provided in Article VII and hereinabove, the agreements herein set forth have been made and are made solely for the benefit of the Trust and W&R, and the persons expressly provided for in Article VII, their respective heirs and successors, personal representatives and assigns, and except as so provided, nothing expressed or mentioned herein is intended or shall be construed to give any person, firm or corporation other than the Trust, W&R and the persons expressly provided for in Article VII any legal or equitable right, remedy or claim under or in respect of this Agreement or any representation, warranty or agreement herein contained. Except as so provided, the term "heirs, successors, personal representatives and assigns" shall not include any purchaser of shares merely because of such purchase.
	C.	This Agreement shall become effective on April 30, 2009 and shall continue in effect, unless terminated as hereinafter provided, for a period of one (1) year and thereafter only if such continuance is specifically approved at least annually by the Board of Trustees, including the vote of a majority of the trustees who are not parties to the Agreement or "interested persons" (as defined in the 1940 Act) or any such party and who have no direct or indirect financial interest in the operation of any 12b-1 Plan or any agreement relating to that 12b-1 Plan, cast in person at a meeting called for the purpose of voting on such approval. This Agreement may be terminated as to a Portfolio by W&R at any time without penalty upon giving the Trust sixty (60) days' written notice (which notice may be waived by the Trust) and may be terminated as to a Portfolio by the Trust at any time without penalty upon giving W&R sixty (60) days' written notice (which notice may be waived by W&R), provided that such termination by the Trust shall be directed or approved by the vote of a majority of the trustees that are not interested persons, or by the vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Portfolio. This Agreement shall automatically terminate in the event of its assignment, the term "assignment" for this purpose having the meaning defined in Section 2(a)(4) of the 1940 Act.
	D.	This Agreement shall be governed and construed in accordance with the laws of Kansas.

           IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers and their corporate seals to be affixed as of the day and year first above written.

		IVY FUNDS VARIABLE INSURANCE
		PORTFOLIOS
		By: /s/Henry J. Herrmann
		Henry J. Herrmann, President
ATTEST:
By:	/s/Mara D. Herrington
	Mara D. Herrington, Secretary
		WADDELL & REED, INC.
		By: /s/Thomas Butch
		Thomas Butch, President
ATTEST:
By:	/s/Wendy J. Hills
	Wendy J. Hills, Secretary

SCHEDULE A*

Ivy Funds VIP Asset Strategy
Ivy Funds VIP Balanced

Ivy Funds VIP Bond

Ivy Funds VIP Core Equity

Ivy Funds VIP Dividend Opportunities
Ivy Funds VIP Energy

Ivy Funds VIP Global Natural Resources
Ivy Funds VIP Growth

Ivy Funds VIP High Income
Ivy Funds VIP International Growth
Ivy Funds VIP International Value
Ivy Funds VIP Micro Cap Growth
Ivy Funds VIP Mid Cap Growth
Ivy Funds VIP Money Market
Ivy Funds VIP Mortgage Securities
Ivy Funds VIP Real Estate Securities
Ivy Funds VIP Science and Technology
Ivy Funds VIP Small Cap Growth
Ivy Funds VIP Small Cap Value
Ivy Funds VIP Value

Ivy Funds VIP Pathfinder Aggressive
Ivy Funds VIP Pathfinder Moderately Aggressive
Ivy Funds VIP Pathfinder Moderate
Ivy Funds VIP Pathfinder Moderately Conservative
Ivy Funds VIP Pathfinder Conservative

*The Trust has adopted a service plan pursuant to Rule 12b-1 under the 1940 Act for each Portfolio with the exception of the Money Market Portfolio.

EX-99.(G)(1)

         Exhibit (g)(1)

ASSIGNMENT AND AMENDMENT OF CUSTODIAN AGREEMENTS

         ASSIGNMENT AGREEMENT AND AMENDMENT (the "Assignment Agreement"), dated as of April 30, 2009, among IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC. (formerly, W&R Target Funds, Inc.), a Maryland corporation, on behalf of each of its series ("Assignor"), IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, a Delaware statutory trust, on behalf of each of its series ("Assignee"), and UMB BANK, N.A. ("Custodian").

         WHEREAS, Assignor, on its own behalf and on behalf of each of its series, and Custodian have entered into a Custodian Agreement, as amended and restated from time to time ("Custodian Agreement");

         WHEREAS, Assignor, which is comprised of more than one series (each, an "Old Fund"), shall be reorganized as a Delaware statutory trust and each Old Fund shall be reorganized as a corresponding separate new series of Assignee (each new series of Assignee that corresponds to an Old Fund, a "New Fund"), all such reorganizations to be effective as of the date hereof;

         WHEREAS, in connection with such reorganizations, Assignor wishes to assign, on its own behalf and on behalf of each of its series its rights and duties under the Custodian Agreement to Assignee, on behalf of its corresponding New Fund(s), and Assignee, on behalf of its respective corresponding New Funds, wishes to succeed to the rights and assume the duties of Assignor under the Custodian Agreement, effective as of the date of hereof;

         WHEREAS, in accordance with Section 9.09 of the Custodian Agreement, Custodian is willing to consent to such assignment of Assignor's rights and delegation of Assignor's duties under the Custodian Agreement to Assignee.

         WHEREAS, in connection with the assignment from Assignor to Assignee, the parties wish to amend the terms of the Custodian Agreement so that, upon the effectiveness of this Assignment Agreement, Assignee shall, on behalf of and with respect to each New Fund, succeed to the rights and responsibilities of the corresponding Old Fund.

         NOW, THEREFORE, the parties hereto agree as follows:

1.	Assignment/Delegation. Effective as of the date of this Assignment Agreement, Assignor, acting on its own behalf and on behalf of each of its series, hereby assigns, transfers and sets over to Assignee, acting on behalf of each corresponding New Fund, the Custodian Agreement and all the rights, title and interest, powers, privileges and remedies of Assignor as to the corresponding Old Fund under the Custodian Agreement. Further, Assignee, acting on behalf of the applicable New Fund, hereby accepts the assignment of the Custodian Agreement as to the corresponding Old Fund and the assignment of all the rights, title and interest, powers, privileges and remedies, as well as all duties, liabilities and obligations, of Assignor under the Custodian Agreement as to the corresponding Old Fund.
2.	Consent by Custodian. As required by Section 9.09 of each Custodian Agreement, Custodian consents to the assignment of the Custodian Agreement and the resulting assignment of rights and duties as set forth in this Assignment Agreement. Further, Custodian releases Assignor from all further obligations and liabilities arising under the Custodian Agreement and acknowledges that Assignor intends to liquidate and dissolve following the reorganizations described above.
3.	Redocumentation. Upon the effectiveness of this Assignment Agreement, in connection with any and all transactions effected on or after the date hereof, all references in the Custodian Agreement to Assignor shall be deemed to refer to Assignee and all references in the Custodian Agreement to an Old Fund shall be deemed to refer to its corresponding New Fund. Except as expressly provided herein, all other terms and conditions of the Custodian Agreement are confirmed in all respects.
4.	Names and Addresses for Communications between Parties. Any information set forth in the Custodian Agreement relating to Assignor's name and address for communications between parties shall be deleted and replaced by the information relating to Assignee set forth below:
		Ivy Funds Variable Insurance Portfolios
		6300 Lamar Avenue
		Overland Park, Kansas 66202
		Attn: Fund Treasurer
		Telephone:          913-236-2000
		Telefax:          913-236-1595
5.	Representations. Each party hereto represents to the others that: (i) this Assignment Agreement does not and will not violate or conflict with its charter or by-laws (or comparable constituent documents), any law, regulation or order of any court or other agency of government applicable to it or any agreement to which it is a party or by which it or any of its property is bound; (ii) its obligations hereunder are legal, valid and binding on it and its assets enforceable in accordance with their terms; and (iii) the person signing this Assignment Agreement for such party is an officer, director, trustee, and/or partner of such party and is authorized and duly empowered to do so.
6.	Governing Law. This Assignment Agreement shall be construed in accordance with and governed by the laws of the State of Missouri, in each case without giving effect to principles of conflicts of law.
7.	Execution in Counterparts. This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same agreement.

         IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be duly executed and delivered as of the date and year first above written.

ASSIGNOR:

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC. (on behalf of itself and each of its series listed on Schedule A attached hereto)

By:	/s/ Mara D. Herrington
Name:	Mara D. Herrington
Title:	Vice President

ASSIGNEE:

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS (on behalf of itself and each of its series listed on Schedule A attached hereto)

By:	/s/ Mara D. Herrington
Name:	Mara D. Herrington
Title:	Vice President

CUSTODIAN:

UMB BANK, N.A.

By:	/s/ Bonnie L. Johnson
Name:	Bonnie L. Johnson
Title:	Vice President

SCHEDULE A

Ivy Funds VIP Asset Strategy

Ivy Funds VIP Balanced

Ivy Funds VIP Bond

Ivy Funds VIP Core Equity

Ivy Funds Dividend Opportunities

Ivy Funds VIP Energy

Ivy Funds VIP Global Natural Resources

Ivy Funds VIP Growth

Ivy Funds VIP High Income

Ivy Funds VIP International Growth

Ivy Funds VIP International Value

Ivy Funds VIP Micro Cap Growth

Ivy Funds VIP Mid Cap Growth

Ivy Funds VIP Money Market

Ivy Funds VIP Mortgage Securities

Ivy Funds VIP Real Estate Securities

Ivy Funds VIP Science and Technology

Ivy Funds VIP Small Cap Growth

Ivy Funds VIP Small Cap Value

Ivy Funds VIP Value

Ivy Funds VIP Pathfinder Aggressive

Ivy Funds VIP Pathfinder Moderately Aggressive

Ivy Funds VIP Pathfinder Moderate

Ivy Funds VIP Pathfinder Moderately Conservative

Ivy Funds VIP Pathfinder Conservative

EX-99.(G)(2)

         Exhibit (g)(2)

ASSIGNMENT AND AMENDMENT OF RULE 17F-5 DELEGATION AGREEMENTS

         ASSIGNMENT AGREEMENT AND AMENDMENT (the "Rule 17f-5 Delegation Assignment Agreement"), dated as of April 30, 2009, among IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC. (formerly, W&R Target Funds, Inc.), a Maryland corporation ("Assignor"), IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, a Delaware statutory trust, on behalf of each of its series ("Assignee"), and UMB BANK, N.A. ("Custodian").

         WHEREAS, Assignor, on its own behalf and on behalf of each of its series, and Custodian have entered into a Rule 17f-5 Delegation Agreement, as amended and restated from time to time ("Rule 17f-5 Delegation Agreement");

         WHEREAS, Assignor, which is comprised of more than one series (each, an "Old Fund"), shall be reorganized as a Delaware statutory trust and each Old Fund shall be reorganized as a corresponding separate new series of Assignee (each new series of Assignee that corresponds to an Old Fund, a "New Fund"), such reorganization to be effective as of the date hereof;

         WHEREAS, in connection with such reorganization, Assignor wishes to assign, on its own behalf or on behalf of each of its series its rights and duties under the Rule 17f-5 Delegation Agreement to Assignee, on behalf of its corresponding New Funds, and Assignee, on behalf of its respective corresponding New Funds, wishes to succeed to the rights and assume the duties of Assignor under the Rule 17f-5 Delegation Agreement, effective as of the date hereof;

         WHEREAS, Custodian is willing to consent to such assignment of Assignor's rights and delegation of Assignor's duties under the Rule 17f-5 Delegation Agreement to Assignee.

         WHEREAS, in connection with the assignments from Assignor to Assignee, the parties wish to amend the terms of the Rule 17f-5 Delegation Agreement so that, upon the effectiveness of this Rule 17f-5 Delegation Assignment Agreement, Assignee shall, on behalf of and with respect to each New Fund, succeed to the rights and responsibilities of the corresponding Old Fund.

         NOW, THEREFORE, the parties hereto agree as follows:

1.	Assignment/Delegation. Effective as of the date of this Rule 17f-5 Delegation Assignment Agreement, Assignor, acting on its own behalf or on behalf of each of its series hereby assigns, transfers and sets over to Assignee, acting on behalf of each corresponding New Fund, the Rule 17f-5 Delegation Agreement and all the rights, title and interest, powers, privileges and remedies of Assignor as to the corresponding Old Fund under the Rule 17f-5 Delegation Agreement. Further, Assignee, acting on behalf of the applicable New Fund, hereby accepts the assignment of Assignor's Rule 17f-5 Delegation Agreement as to the corresponding Old Fund and the assignment of all the rights, title and interest, powers, privileges and remedies, as well as all duties, liabilities and obligations, of Assignor under the Rule 17f-5 Delegation Agreement as to the corresponding Old Fund.
2.	Consent by Custodian. Custodian consents to the assignment of the Rule 17f-5 Delegation Agreement and the resulting assignment of rights and duties as set forth in this Rule 17f-5 Delegation Assignment Agreement. Further, Custodian releases Assignor from all further obligations and liabilities arising under the Rule 17f-5 Delegation Agreement and acknowledges that Assignor intends to liquidate and dissolve following the reorganization described above.
3.	Redocumentation. Upon the effectiveness of this Rule 17f-5 Delegation Assignment Agreement, in connection with any and all transactions effected on or after the date hereof, all references in the Rule 17f-5 Delegation Agreement to Assignor shall be deemed to refer to Assignee and all references in the Rule 17f-5 Delegation Agreement to an Old Fund shall be deemed to refer to its corresponding New Fund. Except as expressly provided herein, all other terms and conditions of the Rule 17f-5 Delegation Agreement are confirmed in all respects.
4.	Representations. Each party hereto represents to the others that (i) this Rule 17f-5 Delegation Assignment Agreement does not and will not violate or conflict with its charter or by-laws (or comparable constituent documents), any law, regulation or order of any court or other agency of government applicable to it or any agreement to which it is a party or by which it or any of its property is bound; (ii) its obligations hereunder are legal, valid and binding on it and its assets enforceable in accordance with their terms; and (iii) the person signing this Rule 17f-5 Delegation Assignment Agreement for such party is an officer, director, trustee, and/or partner of such party and is authorized and duly empowered to do so.
5.	Governing Law. This Rule 17f-5 Delegation Assignment Agreement shall be construed in accordance with and governed by the laws of the State of New York. The parties hereby submit to the exclusive jurisdiction of the Federal courts sitting in the State of New York or the Commonwealth of Massachusetts or of the state courts of either such State or such Commonwealth.
6.	Execution in Counterparts. This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same agreement.

         IN WITNESS WHEREOF, the parties hereto have caused this Rule 17f-5 Delegation Assignment Agreement to be duly executed and delivered as of the date and year first above written.

ASSIGNOR:

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS, INC. (on behalf of itself and each of its series listed in Schedule A attached hereto)

By:	/s/ Mara D. Herrington
Name:	Mara D. Herrington
Title:	Vice President

ASSIGNEE:

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS (on behalf of itself and each of its series listed on Schedule A attached hereto)

By:	/s/ Mara D. Herrington
Name:	Mara D. Herrington
Title:	Vice President

CUSTODIAN:

UMB BANK, N.A.

By:	/s/ Bonnie L. Johnson
Name:	Bonnie L. Johnson
Title:	Vice President

SCHEDULE A

Ivy Funds VIP Asset Strategy

Ivy Funds VIP Balanced

Ivy Funds VIP Bond

Ivy Funds VIP Core Equity

Ivy Funds Dividend Opportunities

Ivy Funds VIP Energy

Ivy Funds VIP Global Natural Resources

Ivy Funds VIP Growth

Ivy Funds VIP High Income

Ivy Funds VIP International Growth

Ivy Funds VIP International Value

Ivy Funds VIP Micro Cap Growth

Ivy Funds VIP Mid Cap Growth

Ivy Funds VIP Money Market

Ivy Funds VIP Mortgage Securities

Ivy Funds VIP Real Estate Securities

Ivy Funds VIP Science and Technology

Ivy Funds VIP Small Cap Growth

Ivy Funds VIP Small Cap Value

Ivy Funds VIP Value

Ivy Funds VIP Pathfinder Aggressive

Ivy Funds VIP Pathfinder Moderately Aggressive

Ivy Funds VIP Pathfinder Moderate

Ivy Funds VIP Pathfinder Moderately Conservative

Ivy Funds VIP Pathfinder Conservative

EX-99.(H)(1)

         Exhibit (h)(1)

TRANSFER AGENCY AGREEMENT

         THIS AGREEMENT, dated as of April 15, 2009, by and between IVY FUNDS VARIABLE INSURANCE PORTFOLIOS (the "Trust"), and Waddell & Reed Services Company ("WRSCO"),

W I T N E S S E T H :

         WHEREAS, The Trust wishes to appoint WRSCO to be its transfer agent with respect to each of its series listed in Appendix A (each, a "Fund") upon, and subject to, the terms and provisions of this Agreement;

         NOW THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties agree as follows:

         A.         Appointment of WRSCO as Transfer Agent; Acceptance.

                  (1)         The Trust hereby appoints WRSCO to act as Transfer Agent for each Fund upon, and subject to, the terms and provisions of this Agreement.

                  (2)         WRSCO hereby accepts the appointment as Transfer Agent for each Fund and agrees to act as such upon, and subject to, the terms and provisions of this Agreement.

                  (3)         WRSCO may appoint an entity or entities approved by the Trust in writing to perform any portion of Agent's duties hereunder (the "Subagent").

         B.         Definitions.

                  (1)         In this Agreement -

                           (a)         The term the "Act" means the Investment Company Act of 1940 as amended from time to time;

                           (b)         The term "account" means the shares of each Fund registered on the books of the Fund in the name of a shareholder under a particular account registration number and includes shares subject to instructions by the shareholder with respect to periodic redemptions and/or reinvestment in additional shares of any dividends payable on said shares;

                           (c)         The term "affiliate" of a person shall mean a person controlling, controlled by, or under common control with that person;

                           (d)         The term "officers' instruction" means an instruction given on behalf of the Trust to WRSCO and signed on behalf of the Trust by any one or more persons authorized to do so by the Trust's Board of Trustees;

                           (e)         The term "Fund" shall mean each separate class of shares of the Trust, as may now or in the future exist;

                           (f)         The term "prospectus" means the prospectus and Statement of Additional Information of the applicable Fund from time to time in effect;

                           (g)         The term "shares" means shares including fractional shares of each Fund, whether or not such shares are evidenced by an outstanding stock certificate issued by the Fund;

                           (h)         The term "shareholder" shall mean the owner of record of shares of a Fund;

                           (i)         The term "share certificate" means a certificate representing shares in the form then currently in use by the Fund.

         C.         Duties of WRSCO.

                  WRSCO shall perform such duties as shall be set forth in this Section C and in accordance with the practice stated in Exhibit A of this Agreement or any amendment thereof, any or all of which duties may be delegated to or performed by one or more Subagents pursuant to Section A (3).

                  (1)         Transfers.

Subject to the provisions of this Agreement WRSCO hereby agrees to perform the following functions as transfer agent for the Fund:

                           (a)         Recording the ownership, transfer, exchange and cancellation of ownership of shares of the Fund on the books of the Trust;

                           (b)         Establishing and maintaining records of accounts;

                           (c)         Computing and causing to be prepared and mailed or otherwise delivered to shareholders payment checks including bank wire transfers and notices of reinvestment in additional shares of dividends, stock dividends or stock splits declared by the Fund on shares and of redemption proceeds due by the Fund on redemption of shares;

                           (d)         Furnishing to shareholders such information as may be reasonably required by the Fund, including appropriate income tax information;

                           (e)         Addressing and mailing to shareholders prospectuses, annual and semi-annual reports and proxy materials for shareholder meetings prepared by or on behalf of the Fund;

                           (f)         Maintaining such books and records relating to transactions effected by WRSCO pursuant to this Agreement as are required by the Act, or by rules or regulations thereunder, or by any other applicable provisions of law, to be maintained by the Trust or its transfer agent with respect to such transactions; preserving, or causing to be preserved, any such books and records for such periods as may be required by any such law, rule or regulation; furnishing the Trust such information as to such transactions and at such time as may be reasonably required by it to comply with applicable laws and regulations; and

                           (g)         Providing such services and carrying out such responsibilities on behalf of the Trust, or imposed on WRSCO as the Fund's transfer agent, not otherwise expressly provided for in this Section C, as may be required by or be reasonably necessary to comply with any statute, act, governmental rule, regulation or directive or court order, including, without limitation, the requirements imposed by the Tax Equity and Fiscal Responsibility Act of 1982 and the Income and Dividend Tax Compliance Act of 1983 relating to the withholding of tax from distributions to shareholders.

                  (2)         Correspondence.

                  WRSCO agrees to deal with and answer all correspondence from or on behalf of shareholders relating to its functions under this Agreement.

         D.         Compensation of WRSCO.

                  With respect to each Fund, the Trust agrees to reimburse WRSCO for the following "out-of-pocket" expenses of WRSCO within five days after receipt of an itemized statement of such expenses, to the extent that payment of such expenses has not been or is not to be made directly by the Trust: (i) costs of stationery, appropriate forms, envelopes, checks, postage, printing (except cost of printing prospectuses, annual and semi-annual reports and proxy materials) and mailing charges, including returned mail and proxies, incurred by WRSCO with respect to materials and communications sent to shareholders in carrying out its duties to the Trust under this Agreement; (ii) long distance telephone costs incurred by WRSCO for telephone communications and microfilm and storage costs for transfer agency records and documents; (iii) costs of all ancillary and supporting services and related expenses (other than insurance premiums) reasonably required by and provided to WRSCO, other than by its employees or employees of an affiliate, with respect to functions of the Trust being performed by it in its capacity as Transfer Agent hereunder, including legal advice and representation in litigation to the extent that such payments are permitted by Section G of this Agreement and charges to WRSCO made by any Subagent; (iv) costs for special reports or information furnished on request pursuant to this Agreement and not specifically required by WRSCO by Section C of this Agreement; and (v) reasonable costs and expenses incurred by WRSCO in connection with its duties of WRSCO described in Section (C)(1)(i). In addition, the Trust agrees to promptly pay over to WRSCO any fees or payment of charges it may receive from a shareholder for services furnished to the shareholder by WRSCO.

                  Services and operations incident to the sale and distribution of each Fund's shares, including sales communications, confirmations of investments (not including reinvestment of dividends) and the clearing or collection of payments will not be for the account or at the expense of the Trust under this Agreement.

         E.         Right of Trust to Inspect Records, etc.

                  The Trust will have the right under this Agreement to perform on site inspection of records and accounts and to perform audits directly pertaining to the Trust's shareholder accounts serviced by WRSCO hereunder at WRSCO's or any Subagent's facilities in accordance with reasonable procedures at the frequency necessary to assure proper administration of the Agreement. WRSCO will cooperate with the Trust's auditors or representatives of appropriate regulatory agencies and furnish all reasonably requested records and data.

         F.         Insurance.

                  WRSCO now has the insurance coverage described in Exhibit B, attached hereto, and WRSCO will not take any action to eliminate or decrease such coverage during the term of this Agreement without receiving the approval of the Trust in advance of any change, except WRSCO, after giving reasonable notice to the Trust, may eliminate or decrease any coverage if the premiums for such coverage are substantially increased.

         G.         Standard of Care; Indemnification.

                  WRSCO will at all times exercise due diligence and good faith in performing its duties hereunder. WRSCO will make every reasonable effort and take all reasonably available measures to assure the adequacy of its personnel and facilities as well as the accurate performance of all services to be performed by it hereunder within, at a minimum, the time requirements of any applicable statutes, rules or regulations or as set forth in the prospectus.

                  WRSCO shall not be responsible for, and the Trust agrees to indemnify WRSCO for any losses, damages or expenses (including reasonable counsel fees and expenses) (i) resulting from any claim, demand, action or suit not resulting from WRSCO's failure to exercise good faith or due diligence and arising out of or in connection with WRSCO's duties on behalf of the Trust hereunder; (ii) for any delay, error or omission by reason of circumstances beyond its control, including acts of civil or military authority, national emergencies, labor difficulties (except with respect to the WRSCO's employees), fire, mechanical breakdown beyond its control, flood or catastrophe, acts of God, insurrection, war, riots, terrorist attacks, or failure beyond its control of transportation, communication or power supply; or (iii) for any action taken or omitted to be taken by WRSCO in good faith in reliance on (a) the authenticity of any instrument or communication reasonably believed by it to be genuine and to have been properly made and signed or endorsed by an appropriate person, (b) the accuracy of any records or information provided to it by the Trust, (c) any authorization or instruction contained in any officers' instruction, or (d) with respect to the functions performed for the Trust listed in Section C(1) of this Agreement, any advice of counsel approved by the Trust who may be internally employed counsel or outside counsel, in either case for the Trust and/or WRSCO.

                  In order for the rights to indemnification to apply, it is understood that if in any case the Trust may be asked to indemnify or hold WRSCO harmless, the Trust shall be advised of all pertinent facts concerning the situation in question, and it is further understood that WRSCO will use reasonable care to identify and notify the Trust promptly concerning any situation which presents or appears likely to present a claim for indemnification against the Trust. The Trust shall have the option to defend WRSCO against any claim which may be the subject of this indemnification and, in the event that the Trust so elects, it will so notify WRSCO and thereupon the Trust shall take over complete defense of the claim and WRSCO shall sustain no further legal or other expenses in such situation for which WRSCO shall seek indemnification under this paragraph. WRSCO will in no case confess any claim or make any compromise in any case in which the Trust will be asked to indemnify WRSCO except with the Trust's prior written consent.

         H.         Term of the Agreement; Taking Effect; Amendments.

                  This Agreement shall become effective as to each Fund on April 30, 2009 and shall continue, unless terminated as hereinafter provided, for a period of one year and from year to year thereafter, provided that such continuance shall be specifically approved as provided below.

                  This Agreement shall go into effect, or may be continued, or may be amended or a new agreement between the Trust and WRSCO covering the substance of this Agreement may be entered into only if the terms of this Agreement, such continuance, the terms of such amendment or the terms of such new agreement have been approved by the Board of Trustees of the Trust, including the vote of a majority of the trustees who are not "interested persons," as defined in the Act, of either party to this Agreement or of Waddell & Reed Investment Management Company, cast in person at a meeting called for the purpose of voting on such approval. Such a vote is hereinafter referred to as a "disinterested trustee vote."

                  Any disinterested trustee vote shall include a determination that: (i) the Agreement, amendment, new agreement or continuance in question is in the best interests of each affected Fund and its shareholders; (ii) the services to be performed under the Agreement, the Agreement as amended, new agreement or agreement to be continued, are services required for the operation of the Fund; (iii) WRSCO can provide services the nature and quality of which are at least equal to those provided by others offering the same or similar services; and (iv) the fees for such services are fair and reasonable in the light of the usual and customary charges made by others for services of the same nature and quality.

         I.         Termination.

                  (1)         This Agreement may be terminated as to a Fund by WRSCO at any time without penalty upon giving the Trust 120 days' written notice (which notice may be waived by the Trust) and may be terminated by the Trust at any time without penalty upon giving WRSCO sixty (60) days' written notice (which notice may be waived by WRSCO), provided that such termination by the Trust shall be directed or approved by the vote of a majority of the Board of Trustees of the Trust in office at the time or by the vote of a majority (as defined in or under the Act) of the outstanding voting securities of the Fund.

                  (2)         On termination, WRSCO will deliver to the Trust or its designee all files, documents and records of the affected Fund used, kept or maintained by WRSCO in the performance of its services hereunder, including such of the Fund's records in machine readable form as may be maintained by WRSCO, as well as such summary and/or control data relating thereto used by or available to WRSCO.

                  (3)         In the event of any termination which involves the appointment of a new transfer agent, including the Trust acting as such on its own behalf, the Trust shall have the non-exclusive right to the use of the data processing programs used by WRSCO in connection with the performance of its duties under this Agreement without charge.

                  (4)         In addition, on such termination or in preparation therefore, at the request of the Trust and at the Trust's expense WRSCO shall provide to the extent that its capabilities then permit such documentation, personnel and equipment as may be reasonably necessary in order for a new agent or the Trust to fully assume and commence to perform the agency functions described in this Agreement with a minimum disruption to each affected Fund's activities.

         J.         Construction; Governing Law.

                  The headings used in this Agreement are for convenience only and shall not be deemed to constitute a part hereof. Whenever the context requires, words denoting singular shall be read to include the plural. This Agreement and the rights and obligations of the parties hereunder, shall be construed and interpreted in accordance with the laws of the State of Kansas, except to the extent that the laws of the State of Delaware apply with respect to share transactions.

         K.         Representations and Warranties of Agent.

                  WRSCO represents and warrants that it is a corporation duly organized and existing and in good standing under the laws of the State of Missouri, that it is duly qualified to carry on its business in the State of Kansas and wherever its duties require, that it has the power and authority under laws and by its Articles of Incorporation and Bylaws to enter into this Transfer Agency Agreement and to perform the services contemplated by this Agreement.

         L.         Entire Agreement.

                  This Agreement and the Exhibits annexed hereto constitutes the entire and complete agreement between the parties hereto relating to the subject matter hereof, supersedes and merges all prior discussions between the parties hereto, and may not be modified or amended orally.

                  IN WITNESS WHEREOF, the parties have hereto caused this Agreement to be duly executed on the day and year first above written.

		IVY FUNDS VARIABLE INSURANCE PORTFOLIOS
		By:	/s/ Henry J. Herrmann
			Henry J. Herrmann, President
ATTEST:
By:	/s/ Mara Herrington
	Mara Herrington, Secretary
		WADDELL & REED SERVICES COMPANY
		By:	/s/ Michael D. Strohm
			Michael D. Strohm, President
ATTEST:
By:	/s/ Wendy J. Hills
	Wendy J. Hills, Secretary

APPENDIX A

List of Funds

Ivy Funds VIP Asset Strategy

Ivy Funds VIP Balanced

Ivy Funds VIP Bond

Ivy Funds VIP Core Equity

Ivy Funds VIP Dividend Opportunities

Ivy Funds VIP Energy

Ivy Funds VIP Global Natural Resources

Ivy Funds VIP Growth

Ivy Funds VIP High Income

Ivy Funds VIP International Growth

Ivy Funds VIP International Value

         Ivy Funds VIP Micro Cap Growth

Ivy Funds VIP Mid Cap Growth

Ivy Funds VIP Money Market

Ivy Funds VIP Mortgage Securities

Ivy Funds Real Estate Securities

Ivy Funds VIP Science and Technology

Ivy Funds VIP Small Cap Growth

Ivy Funds VIP Small Cap Value

Ivy Funds VIP Value

Ivy Funds VIP Pathfinder Aggressive

Ivy Funds VIP Pathfinder Moderately Aggressive

Ivy Funds VIP Pathfinder Moderate

Ivy Funds VIP Pathfinder Moderately Conservative

Ivy Funds VIP Pathfinder Conservative

EXHIBIT A

A.         DUTIES IN SHARE TRANSFERS AND REGISTRATION

         1.         WRSCO in carrying out its duties shall follow general commercial practices and the Rules of the Stock Transfer Association, Inc. except as they may conflict or be inconsistent with the specific provisions of the Trust Instrument and Bylaws, prospectus, applicable Federal and state laws and regulations and this Agreement.

         2.         WRSCO shall not require that the signature of the appropriate person be guaranteed, witnessed or verified in order to effect a redemption, transfer, exchange or change of address except as may from time to time be directed by the Fund as set forth in an officers' instruction. In the event a signature guarantee is required by the Fund, WRSCO shall not inquire as to the genuineness of the guarantee.

B.         The practices, procedures and requirements specified in A above may be modified, altered, varied or supplemented as from time to time may be mutually agreed upon by the Fund and WRSCO and evidenced on behalf of the Fund by an officers' instruction. Any such change shall not be deemed to be an amendment to the Agreement within the meaning of Section H of the Agreement.

EXHIBIT B
					Bond or
Name of Bond				Policy No.	Insurer
------------				---------	--------
Investment Company				87015108B	ICI
Blanket Bond Form					Mutual
					Insurance
					Company
	Fidelity		$31,500,000
	Audit Expense		50,000
	On Premises		31,500,000
	In Transit		31,500,000
	Forgery or Alteration		31,500,000
	Securities		31,500,000
	Counterfeit Currency		31,500,000
	Uncollectible Items of
		Deposit	25,000
	Phone-Initiated Transactions		31,500,000
	Computer Security		31,500,000
Directors and Officers/				87015108D	ICI
Errors and Omissions Liability					Mutual
Insurance Form					Insurance
	Total Limit		$30,000,000		Company
Blanket Lost Instrument Bond (Mail Loss)				30S100639551	Travelers
Blanket Undertaking Lost Instrument
	Waiver of Probate			42SUN339806	Hartford
					Casualty
					Insurance
Effective December 1, 2008

EX-99.(H)(2)

Exhibit (h)(2)          

ACCOUNTING SERVICES AGREEMENT

         THIS AGREEMENT, effective April 30, 2009, is entered into by and between Ivy Funds Variable Insurance Portfolios ("Trust"), a Delaware statutory Trust, and Waddell & Reed Services Company, a Missouri corporation ("WRSCO").

WITNESSETH:

         WHEREAS, the Trust wishes to appoint WRSCO to be its Accounting Services Agent and to perform certain administrative services with respect to each of its series listed in Appendix A (each, a "Fund") upon and subject to the terms and provisions of this Agreement;

         NOW THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties agree as follows:

         A.         Appointment of WRSCO as Accounting Services Agent for the Trust; Acceptance.

                  (1) The Trust hereby appoints WRSCO to act as Accounting Services Agent for the Funds upon and subject to the terms and provisions of this Agreement.

                  (2) WRSCO hereby accepts the appointment as Accounting Services Agent for the Funds and agrees to act as such, upon and subject to the terms and provisions of this Agreement.

         B.         Duties of WRSCO.

                  WRSCO shall perform such duties as set forth in this Paragraph B as agent for and on behalf of the Trust.

                  (1) WRSCO shall at its expense provide bookkeeping and accounting services and assistance, including, in particular, the following administrative services as are required by the Funds:

1. maintaining the registration or qualification of the Funds and their shares under state "Blue Sky" or securities laws and regulations, provided that the Funds shall pay all related filing fees and registration or qualification fees;
2. record each current day's trading activity and such other proper bookkeeping entries as are necessary for determining that day's net asset values for the Funds, including pricing daily the value of shares of each Fund;
3. assisting the Funds and third-party solicitors (if any) in connection with soliciting and gathering shareholder proxies;
4. preparing the Funds' U.S. Federal, state and local income tax returns, provided that the Funds shall pay all charges for services and expenses of the Funds' independent accountants in reviewing such returns;
5. preparing the financial information for the Funds' prospectuses, statements of additional information and periodic reports to shareholders, provided that the Funds shall pay all charges for services and expenses of the Funds' independent registered public accounting firm;
6. preparing each Fund's Form N-SAR, Form N-CSR, Form N-PX and Form N-Q, or such other forms as the Securities and Exchange Commission (the "SEC") from time to time may prescribe under the Investment Company Act of 1940, as amended (the "1940 Act");
7. in coordination with the Funds' legal counsel preparing and filing with the SEC the Funds' registration statement (including prospectuses and statements of additional information), and any amendments or supplements that may be made from time to time, and preparing and filing with the SEC notices and proxy materials for meetings of shareholders, provided that the Funds shall pay all charges for services and expenses of the Funds' outside legal counsel;
8. assisting in the printing of the Funds' prospectuses, periodic reports to shareholders and proxy materials;
9. rendering statements or copies of records for the Funds from time to time as requested by the Trust (see Appendix B);
10. facilitating audits of accounts by the Trust's independent registered public accounting firm or by any other auditors employed or engaged by the Trust or by any regulatory body with jurisdiction over the Trust;
11. computing each Fund's net asset value per share and, as applicable, its public offering price, total returns and yields, and notifying the Trust and such other persons as the Trust may reasonably request of the net asset value per share, the public offering price and/or the total return yield; and
12. providing executive, clerical and secretarial personnel competent to carry out the above responsibilities.

                  (2) WRSCO shall maintain and keep current the accounts, books, records, and other documents relating to the Funds' financial and portfolio transactions as may be required by rules and regulations of the SEC adopted under Section 31(a) of the 1940 Act.

                  (3) WRSCO shall cause the subject records of the Funds to be maintained and preserved pursuant to the requirements under the 1940 Act.

                  (4) In pricing daily the value of shares of the Funds, WRSCO may make arrangements with, and obtain the value of portfolio securities from, pricing services or quotation services that are compensated by the Funds directly or indirectly through the placement of portfolio transactions with broker-dealers who provide such valuation or quotation services to WRSCO.

                  (5) WRSCO shall maintain duplicate copies, or information from which copies may be reconstructed, of the records necessary to the preparation of the Funds' financial statements and valuations of its assets. Such duplicate copies or information shall be maintained at a location other than where WRSCO performs its normal duties hereunder so that in the event the records established and maintained pursuant to the foregoing provisions of this Section B are damaged or destroyed, WRSCO shall be able to provide the bookkeeping and accounting services and assistance specified in this Section B.

                  (6) In the event any of WRSCO's facilities or equipment necessary for the performance of its duties hereunder is damaged, destroyed or rendered inoperable by reason of fire, vandalism, riot, natural disaster or otherwise, WRSCO will use its best efforts to restore all services hereunder to the Funds and will not seek from the Funds additional compensation to repair or replace damaged or destroyed facilities or equipment. WRSCO shall also make and maintain arrangements for emergency use of alternative facilities for use in the event of the aforesaid destruction of or damage to its facilities.

         C.         Compensation of WRSCO.

                  For the services performed by WRSCO hereunder, each Fund agrees to pay to WRSCO the amount set forth in Appendix C.

         D.         Right of the Trust to Inspect and Ownership of Records.

         The Trust will have the right under this Agreement to perform on-site inspection of records and accounts, and audits directly pertaining to the Funds' accounting and portfolio records maintained by WRSCO hereunder at WRSCO's facilities. WRSCO will cooperate with the Trust's independent registered public accounting firm or representatives of appropriate regulatory agencies and furnish all reasonably requested records and data. WRSCO acknowledges that these records are the property of the Trust, and that it will surrender to the Trust all such records promptly on request.

         E.         Standard of Care; Indemnification.

                  WRSCO will at all times exercise due diligence and good faith in performing its duties hereunder. WRSCO will make every reasonable effort and take all reasonably available measures to assure the adequacy of its personnel, facilities and equipment as well as the accurate performance of all services to be performed by it hereunder within, at a minimum, the time requirements of any applicable statutes, rules or regulations and in conformity with the Trust's Trust Instrument, By-laws and representations made in the Trust's current registration statement as filed with the SEC.

                  WRSCO shall not be responsible for, and the Trust agrees to indemnify WRSCO for, any losses, damages or expenses (including reasonable counsel fees and expenses) (i) resulting from any claim, demand, action or suit not resulting from WRSCO's failure to exercise good faith or due diligence and arising out of or in connection with WRSCO's duties on behalf of the Funds hereunder; (ii) for any delay, error or omission by reason of circumstances beyond its control, including acts of civil or military authority, national emergencies, labor difficulties (except with respect to WRSCO's employees), fire, mechanical breakdown beyond its control, flood catastrophe, acts of God, insurrection, war, riots or failure beyond its control of transportation, communication or power supply; or (iii) for any action taken or omitted to be taken by WRSCO in good faith in reliance on the accuracy of any information provided to it by the Trust or its Trustees or in reliance on any advice of counsel who may be internally employed counsel or outside counsel for the Trust or advice of any independent accountant or expert employed by the Trust with respect to the preparation and filing of any document with a governmental agency or authority.

                  In order for the rights to indemnification to apply, it is understood that if in any case the Trust may be asked to indemnify or hold WRSCO harmless, the Trust shall be advised of all pertinent facts concerning the situation in question, and it is further understood that WRSCO will use reasonable care to identify and notify the Trust promptly concerning any situation which presents or appears likely to present a claim for indemnification against the Trust. The Trust shall have the option to defend WRSCO against any claim which may be the subject of this indemnification and, in the event that the Trust so elects, it will so notify WRSCO, and thereupon the Trust shall take over complete defense of the claim, and WRSCO shall sustain no further legal or other expenses in such situation for which WRSCO shall seek indemnification under this paragraph. WRSCO will in no case confess any claim or make any compromise in any case in which the Trust will be asked to indemnify WRSCO except with the Trust's prior written consent.

         F.         Term of the Agreement; Taking Effect; Amendments.

                  This Agreement shall become effective as to each Fund on the date hereof and shall continue, unless terminated as hereinafter provided, for a period of one (1) year and from year-to-year thereafter, provided that such continuance shall be specifically approved as provided below.

                  This Agreement shall go into effect, or may be continued, or may be amended, or a new agreement covering the same topics between the Trust and WRSCO may be entered into only as to a Fund if the terms of this Agreement, such continuance, the terms of such amendment or the terms of such new agreement have been approved by the Board of Trustees of the Trust, including the vote of a majority of the trustees who are not "interested persons," as defined in the 1940 Act, of either party to this Agreement, the agreement to be continued, amendment or new agreement, cast in person at a meeting called for the purpose of voting on such approval. Such a vote is hereinafter referred to as a "disinterested trustee vote."

                  Any disinterested trustee's vote shall, in favor of continuance, amendment or execution of a new agreement, include a determination that (i) the Agreement, amendment, new agreement or continuance in question is in the best interests of each affected Fund and its shareholders; (ii) the services to be performed under the Agreement, the Agreement as amended, new agreement or agreement to be continued, are services required for the operation of the Fund; (iii) WRSCO can provide services, the nature and quality of which are at least equal to those provided by others offering the same or similar services; and (iv) the fees for such services are fair and reasonable in the light of the usual and customary charges made by others for services of the same nature and quality.

                  Nothing herein contained shall prevent any disinterested trustee vote from being conditioned on the favorable vote of the holders of a majority of the outstanding voting securities (as defined in or under the 1940 Act) of a Fund.

         G.         Termination.

                  (1) This Agreement may be terminated as to a Fund by WRSCO at any time without penalty upon giving the Trust at least one hundred twenty (120) days' written notice (which notice may be waived by the Trust ) and may be terminated as to a Fund by the Trust at any time without penalty upon giving WRSCO at least sixty (60) days' written notice (which notice may be waived by WRSCO), provided that such termination by the Trust shall be directed or approved by the vote of a majority of the Board of Trustees of the Trust in office at the time or by the vote of the majority of the outstanding voting securities (as defined in or under the 1940 Act) of the Fund.

                  (2) On termination, WRSCO will deliver to the Trust or its designee all files, documents and records of the affected Fund used, kept or maintained by WRSCO in the performance of its services hereunder, including such of the Fund's records in machine readable form as may be maintained by WRSCO, as well as such summary and/or control data relating thereto used by or available to WRSCO.

                  (3) In addition, on such termination or in preparation therefore at the request of the Trust and at the Trust's expense, WRSCO shall provide, to the extent that its capabilities then permit, such documentation, personnel and equipment as may be reasonably necessary in order for a new agent or the Trust to fully assume and commence to perform the agency functions described in this Agreement with a minimum disruption to each affected Fund's activities.

                  (4) This Agreement shall automatically terminate in the event of its assignment, the term "assignment" for this purpose having the meaning defined in Section 2(a)(4) of the 1940 Act and the rules and regulations thereunder of the SEC.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date and year first above written.

		IVY FUNDS VARIABLE INSURANCE PORTFOLIOS
		By:	/s/ Henry J. Herrmann
			Henry J. Herrmann, President
ATTEST:
By:	/s/ Mara Herrington
	Mara Herrington, Secretary
		WADDELL & REED SERVICES COMPANY
		By:	/s/ Michael D. Strohm
			Michael D. Strohm, President
ATTEST:
By:	/s/ Wendy J. Hills
	Wendy J. Hills, Secretary

APPENDIX A

List of Funds

Ivy Funds VIP Asset Strategy

Ivy Funds VIP Balanced

Ivy Funds VIP Bond

Ivy Funds VIP Core Equity

Ivy Funds VIP Dividend Opportunities

Ivy Funds VIP Energy

Ivy Funds VIP Global Natural Resources

Ivy Funds VIP Growth

Ivy Funds VIP High Income

Ivy Funds VIP International Growth

Ivy Funds VIP International Value

Ivy Funds VIP Micro Cap Growth

Ivy Funds VIP Mid Cap Growth

Ivy Funds VIP Money Market

Ivy Funds VIP Mortgage Securities

Ivy Funds VIP Real Estate Securities

Ivy Funds VIP Science and Technology

Ivy Funds VIP Small Cap Growth

Ivy Funds VIP Small Cap Value

Ivy Funds VIP Value

Ivy Funds VIP Pathfinder Aggressive

Ivy Funds VIP Pathfinder Moderately Aggressive

Ivy Funds VIP Pathfinder Moderate

Ivy Funds VIP Pathfinder Moderately Conservative

Ivy Funds VIP Pathfinder Conservative

APPENDIX B

Standard Reports and Availability

         The following reports will be provided to the Trust on a regular basis with availability as indicated:

A.         Daily

         1.         Printed Trial Balance

         2.         Net Asset Value Worksheet

         3.         Cash Forecast

         4.         Yield Computation, if applicable

B.         Weekly - Tax Lot Ledgers

C.         Monthly

         1.         Tax Lot Ledgers as of month-end

         2.         Working Appraisal as on month-end

         3.         Purchase and Sale Journal for the month

         4.         Summary of Gains and Losses on Securities for the month

         5.         Dividend Ledger for the month (Receivable as of month-end and earned)

         6.         Interest Income Analysis for the month (receivable as of month-end and earned)

         7.         Trial Balance as of month-end

         8.         Net Asset Value Worksheet as of month-end

         9.         Open Trades (payable and receivable for unsettled securities transactions)

D.         Annually

         1.         Purchase and Sale Journal for the year

         2.         Summary of Gains and Losses on Securities for the year

         3.         Broker Allocation Report for the year

APPENDIX C

Compensation Schedule

1.         Each Fund, other than a Pathfinder Fund

Each Fund, other than a Pathfinder Fund, agrees to pay to WRSCO for its services under the Agreement an amount payable on the first day of the month as shown on the following table pertinent to the average daily net assets of the Fund during the prior month:

Fund's Average Daily Net Assets for the Month							Monthly Fee
	$	0	-	$	10	million	$	0
	$	10	-	$	25	million	$	958
	$	25	-	$	50	million	$	1,925
	$	50	-	$	100	million	$	2,958
	$	100	-	$	200	million	$	4,033
	$	200	-	$	350	million	$	5,267
	$	350	-	$	550	million	$	6,875
	$	550	-	$	750	million	$	8,025
	$	750	-	$	1.0	billion	$	10,133
	$	1.0 billion and over					$	12,375

In addition, for each class of shares in excess of one, each Fund shall pay to WRSCO a monthly per-class fee equal to 2.5% of the monthly base fee.

Each Fund shall also pay a monthly fee to WRSCO 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 may be voluntarily waived until Fund assets are at least $10 million.

2.         Ivy Funds VIP Pathfinder Aggressive, Ivy Funds VIP Pathfinder Moderately Aggressive, Ivy Funds VIP Pathfinder Moderate, Ivy Funds VIP Pathfinder Moderately Conservative and Ivy Funds VIP Pathfinder Conservative

Each Pathfinder Fund agrees to pay to WRSCO for its services under the Agreement an amount payable on the first day of the month as shown on the following table pertinent to the average daily net assets of the Fund during the prior month:

Fund's Average Daily Net Assets for the Month							Monthly Fee
	$	0	-	$	10	million	$	0
	$	10	-	$	25	million	$	479.00
	$	25	-	$	50	million	$	962.50
	$	50	-	$	100	million	$	1,479.00
	$	100	-	$	200	million	$	2,016.50
	$	200	-	$	350	million	$	2,633.50
	$	350	-	$	550	million	$	3,437.50
	$	550	-	$	750	million	$	4,012.50
	$	750	-	$	1.0	billion	$	5,066.50
	$	1.0 billion and over					$	6,187.50

In addition, for each class of shares in excess of one, each Pathfinders Fund shall pay to WRSCO a monthly per-class fee equal to 1.25% of the monthly base fee.

Each Pathfinder Fund shall also pay a monthly fee to WRSCO 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 may be voluntarily waived until Fund assets are at least $10 million.

EX-99.(I)

Exhibit (i)

April 29, 2009


SECURITIES AND EXCHANGE COMMISSION
100 F Street, NE
Washington, DC 20549

Re:	Ivy Funds Variable Insurance Portfolios
	Post-Effective Amendment No. 49

Dear Sir or Madam:

In connection with the public offering of Trust Shares of Ivy Funds Variable Insurance Portfolios (the Registrant), I have examined such corporate records and documents and have made such further investigation and examination as I deemed necessary for the purpose of this opinion.

It is my opinion that the indefinite number of such Trust Shares covered by the Registrant's Registration Statement on Form N-1A, when issued and paid for in accordance with the terms of the offering, as set forth in the Prospectus and Statement of Additional Information forming a part of the Registration Statement, will be, when such Registration shall have become effective, legally issued, fully paid and non-assessable by the Registrant.

I hereby consent to the filing of this opinion as an Exhibit to the Registration Statement and to the reference to me in such Statement of Additional Information.

Yours truly,



/s/Kristen A. Richards
Kristen A. Richards
Vice President, Assistant Secretary
and Associate General Counsel

EX-99.(J)

Exhibit (j)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Post-Effective Amendment No. 49 to Registration Statement No. 33-11466 on Form N-1A of our report dated February 16, 2009, relating to the financial statements and financial highlights of Ivy Funds Variable Insurance Portfolios, Inc. (to be renamed Ivy Funds Variable Insurance Portfolios on the effective date of this filing), including Ivy Funds VIP Asset Strategy, Ivy Funds VIP Balanced, Ivy Funds VIP Bond, Ivy Funds VIP Core Equity, Ivy Funds VIP Dividend Opportunities, Ivy Funds VIP Energy, Ivy Funds VIP Global Natural Resources, Ivy Funds VIP Growth, Ivy Funds VIP High Income, Ivy Funds VIP International Growth, Ivy Funds VIP International Value, Ivy Funds VIP Micro Cap Growth, Ivy Funds VIP Mid Cap Growth, Ivy Funds VIP Money Market, Ivy Funds VIP Mortgage Securities, Ivy Funds VIP Real Estate Securities, Ivy Funds VIP Science and Technology, Ivy Funds VIP Small Cap Growth, Ivy Funds VIP Small Cap Value, Ivy Funds VIP Value, Ivy Funds VIP Pathfinder Aggressive, Ivy Funds VIP Pathfinder Moderately Aggressive, Ivy Funds VIP Pathfinder Moderate, Ivy Funds VIP Pathfinder Moderately Conservative and Ivy Funds VIP Pathfinder Conservative appearing in the Annual Report on Form N-CSR of Ivy Funds Variable Insurance Portfolios for the fiscal year or periods ended December 31, 2008, and to the references to us under the headings "Financial Highlights" in the Prospectus and "Investment Advisory and Other Services - Custodial and Auditing Services" and "Financial Statements" in the Statement of Additional Information, which are parts of such Registration Statement.

Deloitte & Touche LLP


Kansas City, Missouri
April 24, 2009

EX-99.(M)(1)

Exhibit (m)(1)

IVY FUNDS VARIABLE INSURANCE
PORTFOLIOS SERVICE PLAN

Effective April 30, 2009

This Plan is adopted by Ivy Funds Variable Insurance Portfolios (the "Trust"), on behalf of each series of the Trust other than the Money Market series (each a "Fund") pursuant to Rule  12b-1 under the Investment Company Act of 1940, as amended (the "Act"), to provide for payment by the Trust of certain expenses in connection with the provision of personal services to the owners of variable life insurance policies or variable annuity contracts funded by shares of the Funds ("Policies") and/or maintenance of the accounts of such Policies ("Policyowners"). Payments under the Plan are to be made to Waddell & Reed, Inc. ("W&R").

Service Fee

With respect to each Fund, the Trust is authorized to pay to W&R an amount not to exceed on an annual basis .25 of 1% of the Fund's average net assets as a "service fee" to finance Policyowner servicing by W&R, its affiliated companies, broker-dealers who may sell the Fund's shares and other third parties and to encourage and foster the maintenance of Policyowner accounts. The amounts shall be payable to W&R daily or at such other intervals as the board of trustees may determine.

FINRA Definition

The "service fee" shall be considered a payment made by the Trust for personal service and/or maintenance of Policyowner accounts, as such is now defined by the Financial Industry Regulatory Authority ("FINRA"), provided, however, if FINRA adopts a definition of "service fee" for purposes of Rule 2830 and FINRA Conduct Rules that differs from the definition of "service fee" as presently used, or if FINRA adopts a related definition intended to define the same concept, the definition of "service fee" as used herein shall be automatically amended to conform to the FINRA definition.

Quarterly Reports

W&R shall provide to the board of trustees of the Trust, and the board of trustees shall review, at least quarterly a written report of the amounts so expended of the service fee paid or payable to it under this Plan and the purposes for which such expenditures were made.

Approval of Plan

This Plan shall become effective as to a Fund when it has been approved by a vote of at least a majority of that Fund's outstanding voting securities (as defined in the Act) and by a vote of the board of trustees of the Trust and of the trustees who are not interested persons of the Trust and have no direct or indirect financial interest in the operation of the Plan or any agreement related to this Plan (other than as trustees of the Trust or as Policyowners) ("independent trustees") cast in person at a meeting called for the purposes of voting on such Plan.

Continuance

This Plan shall continue in effect for a period of one (1) year and thereafter from year to year only so long as such continuance is approved by the trustees, including the independent trustees, as specified hereinabove for the adoption of the Plan by the trustees and independent trustees.

Trustee Continuation

In considering whether to adopt, continue or implement this Plan, the trustees shall have a duty to request and evaluate, and W&R shall have a duty to furnish, such information as may be reasonably necessary to an informed determination of whether this Plan should be adopted, implemented or continued.

Termination

This Plan may be terminated as toa Fund at any time by a vote of a majority of the independent trustees of the Trust by a vote of the majority of the outstanding voting securities of that Fund without penalty. On termination, the payment of all service fees shall cease, and the Trust shall have no obligation to W&R to reimburse it for any cost or expenditure it has made or may make to service Policyowner accounts.

Amendments

This Plan may not be amended to increase materially the amount to be spent by a Fund for personal service and/or maintenance of Policyowner accounts without approval of the shareholders of that Fund, and all material amendments of this Plan must be approved in the manner prescribed for the adoption of the Plan as provided hereinabove.

Trustees

While this Plan is in effect, the selection and nomination of the trustees who are not interested persons of the Fund shall be committed to the discretion of the trustees who are not interested persons of the Trust.

Records

Copies of this Plan and reports made pursuant to this Plan shall be preserved as provided in Rule 12b-1(f) under the Act.

EX-99.(P)(1)

         Exhibit (p)(1)

CODE OF ETHICS

FOR

ADVANTUS CAPITAL MANAGEMENT, INC.

AND AFFILIATES

I. PURPOSE AND CONSTRUCTION.

         This Code of Ethics ("Code") is adopted by Advantus Capital Management, Inc. (the "Adviser"), Securian Financial Services, Inc. ("Securian"), Advantus Series Fund, Inc. (the "Series Fund") (together with the Adviser, Securian and the Series Fund, the "Covered Entities") to set forth their policy with regard to conduct by their officers, directors and employees and in an effort to comply with and prevent violations of Section 17 of the Investment Company Act of 1940 (the "Investment Company Act"), Section 15(f) of the Securities Exchange Act of 1934 and Section 204A of the Investment Advisers Act of 1940 (the "Investment Advisers Act"). The focus of this Code is to set forth the standards of ethical conduct expected from employees, officers and directors and to restrict and prevent the investment activities by persons with access to certain information that might be harmful to the interests of the Covered Entities or which might enable such persons to profit illicitly from their relationship with the Covered Entities.

II. STATEMENT OF GENERAL ETHICAL PRINCIPLES.

A.	Individuals covered by this Code will at all times conduct themselves with integrity and distinction, putting first the interests of the clients of the Covered Entities (the "Clients" and each a "Client").
B.	This Code is based on the principle that the individuals covered by this Code owe a fiduciary duty to Clients to conduct their Personal Securities Transactions in a manner which does not interfere with portfolio transactions and in such a manner as to avoid any actual or potential conflict of interest or abuse of such person's position of trust and responsibility, or otherwise take inappropriate advantage of such person's position in relation to the Covered Entities. Individuals covered by this Code must adhere to this general principle as well as comply with the Code's specific provisions. It bears emphasis that technical compliance with the Code's procedures will not automatically insulate from scrutiny, activities which show a pattern of abuse of the individual's fiduciary duties.
C.	All persons covered by this Code must comply with all applicable Federal securities laws.

III. RESTRICTIONS.

A.	Nondisclosure of Information. An Access Person shall not divulge to any person, contemplated or completed securities transactions of Client, except in the performance of his or her duties. This prohibition shall not apply if such information previously has become a matter of public knowledge.
B.	Section 17(d) Limitations. No Affiliated Person of the Series Fund or Securian or any Affiliated Person of such person or Securian, acting as principal, shall effect any transaction in which the Series Fund, or a company controlled by the Series Fund, is a joint or a joint and several participant with such person, Securian or Affiliated Person, in contravention of such rules and regulations as the Securities and Exchange Commission (the "SEC") may prescribe under Section 17(d) of the Investment Company Act for the purpose of limiting or preventing participation by the Series Fund or controlled companies on a basis different from or less advantageous than that of such other participant.
C.	Proscribed Activities Under Rule 17j-1(b). Rule 17j-1(b) under the Investment Company Act provides:

It shall be unlawful for any Affiliated Person of or principal underwriter for the Series Fund, or any Affiliated Person of the Adviser or principal underwriter for the Series Fund, in connection with the purchase or sale, directly or indirectly, by such person of a Security Held or to be Acquired (as defined in Section IX) by the Series Fund:

1. To employ any device, scheme or artifice to defraud the Series Fund;
2. To make to the Series Fund any untrue statement of a material fact or omit to state to the Series Fund a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;
3. To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any the Series Fund; or
4. To engage in any manipulative practice with respect to the Series Fund.

                  Any violation of Rule 17j-1(b) shall be deemed to be a violation of this Code.

A.	Covenant to Exercise Best Judgment. An Access Person shall act on his or her best judgment in effecting, or failing to effect, any transaction and such Access Person shall not take into consideration his or her personal financial situation in connection with decisions regarding portfolio transactions.
B.	Limitations on Personal Securities Transactions.

1.	No Personal Securities Transactions without Prior Approval. No Access Person shall engage in a Personal Securities Transaction without pre-clearance.
	a.	Prior to effecting any Personal Securities Transaction, except as provided in Paragraph b. below, an Access Person shall secure pre-clearance utilizing the procedures set forth in (i) or (ii) below.

1. Manual Pre-Clearance.
   An Access Person shall notify the Chief Compliance Officer of the Adviser, or his or her designee, of the proposed transaction, and shall provide the name of the issuer, the title or type of Security, the number of shares and the price per share or the principal amount of the transaction. The Chief Compliance Officer of the Adviser, or his or her designee, shall, after investigation, determine that such proposed transaction would or would not be consistent with the specific limitations of Section III.E. and with this Code generally.
   
   The conclusion of the Chief Compliance Officer of the Adviser, or his or her designee, shall be promptly communicated to the person making such request. The Chief Compliance Officer of the Adviser, or his or her designee, shall make written records of actions under this Section, which records shall be maintained and made available in the manner required by Rule 17j-1(f).
   
2. E-Mail Based Prior Clearance.
   
   As an alternative to manual pre-clearance set forth above, an Access Person may utilize the Lotus Notes based Trade Approval System ("TAS") to pre-clear Personal Securities Transactions. An Access Person who has undergone TAS training and has had TAS installed on their computer is called a "User."
   
   The User will enter the proposed Personal Securities Transaction on TAS. The User will enter the security ticker symbol and other information required by TAS. TAS searches all applicable restricted lists based on the security ticker symbol. The User has the responsibility for determining that the security ticker symbol is accurate. If the proposed Personal Securities Transaction clears the restricted lists, the User will forward the proposed trade to the applicable trading desk for further clearance. Approval or rejection of each proposed Personal Securities Transaction will be made by e-mail notification to the mailbox of the User. The User will be required to enter information as to whether the trade is executed or not executed and the price at which it was executed.
   
   In utilizing TAS, the User is required to make certifications with regard to the transaction as set forth on TAS. For each proposed Personal Securities Transaction the User has the responsibility to enter the information correctly and ensure the accuracy of each of these statements. Failure to enter the correct security ticker symbol or to ensure that each certification is correct may result in disciplinary action being taken against the User in accordance with the provisions of the Code. Records of actions under this section shall be maintained and made available in the manner required by Rule l7j-l(f).
   

b. Personal Securities Transactions in the following securities do not require prior approval pursuant to this section:

1. Direct obligations of the Government of the United States (transactions in securities that are indirect obligations of the U.S. Government such as securities of the Federal National Mortgage Association are not exempted);
   
2. Shares issued by open-end investment companies;
   
3. Bankers' acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements;
   
4. Shares issued by unit investment trusts that are invested exclusively in one or more open-end funds;
   
5. Shares issued by a Reportable Fund;
   
6. Exchange traded funds and options on exchange traded funds; or
7. Securities held or to be held in Non-influence and non-control accounts.

2. Limitations Related to Time of Transactions.

a.	No Access Person shall engage in a Personal Securities Transaction involving any Security which, with respect to any Client, has been purchased or sold within the most recent 7 calendar days or which has a pending "buy" or "sell" order.
b.	No Access Person who is a portfolio manager or analyst shall engage in a Personal Securities Transaction involving any Security which, with respect to Client they manage or make recommendations for, is being considered for purchase or sale within the next 7 calendar days.
c.	The restrictions contained in paragraphs a. and b. above will not apply if any such Security:

1. is no longer held by any Client as a result of a sale within the most recent 7 calendar days (in which case such Security may be sold the next day following the completion of such a transaction by a Client), or
   
2. is purchased or sold on any day, and/or the previous 7 calendar days, solely by one or more Clients which track the performance of an index.

d.	No Access Person shall profit from the purchase and sale, or sale and purchase, of the same (or an equivalent) Security in a Personal Securities Transaction within sixty calendar days.
e.	The following Personal Securities Transactions are not subject to the limitations set forth in Paragraphs a., b. and d. above:

1. Transactions in Securities held or to be held in Non-influence and non-control accounts;
2. Transactions in Securities which are not eligible for purchase or sale by any Reportable Fund;
   
3. Transactions effected pursuant to an automatic dividend reinvestment plan;
   
4. Transactions effected upon the exercise or rights issued by an issuer pro rata to all holders of a class of its Securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired;
   
5. Transactions effected in any exchange traded or open-end investment option or fund.

3.	Initial Public Offering Limitations. No Access Person shall engage in any Personal Securities Transaction that involves the purchase of a Security which is part of an Initial Public Offering.
4.	Limited Offering Limitations.

a.	No Access Person shall engage in any Personal Securities Transaction that involves a Limited Offering of Securities without the express prior approval of the Chief Compliance Officer of the Adviser, or his or her designee in accordance with the procedures set forth in Section III.E.6. In reviewing any such approval request, the Chief Compliance Officer of the Adviser, or his or her designee, shall consider, among other factors, whether the investment opportunity should be reserved for a Client, and whether the opportunity is being offered to the requesting individual by virtue of his or her position with the Covered Entity.
b.	Access Persons who have received approval as set forth above and who continue to hold the Security acquired in such Limited Offering, shall disclose any such continuing investment to the Chief Compliance Officer of the Adviser, or his or her designee, if and when they should become involved in any subsequent consideration of an investment in the same issuer for the portfolio of any Client. In such case the decision to invest in the Securities of such an issuer shall be subject to the approval of the Chief Compliance Officer of the Adviser, or his or her designee.
c.	The Chief Compliance Officer of the Adviser, or his or her designee, shall make written records of actions under this section.

5.	Copies of Brokerage Reports. All Access Persons that engage in a Personal Securities Transaction are required to have the executing broker send a duplicate copy of the confirmation of the transaction to the Chief Compliance Officer of the Adviser or his or her designee at the same time as it is provided to such person. In such event, the Access Person shall also direct such broker to provide duplicate copies of any periodic statements on any account maintained by such person to the Chief Compliance Officer of the Adviser, or his or her designee. If a confirmation is not produced by an executing broker in connection with a Personal Securities Transaction, the Access Person shall provide other evidence of such transaction (e.g. a print out of the computer screen confirming a transaction involving shares issued by a Reportable Fund) to the Chief Compliance Officer.
6.	Waivers. An Access Person may also request prior approval of a Personal Securities Transaction which, on its face, would be prohibited by the limitations of Section III.E. Such person shall provide to the Chief Compliance Officer of the Adviser, or his or her designee, a description of the proposed transaction, including the name of the issuer, the title or type of the Security, the number of shares and the price per share or the principal amount of the transaction, and shall also provide a statement why the applicable limitation should be waived in the case of the proposed transaction. The Chief Compliance Officer of the Adviser, or his or her designee, shall, after investigation, determine that a waiver of the limitations otherwise applicable to the proposed transaction would, may, or would not be consistent with the purpose of this Code. Purchases and sales consistent with the Code shall include those which are only remotely potentially harmful to any Client, those which would be very unlikely to affect a highly institutional market, and those which clearly are not related economically to the securities to be purchased, sold or held by any Client.
7.	Excessive Trading. Access Persons are prohibited from engaging in a pattern of transactions in Securities which are excessively frequent so as to potentially: (i) impact their ability to carry out their assigned responsibilities, (ii) increase the possibility of actual or apparent conflicts, or violate any of the provisions of this Code or other applicable rules and regulations.
8.	Exclusion for Certain Series Fund Officers and Independent Directors. Notwithstanding the above, after notification by the Chief Compliance Officer of the Adviser, an officer of the Series Fund, who is not an employee of a Covered Entity, or an Independent Director of the Series Fund, or any Independent Counsel to the Independent Directors shall not be subject to the requirements of this Section III.E. If any such person obtains information regarding the future purchase or sale of a Security by the Series Fund (or a recommendation of the Adviser pertaining to the future purchase or sale of a Security by the Series Fund), such person shall be subject to the requirements of Section III.E. as to such Security.

F. Obligation to Report Violations. Each Access Person is obligated to report violations of the Code to the Chief Compliance Officer of the Adviser.

IV. REPORTING REQUIREMENTS.

A. Initial and Annual Reports by Personnel. All Access Persons hall submit to the Chief Compliance Officer of the Adviser, or his or her designee, a report of all Securities beneficially owned by them at the time that they commence employment with the Covered Entity (or any affiliated company). This report shall be submitted to the Chief Compliance Officer of the Adviser, or his or her designee, within 10 calendar days of commencement of employment and the information must be current as of a date no more than 45 calendar days prior to the date the report was submitted. All Access Persons shall submit to the Chief Compliance Officer of the Adviser, or his or her designee, within 30 calendar days of the end of each calendar year, a report of all Securities beneficially owned by them as of December 31 of each year or at such other date selected by the Chief Compliance Officer of the Adviser. The initial and annual security holdings report must include the following information:

1. the title and type of the security (including the exchange ticker symbol or CUSIP number), number of shares, or principal amount of each Security in which the Access Person has any direct or indirect Beneficial Ownership;
   
2. the name of the broker, dealer, or bank with whom the Access Person maintains an account in which any securities are held for the direct or indirect benefit of the Access Person. The initial security holdings report should be as of the date the person became an Access Person; and
   
3. the date the report is submitted by the Access Person.
   

B. Quarterly Report. Not later than 30 calendar days after the end of each calendar quarter or such shorter time as directed by the compliance department, each Access Person shall submit a report (as shown in Exhibit A) which shall specify the following information with respect to transactions during the then ended calendar quarter in any Security in which such Access Person has, or by reason of such transaction acquired, any direct or indirect Beneficial Ownership in the Security:

1. the date of transaction, the name of the issuer, the title or type of Security (and as applicable the exchange ticker symbol or CUSIP number), the interest rate and maturity (if applicable), the number of shares, and the principal amount of each Security involved;
2. the nature of the transaction (i.e., purchase, sale, or any other type of acquisition or disposition);
3. the price of the Security at which the transaction was effected;
4. the name of the broker, dealer, or bank with or through whom the transaction was effected;
5. the date that the report is submitted by the Access Person; and
6. any account established in the quarter by the Access Person in which any securities were held during the quarter for the direct or indirect benefit of the Access Person.

		If no transactions have occurred or no accounts have been established in the quarter, the report shall so indicate.
.
	C.	Limitation on Reporting Requirements. Notwithstanding the provisions of Section IV.A. and B., no Access Person shall be required:

1. To make a report with respect to transactions effected pursuant to an automatic investment plan; or
2. To make a quarterly report, initial or annual holdings report, if such person is not an "interested person" of the Series Fund as defined in Section 2(a)(19) of the Investment Company Act, and would be required to make such a report solely by reason of being a director of the Series Fund, except where such director knew, or in the ordinary course of fulfilling his or her official duties as a director of the Series Fund should have known, that during the 15 calendar day period immediately preceding or after the date of the transaction in a Security by the director, such Security was being purchased or sold by the Series Fund or such purchase or sale by the Series Fund was being considered by the Series Fund or the Adviser.

D.	Reports of Violations. In addition to the quarterly reports required under this section, each Access Person promptly shall report any transaction which is, or might appear to be, in violation of this Code. Such report shall be made to the Chief Compliance Officer of the Adviser. Retaliation in any way by an officer, director or employee of a Covered Entity for reporting potential violations of this Code shall be deemed to be an additional violation of the Code.
E.	Filing of Reports. All reports prepared pursuant to this section shall be filed with the person designated by the Chief Compliance Officer of the Adviser to review these materials.
F.	Quarterly Report by Adviser. Each calendar quarter, after the receipt of reports from reporting persons, the Chief Compliance Officer of the Adviser, or his or her designee, shall prepare a report which shall certify, to the best of his or her knowledge, that all persons required to file a report under Section IV.B. have complied with this Code for such prior quarter or, if unable to make such certification, shall describe in detail incomplete reports, violations or suspected violations of this Code.
G.	Dissemination of Reports. Any reports submitted pursuant to this section may be disseminated as may be reasonably necessary to accomplish the purposes of this Code.

V.         RECORDKEEPING REQUIREMENTS

A. The Covered Entities must each at its principal place of business, maintain records in the manner and extent set out in this Section of the Code and must make available to the Securities and Exchange Commission (SEC) or any representative of the SEC at any time and from time to time for reasonable periodic, special or other examination:

1. A copy of the Code that is in effect, or at any time within the past five years was in effect, must be maintained in an easily accessible place;
2. A record of all written acknowledgements regarding receipt and review of the Code for each person who is currently, or within the past five years, was an Access Person.
3. A record of any violation of the Code, and of any action taken as a result of the violation, must be maintained in an easily accessible place for at least five years after the end of the fiscal year in which the violation occurs;
4. A copy of each report made by an Access Person as required, including any information provided in lieu of a quarterly transaction report, see Section IV.A, must be maintained for at least five years after the end of the fiscal year in which the report is made or the information is provided, the first two years in an easily accessible place;
5. A record of all persons, currently or within the past five years, who are or were required to make reports as deemed Access Persons, or who are or were responsible for reviewing these reports, must be maintained in an easily accessible place;
6. A copy of each report defined in Section VI.B must be maintained for at least five years after the end of the fiscal year in which it is made, the first two years in an easily accessible place.

B. The Covered Entities must maintain a record of any decision, and the reasons supporting the decision, to approve the acquisition of Limited Offering securities or to grant any waiver under this Code, for at least five years after the end of the fiscal year in which the approval is given.

VI. FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS

A.

The Board of Directors of each Covered Entity (the "Boards," each a "Board") must approve the Code and any material change to the Code. In the case of the Series Fund Board, a majority of directors who are not interested persons must approve the Code and material changes. The Boards must base approval of a Code and any material changes to the Code on a determination that the Code contains provisions reasonably necessary to prevent Access Persons from engaging in any conduct prohibited by section III.C. Before approving the Code, the Boards must receive a certification from the Covered Entities that each has adopted procedures reasonably necessary to prevent Access Persons from violating its Code. The Boards must approve a material change to the Code no later than six months after adoption of the material change. The Covered Entities must each use reasonable diligence and institute procedures reasonably necessary to prevent violations of its Code.

B.

No less frequently than annually, each Covered Entity must furnish to the Series Fund Board a written report that:

1. Describes any issues arising under the Code since the last report to the Board, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to the material violations; and
   
2. Certifies that the Covered Entities have adopted procedures reasonably necessary to prevent Access Persons from violating the Code.

VII. ENFORCEMENT AND SANCTIONS.

A.	General. Any Access Person or Affiliated Person who is found to have violated any provision of this Code may be permanently dismissed, reduced in salary or position, temporarily suspended from employment, or sanctioned in such other manner as may be determined by the applicable Board in its discretion. If an alleged violator is not affiliated with a Covered Entity, the Chief Compliance Officer of the Adviser shall have the responsibility for enforcing this Code and determining appropriate sanctions. In determining sanctions to be imposed for violations of this Code, any factors deemed relevant, including but not limited to the following:
	1.	the degree of willfulness of the violation;
	2.	the severity of the violation;
	3.	the extent, if any, to which the violator profited or benefited from the violation;
	4.	the adverse effect, if any, of the violation on a Client;
	5.	the market value and liquidity of the class of Securities involved in the violation;
	6.	the prior violations of the Code, if any, by the violator;
	7.	the circumstances of discovery of the violation; and
	8.	if the violation involved the purchase or sale of Securities in violation of this Code, (a) the price at which the Client purchase or sale was made and (b) the violator's justification for making the purchase or sale, including the violator's tax situation, the extent of the appreciation or depreciation of the Securities involved, and the period the Securities have been held.

B.	Violations of Limits on Personal Securities Transaction (Section III.E.)
	1.	At its election, a Covered Entity may choose to treat a transaction prohibited under Section III.E. of this Code as having been made for the account of a Client. Such an election may be made only by (i) in the case of the Series Fund, a majority vote of the directors who are not Affiliated Persons of the Series Fund, and (ii) in the case of the Adviser and Securian, a majority vote of the directors. Notice of an election under this section shall not be effective unless given to the Chief Compliance Officer of the Adviser within 60 calendar days after the Covered Entity is notified of such transaction. In the event of a violation involving more than one Client, recovery shall be allocated between the affected Clients in proportion to the relative net asset values of the Client portfolios as of the date of the violation.
	2.	If securities purchased in violation of Section III.E. of this Code have been sold in a bona fide sale, the Covered Entity shall be entitled to recover the profit made by the seller. If such securities are still owned by the seller, or have been disposed of by such seller other than by a bona fide sale at the time notice of election is given by the Covered Entity, the Covered Entity shall be entitled to recover from the seller the difference between the cost of such Securities to the violator and the fair market value of such Securities on the date the Covered Entity acquired such Securities. If the violation consists of a sale of Securities in violation of Section III.E. of this Code, the Covered Entity shall be entitled to recover from the violator the difference between the net sale price per share received by the violator and the net sale price per share received by the Covered Entity, multiplied by the number of shares sold by the violator. Each violation shall be treated individually and no offsetting or netting of violations shall be permitted. The sums due from a violator under this paragraph shall include sums due to a Covered Entity as a result of a violation by a member of the immediate family of such violator.
	3.	Knowledge on the part of a director or officer of a Covered Entity who is an Affiliated Person of the Adviser of a transaction in violation of this Code shall not be deemed to be notice under Section VII.B.1.
	4.	If a Board determines that a violation of this Code has caused financial detriment to a Client, the Adviser shall use its best efforts, including such legal action as may be required, to cause a person who has violated this Code to deliver to such Client such Securities, or to pay to the Client such sums, as the Covered Entity shall declare to be due under this section, provided that:

a.	the Adviser shall not be required to bring legal action if the amount reasonably recoverable would not be expected to exceed $2,500;
b.	In lieu of bringing a legal action against the violator, the Adviser may elect to pay to the Client such sums as the Client shall declare to be due under this section; and
c.	the Adviser shall have no obligation to bring any legal action if the violator was not an Affiliated Person of a Covered Entity.

C.	Rights of Alleged Violator. A person charged with a violation of this Code shall be informed of the violation in writing and shall have the opportunity to appear before such Board (or such Board's designees) as may have authority to impose sanctions pursuant to this Code, at which time such person shall have the opportunity, orally or in writing, to deny any and all charges, set forth mitigating circumstances, and set forth reasons why the sanctions for any violations should not be severe.
D.	Delegation of Duties. Each Board may delegate its enforcement duties under this section to such officers of any Covered Entity, such as the Chief Compliance Officer of the Adviser, and with such authority as such Board deems appropriate.
E.	Non-exclusivity of Sanctions. The imposition of sanctions hereunder by a Board will not preclude the imposition of additional sanctions by the Board of another Covered Entity and shall not be deemed a waiver of any rights by the Clients.

8. MISCELLANEOUS PROVISIONS.

1. Identification of Access Persons. The Adviser shall, on behalf of the Covered Entities, identify all Access Persons who are under a duty to make reports under Section IV and shall inform such persons of such duty.
2. Maintenance of Records. The Adviser shall, on behalf of the Covered Entities, maintain and make available records as required by Rule 17j-1(d).
3. Annual Certification of Compliance. All Access Persons shall sign a certificate to be presented to the Adviser upon the start of their employment with a Covered Entity and at the end of each calendar year certifying that they have read and understood this Code and any amendments to the Code and acknowledging that they are subject to the terms of the Code. The certificate shall additionally provide that such person has disclosed or reported all Personal Securities Transactions required to be disclosed or reported pursuant to the provisions of this Code.
4. Service as Director. An Access Person may not serve as a director of a publicly traded company without the prior consent of the Chief Compliance Officer of the Adviser, or his or her designee. The Chief Compliance Officer of the Adviser, or his or her designee, shall not provide such authorization unless he or she finds that such board service would be consistent with the interests of the Covered Entities and Clients. Should any person receive such authorization, any investment by a Client in the securities of any such publicly traded company while such person is serving as a director shall be previously approved by the Chief Compliance Officer of the Adviser, or his or her designee.
5. Effective Date. The effective date of this Code shall be February 1, 2005, as amended effective February 1, 2006, June 30, 2006, December 30, 2006 and January 28, 2009.

IX. DEFINITIONS.

A.	"Access Person" shall mean:
	1.	(a) any Employee, or (b) any employee of any company in a control relationship with a Covered Entity who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a Security by a Covered Entity or on behalf of a Client, or whose functions or duties relate to the making of any recommendations with respect to such purchases or sales;
	2.	any natural person in a control relationship to the Covered Entity who obtains information concerning recommendations made to a Client with regard to the purchase or sale of a Security by a Covered Entity or on behalf of a Client;
	3.	any director, officer or general partner of a principal underwriter who has access to nonpublic information regarding any Clients' purchase or sale of Securities, or nonpublic information regarding the portfolio holdings of any Reportable Fund, or who is involved in making securities recommendations to Clients, or who has access to such recommendations that are nonpublic, and in the case of a Covered Entity that provides investment advice as its primary business, any director or officer of such Covered Entity; and
	4.	all directors and officers of the Adviser and the Series Fund.
B.	"Affiliated Person" means:

1. Any person directly or indirectly owning, controlling or holding with power to vote, five percent (5%) or more of the outstanding voting securities of such other person;
2. Any person, five percent (5%) or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other person;
3. Any person directly or indirectly controlling, controlled by, or under common control with, such other person;
4. Any officer, director, partner, co-partner, or employee of such other person;
5. If such other person is an investment company, any investment adviser thereof or any member of any advisory board thereof; and
6. If such other person is an unincorporated investment company not having a board of directors, the depositor thereof.
   

C. "Beneficial Ownership" shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 pursuant to Rule 16a-1 thereunder, except that the determination of direct or indirect beneficial ownership shall apply to all Securities which the person has or acquires Beneficial Ownership includes, but is not limited to those securities owned by a person who directly or indirectly through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the securities. Direct pecuniary interest includes the opportunity directly or indirectly to profit or share in any profit derived from a transaction in the securities. The term indirect pecuniary interest includes but is not limited to securities held by members of a person's immediate family sharing the same household. You are generally considered to be the beneficial owner of securities owned by any of the following:

1. your spouse/domestic partner;
2. minor children of you, your spouse/domestic partner, or both;
3. a trust of which you are a trustee or a beneficiary;
4. any of your relatives, or relatives of your spouse/domestic partner, that share your home;
5. a partnership of which you are a partner;
6. a corporation of which you are a substantial shareholder; or
7. any other person who relies on you to make investment decisions.

D.	"Chief Compliance Officer" means the Compliance Officer of the Adviser.
E.	"Control" shall have the meaning set forth in Section 2(a)(9) of the Investment Company Act and shall include the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. A person who directly or indirectly owns more than 25% of the voting securities of a company is presumed to control such company.
F.	"Employee" means an employee of the Adviser, including employees that meet the definition of "access person" pursuant to Investment Advisers Act Rule 204A-1, or with respect to any other Covered Entity or any other affiliated company, an employee who has been notified that he or she is also subject to this Code.
G.	"Initial Public Offering" means an offering of securities registered with the Commission, the issuer of which, immediately before the registration, was not required to file reports with the Commission.
H.	"Limited Offering" means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule 505, or Rule 506 under the Securities Act of 1933.
I.	"Non-Influence and Non-Control Account" means an account or accounts over which an Access Person has no direct or indirect influence or control. Access Persons wishing to qualify an account as Non-influence and non-control account are required to receive the prior written approval from the Chief Compliance Officer.
J.	"Personal Securities Transaction" means a transaction in a Security which (i) an Access Person effects for his or her own account or for an account over which he or she has Beneficial Ownership, or (ii) that a person who is not an Access Person effects if an Access Person is a Beneficial Owner of such Security (for example, transactions made by an Access Person's spouse).
K.	"Purchase or sale of a Security" also includes the writing of an option to purchase or sell a Security.
L.	"Reportable Fund" means any investment company registered under the Investment Company Act for which a Covered Entity serves as an investment adviser or whose investment adviser or principal underwriter controls, is controlled by or is under common control with a Covered Entity.
M.	"Security" means any security as that term is defined in Section 2(a)(36) of the Investment Company Act, or Section 202(a)(18) of the Investment Advisers Act, and includes, but is not limited to: means any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, reorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. Indirect obligations of the U.S. Government, such as securities of the Federal National Mortgage Association; shares issued by an open-end fund where such shares are issued by a Reportable Fund; investment options underlying a variable annuity, variable life insurance policy, or 401(k) plan, where such investment options include shares issued by a Reportable Fund; and exchange traded funds are also Securities for the purposes of the Code. Security does not include:

1. direct obligations of the Government of the United States;
   
2. bankers acceptances, bank certificates of deposit, commercial paper and
3. high quality short-term debt instruments, including repurchase agreements;
4. shares issued by money market funds;
5. shares issued by open-end funds (other than a Reportable Fund or an exchange traded fund); and
6. shares issued by unit investment trusts that are invested exclusively in one or more open-end funds, none of which are a Reportable Fund.

N. "Security Held or to be Acquired" means any Security which, within the most recent 15 calendar days (i) is or has been held by the Adviser on behalf of a Client, or (ii) is being or has been considered by the Client or Adviser for purchase by or on behalf of a Client, and (iii) includes any option to purchase or sell, and any Security that is exchangeable for or convertible into, any Security that is held by or to be acquired by the Adviser on behalf of a Client.

APPENDIX B

INSIDER TRADING SUPPLEMENT

TO THE

CODE OF ETHICS

         The purpose of this Supplement to the Code is to expand upon the provisions of the Code and on prior group and private discussions regarding the topic of insider trading. If you have any further questions on insider trading, talk with your supervisor, a Covered Entity attorney or the Chief Compliance Officer of the Adviser.

         The term "insider trading" refers to the use of material non-public information to trade securities. It is also a violation of law to communicate material non-public information to others.

         The Code prohibits the use of any special knowledge, personal contacts or access to property or equipment obtained in connection with employment at a Covered Entity for personal gain. The use of inside information for personal securities transactions is clearly included in the prohibition. In addition to personal transactions, insider trading prohibitions apply to securities transactions made on behalf of Clients.

         In recent years several highly publicized insider trading cases involved the merger and acquisition areas of brokerage companies or had some other connection with the underwriting of securities. The Covered Entities are not involved in the merger and acquisition business and do not participate in the sort of securities underwritings that leads to the typical insider trading violations. (e.g., a person knowingly takes secret information about a company and tries to make money by buying or selling securities whose price will be affected by the secret information). However, the insider trading law applies to a very broad range of activity and should be a matter of constant consideration in all security trades.

         We must be vigilant against even inadvertent violations. We seldom come across dramatic inside information in the regular course of our business. What inside information we do come across is so similar in nature to the non-inside information about companies we regularly use that without a constant awareness of inside information issues, a trade could be made which is inadvertently based in part on items of tainted information.

         Who is an insider? The concept of insider includes the officers, directors and employees of the company whose securities are in question. It also includes people who enter into a special confidential relationship with the company and as a result are given access to confidential information about the company. These can include attorneys, accountants, consultants, lenders and the employees of such organizations. We will most often be an insider due to being a lender to a company.

         What is material information? Information for which there is a substantial likelihood that reasonable investors would consider it important to making their investment decisions, or information that is reasonably certain to have a substantial effect on the price of a company's securities is material information.

         What is non-public information? Information that has not yet been communicated to the public through, for example, SEC filings, newspaper reports or wire service reports, is non-public information.

         Prevention and detection of insider trading. We have a continuing obligation to prevent and detect insider trading. An employee who obtains information about a company which appears to be material non-public information should disclose that information to his superior and the Chief Compliance Officer. If it appears that the information is material non-public information, the Compliance department will put the company on the restricted list so that employees cannot trade the stock/bond in personal transactions. Also, the compliance department will inform all employees that they should not trade the securities of the identified company for Client accounts because we possess inside information with respect to the company. These restrictions will be removed when the Chief Compliance Officer determines that the information no longer constitutes material non-public information. Upon request and with the approval of the Chief Compliance Officer, the Chief Compliance Officer may allow the privately negotiated sale, on behalf of Clients, of private placement securities issued by companies on the restricted list to sophisticated institutional investors.

         When deemed appropriate, management may also review trades made in personal accounts and on behalf of a Covered Entity or any of its Clients for evidence of trading in violation of these rules.

         As with all matters concerning ethical conduct, rules and procedures for insider trading are intended to promote the highest ethical standards. It is not sufficient by itself that a course of action is legal. It also must be the right thing to do. There are no transactions important enough to risk the reputation of a Covered Entity or Minnesota Life Insurance Company. All business should be conducted with this in mind.

APPENDIX C

GIFT AND BUSINESS ENTERTAINMENT

SUPPLEMENT TO THE CODE OF ETHICS

         As an employee of a Covered Entity or an employee of an affiliated company who has been notified that he or she is also subject to the Code, you are being paid solely to conduct the business of the company to the best of your ability. Any special knowledge or personal contacts you develop while working should be used for the benefit of the company and should not be considered supplemental compensation or used for personal gain.

         No single rule or group of rules can anticipate every circumstance a person might encounter which has ethical implications. You must use your own judgment as to right and wrong but be guided by the knowledge that you are being relied upon the Covered Entities to preserve and promote their reputation as a trustworthy and honorable institutions. If in doubt, you are encouraged to talk with your superiors, but ultimately you are responsible for your own actions. Certain Access Persons may be required to report business entertainment and gifts on a quarterly or other basis as directed by the Chief Compliance Officer of the Adviser.

         Below are guidelines to assist you in exercising your own good judgment in two areas that commonly produce questions concerning appropriate conduct.

Business Entertainment

         Letting someone pay for a business meal or other entertainment generally is permissible if the primary purpose is related to company business. Avoid situations in which such meals or entertainment may influence or appear to influence your independence of judgment. If you could not provide your host with a similar meal or entertainment and put it on your expense report it is probably inappropriate to accept. A general guideline is that the value of the meals or entertainment from any one source in one calendar year should not exceed $250. If you anticipate that you will or if you actually receive business meals or other entertainment in excess of $250 from any one source in one calendar year, you must notify the Chief Compliance Officer.

Gifts

         You may accept non-cash gifts (or prizes) of nominal value, but any gift that presents or appears to present a conflict of interest should not be accepted. "Nominal value" is defined as a gift worth not more than $100 from any one source in one calendar year. Gifts of cash or securities should never be accepted. When in doubt about a gift, fully disclose the nature of the situation to the Chief Compliance Officer.

Duty to Disclose Conflicts

         All employees shall disclose to their superiors in a timely manner all conflicts of interest and other matters which could reasonably be expected to interfere with their duty to Covered Entities or impair their ability to render unbiased and objective advice.

Sanctions

         Upon discovering a violation of this Code, the Boards of the Covered Entities (or their designee) may impose such sanctions deemed appropriate. A record will be kept of all known violations and any sanctions imposed.

         Any person charged with a violation of the Code shall be informed of the violation and shall have the opportunity to explain his actions prior to the imposition of any sanction.

EX-99.(P)(2)

         Exhibit (p)(2)

Code of Business Conduct and Ethics For Directors, Officers and Employees

IGM Financial Inc.

Investors Group Inc.

Mackenzie Financial Corporation

Investment Planning Counsel Inc.

October, 2008

Contents

1. Purpose and Scope	1
Your Obligations	2
Consequences of Breach	2
Guidance and Further Information	2
Obligation to Report	3
Board Approval of Waivers	3

2. Behaviour in the Workplace	3
Discrimination	4
Harassment	4
Other Unacceptable Behaviour	5
Reporting Procedures and Discipline	5

3. Personal and Confidential Information	5
Personal Information	5
Confidential Information	5

4. Conflicts of Interest and Corporate Opportunities	6
Outside Business Activities	7

5. Insider Trading and Reporting	7
6. Fair Competition	9
Fair Competition	9

7. Payments, Gifts and Entertainment	10
8. Fraud Prevention	10
Reporting, Investigation and Requests for Information or Assistance	11

9. Integrity of Financial Information and Reporting Concerns	11
10. Anti-Money Laundering	12
11. Records Retention	12
12. Communicating With Others	12
Disclosure of Financial and Corporate Information	12
Requests from Regulators	13
Sales Communications	14
Media Contact	14
Personal Communications	14
Political Involvement	14

13. Use of Company Resources	15
14. Intellectual Property	15
Company Intellectual Property	15
Intellectual Property of Others	16
Reporting and Further Guidance	16

Appendices
A. Privacy Guidelines	16
B. Insider Trading and Reporting Policy	16
C. Accounting Policies	16

In this Code of Business Conduct and Ethics, the term:

• "IGM" refers to IGM Financial Inc.
• "Company" refers to:

• IGM and
• Investors Group Inc., Mackenzie Financial Corporation and Investment Planning Counsel Inc., and all of their respective subsidiaries.

• "Compliance Officer" refers to
  • in the case of IGM, the Chief Compliance Officer of IGM and
  • in the case of a particular Company, the senior compliance officer of that Company as designated by the Chief Compliance Officer of IGM.

1. Purpose and Scope

This Code of Business Conduct and Ethics (the "Code") sets out standards of business conduct, which must be followed by all directors, officers and employees of IGM and of the Company. This includes directors, officers and employees of subsidiaries in every jurisdiction in which the Company operates, unless a comparable code, approved by the Boards of Directors of the subsidiary and IGM, applies to such subsidiary.

In certain circumstances, the Company may be represented by third parties in the sale, service or administration of our financial products or services. In addition, the Company may contract with third parties to perform specific business functions or services. The Company has established Business Practices and Procedures to help you determine if this Code, certain provisions of this Code, or other appropriate standards of conduct should apply to such third parties. If you are involved in contracting with third parties, you must familiarize yourself with and adhere to these Business Practices and Procedures.

This Code applies to conduct in the workplace or at work-related activities. In addition, directors, officers and employees are reminded that their conduct outside the workplace may reflect upon the Company.

The Company is committed to integrity and ethical behaviour in all we do. High standards of conduct are important in maintaining the trust and confidence of our clients, shareholders, others with whom we do business, and the communities in which we live and work. All directors, officers and employees are Company representatives, and are expected to conduct themselves with both personal and professional integrity.

The Company is committed to fair dealing with all clients, employees, shareholders, suppliers, competitors and other stakeholders. Unfair dealing includes manipulation, concealment, abuse of privileged information, misrepresentation of material facts and other illegal or unethical practices.

This Code is supplemented by Company policies, procedures, guidelines, practices, standards, handbooks, manuals and job aids that apply to you in your position with the Company, which are referred to in this Code as "Business Practices and Procedures."

Your Obligations

As a condition of your employment or appointment, you must familiarize yourself with, and at all times comply with:

• this Code;
• Business Practices and Procedures applicable to you in your position with the Company; and
• any law or regulation, or external code of conduct, standard or guideline applicable to you in your position with the Company.

It is your responsibility to review all applicable Business Practices and Procedures in their entirety. A complete list of Business Practices and Procedures is available from the Mackenzie Employee Access intranet (link) for your review. Please pay special attention to policies that specifically relate to your role.

This Code may be updated or amended from time to time and any changes will be communicated to you. It is your responsibility to review this Code and any amendments periodically to ensure you are in compliance with it.

Each year, you will be required to acknowledge that you have read this Code, that you understand your obligations under it, and that you agree to comply with it. However, in no event will compliance with this Code create any rights to continued employment or appointment.

Consequences of Breach

If you breach:

• this Code;
• any applicable Business Practice and Procedure; or
• any law or regulation, or external code of conduct, standard or guideline applicable to you in your position with the Company,

you may be subject to disciplinary action, up to and including termination of your employment, appointment or contract with the Company, and you may also be subject to civil and/or criminal sanctions.

Guidance and Further Information

This Code sets out key principles of business conduct that you are required to follow. It cannot address every situation you may encounter. In the event that you encounter a situation for which this Code does not provide specific guidance, the following questions may help you make the right decision:

• Is it fair and ethical?
• Is it legal?
• How would this situation be perceived by a co-worker, a client, a shareholder or a regulator?
• How would this situation be perceived if it were made public?
• Are my actions consistent with the overall values described in this Code?

If you are unsure of the legal, ethical or reputational implications of a particular situation, or would like further guidance related to a matter referenced in this Code, you should contact your Compliance Officer. Directors should consult the General Counsel or the Chairman of the Board of IGM.

For officers and employees, Business Practices and Procedures applicable to your specific business area, department, work unit or position are communicated to you by the person to whom you report (your supervisor). If you have questions or need additional information about any Business Practices and Procedures, you should contact your supervisor.

If you would like further information on the laws and regulations that apply to you in your position with the Company, contact your supervisor, or legal counsel in the Legal Department. Compliance with this Code and the Company's Business Practices and Procedures will help ensure compliance with applicable laws and regulations.

If you believe there is a conflict between this Code, any Business Practices and Procedures, and any legal or regulatory requirements that apply to you in your position with the Company, you should contact your Compliance Officer for guidance.

Obligation to Report

You must promptly report any known or suspected breach of this Code, any applicable law or regulation or external code of conduct, standard or guideline. If you are an officer or an employee, you should report any breach or suspected breach to the person identified in the applicable Business Practices and Procedures, as well as your Compliance Officer. If you are a director, you should report any breach or suspected breach to the General Counsel or the Chairman of the Board of IGM. This applies whether the breach or suspected breach involves you or another person subject to this Code. In addition, you should report to the person noted above if you become aware of or suspect illegal or unethical conduct by any of the Company's clients or others with whom we do business that may affect our business relationship with them or the Company's reputation.

The Company takes all breaches and suspected breaches seriously, and therefore requires that they be investigated and responded to on a timely basis. You must co-operate fully with all such investigations.

The Company will respect the confidentiality of those who raise a concern, subject to its obligation to investigate the concern and any obligation to notify others, including regulators and other authorities and third parties. You may choose to report any concern anonymously; however, you should be aware that the Company's ability to fully investigate an anonymous report may be limited if it is unable to obtain additional information from you.

You should not attempt to conduct an investigation or verify your suspicions yourself. You need not be certain that an action or inaction breaches this Code, or is otherwise inappropriate, before you raise a concern. Genuine concerns, raised in good faith, will be investigated fully and appropriate action will be taken. The Company will not permit any reprisal, retaliation or disciplinary action to be taken against anyone for raising a concern in good faith. It is a breach of this Code to make a mischievous or malicious report.

Board Approval of Waivers

A waiver of the Code will only be granted in exceptional circumstances and only with the written approval of the Board of Directors of IGM. Any waiver will be disclosed in accordance with securities law.

2. Behaviour in the Workplace

The Company is committed to providing a workplace in which all people are treated with dignity and respect. The Company will not tolerate unlawful discrimination or harassment, or other unacceptable behaviour in the workplace. This applies to your interactions with co-workers, clients, service providers and anyone else you encounter in your work. It applies to conduct in the workplace or in work-related activities, including any office, client premises or location in which Company business is conducted, where Company-related business or social activities take place, or where conduct could potentially have an impact on the workplace or workplace relations.

Discrimination

The Company is committed to providing equal opportunities in employment, appointment and advancement based on appropriate qualifications, requirements and performance, and does not tolerate unlawful workplace discrimination. You must not unlawfully discriminate on the basis of, among other things, age, sex, sexual orientation, race, national origin, religion or disability ("Prohibited Grounds of Discrimination").

Harassment

The Company does not tolerate sexual harassment or any other form of harassment. Harassment includes any unwelcome comment or conduct related to a Prohibited Ground of Discrimination that might reasonably be expected to cause a person undue offence, where:

• submission to the conduct is made either an explicit or implicit term or condition of employment or appointment;
• submission to, or rejection of, the conduct by an individual is used as a basis of employment or appointment decisions affecting the individual;
• the conduct has the purpose or effect of unreasonably interfering with an individual's performance; or
• the conduct creates an intimidating, hostile or offensive working environment.

Harassment includes conduct that is abusive, threatening, demeaning or humiliating. Harassment may occur even if no offence was intended. Harassment may occur when an individual hears or sees something that he or she finds offensive, even though the person to whom it was directed does not find it unwelcome, or does not make a complaint. Harassment may occur as a result of one incident or a series of incidents.

The following are some examples of behaviour that may be considered harassment:

• comments or conduct that disparage or ridicule a person's age, sex, sexual orientation, race, national origin, religion or disability;
• mimicking a person's accent, speech or mannerisms based on their age, sex, sexual orientation, race, national origin, religion or disability;
• sexual remarks, jokes, innuendoes or gestures;
• refusing to work with people because of their age, sex, sexual orientation, race, national origin, religion or disability;
• unwelcome advances, invitations, propositions or demands of a sexual nature;
• unnecessary and unwanted physical contact; and
• display or circulation of racist, derogatory, offensive or sexually explicit materials.

Performance management, which deals with performance counseling, discipline or other management actions to address job performance issues or other legitimate employment issues, does not in and of itself constitute harassment.

Other Unacceptable Behaviour

You must treat everyone you deal with in your work for the Company with dignity and respect. The Company will not tolerate threats, violence or other inappropriate behaviour in the workplace.

The use of alcohol and drugs may have a negative impact on your performance and on the Company's reputation. Drug and alcohol impairment on the job will be treated as a serious matter. The use or possession of illegal drugs on Company property is prohibited at all times. In addition, alcohol use is prohibited on Company property, except under special circumstances specifically authorized by the Company, such as when alcohol is served at Company sponsored events.

Reporting Procedures and Discipline

The Company promptly and thoroughly investigates all reports of unlawful discrimination, harassment or other unacceptable behaviour in as confidential a manner as possible.

Where the Company determines that unlawful discrimination, harassment or other unacceptable behaviour has occurred, as with any breach of the Code, it will take appropriate disciplinary action against those responsible, which may include dismissal. The Company will not tolerate retaliation or retribution against anyone for reporting unlawful discrimination, harassment or other unacceptable behaviour in good faith.

If you believe you are being subjected to unlawful discrimination, harassment or other unacceptable behaviour, or if you observe or receive a complaint regarding such behaviour, you should report it to your supervisor or to the Human Resources Department. For additional information on how to report complaints, please consult the applicable Business Practices and Procedures.

3. Personal and Confidential Information

Personal Information

The Company respects the privacy of personal information received from clients, employees, and other individuals. Personal information may include a wide range of information, such as an individual's home address and phone number, family and employment status, health information, and financial information.

You are required to comply with the Privacy Guidelines, which are appended to this Code.

Any questions about Business Practices and Procedures related to the collection, use and disclosure of personal information that apply to you in your position with the Company should be directed to your supervisor, or your Compliance Officer. Any concerns, inquiries or requests related to the Privacy Guidelines should be directed to your Compliance Officer.

Confidential Information

Confidential information of the Company or any aspect of its business activities must not be disclosed to any person, except in the necessary course of business, unless and until such information is made available to the public by the Company.

Examples of confidential information include non-public information about the Company's:

• operations, results, strategies and projections;
• business plans, business processes and client relationships;
• product pricing, and new product and other business initiatives;
• prospective or actual clients, suppliers, re-insurers or advisors;
• technology systems and proprietary products;
• lawyer/client communications; and
• merger, acquisition and divestiture plans,

as well as confidential information the Company receives from other companies and from clients.

You are responsible for protecting any confidential information in your possession against theft, loss, unauthorized disclosure, access or destruction, or other misuse. To protect confidential information, you should:

• only disclose confidential information to others within the Company on a need-to-know basis or when authorized to do so;
• control access to confidential information by, for example, not leaving it unattended in conference rooms or discarding it in a public place;
• refrain from discussing confidential Company business in public where you may be overheard, including in elevators, in restaurants, in taxis or on airplanes; and
• comply with all relevant Business Practices and Procedures that have been established in your business area or office to safeguard confidential information, including those regarding the use of electronic communications, such as cell phones, Internet and e-mail.

Your obligation to protect the Company's confidential information continues after your employment or appointment with the Company has ended. As well, any documents or materials containing confidential information must be returned when you leave the Company.

If you are uncertain about whether specific information must be kept confidential, or what procedures you should use to protect confidentiality, consult your supervisor or contact legal counsel in the Legal Department.

You must also comply with the requirements related to the confidentiality of material non-public information contained in the Insider Trading and Reporting Policy appended to this Code.

4. Conflicts of Interest and Corporate Opportunities

You must act in the best interests of the Company. A conflict of interest arises when your personal interests interfere with the interests of the Company. A conflict of interest -- even the appearance of a conflict of interest -- may be harmful to the Company.

Any conflicts of interest, or potential conflicts of interests, must be disclosed, as set out below. Some conflicts may be permissible if they are disclosed and approved. Otherwise, conflicts must be avoided.

Many situations could give rise to a conflict of interest, or to the appearance of a conflict of interest, such as the following:

• using Company property, information or relationships, including opportunities of the Company, for direct or indirect personal gain;
• working for another organization that competes with the Company, or that has a business relationship with the Company;
• receiving personal discounts or benefits from suppliers, service providers or other business connections of the Company, that are not generally available to others at the Company;
• receiving gifts or entertainment that could influence, or appear to influence, business decisions;
• directing business to a supplier that is owned or managed by a spouse, relative or close friend;
• hiring, supervising or making a promotion decision about a spouse, relative or close friend;
• you or a member of your family having a significant financial interest in a competing business, or in a current or prospective supplier or service provider;
• becoming an insider in any public company by acquiring more than 10% of the voting rights of that company; and,
• accepting an appointment to the board of directors or a committee of any organization whose interests may conflict with the Company's interests, or accepting an appointment to the board of directors of any publicly traded company.

These are just examples. Since it is not possible to list all potential conflicts, you must exercise good judgement and common sense in anticipating situations that may give rise to a conflict of interest.

All potential and actual conflicts of interest, or transactions or relationships that may give

rise to a conflict of interest, must be disclosed immediately. This requirement extends to any interests, transactions or relationships involving you, your immediate family or other individuals in close personal relationships with you.

Employees and officers who believe they may have a conflict of interest, become aware of

the potential for a conflict of interest involving other people, or are uncertain whether the potential for a conflict of interest exists, must immediately notify their Compliance Officer. In these circumstances, directors should contact the General Counsel or the Chairman of the Board of IGM.

Conflicts will be reviewed upon disclosure. When the review is completed, you will receive a written response from your Compliance Officer, the General Counsel or Chairman of the Board of IGM.

Outside Business Activities

Officers and employees should be aware that engaging in outside business activities, such as taking a second job, running your own business, or accepting a directorship may be prohibited. The Company has established Business Practices and Procedures regarding participation in outside business activities. If you plan to engage in any outside business activities, you must familiarize yourself with and adhere to these Business Practices and Procedures.

In all cases, potential conflicts of interest related to those activities should be disclosed to your Compliance Officer. Members of the board of directors should disclose potential conflicts to the General Counsel or the Chairman of the Board of IGM.

5. Insider Trading and Reporting

You must comply with the IGM Financial Inc. Insider Trading and Reporting Policy, which is appended to this Code. In particular, among other things:

• You may not buy, sell or otherwise trade in securities of IGM, or Power Financial Corporation, Power Corporation of Canada, Great-West Lifeco Inc., The Great-West Life Assurance Company, Canada Life Financial Corporation, The Canada Life Assurance Company or Great-West Lifeco Finance (Delaware) LP (the "Public Affiliates") if you possess material non-public information about those companies. This restriction does not apply to certain purchases of IGM common shares specifically referenced in certain share plans such as, but without limitation to, the Employee Share Ownership Plan and transfers of shares where underlying beneficial ownership of the shares does not change. Please refer to the Insider Trading and Reporting Policy for more information. Trading with knowledge of material non-public information is illegal under applicable securities laws.
• You may not disclose material non-public information about those companies (a practice commonly referred to as "tipping") except in the necessary course of business. If you must communicate material non-public information about any of those companies in the necessary course of business, you should generally advise the recipient not to disclose the information without written authorization from the appropriate company, and not to buy, sell or otherwise trade in the securities of the company until such time as the information has been generally disclosed to the public. You should be careful to avoid inadvertently disclosing material non-public information to your spouse, family members, friends and others as this could be considered tipping. Tipping is illegal under applicable securities laws.
• You may not buy, sell or otherwise trade in the securities of a company with which the Company does business, if you possess material non-public information about that company, unless and until such information has become public. In addition, you may not tip others concerning such information.
• No director or officer who is an insider may speculate in (e.g. sell a "call" or buy a "put") the securities of IGM or any of its Public Affiliates regardless of whether or not he or she possesses material non-public information.
• No director or officer who is an insider may knowingly sell short or otherwise sell the securities of IGM or any of its Public Affiliates if he or she does not own or has not fully paid for the Securities to be sold (other than in connection with a "cashless" exercise of an option where the individual is entitled to be issued a security upon payment of the exercise price).
• Directors of IGM and Restricted Trading Officers (as designated by the Co-Presidents and Chief Executive Officers), may not buy, sell or otherwise trade in the securities of IGM or any of its Public Affiliates at any time without the approval of the General Counsel.
• Directors and certain officers may be required to file reports of trades in securities of IGM or any of its Public Affiliates with regulatory authorities.

For these purposes, "material non-public information" about a company is information that:

• has not been generally disclosed to the public through a news release, a communication to shareholders or widely reported media coverage; and
• significantly affects, or would reasonably be expected to have a significant effect on, the market price or the value of any securities of the company or that could affect the decision of a reasonable investor.

Examples of material non-public information may include information about:

• earnings or financial performance;
• business operations, results, projections or strategic plans;
• potential mergers, acquisitions or divestitures;
• potential sales of assets;
• gains or losses of major clients;
• the introduction of new products;
• public offerings of securities;
• changes in senior management;
• major changes in accounting policy; and
• actual or threatened lawsuits or regulatory investigations.

If you are not sure whether information is material non-public information, you should contact

senior legal counsel in the Legal Department. If you require guidance concerning the IGM Financial Inc. Insider Trading and Reporting Policy, you should contact senior legal counsel for IGM before buying, selling or otherwise trading in any securities.

6. Fair Competition

Fair Competition

The Company is committed to conducting its business in compliance with all competition laws (also called "antitrust laws"). Competition laws cover a wide range of business and competitive conduct, and generally prohibit any agreement to restrain or injure competition in a significant way. Among other things, competition laws prohibit agreements and understandings with others (including competitors, clients or suppliers) to:

• fix product prices;
• rig bids;
• boycott clients or suppliers;
• allocate clients or markets; and
• limit the sale or production of products or services.

Competition laws also prohibit deceptive marketing practices, including making false or misleading statements. Other business practices that unduly or substantially prevent, limit or lessen competition may also be prohibited. In certain circumstances, such practices may include "tied selling" (supplying a particular product or service to a client only if the client also agrees to purchase another product or service) and "exclusive dealing" (requiring a client to deal only or primarily in your product or service).

You must not engage in anti-competitive practices. You should familiarize yourself with and adhere to Business Practices and Procedures that have been established to guide you in avoiding anti-competitive practices. The failure to comply with competition laws may result in the prosecution of individuals, who could face substantial fines, damage awards and/or prison terms, and may subject the Company to criminal fines, administrative penalties and private lawsuits. Even allegations of anti-competitive behaviour can have a serious reputational impact. If you have any questions, you should contact senior legal counsel in the Legal Department.

If your work involves contact with competitors in any setting, including trade association meetings, it is important that you avoid discussions regarding pricing, bids, discounts, promotions, terms and conditions of sale, and any other proprietary or confidential information.

If you are unsure whether a particular business practice may be anti-competitive, or if you become aware of any practice that may be anti-competitive, you should contact senior legal counsel in the Legal Department.

7. Payments, Gifts and Entertainment

You must not engage in bribery, extortion or attempts to otherwise inappropriately influence public officials or others in order to obtain business advantage or access. These practices will not be tolerated by the Company.

Offering gifts and entertainment to others outside the Company may be appropriate in certain situations. However, the timing and nature of the gift or entertainment, as well as the circumstances under which it is offered, are important.

In particular, any gift or entertainment must be:

• reasonable and modest;
• considered an accepted business practice; and
• legal.

In general, gifts and entertainment should also be unsolicited.

Please refer to the Conflict of Interest and Corporate Opportunities section of this Code for guidance regarding situations where payments, gifts or entertainment have been offered to you.

8. Fraud Prevention

In carrying out your duties with the Company, you must not initiate, participate or assist in fraudulent or dishonest activities. Such activities include, but are not limited to:

• theft, embezzlement or misappropriation of client or Company funds or property, or the property or funds of others;
• forgery or alteration of any document or part thereof, including but not limited to cheques, drafts, promissory notes or securities or policy related documents such as claims, loans, surrenders, withdrawals, assignments, etc.;
• falsification, misuse or unauthorized removal of client or Company records;
• false representation or concealment of information that is designed to result in a party obtaining a benefit to the detriment of the Company or its clients; and
• false representation or concealment of information that is designed to result in the Company obtaining a benefit to the detriment of others.

Reporting, Investigation and Requests for Information or Assistance

The Company will promptly investigate any reports of fraudulent or dishonest activity related to Company business by directors, officers, employees, clients, claimants, vendors, suppliers or service providers. If you are aware of or suspect such fraudulent or dishonest activity, you must promptly report it to the General Counsel or Chairman of the Board of IGM.

Do not attempt to conduct your own investigation. The Company is responsible for the investigation of any dishonest or fraudulent activities related to Company business. Where appropriate, the Company will report any dishonest or fraudulent activities to the appropriate law enforcement or regulatory agencies.

If you receive a request for information or assistance concerning fraudulent or dishonest activities from a law enforcement or regulatory agency, or from any other third party, you should immediately notify your Compliance Officer.

For additional guidance, please contact the General Counsel of IGM.

9. Integrity of Financial Information and Reporting Concerns

The Company's financial statements must be prepared in accordance with Generally Accepted Accounting Principles, including the accounting requirements of applicable regulators. The Company's financial statements must fairly present, in all material respects, the financial position, results of operations and cash flows of the Company.

You are responsible for the accuracy of all financial, accounting and expense information prepared by you, or under your supervision, and submitted to, or on behalf of, the Company. Any financial information must be accurate, timely, informative and understandable. You have a responsibility to raise any concerns you may have regarding accounting, internal accounting controls or auditing matters.

The Company has established the Accounting Policies, appended to this Code, to allow you to report complaints or concerns about IGM or any of its subsidiaries regarding these matters, and to ensure that such reports are investigated promptly and thoroughly. Please refer to the Accounting Policies for examples of possible concerns regarding accounting, internal accounting controls or auditing matters, and for instructions on reporting procedures. Employees may report any complaint or concern anonymously although the Company's ability to fully investigate an anonymous report may be limited if it is unable to obtain additional information.

In addition, if you become aware of any investment or transaction that you believe could adversely affect the well being of the Company, you must report it to the General Counsel of IGM. The General Counsel will ensure that any concerns regarding such matters are reviewed by Company officers and, if appropriate, reported to the Audit Committee of the Board of Directors. Directors should report similar concerns to the General Counsel or the Chairman of the Board of IGM.

10. Anti-Money Laundering

The Company is committed to complying with legislation to deter and detect money laundering. Money laundering is the process by which criminals attempt to conceal the proceeds of criminal activity, such as financing terrorist activities, narcotics trafficking, bribery and fraud, to hide them or to make those proceeds appear legitimate. Money laundering often involves complex financial transactions and encompasses many different types of products and services.

The Company has established Business Practices and Procedures and training protocols for applicable business areas in accordance with applicable anti-money laundering laws in each jurisdiction. Such Business Practices and Procedures generally set out requirements with respect to client identification and record keeping, and the reporting of suspicious transactions. If you handle transactions for clients either directly or indirectly, for example by processing forms or payments from or to a client, you must familiarize yourself with and adhere to the applicable Business Practices and Procedures.

For further guidance, consult your supervisor or your Compliance Officer.

11. Records Retention

The Company has established Business Practices and Procedures and/or certain practices with respect to records retention to help it meet its regulatory and legal obligations, and the expectations of its clients, shareholders and others who rely on the accuracy and availability of its information. The integrity of the Company's record keeping processes is important to help the Company meet these obligations and expectations.

Company records include all documents and data, whether paper or electronic, that are produced or received in the course of doing Company business. You must retain Company records in accordance with applicable Business Practices and Procedures and/or established practices, and you may dispose of them only as authorized by those Business Practices and Procedures and/or established practices.

You must not conceal, destroy or alter any Company records that are relevant to any pending, threatened or anticipated regulatory investigation or legal proceeding. Such records must be retained until the matter is finally determined and you are otherwise instructed by the Legal Department. If you believe that any Company records in your possession are, or may be, the subject of litigation, audit or investigation, you must notify and consult with the Legal Department. Failure to retain required Company records may result in criminal and civil proceedings against you and the Company.

For additional guidance, please consult the Business Practices and Procedures related to records retention, or contact your supervisor or your Compliance Officer.

12. Communicating with Others

Disclosure of Financial and Corporate Information

The Company is committed to consistent and fair disclosure practices aimed at informative, timely and broadly disseminated disclosure of information to the market in accordance with all applicable laws.

The Company is subject to the requirements of securities regulators and stock exchanges about how and when information about the Company is disclosed to the public. Accordingly, the Company has established Business Practices and Procedures, including the IGM Disclosure Policy to help ensure that the public disclosure of significant non-public information is accurate, timely, informative and understandable.

As part of the Company's approach to disclosure, a Disclosure Committee has also been established to oversee and coordinate the implementation of the IGM Disclosure Policy. This Committee is comprised of the Co-Presidents and Chief Executive Officers; the Senior Vice-President, General Counsel and Secretary; and the Chief Financial Officer of IGM.

You must comply with all Business Practices and Procedures related to the disclosure of non-public information, including the IGM Disclosure Policy which says, among other things, that:

• You must immediately refer information relating to a development or circumstance that may constitute significant non-public information to the Disclosure Committee through your supervisor. Senior officers receiving such information should in turn refer such information to a member of the Disclosure Committee.

• You must maintain the confidentiality of all significant non-public information and you must not disclose it to any person until it has been generally disclosed to the public, unless disclosure of the information is necessary in the course of business. If you must communicate significant non-public information in the necessary course of business, you should generally advise the recipient not to disclose the information without written authorization from the appropriate company, and not to buy, sell or otherwise trade in the securities of the company until such time as the information has been generally disclosed to the public.
• You must not "selectively disclose" significant non-public information, other than in the necessary course of business. Selective disclosure occurs when significant non-public information is communicated to only some members of the public, such as investors or analysts and other market professionals.
• You must not circulate analysts' reports to third parties without the approval of the Disclosure Committee.
• You must not respond to inquiries from investors, analysts or other members of the investment community, or the media, unless you have been authorized to do so. Requests for information from such sources must be referred to a Spokesperson designated in the Disclosure Policy.
• You must not discuss or post information relating to the Company or the trading of its securities in Internet chat rooms, newsgroups or bulletin boards.

For these purposes, "significant non-public information" about the Company means information that:

• has not been generally disclosed to the public in a manner reasonably expected to result in broad dissemination to the marketplace, which may include the release of such information through a news release, a communication to shareholders or widely reported media coverage; and
• would reasonably be expected to have a significant effect on the market price or the value of any securities of the Company or that could affect the decision of a reasonable investor to buy, hold or sell the securities of the Company.

If you are involved in the disclosure of information to the market, you must familiarize yourself with and adhere to the related Business Practices and Procedures. If you have questions regarding the disclosure of Company information, ask your supervisor or contact the Legal Department.

Requests from Regulators

The Company is regulated by a number of different entities. From time to time, these regulators may examine or request information from the Company. The Company co-operates with all appropriate requests for information on a timely basis. In order to help ensure prompt, consistent response and confidentiality of regulatory information, if you receive an inquiry from a regulator, before responding, you must notify or discuss with your Compliance Officer, or the Legal Department. A record should be kept of all information provided in response to regulatory requests. Please refer to related Business Practices and Procedures for additional guidance.

Information provided to regulators should be accurate and factual. You must not conceal, destroy or alter any documents, lie or make any misleading statements to any regulatory agency representative or cause anyone else to do the same. If you become aware of or suspect someone else of doing so, you must report it immediately to the Legal Department.

Sales Communications

Any advertising or any other material posted on the Company's public website that could reasonably be considered to be a "sales communication" of one of the Companies' dealers must be submitted to the appropriately designated officer for review and approval, in accordance with the rules set out by securities regulators.

Media Contact

In addition to everyday communications with outside persons and organizations, the Company will, on occasion, be asked to express its views to the media. If you are approached by a member of the media, you should indicate that it is the Company's policy to refer all media inquiries to the local officer responsible for communications or public relations in accordance with the established Business Practices and Procedures. You should not respond to any media inquiries unless you are authorized to do so by senior management.

Personal Communications

Your personal communications should not identify the Company or your position with the Company. Do not use Company letterhead, envelopes, fax cover sheets, or other communication materials containing the Company's name, logo or trademark for your personal communications.

In particular, in any personal communication with politicians, public officials, industry or professional associations, the media or the general public, you should not lead people to believe that you are expressing the views of the Company.

Political Involvement

The Company supports and respects your right to participate in the political process. However, you must not use Company funds, goods or services as contributions to, or for the benefit of, candidates or political organizations, unless specifically authorized by the President and Chief Executive Officer of the Company.

No one in the Company may require you to contribute to, support or oppose any candidate or political organization.

The Company may engage in political activities, including communicating with policy-makers at all levels of government and their staffs. You should not engage in such activity on behalf of the Company unless you have obtained authorization to do so from senior management, or for directors, from the Chairman of the Board of IGM. These activities may trigger registration, licensing, and disclosure requirements. If you engage in such activities on behalf of the Company, you must comply with all applicable laws and regulations, and must contact your Compliance Officer or senior legal counsel for the Company.

13. Use of Company Resources

Company resources are intended for Company business, not personal use. Company resources include all equipment, supplies, letterhead, documents, data, mail services, phone services, e-mail and Internet access, and any other resources provided by the Company to support Company business activities. You are expected to use care and diligence to ensure that Company resources entrusted to you are secure. Misappropriation, unauthorized removal, or fraudulent or inappropriate use of Company resources is not permitted.

Incidental personal use of certain Company resources (e.g., email, Internet, local telephone calls, photo-copiers) may be acceptable, subject to management discretion and compliance with related Business Practices and Procedures, as long as it does not interfere with the intended business uses, it does not incur unauthorized expenses and it does not interfere with your productivity. Company resources must never be used for outside business activities, for improper purposes or to violate any laws. If you have a question about the incidental use of Company resources, please contact your supervisor or your Compliance Officer.

Computers and other electronic equipment, and all files and data stored on such equipment, are the property of the Company. The Company may monitor the use of all systems and equipment, and the content of all files and data, in accordance with local laws. By using Company systems or equipment, you consent to the Company's inspection and use of any and all files and data transmitted via or stored on Company systems or equipment, including personal files and e-mail. The downloading or installation of unapproved software is not permitted.

Business Practices and Procedures have been established to govern the use of the Company's e-mail systems, Internet resources and other technology. Business Practices and Procedures have also been established to govern the reporting and reimbursement of allowable business expenses. You should familiarize yourself with and adhere to applicable Business Practices and Procedures.

If you become aware of loss, theft or misuse of Company resources or have questions about the proper use of those resources, you should contact your supervisor or your local Compliance Officer.

14. Intellectual Property

Company Intellectual Property

The Company's intellectual property is among its most valuable assets and the Company is committed to protecting it. The Company's intellectual property includes:

• brands, logos, slogans, domain names, business names and other identifying features used to identify the Company and its products or services;
• software, scripts, interfaces, documentation, advertising and marketing materials, content (such as website content) and databases;
• trade secrets, ideas, inventions, systems and business processes; and
• confidential information, as addressed in the Personal and Confidential Information section of this Code.

Intellectual property created while carrying out the duties of your employment or appointment with the Company, or using any Company resources, whether created during regular business hours or after hours, and whether created on or off Company property, is owned by the Company. You should disclose the creation of any such intellectual property to your supervisor.

The Company may require your assistance, both during and after employment or appointment, in connection with its attempts to evidence, register or enforce its rights in this intellectual property, including the rights afforded by trademarks, copyrights and patents. The Company may require you to waive or assign all rights, title and interest in this intellectual property to the Company.

You must use the Company's intellectual property only as required in your position with the Company. Some examples of inappropriate use or infringement of the Company's intellectual property may include:

• using Company logos on a personal website;
• duplicating copyrighted material without permission;
• altering a Company logo to serve a purpose for which it was not intended; and
• distributing Company software to third parties

Intellectual Property of Others

In the course of its business, the Company may use the intellectual property of others that it has licensed, acquired or obtained permission to use. For example, the Company uses computer software under license from other companies, newspapers, books, magazines, articles, audio and video recordings, or other copyrighted material.

The Company respects the intellectual property rights of others. In the course of your duties with the Company, you must not use any intellectual property that belongs to others unless permitted by the terms of the applicable license agreement or otherwise permitted by applicable law.

Some examples of unauthorized or unlawful use of the intellectual property of others may include:

• using another company's logos in Company marketing materials without permission;
• duplicating copyrighted material without permission;
• plagiarizing documents, in whole or in part;
• installing software that is not licensed to the Company onto Company computers; and
• using intellectual property you obtained in the course of your employment with another company, in the course of your duties with the Company.

Reporting and Further Guidance

If you become aware of or suspect any inappropriate use or infringement of the Company's trademarks, copyrights, patents or other intellectual property rights, or the intellectual property rights of others, you should report it to legal counsel in the Legal Department.

For further guidance on your obligations relating to intellectual property, consult your supervisor or legal counsel in the Legal Department.

Appendices

A. Privacy Guidelines

B. Insider Trading and Reporting Policy

C. Accounting Policies

Code of Business Conduct and Ethics for Directors, Officers and Employees

Acknowledgement Form

I understand that as a condition of my employment I must familiarize myself with and at all times comply with the Code of Business Conduct and Ethics for Directors, Officers and Employees, Business Practices and Procedures applicable to my position and any law or regulation, external code of conduct, standard or guideline that applies to me.

I understand that if I breach the Code, any applicable Business Practices or Procedures or any law or regulation, external code of conduct, standard or guideline that applies to me, I may be subject to disciplinary action, including a warning, revision of responsibilities, suspension, or dismissal.  

I hereby acknowledge that I have received and read the Code of Business Conduct and Ethics for Directors, Officers and Employees (including the policies incorporated by reference), understand my obligations under it, and agree to comply with it.

____ I agree

Name: _______________________________________________________

Department: ____________

Employee ID#: ____________

IGM Financial Inc.

Privacy Guidelines

A.         PROTECTING THE PRIVACY AND CONFIDENTIALITY OF PERSONAL INFORMATION

These Privacy Guidelines describe our commitment to privacy, and explain the principles that guide us in protecting the privacy and confidentiality of personal information.

Personal information is information about an identifiable individual. It includes, but is not limited to, health and financial information.

The Company, its directors, officers and employees, and its licensed representatives and other persons and organizations who act for, or on behalf of, the Company, are required to comply with these Privacy Guidelines.

Access to personal information is restricted to directors, officers, employees, licensed representatives, and other persons or organizations acting for, or on behalf of, the Company, who need the information in order to provide services to the client or the Company.

B.         OUR PRIVACY PRINCIPLES

1.         Accountability

The Company is responsible for personal information in its control, including information that may be transferred to a service provider performing services for, or on behalf of, the Company. The Company has established these Privacy Guidelines, and procedures and practices, to safeguard such personal information.

2.         Purposes

The Company identifies the purposes for which it collects personal information either before or at the time of collection.

3.         Consent

The Company collects, uses and discloses personal information only with the consent of the individual, or as otherwise allowed by law.

Consent to the collection, use, or disclosure of personal information may be express or implied, as appropriate. Individuals may withdraw their consent at any time, subject to legal or contractual restrictions and considerations.

4.         Collection

The Company only collects personal information that is necessary for the purposes identified. Personal information is collected directly from the individual, and may, with consent or as otherwise allowed by law, be collected from other sources.

5.         Use, disclosure and retention

Personal information is not, without consent, used or disclosed to a third party for any purpose other than that for which it was collected, unless such use or disclosure is required or allowed by law. This may include use or disclosure in order to protect the Company's interests in civil proceedings and in proceedings involving criminal activity, fraud or misrepresentation. The Company retains personal information only as long as necessary to fulfill the identified purpose or as otherwise required or allowed by law.

6.         Accuracy

The Company uses reasonable efforts to ensure that personal information is accurate and complete for the purposes for which it is to be used.

7.         Safeguards

The Company protects the security and confidentiality of personal information with safeguards appropriate to the sensitivity of the information.

8.         Openness

The Company's Privacy Guidelines are available to clients and the public. Upon written request addressed to the Chief Compliance Officer, we will provide a copy of these Guidelines, and respond to inquiries about our practices relating to personal information.

9.         Individual access

An individual may request to be informed of the existence, use and disclosure of personal information pertaining to him or her. The Company will provide appropriate access to such information that it holds. If the Company determines not to provide access to personal information, we will provide an explanation. Individuals may request the correction of personal information the Company holds about them, and if we find that what we have is incorrect, we will correct it.

C.         CONCERNS, INQUIRIES OR REQUESTS

Any concern, inquiry or request related to privacy should be made in writing. Send to:

Chief Compliance Officer

IGM Financial Inc.

447 Portage Avenue

Winnipeg MB

R3C 3B6

IGM Financial Inc.

Insider Trading and Reporting Policy

This Policy governs the trading in securities of IGM Financial Inc. ("IGM") and certain other companies by directors, officers and employees of IGM and its subsidiaries. This Policy does not apply to trading in securities of IGM by Investors Group's Consultants, Regional Directors and Division Directors or by IPC financial advisors.

1. INTRODUCTION

1. Purpose and Scope

Certain Canadian federal and provincial statutes impose:

• restrictions on trading in the securities of public companies;
• restrictions on communicating certain information about public companies; and
• obligations on certain individuals to report securities trades to appropriate regulatory authorities.

This Policy has been established by IGM to assist its directors, officers and employees and the directors, officers and employees of its subsidiaries, in complying with these statutory requirements.

The policy also differentiates between insiders who must report their trades by filing insider trading reports with the Canadian Securities Administrators ("non-exempt insiders") and insiders who do not need to file reports ("exempt insiders"), though they must continue to abide by the rules for insiders set out in this policy. The Corporate Secretary's Department maintains a list of insiders and will advise insiders as to whether they are exempt or non-exempt.

2. Definitions

In this Policy, the term:

"Associate" of IGM or of a director, officer or employee of IGM or a subsidiary of IGM means:

• a company of which IGM or the director, officer or employee beneficially owns, directly or indirectly, voting securities carrying more than 10% of the voting rights attached to all voting securities;
• any partner of IGM or any business partner of the director, officer or employee;
• any trust or estate in which IGM or the director, officer or employee has a substantial beneficial interest or as to which IGM or the director, officer or employee serves as a trustee or in a similar position;
• the spouse or common law spouse of the director, officer or employee who resides in the same home as the director, officer or employee; and
• any relative of the director, officer or employee or his or her spouse or common law spouse, as referred to in the preceding bullet, who resides in the same home as the director, officer or employee.

"Blackout Period" means a period determined by IGM, other than a Quarterly Blackout Period, in respect of which IGM determines that it would be inadvisable for some or all of the persons governed by this policy to trade in securities of IGM.

"Deferred Share Unit Plan" means the deferred share unit plan for the directors of IGM and any other similar plan for the directors and/or senior officers of IGM or of a subsidiary of IGM.

"Exempt Insiders" means those IGM Insiders who, pursuant to National Instrument 55-101 (as amended from time to time) ("NI 55-101"), are exempt from the obligation to file insider reports, a list of whom is maintained by IGM's Corporate Secretary's Department.

"IGM Insiders" for purposes of this Policy means:

• every director or officer of IGM; and
• every director or officer of a subsidiary of IGM.

"material change" means a change (or a decision to implement a change) in the business, operations or capital of IGM or a Public Affiliate that would reasonably be expected to have a significant effect on the market price or value of any of the Securities of IGM or the Public Affiliate, as the case may be.

"material fact" in relation to IGM or a Public Affiliate of IGM means a fact that would reasonably be expected to have a significant effect on the market price or value of the Securities of IGM or the Public Affiliate, as the case may be.

"Material Non-Public Information" means, in respect of IGM or a Public Affiliate, any information (including a material fact or a material change) relating to such company or a subsidiary of such company that would reasonably be expected to have a significant effect on the market price or value of the Securities of IGM or the Public Affiliate or that could affect the decision of a reasonable investor and that has not been generally disclosed to the public.

"Non-Exempt Insiders" means those IGM Insiders who pursuant to NI 55-101 are not exempt from the obligation to file insider trading reports, a list of whom is maintained by IGM's Corporate Secretary's Department.

"officer" means (a) a chair or a vice-chair of the board of directors, a chief executive officer, a chief operating officer, a chief financial officer, a president, a vice-president or above, a secretary, an assistant secretary, a treasurer, an assistant treasurer, or the general manager, (b) every individual who is designated as an officer under a by-law or similar authority of IGM, and (c) any other individual who performs functions similar to those normally performed by an individual occupying any office referred to in (a) or (b).

"Public Affiliates" means Power Corporation of Canada, Power Financial Corporation, Great-West Lifeco Inc., The Great-West Life Assurance Company, Canada Life Financial Corporation The Canada Life Assurance Company and Great-West Lifeco Finance (Delaware) LP.

"Quarterly Blackout Period" means the period beginning five weeks before and ending two full trading days after the day on which a press release announcing quarterly or annual financial results of IGM is issued.

"Securities" means any shares, stock options, bonds, debentures, notes or other evidence of indebtedness, deferred share units, stock appreciation rights and any other document, instrument or writing commonly known as a security.

"Share Purchase Plan" means the IGM Employee Share Purchase Plan and any other similar plan for the employees of IGM or a subsidiary of IGM.

"Trade Date" means the actual date of a trade or transaction in Securities and not the date of the settlement of the trade or transaction.

B. PROHIBITED ACTIVITIES

1. General Restrictions on Trading in Securities of IGM and its Public Affiliates

No director, officer or employee of IGM or of any of its subsidiaries nor any of their Associates who has knowledge of Material Non-Public Information with respect to IGM or any of its Public Affiliates shall sell, purchase or otherwise trade in the Securities of IGM or in the Securities of any such Public Affiliate, as the case may be.

This prohibition applies to all sales, purchases and other trades in Securities of IGM and its Public Affiliates (other than as described below under Section 2 -- Exemptions from Trading Restrictions) including:

• purchases and sales of Securities on a private basis or through a stock exchange or other public market;
• exercises of stock options accompanied by sales of underlying securities;
• the communication of instructions under the Share Purchase Plan or the Deferred Share Unit Plan to increase, decrease or discontinue contributions; and
• the sale of Securities of IGM acquired under the Share Purchase Plan.

This prohibition ceases to apply when:

• the Material Non-Public Information has been generally disclosed to the public by way of a press release and more than two full trading days have elapsed since the day on which the press release was issued; or
• the Material Non-Public Information ceases to be material (e.g. a potential material acquisition has been abandoned).

It may be difficult to determine definitively whether particular information constitutes Material Non-Public Information and, accordingly, any significant non-public information (such as information about financial results, dividends or a proposed significant acquisition or disposition) should be treated as Material Non-Public Information.

In addition to the foregoing restrictions:

• directors of IGM; and
• those officers of IGM and its subsidiaries who have been designated by IGM's Co-Presidents and Chief Executive Officers as being a "Restricted Trading Officer" for purposes of this Policy

may not at any time sell, purchase or otherwise trade in the Securities of IGM or in the Securities of any of the Public Affiliates without the prior approval of the Corporate Secretary of IGM.

2. Exemptions from Trading Restrictions

The trading restrictions set forth in Section 1 and Section 7 of this Policy do not apply to the following:

• purchases of Securities made pursuant to an automatic dividend reinvestment plan or a Share Purchase Plan pursuant to standing instructions given prior to the commencement of a blackout period and prior to the acquisition of knowledge of Material Non-Public Information;
• the grant or redemption of deferred share units pursuant to the Deferred Share Unit Plan as, and in accordance with the requirements relating to, an automatic securities purchase plan under applicable securities legislation; and
• transfers of shares where underlying beneficial ownership of the shares does not change (i.e. Employee Share Purchase Plan to RRSP).

3. Restrictions on Trading in Securities of Other Companies

In the course of their duties with IGM or its subsidiaries, directors, officers and employees and their Associates may become aware of Material Non-Public Information about another company in the context, for example, of investigating a potential investment or acquisition. In that case, the restrictions set forth in Section 1 apply with respect to selling, purchasing or otherwise trading in the Securities of that other company.

4. No Tipping

No director, officer or employee of IGM or any of its subsidiaries nor any of their Associates shall communicate Material Non-Public Information with respect to IGM or any of its Public Affiliates to any other person or company, except in the necessary course of business, nor shall any such director, officer or employee or any of their Associates who is aware of Material Non-Public Information with respect to IGM or any of its Public Affiliates encourage any other person or company to sell, purchase or otherwise trade in the Securities of IGM or any of its Public Affiliates regardless of whether the Material Non-Public Information itself is specifically communicated to such person or company.

In complying with this provision, it is important to avoid communicating Material Non-Public Information inadvertently by, for example, discussing it in places where the conversation may be overheard (such as elevators, restaurants, taxis, airplanes or on cell phones), or by allowing documents or relevant material to be seen by individuals who do not need to know the information (such as reading, displaying or discarding documents in public places).

If Material Non-Public Information must be communicated in the necessary course of business (which does not include disclosure to analysts, institutional investors, other market professionals or members of the press and other media), and subject to complying with the Disclosure Policy of IGM, the individual communicating the Material Non-Public Information shall advise the recipient not to disclose the information without written authorization from the appropriate company, and not to buy, sell or otherwise trade in the Securities of the company until such time as the information has been generally disclosed to the public.

In the course of their duties with IGM or its subsidiaries, directors, officers and employees may become aware of Material Non-Public Information about another company in the context, for example, of investigating a potential investment or acquisition. In that case, the restrictions on tipping set forth in this Section apply to such Material Non-Public Information.

1. No Speculation

   No IGM Insider shall knowingly, directly or indirectly, sell a "call" or buy a "put" in respect of any Security of IGM or any of its Public Affiliates. In addition, IGM Insiders may not purchase or sell Securities of IGM or any of its Public Affiliates with the intention of reselling or repurchasing them within a six month period in the expectation of a short-term rise or fall in the market price of the Securities. Speculating in Securities of IGM or its Public Affiliates for short-term profit is to be distinguished from purchasing and selling such Securities as part of a long-term investment program.

2. No Short Selling

No IGM Insider shall knowingly sell, directly or indirectly, any Security of IGM, or of any of its Public Affiliates if he or she does not own or has not fully paid for the Securities to be sold (other than in connection with a "cashless" exercise of an option where an Insider is entitled to be issued a security upon payment of the exercise price).

3. Restrictions on Trading During Quarterly Blackout Periods and Blackout Periods

No IGM Insider, no Associate of an IGM Insider, and no other officer or employee of IGM or other person who has been designated by IGM's Co-Presidents and Chief Executive Officers as being subject to the Quarterly Blackout Periods shall sell, purchase or otherwise trade in the Securities of IGM, Power Corporation of Canada, or Power Financial Corporation during any Quarterly Blackout Period.

In addition, such IGM Insiders, Associates of IGM Insiders, officers or employees of IGM or other persons who have been designated by IGM's Co-Presidents and Chief Executive Officers for such purpose, shall not sell or purchase or otherwise trade in securities of IGM, Power Corporation of Canada, or Power Financial Corporation, during any Blackout Period as they may be advised by IGM.

IGM shall advise IGM Insiders and the other persons referred to above in advance, as applicable, as to when each Quarterly Blackout Period or Blackout Period is to commence and terminate.

4. Advising Associates of Trading and Tipping Restrictions

Directors, officers and employees of IGM or a subsidiary of IGM shall advise their Associates of the restrictions in Sections 1, 2, 3, 4 and 7 above of this Policy.

C. REPORTING OBLIGATIONS

1. Reporting Trades in Securities of IGM

An insider report must be filed by or on behalf of each Non-Exempt Insider:

• within 10 calendar days of the date on which he or she first becomes a Non-Exempt Insider, disclosing any direct or indirect beneficial ownership of or control or direction over Securities of IGM held at that time (if no such beneficial ownership or control or direction is then held, no insider report need be filed);
• within 10 calendar days of the trade date on which a change occurs in his or her direct or indirect beneficial ownership of or control or direction over Securities of IGM, including purchases and sales in the public markets, dispositions under the Share Purchase Plan, transfers to, from, among and between an agent, nominee or custodian, option grants, exercises and expiry, and certain derivative-based transactions, disclosing the date on which the change took place and the change or changes that occurred, including details of each transaction or trade; and
• within 90 calendar days of December 31, disclosing Securities purchased or, in certain cases, sold during the calendar year under the Share Purchase Plan and any automatic dividend reinvestment plan.

Such insider reports must be filed with provincial securities commissions in accordance with the "System for Electronic Disclosure by Insiders".

IGM's Associate Corporate Secretary shall advise IGM Insiders as to whether they are Exempt Insiders or Non-Exempt Insiders. Non-Exempt Insiders who purchase, sell or otherwise trade in Securities of IGM or of any of the Public Affiliates shall immediately so advise IGM's Associate Corporate Secretary (or alternatively, in the case of directors of IGM or the Public Affiliates, the Assistant Secretary of Power Financial Corporation or the Associate Secretary of Great-West Lifeco Inc., as the case may be, who shall prepare and file insider reports on behalf of such Non-Exempt Insiders.)

Individual insider files are maintained by the Corporate Secretary's Department for all IGM Insiders and for all applicable securities transactions. If you wish to prepare your own insider trading forms, you are required to provide a copy of the form to the Corporate Secretary's Department at the same time that you file the form with the provincial securities commissions.

2. Reporting Trades in Securities of other Public Affiliates

Under applicable securities legislation, IGM Insiders are also insiders of Power Corporation of Canada, Power Financial Corporation and Great-West-Lifeco Inc., and may be required to file separate insider reports in relation to transactions involving Securities of these companies. Persons subject to such reporting obligations are encouraged to consult with the Corporate Secretary of the relevant company to ensure compliance with applicable policies and legal requirements.

3. Exemptions from Reporting Requirements

The requirement to report trades does not apply to the reporting of the grant of units under the Deferred Share Unit Plan for so long as the existence and material terms of the Deferred Share Unit Plan, and the holdings of IGM Insiders of such units, are described and disclosed in IGM's public filings.

D. SANCTIONS

1. Condition of Appointment or Employment

Failure to adhere to this Policy and applicable legal obligations may expose IGM, the subsidiaries of IGM and their respective directors, officers and employees to sanctions under securities laws, public embarrassment, reputation impairment, civil liability, and/or criminal liability. It is a condition of each director's, officer's and employee's appointment or employment with IGM or a subsidiary of IGM, as the case may be, that they comply with this Policy at all times. IGM and/or a subsidiary of IGM may take any steps or proceedings in respect of any non-compliance as may be available to them, including, but not limited to, termination of appointment or employment.

2. Penalties/Civil Liability

In addition, the federal and provincial statutes which impose trading and tipping restrictions and insider reporting obligations also impose substantial penalties and civil liability for a breach of those restrictions and obligations.

E. GENERAL

Insider trading and reporting is a complex area and this Policy does not cover all circumstances that may arise with respect to insider trading and reporting. Directors, officers and employees who are in doubt about the application of this Policy to them in particular circumstances or who otherwise have questions about this Policy should contact IGM's Corporate Secretary or IGM's Associate Corporate Secretary.

IGM Financial Inc.

Accounting Policies

The Audit Committee of the Board of Directors of IGM Financial Inc. (the "Company") has established policies to maintain and protect the integrity of our accounting and auditing practices and procedures as a public company. An integral part of this commitment is the independence of our external auditors, Deloitte & Touche LLP ("Deloitte"). The policies have been approved by the Audit Committee and apply to all employees of the Company, and its subsidiaries.

All employees are required to read and comply with these policies in full.

POLICIES

1. Pre-approval of services provided by the external auditors, Deloitte

Any person engaging the external auditor for any service must have the engagement request reviewed and approved by the CFO of the Company or referred to the Audit Committee for approval, if appropriate, prior to engaging Deloitte. Approval will be granted in accordance with the Audit Committee's policies on services provided by the external auditor.

2. Hiring policy to protect to auditor independence

To protect the actual and perceived independence of our external auditors, Deloitte, the policy restricts the actual or prospective employment or engagement of:

1. a partner or employee of Deloitte; and
2. anyone who has a close business relationship with the external auditor.

Any employee involved in the hiring process must consult their leader or Human Resources Consultant to familiarize themselves with the full details of this policy.

3. Accounting complaints procedures

If any individual has complaints or concerns regarding accounting, internal accounting controls, or auditing matters regarding the Company or any of its subsidiaries they are encouraged to submit a written complaint regarding their concern.

Examples of potential accounting complaints include the following matters involving either the Company or any of its subsidiaries:

1. fraud or deliberate error in the preparation, evaluation, review or audit of any financial statement;
2. fraud or deliberate error in the recording and maintaining of financial records;
3. deficiencies in or non-compliance with internal accounting controls; or
4. misrepresentation or false statement to or by a senior officer or accountant regarding a matter contained in financial records, financial statements, or other financial reports or public disclosure.

Kindly note, that no complainant is subject to retribution for good faith reporting of concerns under these procedures. However, malicious or knowingly false allegations will be viewed as a serious discipline matter.

Complaints regarding these matters should be submitted in writing using the form provided, and be submitted to the Vice President of Internal Audit, except in cases where the complaint itself relates to the Internal Audit Department, in which case complaints should be submitted to the Senior Vice- President, General Counsel and Secretary.

Complaints will be investigated by the Vice President of Internal Audit in accordance with the Investigation Protocol approved by the Audit Committee.

The identity of the individual lodging the complaint will be kept confidential upon request, and will only be disclosed to the recipient of the complaint, members of the Audit Committee, and regulatory agencies if required by law. Full details on the process, including a form for use in lodging the complaint are attached to this email and are posted in the Public Folders.

Questions or concerns regarding the details or intent of the policies should be directed to your leader, or to the Senior Vice-President, General Counsel & Secretary of the Company.

EX-99.(P)(3)

                                                                         Exhibit (p)(3)

                                  FRANKLIN TEMPLETON INVESTMENTS
                                          CODE OF ETHICS
                   (PURSUANT TO RULE 17J-1 OF THE INVESTMENT COMPANY ACT OF 1940
                      AND RULE 204A-1 OF THE INVESTMENT ADVISERS ACT OF 1940)
                                                AND
                         INSIDER TRADING COMPLIANCE POLICY AND PROCEDURES
                                        REVISED MAY 2008

                                         TABLE OF CONTENTS

         CODE OF ETHICS...............................................................2

         PART 1 - STATEMENT OF PRINCIPLES.............................................2
         PART 2 - PURPOSE OF THE CODE AND CONSEQUENCES OF NON-COMPLIANCE..............3
         PART 3 - COMPLIANCE REQUIREMENTS.............................................4
         PART 4 - REPORTING REQUIREMENTS FOR CODE OF ETHICS PERSONS (EXCLUDING
                  INDEPENDENT DIRECTORS OF THE FUNDS AND OF CERTAIN ADVISORY
                  SUBSIDIARIES OF FRI)...............................................11
         PART 5 - PRE-CLEARANCE REQUIREMENTS APPLICABLE TO ACCESS PERSONS
                  (EXCLUDING INDEPENDENT DIRECTORS OF THE FUNDS AND AND CERTAIN
                  INVESTMENT ADVISORY SUBSIDIARIES OF FRI) AND PORTFOLIO PERSONS)....14
         PART 6 - REQUIREMENTS FOR INDEPENDENT DIRECTORS OF THE FUNDS AND CERTAIN
                  INVESTMENT ADVISORY SUBSIDIARIES OF FRI............................17
         PART 7 - PENALTIES FOR VIOLATIONS OF THE CODE...............................18
         PART 8 - A REMINDER ABOUT THE FRANKLIN TEMPLETON INVESTMENTS
                  INSIDER TRADING POLICY.............................................20

         APPENDIX A: COMPLIANCE PROCEDURES AND DEFINITIONS...........................21

         I.    RESPONSIBILITIES OF EACH DESIGNATED COMPLIANCE OFFICER................22
         II.   DEFINITIONS OF IMPORTANT TERMS........................................26

         APPENDIX B: ACKNOWLEDGEMENT FORM AND SCHEDULES..............................28

         ACKNOWLEDGEMENT FORM........................................................29
         SCHEDULE A: LEGAL AND COMPLIANCE OFFICERS CODE OF ETHICS ADMINISTRATION
                     DEPT. CONTACT INFO..............................................30
         SCHEDULE B: TRANSACTIONS REPORT.............................................31
         SCHEDULE C: INITIAL & ANNUAL DISCLOSURE OF BROKERAGE ACCOUNTS, INVESTMENT
                     ADVISORY ACCOUNTS, SECURITIES HOLDINGS AND DISCRETIONARY
                     AUTHORITY.......................................................32
         SCHEDULE D: NOTIFICATION OF  SECURITIES ACCOUNT.............................34
         SCHEDULE E: NOTIFICATION OF DIRECT OR INDIRECT BENEFICIAL INTEREST..........35
         SCHEDULE F: CHECKLIST FOR INVESTMENTS IN PARTNERSHIPS AND SECURITIES
                     ISSUED IN LIMITED OFFERINGS PRIVATE PLACEMENTS).................36
         SCHEDULE G: REQUEST FOR APPROVAL TO SERVE AS A DIRECTOR.....................38

         APPENDIX C: INVESTMENT ADVISER AND BROKER-DEALER AND OTHER SUBSIDIARIES
         OF FRANKLIN RESOURCES, INC. - MAY 2008......................................39

         INSIDER TRADING COMPLIANCE POLICY AND PROCEDURES............................40

         A.    LEGAL REQUIREMENT.....................................................40
         B.    WHO IS AN INSIDER?....................................................40
         C.    WHAT IS MATERIAL INFORMATION?.........................................40
         D.    WHAT IS NON-PUBLIC INFORMATION?.......................................41
         E.    BASIS FOR LIABILITY...................................................41
         F.    PENALTIES FOR INSIDER TRADING.........................................41
         G.    INSIDER TRADING PROCEDURES............................................42
         H.    GENERAL ACCESS CONTROL PROCEDURES.....................................43




                                         CODE OF ETHICS

               The Code of Ethics (the "Code") and Policy Statement on Insider Trading
         (the "Insider Trading Policy"), including any supplemental memoranda is
         applicable to all officers, directors, employees and certain designated
         temporary employees (collectively, "Code of Ethics Persons") of Franklin
         Resources, Inc. ("FRI"), all of its subsidiaries, and the funds in the
         Franklin Templeton Group of Funds (the "Funds") (collectively, "Franklin
         Templeton Investments").  The subsidiaries listed in Appendix C of the Code,
         together with Franklin Resources, Inc. and the Funds, have adopted the Code and
         Insider Trading Policy.

               The Code summarizes the values, principles and business practices that
         guide Franklin Templeton Investments' business conduct, provides a set of
         basic principles for Code of Ethics Persons regarding the  conduct expected
         of them and also establishes certain reporting requirements applicable to
         Supervised and Access Persons (defined below).  It is the responsibility of
         all Code of Ethics Persons to maintain an environment that fosters fairness,
         respect and integrity.  Code of Ethics Persons are expected to seek the
         advice of a supervisor or the Code of Ethics Administration Department with
         any questions on the Code and/or the Insider Trading Policy.

              In addition to this Code, the policies and procedures  prescribed under the
         CODE OF ETHICS AND  BUSINESS  CONDUCT  adopted by Franklin  Resources,  Inc. are
         additional  requirements  that  apply to  certain  Code of Ethics  Persons.  The
         current version of the Fair  Disclosure  Polices and Procedures and the Chinese
         Wall Policy also apply to certain Code of Ethics  Persons.  Executive  Officers,
         Directors and certain other designated  employees of FRI will also be subject to
         additional  requirements  with respect to the trading of the  securities  of FRI
         (i.e. BEN shares).

         PART 1 - STATEMENT OF PRINCIPLES
               All Code of Ethics Persons are required to conduct themselves in a
         lawful, honest and ethical manner in their business practices.  Franklin
         Templeton Investments' policy is that the interests of its Funds'
         shareholders and clients are paramount and come before the interests of any
         Code Of Ethics Person.

               The personal investing activities of Code of Ethics Persons must be
         conducted in a manner to avoid actual OR potential conflicts of interest with
         Fund shareholders and other clients of any Franklin Templeton adviser.

         Code of Ethics  Persons  shall  use  their  positions  with  Franklin  Templeton
         Investments  and any  investment  opportunities  they  learn of because of their
         positions  with  Franklin  Templeton  Investments  in a manner  consistent  with
         applicable  Federal  Securities  Laws and  their  fiduciary  duties  to use such
         opportunities  and  information for the benefit of the Funds'  shareholders  and
         clients.

               Information concerning the identity of security holdings and financial
         circumstances of Funds and other clients is confidential and all Code of
         Ethics Persons must vigilantly safeguard this sensitive information.

               Lastly, Code of Ethics Persons shall not, in connection with the
         purchase or sale of a security, including any option to purchase or sell, and
         any security convertible into or exchangeable for, any security that is "held
         or to be acquired" by a Fund:

         A.  employ any device, scheme or artifice to defraud a Fund;

         B.  make to a Fund any untrue statement of a material fact or omit to state
             to a Fund a material fact necessary in order to make the statements
             made, in light of the circumstances under which they are made, not
             misleading;

         C.  engage in any act, practice, or course of business which operates or
             would operate as a fraud or deceit upon a Fund; or

         D.  engage in any manipulative practice with respect to a Fund.

               A security is "held or to be acquired" if within the most recent 15 days
         it (i) is or has been held by a Fund, or (ii) is being or has been considered
         by a Fund or its investment adviser for purchase by the Fund.


         PART 2 - PURPOSE OF THE CODE AND CONSEQUENCES OF NON-COMPLIANCE

               It is important that you read and understand the Code because its
         purpose is to help all of us comply with the law and to preserve and protect
         the outstanding reputation of Franklin Templeton Investments.

               Any violation of the Code or Insider Trading Policy including engaging
         in a prohibited transaction or failure to file required reports may result in
         disciplinary action, up to and including termination of employment and/or
         referral to appropriate governmental agencies.

         All Code of Ethics  Persons must report  violations  of the Code and the Insider
         Trading  Policy whether  committed by themselves or by others  promptly to their
         supervisor  or the Code of  Ethics  Administration  Department.  If you have any
         questions or concerns about  compliance  with the Code or Insider Trading Policy
         you are  encouraged  to  speak  with  your  supervisor  or the  Code  of  Ethics
         Administration  Department.  In addition, you may call the Compliance and Ethics
         Hotline at  1-800-636-6592.  Calls to the  Compliance  and Ethics Hotline may be
         made anonymously.  Franklin Templeton Investments will treat the information set
         forth in a report of any  suspected  violation  of the Code or  Insider  Trading
         Policy  in a  confidential  manner  and will  conduct a prompt  and  appropriate
         evaluation and investigation of any matter reported.  Code of Ethics Persons are
         expected to cooperate in  investigations of reported  violations.  To facilitate
         employee reporting of violations of the Code or Insider Trading Policy, Franklin
         Templeton  Investments will not allow retaliation  against anyone who has made a
         report in good faith.

         PART 3 - COMPLIANCE REQUIREMENTS


         3.1   WHO IS COVERED BY THE CODE AND HOW DOES IT WORK?

              The  Statement  of  Principles  contained  in the Code and the policies and
         procedures prescribed under the CODE OF ETHICS AND BUSINESS CONDUCT contained in
         Appendix  D must be  observed  by ALL  Code of  Ethics  Persons.  All  officers,
         directors,  employees and certain designated  temporary employees of Franklin
         Templeton Investments are Code of Ethics Persons. However, depending on which of
         the categories described below that you are placed, there are different types of
         restrictions  and  reporting  requirements  placed  on your  personal  investing
         activities.  The category in which you will be placed generally  depends on your
         job function,  although unique  circumstances  may result in your placement in a
         different category. If you have any questions regarding which category you are a
         member of and the attendant responsibilities,  please contact the Code of Ethics
         Administration Department.

              (1)  SUPERVISED  PERSONS: Supervised persons are an adviser's partners,
                   officers,  directors (or other persons  occupying a similar  status or
                   performing  similar  functions),  and employees,  as well as any other
                   person who provides advice on behalf of the adviser and are subject to
                   the supervision and control of the adviser.

              (2) ACCESS  PERSONS:  Access  Persons are those persons who: have access to
                  nonpublic   information   regarding  Funds'  or  clients'   securities
                  transactions;  or are involved in making securities recommendations to
                  Funds  or  clients;  or  have  access  to  recommendations   that  are
                  nonpublic;  or have  access to  nonpublic  information  regarding  the
                  portfolio  holdings  of  Reportable  Funds.  Examples  of  "ACCESS  TO
                  NONPUBLIC INFORMATION" include having access to trading systems,
                  portfolio   accounting  systems,   research  databases  or  settlement
                  information.  Thus,  Access  Persons  are  those  people  who are in a
                  position to exploit  information  about Funds' or clients'  securities
                  transactions  or  holdings.  Administrative,  technical  and  clerical
                  personnel  may be deemed Access  Persons if their  functions or duties
                  give them access to such nonpublic information.

                  The following are some of the departments,  which would typically (but
                  not  exclusively)  include  Access  Persons.  Please note however that
                  whether you are an Access  Person is based on an analysis of the types
                  of information that you have access to and the  determination  will be
                  made on a case-by-case basis:

                       o fund accounting;
                       o futures associates;
                       o global compliance;
                       o portfolio administration;
                       o private client group/high net worth; and
                       o anyone else designated by the Director of Global Compliance
                         and/or the Chief Compliance Officer.

                   In addition, you are an Access Person if you are any of the following:

                       o an officer or director of the Funds;
                       o an officer or director of an investment advisor or broker-dealer
                         subsidiary of  Franklin Templeton Investments; or
                       o a person that controls those entities

                 NOTE: UNDER THIS DEFINITION, AN INDEPENDENT DIRECTOR OF FRI WOULD NOT BE
                 CONSIDERED AN ACCESS PERSON.

              (3) PORTFOLIO PERSONS: Portfolio Persons are a subset of Access Persons and
                  are those employees of Franklin Templeton Investments, who, in
                  connection with his or her regular functions or duties, makes or
                  participates in the decision to purchase or sell a security by a Fund
                  or any other client or if his or her functions relate to the making of
                  any recommendations about those purchases or sales. Portfolio Persons
                  include:

                       o portfolio managers;
                       o research analysts;
                       o traders;
                       o employees serving in equivalent capacities (such as Futures
                         Associates);
                       o employees supervising the activities of Portfolio Persons; and
                       o anyone else designated by the Director of Global Compliance
                         and/or the Chief Compliance Officer.

              (4)  NON-ACCESS PERSONS: If you are an employee or temporary employee of
                   Franklin Templeton  Investments AND you do not fit into any of the
                   above categories, you are a Non-Access Person.  Because you do not
                   receive nonpublic information about Fund/Client  portfolios, you are
                   subject only to the prohibited transaction provisions described in 3.4
                   of the Code, the Statement of Principles and the Insider  Trading
                   Policy and the policies and  procedures prescribed under the FRI Code
                   of Ethics and Business Conduct. The independent directors of FRI are
                   Non-Access Persons.

              You will be notified about which of the category(ies) you are considered to
         be a  member  of at the time  you  become  affiliated  with  Franklin  Templeton
         Investments and also if you become a member of a different category.

              As  described   further  below,   the  Code  prohibits   certain  types  of
         transactions  and requires  pre-clearance  and  reporting of others.  Non-Access
         Persons  and  Supervised  Persons  do  not  have  to  pre-clear  their  security
         transactions,  and, in most  cases,  do not have to report  their  transactions.
         Independent  Directors  of the Funds  also need not  pre-clear  or report on any
         securities  transactions unless they knew, or should have known that, during the
         15-day  period  before or after the  transaction,  the security was purchased or
         sold or considered for purchase or sale by a Fund.  HOWEVER,  PERSONAL INVESTING
         ACTIVITIES OF ALL CODE OF ETHICS PERSONS ARE TO BE CONDUCTED IN COMPLIANCE  WITH
         THE PROHIBITED  TRANSACTIONS  PROVISIONS CONTAINED IN SECTION 3.4, THE STATEMENT
         OF PRINCIPLES AND THE INSIDER TRADING COMPLIANCE POLICY AND PROCEDURES.

         3.2   WHAT ACCOUNTS AND TRANSACTIONS ARE COVERED?

               The Code covers:

              1. SECURITIES  ACCOUNTS/TRANSACTIONS IN WHICH YOU HAVE DIRECT OR INDIRECT
         BENEFICIAL OWNERSHIP.

              You are  considered  to have  "beneficial  ownership" of a security if you,
         directly or  indirectly,  through any  contract,  arrangement,  relationship  or
         otherwise,  have or share a direct or indirect  economic interest in a security.
         There is a presumption that you have an economic  interest in securities held or
         acquired by a member of your immediate family sharing the same household.  Thus,
         a transaction by or for the account of your spouse,  or other  immediate  family
         member living in your home would be treated as though the transaction  were your
         own.

              2.  TRANSACTIONS  FOR AN  ACCOUNT  IN WHICH YOU HAVE AN  ECONOMIC  INTEREST
         (OTHER  THAN THE  ACCOUNT OF AN  UNRELATED  CLIENT FOR WHICH  ADVISORY  FEES ARE
         RECEIVED) AND HAVE OR SHARE INVESTMENT CONTROL

              For example,  if you invest in a corporation that invests in securities and
         you have or share control over its investments,  that  corporation's  securities
         transactions would generally be treated as though they were your own.

              3. SECURITIES IN WHICH YOU DO NOT HAVE AN ECONOMIC  INTEREST (THAT ARE HELD
         BY A PARTNERSHIP,  CORPORATION, TRUST OR SIMILAR ENTITY HOWEVER, YOU EITHER HAVE
         CONTROL OF SUCH ENTITY, OR HAVE OR SHARE CONTROL OVER ITS INVESTMENTS.

              For example, if you were the trustee of a trust or foundation but you did
         not have an  economic  interest  in the entity  (i.e.,  you are not the  trustor
         (settlor) or beneficiary) the securities transactions would be treated as though
         they were your own if you had voting or investment control of the trust's assets
         or you had or shared control over its investments.

         ACCORDINGLY, EACH TIME THE WORDS "YOU" OR "YOUR" ARE USED IN THIS DOCUMENT, THEY
         APPLY NOT ONLY TO YOUR PERSONAL TRANSACTIONS AND ACCOUNTS,  BUT TO ALL THE TYPES
         OF ACCOUNTS AND  TRANSACTIONS  DESCRIBED  ABOVE. If you have any questions as to
         whether a  particular  account or  transaction  is  covered by the Code,  please
         contact the Code of Ethics Administration  Department  650-312-3693 (ext. 23693)
         for guidance.

         3.3   WHAT SECURITIES ARE EXEMPT FROM THE CODE OF ETHICS?

              You do not need to pre-clear OR report  transactions in the following types
         of securities:

               (1)  direct obligations of the U.S. government (i.e. securities issued or
                    guaranteed by the U.S. government such as Treasury bills, notes and
                    bonds including U.S. savings bonds and derivatives thereof);

               (2)  money market instruments - banker's acceptances, bank certificates
                    of deposits, commercial paper, repurchase agreements and other high
                    quality short-term debt instruments;

               (3)  shares of money market funds;

               (4)  shares issued by unit investment trusts that are invested exclusively
                    in one or more open-end funds, none of which are Reportable Funds.

               (5)  shares issued by U.S. registered open-end fund (I.E. mutual funds)
                    other than Reportable Funds"

              Transactions in the types of securities  listed above are also exempt from:
         (i) the  prohibited  transaction  provisions  contained in Section 3.4; (ii) the
         additional requirements applicable to Portfolio Persons and (iii) the applicable
         reporting requirements contained in Part 4.

         3.4   PROHIBITED TRANSACTIONS AND TRANSACTIONS REQUIRING PRE-APPROVAL FOR CODE
               OF ETHICS PERSONS

               A. INTENT" IS IMPORTANT

              The transactions  described below comprise a non-exclusive listing of those
         transactions  that  have  been  determined  by  the  courts  and  the  SEC to be
         prohibited by law. These types of transactions  are a violation of the Statement
         of Principles and are prohibited.  It should be noted that pre-clearance,  which
         is a cornerstone  of our  compliance  efforts,  cannot detect  inappropriate  or
         illegal  transactions,  which are by their  definition  dependent  upon  intent.
         Therefore,  personnel of the Code of Ethics Administration Department can assist
         you with compliance with the Code, however, they CANNOT guarantee any particular
         transaction  complies  with the Code or any  applicable  law. The fact that your
         proposed transaction receives  pre-clearance may not provide a full and complete
         defense to an accusation of a violation of the Code or of any laws. For example,
         if you executed a transaction  for which you received  pre-clearance,  or if the
         transaction was exempt from pre-clearance (e.g., a transaction for 500 shares or
         less),  that would not  preclude a  subsequent  finding  that  front-running  or
         scalping  occurred because such activity is dependent upon your intent. In other
         words,  your  intent  may  not be  able  to be  detected  or  determined  when a
         particular  transaction  request is analyzed for pre-clearance,  but can only be
         determined after a review of all the facts.

               In the final analysis, adherence to the principles of the Code remains
         the responsibility of EACH person effecting personal securities transactions.

               B.   CODE OF ETHICS PERSONS - PROHIBITIONS AND REQUIREMENTS

                 1. FRONT RUNNING:  TRADING AHEAD OF A FUND OR CLIENT

               You shall not front-run any trade of a Fund or client.  The term "front
         run" means knowingly trading before a contemplated transaction by a Fund or
         client of any Franklin Templeton adviser, whether or not your trade and the
         Fund's or client's trade take place in the same market. Front running is
         prohibited whether or not you realize a profit from such a transaction.
         Thus, you may not:

              (a)   purchase a security if you intend, or know of Franklin Templeton
                    Investments' intention, to purchase that security or a related
                    security on behalf of a Fund or client, or

              (b)   sell a security if you intend, or know of Franklin Templeton
                    Investments' intention, to sell that security or a related security
                    on behalf of a Fund or client.

                 2. SCALPING

              You shall not  purchase a security (or its  economic  equivalent)  with the
         intention of  recommending  that the security be purchased for a Fund or client,
         or sell short a security  (or its  economic  equivalent)  with the  intention of
         recommending  that  the  security  be sold  for a Fund or  client.  Scalping  is
         prohibited whether or not you realize a profit from such a transaction.

                 3. TRADING PARALLEL TO A FUND OR CLIENT

              You shall not either buy a security  if you know that the same or a related
         security  is  being  bought  contemporaneously  by a Fund or  client, or sell a
         security  if you  know  that  the  same or a  related  security  is  being  sold
         contemporaneously by a Fund or client.

                 4. TRADING AGAINST A FUND OR CLIENT

              You shall not:

              (a)   buy a security if you know that a Fund or client is selling the same
                    or a related security; or has sold the security or

              (b)   sell a security if you know that a Fund or client is buying the same
                    or a related security, or has bought the security.

               Refer to Section I.A., "Pre-clearance Standards," of Appendix A of the
         Code for more details regarding the pre-clearance of personal securities
         transactions.

                 5. CERTAIN TRANSACTIONS IN SECURITIES OF FRANKLIN RESOURCES, INC., AND
                    AFFILIATED CLOSED-END FUNDS

              You shall not effect a short sale of the securities, including "short sales
         against the box" of Franklin  Resources,  Inc., or any of the Franklin Templeton
         Investments'  closed-end  funds,  or  any  other  security  issued  by  Franklin
         Templeton   Investments.   This  prohibition   would  also  apply  to  effecting
         economically equivalent  transactions,  including, but not limited to purchasing
         and  selling  call or put options and swap  transactions  or other  derivatives.
         Officers and directors of Franklin  Templeton  Investments who are covered by
         Section 16 of the  Securities  Exchange  Act of 1934,  are  reminded  that their
         obligations  under  Section 16 are in addition to their  obligations  under this
         Code and other additional requirements with respect to pre-clearance and Rule
         144 affiliate policies and procedures.

                 6. SHORT TERM TRADING OR "MARKET TIMING" IN THE FUNDS.

              Franklin Templeton  Investments seeks to discourage short-term or excessive
         trading,  often  referred to as "market  timing." Code of Ethics Persons must be
         familiar with the "Market Timing Trading Policy"  described in the prospectus of
         each Fund in which they  invest and must not  engage in  trading  activity  that
         might violate the purpose or intent of that policy. Accordingly,  all directors,
         officers and employees of Franklin  Templeton  Investments  must comply with the
         purpose  and intent of each fund's  Market  Timing  Trading  Policy and must not
         engage in any short-term or excessive  trading in Funds.  The Trade Control Team
         of each Fund's transfer  agent will  monitor  trading  activity  by  directors,
         officers  and  employees  and will  report to the Code of Ethics Administration
         Department,  trading  patterns or behaviors that may constitute  short-term or
         excessive  trading.  Given the  importance of this issue,  if the Code of Ethics
         Administration  Department determines that you engaged in this type of activity,
         you will be subject to discipline, up to and including termination of employment
         and a permanent suspension of your ability to purchase shares of any Funds. This
         policy  applies to Franklin  Templeton  funds  including  those Funds  purchased
         through a 401(k) plan and to funds that are sub-advised by an investment adviser
         subsidiary  of Franklin  Resources,  Inc.,  but does not apply to purchases  and
         sales of Franklin Templeton money fund shares.

                 7. SERVICE AS A DIRECTOR

              Code of Ethics  Persons  (excluding  Independent  Directors of FRI) may not
         serve as a director, trustee, or in a similar capacity for any public or private
         company (excluding not-for-profit companies,  charitable groups and eleemosynary
         organizations)  unless you receive approval from the CEO of Franklin  Resources,
         Inc. and it is determined  that your service is consistent with the interests of
         the Funds and clients of  Franklin  Templeton  Investments.  You must notify the
         Code of Ethics  Administration  Department,  of your  interest  in  serving as a
         director,  including  your reasons for electing to take on the  directorship  by
         completing Schedule G. The Code of Ethics Administration Department will process
         the request through the Franklin Resources,  Inc. CEO. If approved by the CEO of
         Franklin Resources, Inc. procedures applicable to serving as an outside director
         will be furnished to you by the Code of Ethics  Administration  Department.  FRI
         Independent  Directors  are subject to the FRI Corporate  Governance  Guidelines
         with respect to services on another company's board.

                 C. ACCESS PERSONS (EXCLUDING INDEPENDENT DIRECTORS OF THE FUNDS) AND
                    PORTFOLIO PERSONS - ADDITIONAL PROHIBITIONS AND REQUIREMENTS.

                 1. SECURITIES SOLD IN A PUBLIC OFFERING

               Access Persons shall not buy securities in any initial public offering,
         or a secondary offering by an issuer except for offerings of securities made
         by closed-end funds that are either advised or sub-advised by a Franklin
         Templeton Investments adviser. Although exceptions are rarely granted, they will
         be considered on a case-by-case basis and only in accordance with procedures
         contained in section I.B. of Appendix A.

                 2. INTERESTS IN PARTNERSHIPS AND SECURITIES ISSUED IN LIMITED OFFERING
                    (PRIVATE PLACEMENTS)

              Access  Persons  shall  not  invest  in  limited  partnerships   (including
         interests  in limited  liability  companies,  business  trusts or other forms of
         "hedge funds") or other  securities in a Limited  Offering  (private  placement)
         without pre-approval from the Code of Ethics Administration Department. In order
         to seek consideration for pre-approval you must:

              (a) complete the Limited Offering (Private  Placement) Checklist (Schedule
                  F)

              (b) provide supporting documentation  (e.g., a copy of the offering
                  memorandum); and

              (c) obtain approval of the appropriate Chief Investment Officer; and

              (d) submit all documents to the Code of Ethics Administration Department.

              Approvals for such investments will be determined by the Director of Global
         Compliance or the Chief Compliance Officer.

              Pre-approval is not required for investments in FTI sponsored  products but
         reporting  on Schedule B,  including  the  offering  memorandum  (or  equivalent
         documents) is still required.

               D. PORTFOLIO PERSONS - ADDITIONAL PROHIBITIONS AND REQUIREMENTS

                 1. SHORT SALES OF SECURITIES

              Portfolio  Persons  shall not sell short ANY  security  held by  Associated
         Clients,  including  "short  sales  against  the box." This  prohibition  also
         applies to effecting economically equivalent  transactions,  including,  but not
         limited to, sales of uncovered call options,  purchases of put options while not
         owning the  underlying  security  and short sales of bonds that are  convertible
         into equity positions.

                 2. SHORT SWING TRADING

              Portfolio  Persons  shall not profit from the purchase and sale or sale and
         purchase within sixty (60) calendar days of any security in all his/her personal
         accounts  taken in  aggregate,  including  derivatives.  Portfolio  Persons  are
         responsible  for  transactions  that may occur in margin and option accounts and
         all such transactions must comply with this restriction./1

              This restriction does NOT apply to:

              (a) trading within a sixty (60) calendar day period if you do not realize a
                  profit and if you do not violate any other provisions of this Code;
                  AND

              (b) profiting on the  purchase and sale or sale and purchase  within sixty
                 (60) calendar days of the following securities:

                   o securities that are direct obligations of the U.S. Government, such
                     Treasury  bills, notes and bonds, and U.S. Savings Bonds and
                     derivatives thereof;

                   o high quality short-term instruments ("money market instruments")
                     including but not limited to (i) bankers' acceptances, (ii) U.S.
                     bank certificates of deposit; (iii) commercial paper; and (iv)
                     repurchase agreements;

                   o shares of any registered open-end investment companies  including
                     Exchange Traded Funds (ETF), Holding Company Depository Receipts
                     (Hldrs) and shares of Franklin Templeton Funds subject to the short
                     term trading (market timing) policies described in each Fund's
                     prospectus; and

                   o call or put options on a financial index ("index option").

              Calculation of profits on any short-swing transaction will be maximum gain
         realzied based on the  purchases and sales (or sales and purchases) occurring
         during the 60 day period. For example:

                   o 6/1/XX buy 1000 shares of Company ABC @ $10.00/share
                   o 6/1/XX buy 500 shares of Company ABC @ $15.00/share
                   o 6/1/XX buy 500 shares of Company ABC @ $14.00/share

                 The short swing profit would be calculated as follows:

                   o 7/15/XX sale of 500 shares of Company ABC @ $14.00/share = $7000
                   o 6/1/XX buy 500 shares of Company ABC @ $10.00/share =      $5000
                     Short-swing profit:                                        $2000

                 3. DISCLOSURE OF INTEREST IN A SECURITY AND METHOD OF DISCLOSURE

               As a Portfolio Person, you must promptly disclose your direct or indirect
         beneficial interest in a the securityof an issue,

              (a) if you are involved, either directly or as part of a larger research
                  group, in analysis of the issuer;

              (b) if you participate in the decision to include the company on "buy" or
                  "sell" lists or model portfolios; or

              (c) before you place an initial order for an account you manage.

              In such instances,  you must initially disclose that beneficial interest to
         your Chief Investment  Officer and/or Director or Research,  with a copy to Code
         of  Ethics   Administration,   using  Schedule  E  (or  on  a  form   containing
         substantially similar information) that has been signed by your Chief Investment
         Officer and/or Director or Research.

              Additionally,   you  must   re-disclose  to  your  your  Chief   Investment
         Officer/Director  or  Research,  if you  participate  in decisions to change the
         recommendation  of the  security  (e.g. Recommending  to  increase  or decrease
         portfolio weighting).

              PART 4 -  REPORTING  REQUIREMENTS  FOR CODE OF  ETHICS  PERSONS  (EXCLUDING
         INDEPENDENT DIRECTORS OF THE FUNDS AND OF CERTAIN ADVISORY SUBSIDIARIES OF FRI)

              Reference to Access Persons in this Part 4 do not apply to the  Independent
         Directors  of the  Funds  and  of FRI.  Reporting  requirements  applicable  to
         Independent Directors of the Funds are separately described in Part 6.

         4.1 REPORTING OF BENEFICIAL OWNERSHIP AND SECURITIES TRANSACTIONS

              Compliance with the following  personal  securities  transaction  reporting
         procedures  is  essential  to meeting our  responsibilities  with respect to the
         Funds and other clients as well as complying with regulatory  requirements.  You
         are expected to comply with both the letter and spirit of these  requirements by
         completing and filing all reports required under the Code in a timely manner. If
         you have any questions about which reporting  requirements  apply to you, please
         contact the Code of Ethics Administration Department.

         4.2 INITIAL REPORTS

                 A. ACKNOWLEDGEMENT FORM (SUPERVISED PERSONS, ACCESS PERSONS AND
                    PORTFOLIO PERSONS)

              All  Supervised  Persons, Access  Persons  and  Portfolio  Persons  must
         complete  and  return  an  executed  Acknowledgement  Form to the Code of Ethics
         Administration  Department  no later than ten (10)  calendar days after the date
         the  person  is  notified  by a  member  of the Human Resources Department.

               B. SCHEDULE C - INITIAL & ANNUAL DISCLOSURE OF BROKERAGE ACCOUNTS,
                  SECURITIES HOLDINGS AND DISCRETIONARY AUTHORITY (ACCESS PERSONS AND
                  PORTFOLIO PERSONS)

         In addition, all Access Persons and Portfolio Persons must also file Schedule C
         (Initial & Annual  Disclosure  of Brokerage  Accounts,  Securities  Holdings and
         Discretionary  Authority) by returning the completed form to Human Resources no
         later than ten (10) calendar days after becoming an Access or Portfolio  Person.
         The submitted  information must be current as of a date not more than forty-five
         (45) days prior to becoming an Access or Portfolio Person.

         4.3  QUARTERLY TRANSACTION REPORTS

                 A. ACCESS PERSONS AND PORTFOLIO PERSONS

              You must report ALL securities  transactions  except for those (1) effected
         pursuant  to  an  Automatic  Investment  Plan  (however,  any  transaction  that
         overrides the preset  schedule or allocations of the automatic  investment  plan
         must  be  included  in a  quarterly  transaction  report.);  or (2)  that  would
         duplicate information contained in broker confirmations or statements.

              You must provide the Code of Ethics Administration Department no later than
         thirty (30) calendar days after the end of each calendar  quarter,  with either;
         (i) copies of all broker's confirmations and statements (which may be sent under
         separate  cover by the broker)  showing  all your  securities  transactions  and
         holdings  in such  securities,  or (ii) a  completed  Schedule  B  (Transactions
         Report).  Please use Schedule B only when your  securities  transactions  do not
         generate a  statement  or do not take place in a  brokerage  account.  Brokerage
         statements  and  confirmations   submitted  must  include  all  transactions  in
         securities in which you have, or by reason of the transaction acquire any direct
         or indirect  beneficial  ownership,  including  transactions  in a discretionary
         account and transactions for any account in which you have any economic interest
         AND have or share investment  control.  Please remember that you must report all
         securities  acquired by gift,  inheritance,  vesting,/2 stock splits,  merger or
         reorganization of the issuer of the security.

               Failure to timely report transactions is a violation of Rule 17j-1, Rule
         204A-1, as well as the Code, and will be reported to the Director of Global
         Compliance and/or the Fund's Board of Directors and may also result in
         disciplinary action, up to and including, termination.

         4.4   ANNUAL REPORTS

               A. SECURITIES ACCOUNTS AND SECURITIES HOLDINGS REPORTS  (ACCESS PERSONS
                  AND PORTFOLIO PERSONS)

              You must file a report of all personal  securities  accounts and securities
         holdings on Schedule C (Initial and Annual  Disclosure  of  Brokerage  Accounts,
         Investment Advisory Accounts,  Securities Holdings and Discretionary Authority),
         with the Code of Ethics Administration Department, annually by February 1st. You
         must report the name and  description  of each  securities  account in which you
         have a direct or indirect beneficial interest,  including securities accounts of
         your  immediate  family  residing  in  the  same  household.  You  must  provide
         information on any account that is covered under Section 3.2 of the Code.

              This report should include ALL of your securities  holdings,  including any
         security  acquired  by a  transaction,  gift,  inheritance,  vesting,  merger or
         reorganization  of the issuer of the  security,  in which you have any direct or
         indirect beneficial ownership,  including securities holdings in a discretionary
         account.  Your securities  holding  information  must be current as of a date no
         more than  forty-five  (45) days before the report is submitted.  You may attach
         copies of year-end brokerage statements to Schedule C in lieu of listing each of
         your security positions on the Schedule.

              B.  ACKNOWLEDGEMENT FORM (SUPERVISED PERSONS, ACCESS PERSONS AND PORTFOLIO
                  PERSONS)

              Supervised Persons,  Access Persons and Portfolio Persons, will be asked to
         certify by February 1st annually  that they have  complied  with and will comply
         with the CODE and Insider Trading Policy by filing the Acknowledgment  Form with
         the Code of Ethics Administration Department.

         4.5   BROKERAGE ACCOUNTS, INVESTMENT ADVISORY ACCOUNTS AND CONFIRMATIONS OF
               SECURITIES TRANSACTIONS (ACCESS PERSONS AND PORTFOLIO PERSONS)

              Before or at a time  contemporaneous  with  opening a brokerage  account or
         investment  advisory  account with a  registered  broker-dealer,  or a bank,  or
         placing  an  initial  order for the  purchase  or sale of  securities  with that
         broker-dealer, investment adviser or bank, you must:

               (a) notify the Code of Ethics Administration Department, in writing, by
                   completing Schedule D (Notification of Securities Account) or by
                   providing substantially similar information; and

               (b) notify the institution with which you open the account, in writing,
                   of your association with Franklin Templeton Investments.

              The Code of Ethics Administration Department will request, in writing, that
         the institution send duplicate  copies of  confirmations  and statements for all
         transactions  effected in the account  simultaneously with their mailing of such
         confirmation and statement to you.

              If you have an existing  account on the effective date of this Code or upon
         becoming an Access or  Portfolio  Person,  you must comply  within ten (10) days
         with conditions (a) and (b) above.


         PART 5 - PRE-CLEARANCE REQUIREMENTS (APPLICABLE TO ACCESS PERSONS (EXCLUDING
         INDEPENDENT DIRECTORS OF THE FUNDS AND CERTAIN INVESTMENT ADVISORY SUBSIDIARIES
         OF FRI) AND PORTFOLIO PERSONS

         References  to Access  Persons  in this  Part 5 do not apply to the  Independent
         Directors  of the Funds and Certain  Investment  Advisory  Subsidiaries  of FRI.
         Pre-clearance  requirements applicable to Independent Directors of the Funds are
         separately described in Part 6.

              PRIOR APPROVAL (PRE-CLEARANCE) OF SECURITIES TRANSACTIONS

                 A. LENGTH OF APPROVAL

              You shall not buy or sell any security without first contacting a member of
         the Code of Ethics  Administration  Department either electronically or by phone
         and obtaining his or her approval,  unless your proposed  transaction is covered
         by  paragraph B below.  Approval  for a proposed  transaction  will remain valid
         until the close of the business day following the day  pre-cleara
                                                               nce  is granted
         but may be  extended  in  special  circumstances,  shortened  or  rescinded,  as
         explained in the section entitled Pre-clearance Standards in Appendix A.

                 B. SECURITIES NOT REQUIRING PRE-CLEARANCE

              You do not need to request  pre-clearance  for the types of  securities  or
         transactions  listed  below.  However,  all other  provisions of the Code apply,
         including,  but not  limited  to:  (i)  the  prohibited  transaction  provisions
         contained  in Part 3.4 such as  front-running;  (ii) the  additional  compliance
         requirements applicable to Portfolio Persons contained in Part 3.4(D), (iii) the
         applicable reporting  requirements contained in Part 4; and (iv) insider trading
         prohibitions described in the Insider Trading Policy.

               If you have any questions, contact the Code of Ethics Administration
         Department before engaging in the transaction.  If you have any doubt whether
         you have or might acquire direct or indirect beneficial ownership or have or
         share investment control over an account or entity in a particular
         transaction, or whether a transaction involves a security covered by the
         Code, you should consult with the Code of Ethics Administration Department
         before engaging in the transaction.

         You need NOT pre-clear the following types of transactions or securities:

              1)  FRANKLIN RESOURCES, INC., AND CLOSED-END FUNDS OF FRANKlIN TEMPLETON
                  GROUP OF FUNDS.  Purchases and sales of securities of Franklin
                  Resources, Inc. and closed-end funds of Franklin Templeton Group of
                  Funds, as these securities cannot be purchased on behalf of our
                  advisory clients./3

              2)  SHARES OF OPEN-END INVESTMENT COMPANIES (INCLUDING REPORTABLE FUNDS),

              3)  SMALL QUANTITIES (NOT APPLICABLE TO OPTION TRANSACTIONS (EXCEPT INDEX
                  OPTIONS) OR CORPORATE BONDS).

                   o  Transactions of 500 shares or less of any security regardless of
                      where it is traded in any 30-day period including Exchange Traded
                      Funds (ETFs) (including SPDRS), Holding Company Depository Receipts
                      (Holdrs) and index options (5 contracts); or
                   o  Transactions in municipal bonds with a face value of $100,000 or
                      less in any 30-day period.
                   o  Option transactions and municipal bond transactions: the small
                      quantities rule is not applicable to option (except index options)
                      and municipal bond transactions.  All option and municipal bond
                      transactions must be pre-cleared except for employer stock options
                      as noted in employer stock option programs below.

               PLEASE NOTE THAT YOU MAY NOT EXECUTE ANY TRANSACTION, REGARDLESS OF
               QUANTITY, IF YOU LEARN THAT THE FUNDS OR CLIENTS ARE ACTIVE IN THE
               SECURITY.  IT WILL BE PRESUMED THAT YOU HAVE KNOWLEDGE OF FUND OR CLIENT
               ACTIVITY IN THE SECURITY IF, AMONG OTHER THINGS, YOU ARE DENIED APPROVAL
               TO GO FORWARD WITH A TRANSACTION REQUEST. "SECURITY", WOULD INCLUDE
               SECURITIES OF THE ISSUER THAT ARE ECONOMICALLY EQUIVALENT TO YOUR PROPOSED
               TRANSACTION.  FOR EXAMPLE, YOU MAY NOT PURCHASEE CONVERTIBLE PREFERRED
               STOCK OR CALL OPTIONS OF COMPANY ABC IF YOU LEARN THAT THE FUNDS OR
               CLIENTS ARE ACTIVE IN THE COMMON STOCK OF COMPANY ABC.

              4)  DIVIDEND REINVESTMENT PLANS:  Transactions  made pursuant to dividend
                  reinvestment plans ("DRIPs") do not require pre-clearance regardless
                  of quantity or Fund activity.

              5)  GOVERNMENT OBLIGATIONS.  Transactions in securities issued or
                  guaranteed by the governments of the United States, Canada, the
                  United Kingdom, France, Germany, Switzerland, Italy and Japan, or
                  their agencies or instrumentalities, or derivatives thereof.

              6)  PAYROLL DEDUCTION PLANS.  Securities purchased by an Access Person's
                  spouse pursuant to a payroll deduction program.

              7)  EMPLOYER STOCK OPTION PROGRAMS.  Transactions involving the exercise
                  and/or purchase by an Access Person or an Access Person's spouse of
                  securities pursuant to a program sponsored by a company employing
                  the Access Person or Access Person's spouse.

              8)  PRO RATA DISTRIBUTIONS.  Purchases effected by the exercise of
                  rights issued pro rata to all holders of a class of securities or
                  the sale of rights so received.

              9)  TENDER OFFERS.  Transactions in securities pursuant to a bona fide
                  tender offer made for any and all such securities to all similarly
                  situated shareholders in conjunction with mergers, acquisitions,
                  reorganizations and/or similar corporate actions.  However, tenders
                  pursuant to offers for less than all outstanding securities of a
                  class of securities of an issuer must be pre-cleared.

             10)  SECURITIES PROHIBITED FOR PURCHASE BY THE FUNDS AND OTHER CLIENTS.
                  Transactions in any securities that are prohibited investments for
                  all Funds and clients advised by the entity employing the Access
                  Person.

             11)  VARIABLE RATE DEMAND OBLIGATION/NOTE TRANACTIONS.

             12)  NO INVESTMENT CONTROL. Transactions effected for an account or
                  entity over which you do not have or share investment control (i.e.,
                  an account where someone else exercises complete investment
                  control).

             13)  NO BENEFICIAL OWNERSHIP. Transactions in which you do not acquire
                  or dispose of direct or indirect beneficial ownership (i.e., an
                  account where in you have no financial interest).

              C. DISCRETIONARY ACCOUNTS

               You need not pre-clear transactions in any discretionary account for
         which a registered broker-dealer, a registered investment adviser, or other
         investment manager acting in a similar fiduciary capacity, exercises sole
         investment discretion, if the following conditions are met:/4

               (1)   The terms of each account relationship ("Agreement") must be in
                     writing and filed with the Code of Ethics Administration Department
                     prior to any transactions.

               (2)   Any amendment to each  Agreement must be filed with the Code of
                     Ethics Administration Department prior to its effective date.

               (3)   The Access Person certifies to the Code of Ethics  Administration
                     Department at the time such account relationship  commences,  and
                     annually thereafter,  as contained in Schedule C of the Code that
                     such Access Person does not have direct or indirect  influence or
                     control over the account,  other than the right to terminate  the
                     account.

               (4)   Additionally, any discretionary account that you open or maintain
                     with a registered broker-dealer, a registered investment adviser,
                     or  other  investment  manager  acting  in  a  similar  fiduciary
                     capacity  must  provide  duplicate  copies of  confirmations  and
                     statements   for  all   transactions   effected  in  the  account
                     simultaneously  with their delivery to you. If your discretionary
                     account acquires  securities that are not reported to the Code of
                     Ethics  Administration  Department  by a duplicate  confirmation,
                     such   transaction  must  be  reported  to  the  Code  of  Ethics
                     Administration  Department on Schedule B (Quarterly  Transactions
                     Report)  no later  than  thirty  (30)  days  after the end of the
                     calendar quarter after you are notified of the acquisition./5

              However,  if prior to making ANY  request  you  advised  the discretionary
         account manager to enter into or refrain from a specific transaction or class of
         transactions,  you must  first  consult  with the Code of Ethics Administration
         Department and obtain approval prior to making such request.


         PART 6 - REQUIREMENTS FOR INDEPENDENT DIRECTORS OF THE FUNDS AND CERTAIN
         INVESTMENT ADVISORY SUBSIDIARIES OF FRI.

         6.1 PRE-CLEARANCE REQUIREMENTS

         Independent  Directors of the Funds and certain investment advisory subsidiaries
         of FRI shall pre-clear or report on any securities  transactions if they knew or
         should have known that during the 15-day period before or after the  transaction
         the security was  purchased  or sold or  considered  for purchase or sale by the
         Fund.  Such  pre-clearance  and  reporting   requirements  shall  not  apply  to
         securities  transactions  conducted in an account where an Independent  Director
         has granted full  investment  discretion to a brokerage firm, bank or investment
         adviser or conducted in a trust account in which the trustee has full investment
         discretion.

         6.2  REPORTING REQUIREMENTS

                 A.  INITIAL REPORTS

              1. ACKNOWLEDGEMENT FORM

              Independent  Directors  of the Funds must  complete  and return an executed
         Acknowledgement  Form to the Code of Ethics  Administration  Department no later
         than ten (10)  calendar  days after the date the person  becomes an  Independent
         Director of the Fund.

              2. DISCLOSURE OF SECURITIES HOLDINGS, BROKERAGE ACCOUNTS AND DISCRETIONARY
                 AUTHORITY

         Independent  Directors of the Funds and certain investment advisory subsidiaries
         of FRI are not required to disclose any securities holdings, brokerage accounts,
         including brokerage accounts where he/she has granted discretionary authority to
         a brokerage firm, bank or investment adviser.

              B. QUARTERLY TRANSACTION REPORTS

         Independent  Directors of the Funds and certain investment advisory subsidiaries
         of FRI are not required to file any quarterly  transaction reports unless he/she
         knew or should  have known  that,  during the  15-day  period  before or after a
         transaction,  the security was purchased or sold, or considered  for purchase or
         sale, by a Fund or by Franklin Templeton Investments on behalf of a Fund.

              C. ANNUAL REPORTS

         Independent  Directors of the Funds and certain investment advisory subsidiaries
         of FRI will be asked to certify by February 1st annually that they have complied
         with and will  comply  with the Code and  Insider  Trading  Policy by filing the
         Acknowledgment Form with the Code of Ethics Administration Department.


          PART 7 - PENALTIES FOR VIOLATIONS OF THE CODE

               The Code is designed to assure compliance with applicable laws and to
         maintain shareholder confidence in Franklin Templeton Investments.

               In adopting this Code, it is the intention of the Boards of
         Directors/Trustees of the subsidiaries listed in Appendix C of this Code,
         together with Franklin Resources, Inc., and the Funds, to attempt to achieve
         100% compliance with all requirements of the Code - but recognize that this
         may not be possible.  Certain incidental failures to comply with the Code are
         not necessarily a violation of the law or the Code. Such violations of the
         Code not resulting in a violation of law or the Code will be referred to the
         Director of Global Compliance and/or the Chief Compliance Officer and/or the
         relevant management personnel, and disciplinary action commensurate with the
         violation, if warranted, will be imposed.  Additionally, if you violate any
         of the enumerated prohibited transactions contained in Parts 3.4 of the
         Code, you will be expected to give up ANY profits realized from these
         transactions to Franklin Resources, Inc. for the benefit of the affected
         Funds or other clients.  If Franklin Resources, Inc. cannot determine which
         Funds or clients were affected the proceeds will be donated to a charity
         chosen either by you or by Franklin Resources, Inc.    Please refer to the
         following page for guidance on the types of sanctions that would likely be
         imposed for violations of the Code.

               Failure to disgorge profits when requested or even a pattern of
         violations that individually do not violate the law or the Code, but which
         taken together demonstrate a lack of respect for the Code, may result in more
         significant disciplinary action, up to and including termination of
         employment.  A violation of the Code resulting in a violation of the law will
         be severely sanctioned, with disciplinary action potentially including, but
         not limited to, referral of the matter to the board of directors of the
         affected Fund, senior management of the appropriate investment adviser,
         principal underwriter or other Franklin subsidiary and/or the board of
         directors of Franklin Resources, Inc., termination of employment and referral
         of the matter to the appropriate regulatory agency for civil and/or criminal
         investigation.


                               CODE OF ETHICS SANCTION GUIDELINES

         PLEASE BE AWARE THAT THESE GUIDELINES  REPRESENT ONLY A REPRESENTATIVE  SAMPLING
         OF THE  POSSIBLE  SANCTIONS  THAT MAY BE  TAKEN  AGAINST  YOU IN THE  EVENT OF A
         VIOLATION  OF THE  CODE.  REPEATED  VIOLATIONS  OF THE  CODE,  EVEN  INADVERTENT
         VIOLATIONS  THAT DO NOT HARM  FUNDS OR  CLIENTS,  WILL  VIEWED  AS  DISREGARDING
         PRINCIPALS OF THE CODE AND SANCTION WILL BE MORE SEVER.


          ----------------------------------------------------------------------------
                         VIOLATION                        SANCTION IMPOSED
          ----------------------------------------------------------------------------
          o  Failure to pre-clear but otherwise           Reminder Memo
             would have been approved (i.e., no
             conflict with the fund's transactions).
          ----------------------------------------------------------------------------
          o  Failure to pre-clear but otherwise           30 Day Personal Securities
             would have been approved (i.e., no           Trading Suspension
             conflict with the fund's transactions)
             twice within twelve (12) calendar
             months

          o  Failure to pre-clear and the transaction
             would not have been approved
          ----------------------------------------------------------------------------
          o  Failure to pre-clear and the transaction     Immediate sale, 30 Day Personal
             would not have been approved twice           Securities Trading Suspension
             within twenty-four (24) calendar month)      and Disgorgement of Profits
          ----------------------------------------------------------------------------
          o  Trading on a denied request                  Immediate sale, Disgorgement
                                                          of Profits, length of suspen-
                                                          ion and any additional
                                                          penalties will be imposed
                                                          based on the review of all
                                                          facts and circumstances
          ----------------------------------------------------------------------------
          o  Profiting from short-swing trades            Immediate Disgorgement of
             (profiting on purchase & sale or sale &      Profits
             purchase within sixty (60) days)
          ----------------------------------------------------------------------------
          o Failure to return initial or annual           Sanction may include but not
            disclosure forms                              limited to a reminder memo,
          o Failure to timely report transactions         suspension of personal trading,
                                                          monetary sanctions, reporting
                                                          to the Board of Directors,
                                                          placed on unpaid administrative
                                                          leave or termination of
                                                          employment
          ----------------------------------------------------------------------------
          o  Violation of Insider Trading Compliance      Subject to review by the
             Policy Procedures                            appropriate supervisor in
                                                          consultation with the Franklin
                                                          Resources Inc., General Counsel
                                                          for consideration of
                                                          appropriate disciplinary action
                                                          up to and including termination
                                                          of employment and reporting to
                                                          the appropriate regulatory
                                                         agency.
          ----------------------------------------------------------------------------

         PART 8 - A REMINDER ABOUT THE FRANKLIN TEMPLETON INVESTMENTS INSIDER TRADING
                  POLICY

              The Insider Trading Policy (see the attached  Insider  Trading  Compliance
         Policy and  Procedures)  deals with the problem of insider trading in securities
         that could  result in harm to a Fund,  a client,  or members of the  public.  It
         applies to all Code of Ethics Persons. The guidelines and requirements described
         in the Insider  Trading  Policy go  hand-in-hand  with the Code. If you have any
         questions or concerns  about  compliance  with the Code and the Insider  Trading
         Policy  you are  encouraged  to speak  with the  Code of  Ethics  Administration
         Department.



                        APPENDIX A: COMPLIANCE PROCEDURES AND DEFINITIONS

              This appendix sets forth the responsibilities and obligations of the
         Compliance Officers of each entity that has adopted the Code, the Code of Ethics
         Administration Department, and the Legal Department, under the Code and Insider
         Trading Policy.


         I. RESPONSIBILITIES OF EACH DESIGNATED COMPLIANCE OFFICER

              A. PRE-CLEARANCE STANDARDS

                 1. GENERAL PRINCIPLES

              The Director of Global Compliance,  the Chief Compliance Officer and/or the
         Code of Ethics  Administration  Department,  shall permit an Access Person to go
         forward with a proposed  security/9  transaction  only if he or she  determines
         that,  considering  all of the  facts  and  circumstances  known  to  them,  the
         transaction does not violate Federal  Securities Laws, or this Code and there is
         no likelihood of harm to a Fund or client.

                 2. ASSOCIATED CLIENTS

              Unless  there  are  special  circumstances  that  make  it  appropriate  to
         disapprove  a  personal  securities  transaction  request,  the  Code of  Ethics
         Administration  Department shall consider only those securities  transactions of
         the  "Associated  Clients" of the Access  Person,  including  open and  executed
         orders and  recommendations,  in determining  whether to approve such a request.
         "Associated Clients" are those Funds or clients whose securities holdings and/or
         trading information would be available to the Access Person during the course of
         his or her regular  functions  or duties.  As of November  2004,  there are five
         groups of Associated  Clients:  (i) the Franklin Mutual Series Funds and clients
         advised by Franklin Mutual Advisers,  LLC ("Mutual Clients");  (ii) the Franklin
         Group of Funds  and the  clients  advised  by the  various  Franklin  investment
         advisers  ("Franklin  Clients");  (iii)  the  Templeton  Group of Funds  and the
         clients  advised  by  the  various  Templeton  investment  advisers  ("Templeton
         Clients");  (iv) the Bissett Group of Funds and the clients  advised by Franklin
         Templeton  Investments Corp. ("Bisset Clients");  and (v) the Fiduciary Group of
         funds and the  clients  advised by the  various  Fiduciary  investment  advisers
         ("Fiduciary  Clients").  Other Associated  Clients will be added to this list as
         they are established.  Thus, for example, persons who have access to the trading
         information of Mutual Clients  generally will be pre-cleared  solely against the
         securities  transactions  of the Mutual  Clients,  including  open and  executed
         orders and  recommendations.  Similarly,  persons who have access to the trading
         information  of  Franklin  Clients,   Templeton  Clients,  Bissett  Clients,  or
         Fiduciary  Clients,  generally will be pre-cleared solely against the securities
         transactions  of  Franklin  Clients,   Templeton  Clients,  Bissett  Clients  or
         Fiduciary Clients respectively.

              Certain  officers of  Franklin  Templeton  Investments,  as well as certain
         employees  in  the Legal, Global Compliance,   Fund  Accounting,   Investment
         Operations and other personnel who generally have access to trading  information
         of the Funds and clients of Franklin Templeton  Investments during the course of
         their  regular  functions  and  duties,  will  have  their  personal  securities
         transactions   pre-cleared  against  executed  transactions,   open  orders  and
         recommendations of all Associated Clients.

                 3. SPECIFIC STANDARDS

                   (a) SECURITIES TRANSACTIONS BY FUNDS OR CLIENTS

              No clearance  shall be given for any transaction in any security on any day
         during  which an  Associated  Client of the Access  Person has executed a buy or
         sell order in that  security,  until seven (7) calendar days after the order has
         been  executed.  Notwithstanding  a  transaction  in the  previous  seven  days,
         clearance may be granted to sell if all Associated  Clients have disposed of the
         security.

                   (b) SECURITIES UNDER CONSIDERATION

                             OPEN ORDERS

               No clearance shall be given for any transaction in any security on any
         day which an Associated Client of the Access Person has a pending buy or sell
         order for such security, until seven (7) calendar days after the order has
         been executed or if the order is immediately withdrawn.

                             RECOMMENDATIONS

              No clearance  shall be given for any transaction in any security on any day
         on which a  recommendation  for such  security  was made by a Portfolio  Person,
         until seven (7) calendar  days after the  recommendation  was made and no orders
         have subsequently been executed or are pending.

                   (c) LIMITED OFFERING (PRIVATE PLACEMENT)

              In  considering   requests  by  Access  Persons  for  approval  of  limited
         partnerships and other limited  offering,  the Director of Global  Compliance or
         Chief Compliance Officer shall take into account,  among other factors,  whether
         the investment  opportunity  should be reserved for a Fund or other client,  and
         whether the  investment  opportunity  is being  offered to the Access  Person by
         virtue of his or her position with Franklin Templeton Investments. If the Access
         Person receives clearance for the transaction,  an investment in the same issuer
         may  only be made for a Fund or  client  if an  executive  officer  of  Franklin
         Resources,  Inc., who has been informed of the Portfolio  Person's  pre-existing
         investment  and who has no  interest in the issuer,  approves  the  transaction.
         Please see Schedule F.

                   (d) DURATION OF CLEARANCE

              If the  Code  of  Ethics  Administration  Department  approves  a  proposed
         securities  transaction,  the  order  for the  transaction  must be  placed  and
         effected by the close of the next  business day  following  the day approval was
         granted.  The Director of Global Compliance and/or the Chief Compliance  Officer
         may,  in his or her  discretion,  extend  the  clearance  period up to seven (7)
         calendar  days,  beginning  on  the  date  of  the  approval,  for a  securities
         transaction  of any Access Person who  demonstrates  that special  circumstances
         make the extended clearance period necessary and appropriate./10 The Director of
         Global Compliance or the Chief Compliance Officer may, in his or her discretion,
         after consultation with an executive officer of Franklin Resources,  Inc., renew
         the approval  for a particular  transaction  for up to an  additional  seven (7)
         calendar days upon a showing of special  circumstances by the Access Person. The
         Director of Global  Compliance  or the Chief  Compliance  Officer may shorten or
         rescind any  approval or renewal of approval  under this  paragraph if he or she
         determines it is appropriate to do so.

               B.   WAIVERS BY THE DIRECTOR OF GLOBAL COMPLIANCE AND/OR THE CHIEF
         COMPLIANCE OFFICER

                The Director of Global Compliance and/or the Chief Compliance Officer
         may, in his or her discretion, after consultation with an executive officer
         of Franklin Resources, Inc., waive compliance by any Access Person with the
         provisions of the Code, if he or she finds that such a waiver:

               (1)  is necessary to alleviate undue hardship or in view of unforeseen
                    circumstances or is otherwise  appropriate under all the relevant
                    facts and circumstances;

               (2)  will not be inconsistent  with the purposes and objectives of the
                    Code;

               (3)  will not  adversely  affect  the  interests of advisory clients of
                    Franklin  Templeton Investments, the interests of Franklin Templeton
                    Investments or its affiliates; and

               (4)  will not result in a transaction or conduct that would violate
                    provisions of applicable laws or regulations.

               Any waiver shall be in writing, shall contain a statement of the basis
         for it, and the Director of Global Compliance or the Chief Compliance
         Officer, shall promptly send a copy to the General Counsel of Franklin
         Resources, Inc.

              C.  CONTINUING RESPONSIBILITIES OF THE CODE OF ETHICS ADMINISTRATION
                  DEPARTMENT

         PRE-CLEARANCE RECORDKEEPING

               The Code of Ethics Administration Department shall keep a record of all
         requests for pre-clearance regarding the purchase or sale of a security,
         including the date of the request, the name of the Access Person, the details
         of the proposed transaction, and whether the request was approved or denied.
         The Code of Ethics Administration Department shall keep a record of any
         waivers given, including the reasons for each exception and a description of
         any potentially conflicting Fund or client transactions.

         INITIAL, ANNUAL HOLDINGS REPORTS AND QUARTERLY TRANSACTION REPORTS

              The Code of Ethics Administration  Department shall also collect the signed
         Acknowledgment  Forms from Supervised and Access Persons as well as reports,  on
         Schedules B, C, D, E, F, G of the Code, as applicable.  In addition, the Code of
         Ethics  Administration  Department shall keep records of all confirmations,  and
         other  information  with respect to an account  opened and  maintained  with the
         broker-dealer by any Access Person of Franklin Templeton  Investments.  The Code
         of Ethics  Administration  Department shall preserve those  acknowledgments  and
         reports,  the records of consultations and waivers,  and the confirmations,  and
         other information for the period required by the applicable regulation.

               The Code of Ethics Administration Department shall review brokerage
         transaction confirmations, account statements, Schedules B, C, D, E, F and G
         for compliance with the Code.  The reviews shall include, but are not limited
         to;

              (1)  Comparison of brokerage  confirmations,  Schedule Bs, and/or brokerage
                   statements to pre-clearance  requests or, if a private placement,  the
                   Private Placement Checklist;

              (2)  Comparison  of  brokerage  statements  and/or  Schedule  Cs to current
                   securities holding  information,  securities  account  information and
                   discretionary authority information;

              (3)  Conducting  periodic  "back-testing"  of Access  Person  transactions,
                   Schedule  Cs  and/or  Schedule  Es in  comparison  to fund and  client
                   transactions;

               The Code of Ethics Administration Department shall evidence review by
         initialing and dating the appropriate document or log.  Violations of the
         Code detected by the Code of Ethics Administration Department during his or
         her reviews shall be promptly brought to the attention of the Director of
         Global Compliance and/or the Chief Compliance Officer with periodic reports
         to each appropriate Chief Compliance Officer.

               D. PERIODIC RESPONSIBILITIES OF THE CODE OF ETHICS ADMINISTRATION
                  DEPARTMENT

              The Code of Ethics  Administration  Department or designated group shall
         consult  with  FRI's  General  Counsel  and seek  the  assistance of the Human
         Resources Department, as the case may be, to assure that:

              1.   Adequate  reviews and audits are conducted to monitor  compliance with
                   the  reporting,   pre-clearance,   prohibited  transaction  and  other
                   requirements of the Code.

              2.   All  Code of  Ethics  Persons  are  adequately  informed  and  receive
                   appropriate  education and training as to their duties and obligations
                   under the Code.

              3.   All  new  Supervised   and  Access   Persons  of  Franklin   Templeton
                   Investments are required to complete the Code of Ethics Computer Based
                   Training program.  Onsite training will be conducted on an "as needed"
                   basis.

              4.   There are adequate  educational,  informational and monitoring efforts
                   to  ensure  that  reasonable  steps are taken to  prevent  and  detect
                   unlawful  insider  trading by  Supervised  and Access  Persons  and to
                   control access to inside information.

              5.   Written  compliance reports are submitted to the Board of Directors of
                   each  relevant  Fund  at  least   quarterly.   Additionally,   written
                   compliance reports are submitted to the Board of Directors of Franklin
                   Resources,  Inc.,  and the  Board  of  each  relevant  Fund  at  least
                   annually. Such reports will describe any issues arising under the Code
                   or procedures  since the last report,  including,  but not limited to,
                   information  about  material  violations of the Code or procedures and
                   sanctions imposed in response to the material violations.

              6.   The Global Compliance Department will certify at least annually to the
                   Fund's board of directors  that  Franklin  Templeton  Investments  has
                   adopted  procedures  reasonably  necessary to prevent  Supervised  and
                   Access Persons from violating the Code, and

              7.   Appropriate records are kept for the periods required by law. Types of
                   records  include  pre-clearance  requests  and  approvals,   brokerage
                   confirmations, brokerage statements, initial and annual Code of Ethics
                   certifications.


               E.  APPROVAL BY FUND'S BOARD OF DIRECTORS

              (1)  BASIS FOR APPROVAL

              The Board of  Directors/Trustees  must base its  approval  of the Code on a
         determination that the Code contains provisions  reasonably necessary to prevent
         Code of Ethics Persons from engaging in any conduct  prohibited by Rule 17j-1 or
         Rule 204A-1. The Code of Ethics  Administration  Department maintains a detailed
         list of  violations  and will  amend the Code of  Ethics  and  procedures  in an
         attempt to reduce such violations.

              (2)  NEW FUNDS

              At the time a new fund is  organized,  the  Code Of  Ethics  Administration
         Department will provide the Fund's board of directors,  a certification that the
         investment adviser and principal  underwriter has adopted procedures  reasonably
         necessary  to prevent  Code of Ethics  Persons  from  violating  the Code.  Such
         certification will state that the Code contains provisions  reasonably necessary
         to prevent Code of Ethics Persons from violating the Code.

              (3)  MATERIAL CHANGES TO THE CODE OF ETHICS

              The Global Compliance Department will provide the Fund's board of directors
         a written  description  of all  material  changes  to the Code no later than six
         months after adoption of the material change by Franklin Templeton Investments.


         II.  DEFINITIONS OF IMPORTANT TERMS

              For purposes of the Code of Ethics and Insider  Trading  Policy,  the terms
         below have the following meanings:

         1934 ACT - The Securities Exchange Act of 1934, as amended.

         1940 ACT - The Investment Company Act of 1940, as amended.

         ACCESS PERSON - (1) Each director, trustee, general partner or officer of a Fund
               or investment adviser in Franklin Templeton Investments; (2) any Advisory
               Representative; and (3) any director, trustee, general partner or officer
               of a principal underwriter of the Funds, who has access to information
               concerning recommendations made to a Fund or client with regard to the
               purchase or sale of a security.

         ADVISERS ACT - The Investment Advisers Act of 1940, as amended.

         ADVISORY REPRESENTATIVE - Any director, trustee, general partner, officer or
               employee of a Fund or investment adviser of Franklin Templeton Investments
               (or of any company in a control relationship to such Fund or investment
               adviser) who in connection with his or her regular functions or duties
               makes any recommendation, who participates in the determination of which
               recommendation shall be made; or who, obtains any information concerning
               which securities are being recommended prior to the effective
               dissemination of such recommendations.

         AFFILIATED PERSON - it has the same meaning as Section 2(a)(3) of the
               Investment Company Act of 1940. An "affiliated person" of an investment
               company includes directors, officers, employees, and the investment
               adviser.  In addition, it includes any person owning 5% of the company's
               voting securities, any person in which the investment company owns 5% or
               more of the voting securities, and any person directly or indirectly
               controlling, controlled by, or under common control with the company.

         APPROPRIATE ANALYST - With respect to any Access Person, any securities
               analyst or portfolio manager making investment recommendations or
               investing funds on behalf of an Associated Client and who may be
               reasonably expected to recommend or consider the purchase or sale of a
               security.

         ASSOCIATED CLIENT - A Fund or client whose trading information would be
               available to the Access Person during the course of his or her regular
               functions or duties.

         AUTOMATIC INVESTMENT PLAN-A program in which regular periodic purchases (or
               withdrawals) are made automatically in (or from) investment accounts in
               accordance with a predetermined schedule and allocations.  An automatic
               investment plan includes a dividend reinvestment plan.

         BENEFICIAL OWNERSHIP - Has the same meaning as in Rule 16a-1(a)(2) under the
               1934 Act.  Generally, a person has a beneficial ownership in a security
               if he or she, directly or indirectly, through any contract, arrangement,
               understanding, relationship or otherwise, has or shares a direct or
               indirect pecuniary interest in the security.  There is a presumption of
               a pecuniary interest in a security held or acquired by a member of a
               person's immediate family sharing the same household.

         EXCHANGE TRADED FUNDS AND HOLDING COMPANY DEPOSITORY RECEIPTS - An
               Exchange-Traded Fund or "ETF" is a basket of securities that is designed
               to generally track an index--broad stock or bond market, stock industry
               sector, or international stock.  Holding Company Depository Receipts
               "Holdrs" are securities that represent an investor's ownership in the
               common stock or American Depository Receipts of specified companies in a
               particular industry, sector or group.

         FUNDS -U.S. registered investment companies in the Franklin Templeton Group of
               Funds.

         HELD OR TO BE ACQUIRED - A security is "held or to be acquired" if within the
               most recent 15 days it (i) is or has been held by a Fund, or (ii) is
               being or has been considered by a Fund or its investment adviser for
               purchase by the Fund.

         INITIAL PUBLIC OFFERING - An offering of securities registered under the
               Securities Act of 1933, the issuer of which immediately before the
               registration was not subject to the reporting requirements of sections
               13 or 15(d) of the Securities Exchange Act of 1934.

         LIMITED OFFERING- An offering that is exempt from registration under the
               Securities Act of 1933 pursuant to section 4(2) of section 4(6).

         PORTFOLIO PERSON - Any employee of  Franklin Templeton Investments, who, in
               connection with his or her regular functions or duties, makes or
               participates in the decision to purchase or sell a security by a Fund
               in  Franklin Templeton Group of Funds, or any other client or if his or
               her functions relate to the making of any recommendations about those
               purchases or sales.  Portfolio Persons include portfolio managers,
               research analysts, traders, persons serving in equivalent capacities
               (such as Management Trainees), persons supervising the activities of
               Portfolio Persons, and anyone else designated by the Director of Global
               Compliance.

         PROPRIETARY INFORMATION - Information that is obtained or developed during
               the ordinary course of employment with  Franklin Templeton Investments,
               whether by you or someone else, and  is not available to persons outside
               of Franklin Templeton Investments.  Examples of such Proprietary
               Information include, among other things, internal research reports,
               research materials supplied to Franklin Templeton Investments by vendors
               and broker-dealers not generally available to the public, minutes of
               departmental/research meetings and conference calls, and communications
               with company officers (including confidentiality agreements).   Examples
               of non-Proprietary Information include mass media publications (e.g.,
               The Wall Street Journal, Forbes, and Fortune), certain specialized
               publications available to the public (e.g., Morningstar, Value Line,
               Standard and Poors), and research reports available to the general
               public.

         REPORTABLE FUND - Any fund for which an Franklin Templeton Investments' U.S.
               registered investment adviser ("FTI Adviser") serves as an investment
               adviser or a sub-adviser or any fund whose investment adviser or
               principal underwriter controls a FTI Adviser, is controlled by a FTI
               adviser or is under common control with a FTI Adviser.

         SECURITY  - Any stock, note, bond, evidence of indebtedness, participation or
               interest in any profit-sharing plan or limited or general partnership,
               investment contract, certificate of deposit for a security, fractional
               undivided interest in oil or gas or other mineral rights, any put, call,
               straddle, option, or privilege on any security (including a certificate
               of deposit), guarantee of, or warrant or right to subscribe for or
               purchase any of the foregoing, and in general any interest or instrument
               commonly known as a security. For purposes of the Code, security does
               not include:

              1. direct obligations of the U.S. government (i.e. securities issued or
                 guaranteed by the U.S. government such as Treasury bills, notes and
                 bonds including U.S. savings bonds and derivatives thereof);
              2. money market instruments - banker's acceptances, bank certificates of
                 deposits, commercial  paper, repurchase agreement and other high
                 quality short-term debt instruments;
              3. shares of money market funds;
              4. shares issued by open-end funds other than Reportable Funds; and
              5. Shares issued by unit investment trusts that are invested  exclusively
                 in one or more open-end funds, none of which are Reportable Funds.

         SUPERVISED PERSONS- Supervised persons are an advisers' partners, officers,
               directors (or other persons occupying a similar status or performing
               similar functions), and employees, as well as any other persons who
               provide advice on behalf of the adviser and are subject to the
               supervision and control of the adviser.


                           APPENDIX B: ACKNOWLEDGMENT FORM AND SCHEDULES


                                       INITIAL AND ANNUAL

                                       ACKNOWLEDGMENT FORM
                CODE OF ETHICS AND INSIDER TRADING COMPLIANCE POLICY AND PROCEDURES


         INSTRUCTIONS:  Print form, complete, sign and date.  Submit completed form to
         Code of Ethics Administration Department via:

           Inter-office: Code of Ethics Administration SM-920/2   Fax: (650) 312-5646

           U.S. Mail:  Franklin Templeton Investments   E-mail: Preclear-Code of Ethics
           Attn: Code of Ethics Administration Dept.           (internal)
           P.O. Box 25050                                 Lpreclear@frk.com (external)
           San Mateo, CA 94402-5050


         TO:   CODE OF ETHICS ADMINISTRATION DEPARTMENT

            I HEREBY ACKNOWLEDGE RECEIPT OF A COPY OF THE FRANKLIN TEMPLETON
            INVESTMENT'S CODE OF ETHICS ("CODE") AND INSIDER TRADING COMPLIANCE POLICY
            AND PROCEDURES, AS AMENDED, WHICH I HAVE READ AND UNDERSTAND. I WILL COMPLY
            FULLY WITH ALL PROVISIONS OF THE CODE AND THE INSIDER TRADING POLICY TO THE
            EXTENT THEY APPLY TO ME DURING THE PERIOD OF MY EMPLOYMENT.  IF THIS IS AN
            ANNUAL CERTIFICATION, I CERTIFY THAT I HAVE COMPLIED WITH ALL PROVISIONS OF
            THE CODE AND THE INSIDER TRADING POLICY TO THE EXTENT THEY APPLIED TO ME
            OVER THE PAST YEAR.  ADDITIONALLY, I AUTHORIZE ANY BROKER-DEALER, BANK, OR
            INVESTMENT ADVISER WITH WHOM I HAVE SECURITIES ACCOUNTS AND ACCOUNTS IN
            WHICH I HAVE DIRECT OR INDIRECT BENEFICIAL OWNERSHIP, TO PROVIDE BROKERAGE
            CONFIRMATIONS AND STATEMENTS AS REQUIRED FOR COMPLIANCE WITH THE CODE.  I
            FURTHER UNDERSTAND AND ACKNOWLEDGE THAT ANY VIOLATION OF THE CODE OR
            INSIDER TRADING POLICY, INCLUDING ENGAGING IN A PROHIBITED TRANSACTION OR
            FAILURE TO FILE REPORTS AS REQUIRED (SEE SCHEDULES B, C, D, E, F AND G),
            MAY SUBJECT ME TO DISCIPLINARY ACTION UP TO AND INCLUDING TERMINATION OF
            EMPLOYMENT.


         -------------------------------------------------------------------------------
               NAME (PRINT)                 SIGNATURE             DATE SUBMITTED
         -------------------------------------------------------------------------------



         -------------------------------------------------------------------------------
               TITLE                     DEPARTMENT NAME            LOCATION
         -------------------------------------------------------------------------------


         NON ACCESS PERSON     ACCESS PERSON    SUPERVISED PERSON     PORTFOLIO PERSON
         -------------------------------------------------------------------------------

             [  ]                   [  ]              [  ]                  [  ]


         -------------------------------------------------------------------------------
                                                                    YEAR END
           INITIAL DISCLOSURE           ANNUAL DISCLOSURE     (FOR COMPLIANCE USE ONLY)
         -------------------------------------------------------------------------------

              [  ]                            [  ]                   [  ]

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         SCHEDULE A: LEGAL AND COMPLIANCE OFFICERS CODE OF ETHICS ADMINISTRATION DEPT.
                     CONTACT INFO/11

            LEGAL OFFICER
            Craig Tyle
            Executive Vice President & General Counsel
            Franklin Templeton Investments
            One Franklin Parkway
            San Mateo, CA 94403-1906
            Tel: (650) 312-4161
            Fax: (650) 312-2221
            Email: ctyle@frk.com

            COMPLIANCE OFFICERS

            DIRECTOR, GLOBAL COMPLIANCE
            Jim Davis
            Franklin Templeton  Investments
            One Franklin Parkway
            San Mateo, CA 94403-1906
            Tel: (650) 312-2832
            Fax: (650) 312-5676
            Email: jdavis@frk.com

            CHIEF COMPLIANCE OFFICER
            Tim Stearns
            Franklin Templeton Investments
            500 East Broward Blvd., Suite 2100
            Fort Lauderdale, FL 33394-3091
            Tel: (954) 527-7630
            Fax: (954) 847-2470
            Email: tstearns@templeton.com

            CODE OF ETHICS ADMINISTRATION DEPARTMENT
            Maria Abbott, Manager
            Darlene James
            Simon Li
            Tadao Hayashi
            Global Compliance Department
            Franklin Templeton Investments
            One Franklin Parkway
            San Mateo, CA 94403-1906
            Tel: (650) 312-3693
            Fax: (650) 312-5646
            Email: Preclear-Code of Ethics (internal)
                   Lpreclear@frk.com (external)


                             SCHEDULE B: TRANSACTIONS REPORT

         INSTRUCTIONS:  Print form, complete, sign and date. Submit completed form to
         the Code of Ethics Administration Department via:

            Inter-office: Code of Ethics Administration SM-920/2    Fax: (650)312-5646

            U.S. Mail: Franklin Templeton Investments    E-mail: Preclear-Code of Ethics
                       Attn: Code of Ethics                       (internal)
                        Administration Dept                Lpreclear@frk.com (external)
                       P.O. Box 25050
                       San Mateo, CA 94402-5050
         ------------------------------------------------------------------------------

         This report of personal securities transactions not reported by duplicate
         confirmations and brokerage statements pursuant to Section 4.3 of the Code is
         required pursuant to Rule 204A-1of the Investment Advisers Act of 1940 and
         Rule 17j-1(d) of the Investment Company Act of 1940. The report must be
         completed and submitted to the Code of Ethics Administration Department no
         later than thirty (30) calendar days after the end of the calendar quarter in
         which you completed such as transaction. Refer to Section 4.3 of the Code for
         further instructions.

         

<S>	<C>	<C>	<C>	<C>	<C>	<C>	<C>
		SECURITY NAME
		DESCRIPTION/TICKER
		SYMBOL OR CUSIP					PRE-CLEARED
		NUMBER/TYPE OF					THROUGH
		SECURITY (INTEREST	QUANTITY			BROKER DEALER/	COMPLIANCE
TRADE	BUY, SELL	RATE AND MATURITY	(NUMBER OF		PRINCIPAL	BANK AND	DEPARTMENT
DATE	OR OTHER	DATE, IF APPLICABLE)	SHARES)	PRICE	AMOUNT	ACCOUNT NUMBER	(DATE OR N/A)
THIS REPORT SHALL NOT BE CONSTRUED AS AN ADMISSION THAT I HAVE ANY DIRECT OR INDIRECT BENEFICIAL
OWNERSHIP IN THE SECURITIES DESCRIBED ABOVE.

         -------------------------------------------------------------------------------
         NAME (PRINT)          SIGNATURE         DATED SUBMITTED         EMPLOYEE ID
         -------------------------------------------------------------------------------


         -------------------------------------------------------------------------------


         SCHEDULE C: INITIAL & ANNUAL DISCLOSURE OF BROKERAGE ACCOUNTS, INVESTMENT
                     ADVISORY ACCOUTNS, SECURITIES HOLDINGS AND DISCRETIONARY AUTHORITY

         INSTRUCTIONS:  Print form, complete, sign and date.  Submit completed form to
         the Code of Ethics Administration via:

            Inter-office:  Code of Ethics Administration SM-920/2  Fax:  (650)312-5646

            U.S. Mail: Franklin Templeton Investments   E-mail: Preclear-Code of Ethics
            Attn: Code of Ethics Administration Dept        (internal)
            P.O. Box 25050                                  Lpreclear@frk.com (external)
            San Mateo, CA 94402-5050
         ------------------------------------------------------------------------------

         This report shall set forth the name and/or description of each securities
         account and holding in which you have a direct or indirect beneficial
         interest, including securities accounts and holdings of a spouse, minor
         children or other immediate family member living in your home, trusts,
         foundations, and any account for which trading authority has been delegated
         to you, other than authority to trade for a Fund or other client of Franklin
         Templeton Investments or by you to an unaffiliated registered broker-dealer,
         registered investment adviser, or other investment manager acting in a
         similar fiduciary capacity, who exercises sole investment discretion.  In
         lieu of listing each securities account and holding below, you may attach
         copies of current brokerage statements, sign below and return the Schedule C
         along with the brokerage statements to the Code of Ethics Administration
         Department within 10 days of becoming an Access Person if an initial report
         or by February 1st of each year, if an annual report.  The information in
         this Schedule C or any attached brokerage statements must be current as of a
         date no more than 45 days prior to the date you become an Access Person or
         the date you submit your annual report.  Refer to Part 4 of the Code for
         additional filing instructions.

         Securities that are EXEMPT from being reported on the Schedule C include: (i)
         securities that are direct obligations of the U.S. Government, such as
         Treasury bills, notes and bonds, and U.S. Savings Bonds and derivatives
         thereof;  (ii) high quality short-term instruments ("money market
         instruments") including but not limited to bankers' acceptances, U.S. bank
         certificates of deposit; commercial paper; and repurchase agreements; (iii)
         shares of money market funds; shares issued by open-end funds other than
         Reportable Funds (any fund for which a Franklin Templeton Investments' U.S.
         registered investment adviser ("FTI Adviser") serves as an investment adviser
         or a sub-adviser or any fund whose investment adviser or principal
         underwriter is controlled by an FTI adviser or is under common control with a
         FTI adviser; and shares issued by unit investment trusts that are invested in
         one or more open-end funds none of which are Reportable Funds.

         [ ] I DO NOT HAVE ANY BROKERAGE OR INVESTMENT ADVISORY ACCOUNTS.
         [ ] I DO NOT HAVE ANY SECURITIES HOLDINGS.
         [ ] I HAVE ATTACHED STATEMENTS CONTAINING ALL MY BROKERAGE AND INVESTMENT
             ADVISORY ACCOUNTS AND SECURITIES HOLDINGS.
         [ ] I HAVE LISTED MY BROKERAGE AND INVESTMENT ADVISORY ACCOUNTS CONTAINING NO
             SECURITIES HOLDINGS.
         [ ] I HAVE LISTED MY SECURITIES HOLDINGS NOT HELD IN A BROKERAGE AND INVESTMENT
             ADVISORY ACCOUNT.

         ---------------------------------------------------------------------------


         

				SECURITY
		ADDRESS	ACCOUNT	DESCRIPTON/TITLE
	NAME OF	OF SECURITIES	NUMBER	TICKER/SYMBOL	QUANTITY
ACCOUNT NAME(S)	SECURITIES	FIRM, BANK OR	(INCLUDING	OR CUSIP #	NUMBER OF	CHECK THIS
(REGISTRATION SHOWN	FIRM, BANK	INVESTMENT ADVISER	FUND	(INTEREST RATE	SHARES &	BOX IF
ON STATEMENT)	OR INVESTMENT	(STREET/CITY/	NUMBER IF	& MATURITY IF	PRINCIPAL	DISCRETIONARY
	ADVISER	STATE/ZIP CODE)	APPLICABLE	APPROPRIATE)	AMOUNT	ACCOUNT
<S>	<C>	<C>	<C>	<C>	<C>	<C>

         TO  THE  BEST  OF MY  KNOWLEDGE,  I HAVE  DISCLOSED  ALL  OF MY  SECURITIES  AND
         INVESTMENT ADVOSRY ACCOUNTS AND/OR HOLDINGS IN WHICH I HAVE A DIRECT OR INDIRECT
         BENEFICIAL  INTEREST,  INCLUDING  SECURITIES  AND INVESTMENT  ADVISORY  ACCOUNTS
         AND/OR HOLDINGS OF A SPOUSE,  MINOR CHILDREN OR OTHER IMMEDIATE MEMBER LIVING IN
         MY HOME,  TRUSTS,  FOUNDATIONS,  AND ANY ACCOUNT FOR WHICH TRADING AUTHORITY HAS
         BEEN  DELEGATED  TO ME OR BY  ME TO AN  UNAFFILIATED  REGISTERED  BROKER-DEALER,
         REGISTERED  INVESTMENT  ADVISER, OR OTHER INVESTMENT MANAGER ACTING IN A SIMILAR
         FIDUCIARY CAPACITY, WHO EXERCISES SOLE INVESTMENT DISCRETION.


         -------------------------------------------------------------------------------

         NAME (PRINT)            SIGNATURE             DATE SUBMITTED       EMPLOYEE ID
         -------------------------------------------------------------------------------


         -------------------------------------------------------------------------------
         INITIAL DISCLOSURE         ANNUAL
                                  DISCLOSURE
         (CHECK THIS
          BOX IF                 (CHECK THIS
         YOU'RE A NEW            BOX IF ANNUAL                   YEAR END
         ACCESS PERSON)          CERTIFICATION)          (FOR COMPLIANCE USE ONLY)
         -------------------------------------------------------------------------------

            [ ]                       [ ]
         -------------------------------------------------------------------------------





                          SCHEDULE D: NOTIFICATION OF SECURITIES ACCOUNT
         -------------------------------------------------------------------------------
         INSTRUCTIONS:  Print form, complete, sign and date.  Submit completed form to
         Code of Ethics Administration via:

           Inter-office: Code of Ethics Administration SM-920/2    Fax: (650) 312-5646

          U.S. Mail: Franklin Templeton Investments       E-mail: Preclear-Code of Ethics
                    Attn: Code of Ethics Administration         (internal)
                    Dept.                                  Lpreclear@frk.com
                    P.O. Box 25050                         (external)
                    San Mateo, CA 94402-5050
         -------------------------------------------------------------------------------
         All Access Persons,  PRIOR TO OPENING A SECURITIES ACCOUNT OR PLACING AN INITIAL
         ORDER  IN  THE  NEW  ACCOUNT,   are  required  to  notify  the  Code  of  Ethics
         Administration  Department  and the  executing  broker-dealer  in writing.  This
         includes  accounts  in which the  Access  Person  has or will  have a  financial
         interest in (e.g., a spouse's account) or discretionary authority (e.g., a trust
         account for a minor child) and for Reportable Form.

         UPON RECEIPT OF THE NOTIFICATION OF SECURITIES ACCOUNT FORM, THE CODE OF
         ETHICS ADMINISTRATION DEPARTMENT WILL CONTACT THE BROKER-DEALER IDENTIFIED
         BELOW AND REQUEST THAT DUPLICATE CONFIRMATIONS AND STATEMENTS OF YOUR
         BROKERAGE ACCOUNT ARE SENT TO FRANKLIN TEMPLETON INVESTMENTS.


         ACCOUNT INFORMATION:
         -------------------------------------------------------------------------------
         NAME ON THE ACCOUNT (IF                ACCOUNT NUMBER
         OTHER THAN EMPLOYEE,STATE             INCLUDING FUND                  DATE
         RELATIONSHIP I.E., SPOUSE)           NUMBER IF APPLICABLE          ESTABLISHED
         -------------------------------------------------------------------------------


         -------------------------------------------------------------------------------
                                                                             SECURITIES
                                                                               FIRM
                                                                              ADDRESS
          NAME OF                            YOUR REPRESENTATIVE           (CITY/STATE/
         SECURITIES FIRM                         (OPTIONAL)                  ZIP CODE)
         -------------------------------------------------------------------------------


         -------------------------------------------------------------------------------

         EMPLOYEE INFORMATION:
         -------------------------------------------------------------------------------
         NAME (PRINT)               SIGNATURE        DATE SUBMITTED      EMPLOYEE ID
         -------------------------------------------------------------------------------


         -------------------------------------------------------------------------------
                                                         INTEROFFICE            PHONE
         TITLE                  DEPARTMENT NAME          MAIL CODE            EXTENSION
         -------------------------------------------------------------------------------


         -------------------------------------------------------------------------------
         PHONE EXTENSION                SIGNATURE                    DATE
         -------------------------------------------------------------------------------


         -------------------------------------------------------------------------------
                                                          NASD REGISTERED REPRESENTATIVE
         CODE OF ETHICS DESIGNATION                             (SERIES 6, 7, ETC.)
         -------------------------------------------------------------------------------
         [ ] Non Access Person  [ ] Supervised Person
         [ ] Access Person      [ ] Portfolio Person          [ ] Yes     [ ] No
         -------------------------------------------------------------------------------



                SCHEDULE E: NOTIFICATION OF DIRECT OR INDIRECT BENEFICIAL INTEREST

         -------------------------------------------------------------------------------
         INSTRUCTIONS:  Print form, complete, sign and date.  Obtain required signature
         and submit completed form to the Code of Ethics Administration department via:

         Inter-office: Code of Ethics Administration SM-920/2    Fax:  (650)312-5646

         U.S. Mail: Franklin Templeton Investments        E-mail: Preclear-Code of Ethics
                    Attn: Code of Ethics Administration           (internal)
                          Dept.                             Lpreclear@frk.com
                    P.O. Box 2505                             (external)
                    San Mateo, CA 94402-5050
         -------------------------------------------------------------------------------

         If you have any beneficial  ownership in a security and it is recommended to the
         Appropriate  Analyst that the security be considered  for purchase or sale by an
         Associated  Client,  or if a purchase or sale of that security for an Associated
         Client is carried out, you must disclose your beneficial  ownership to the Chief
         Investment  Officer and/or  Director of Research on Schedule E (or an equivalent
         form  containing  similar  information)  before  the  purchase  or  sale  of the
         security,  or before or  simultaneously  with the  recommendation to purchase or
         sell a security.  The Chief Investment  Officer and/or Director of Research must
         review and sign Schedule E and send a copy of the Code of Ethics  Administration
         Department.

         

				DATE AND
				METHOD	PRIMARY
	OWNERSHIP		METHOD OF	LEARNED THAT	PORTFOLIO
	TYPE		ACQUISITION	SECURITY'S UNDER	MANAGER OR	NAME OF	DATE OF
SECURITY	(DIRECT OR	YEAR	(PURCHASE/GIFT	CONSIDERATION	PORTFOLIO	PERSON	VERBAL
DESCRIPTION	INDIRECT)	ACQUIRED	OTHER)	BY FUNDS	ANALYST	NOTIFIED	NOTIFICATION
<S>	<C>	<C>	<C>	<C>	<C>	<C>	<C>
EMPLOYEE'S NAME (PRINT)			SIGNATURE	DATE SUMBITTED		EMPLOYEE ID
CHIEF INVESTMENT OFFICER ORD
DIRECTOR OF RESEARCH NAME (PRINT)				SIGNATURE		DATE

         SCHEDULE F: CHECKLIST FOR INVESTMENTS IN PARTNERSHIPS AND SECURITIES ISSUED IN
                     LIMITED OFFERINGS (PRIVATE PLACEMENTS)

         INSTRUCTIONS:  Print form, complete, sign and date and obtain CIO's signatures.
         Submit completed form to Code of Ethics Administration department via:

         Inter-office: Code of Ethics Administration SM-920/2    Fax: (650) 312-5646

         U.S. Mail: Franklin Templeton Investments       E-mail: Preclear-Code of Ethics
                    Attn: Code of Ethics Administration           (internal)
                          Dept.                                  Lpreclear@frk.com
                    P.O. Box 2505                                (external)
                    San Mateo, CA 94402-5050
         -------------------------------------------------------------------------------

         In deciding whether to approve a transaction,  the Director of Global Compliance
         or the Chief  Compliance  Officer shall take into account,  among other factors,
         whether  the  investment  opportunity  should  be  reserved  for a Fund or other
         client,  and whether the  investment  opportunity is being offered to the Access
         Person by virtue of his or her position with the Franklin Templeton Investments.
         IF THE ACCESS PERSON RECEIVES  CLEARANCE FOR THE  TRANSACTION,  NO INVESTMENT IN
         THE SAME ISSUER MAY BE MADE FOR A FUND OR CLIENT UNLESS AN EXECUTIVE  OFFICER OF
         FRANKLIN  RESOURCES,  INC.,  WITH  NO  INTEREST  IN  THE  ISSUER,  APPROVES  THE
         TRANSACTION.

         IN ORDER TO EXPEDITE YOUR REQUEST, PLEASE PROVIDE THE FOLLOWING INFORMATION:

         -------------------------------------------------------------------------------
         NAME/DESCRIPTION OF PROPOSED INVESTMENT:


         -------------------------------------------------------------------------------
         PROPOSED INVESTMENT AMOUNT:

         -------------------------------------------------------------------------------

         PLEASE ATTACH PAGES OF THE OFFERING MEMORANDUM (OR OTHER DOCUMENTS) SUMMARIZING
         THE INVESTMENT OPPORTUNITY, INCLUDING:

                i) Name of the partnership/hedge fund/issuer;
               ii) Name of the general partner, location & telephone number;
              iii) Summary of the offering; including the total amount the offering/
                   issuer;
               iv) Percentage your investment will represent of the total offering;
                v) Plan of distribution; and
               vi) Investment objective and strategy,


         PLEASE RESPOND TO THE FOLLOWING QUESTIONS:

              a) Was this investment opportunity presented to you in your capacity as a
                 portfolio manager? If no, please explain the relationship, if any, you
                 have to the issuer or principals of the issuer.

              b) Is this investment opportunity suitable for any  fund/client  that you
                 advise?/9  If yes, why isn't the  investment  being made on behalf of
                 the fund/client?  If no, why isn't the investment opportunity suitable
                 for the fund/clients?

              c) Do any of the fund/clients  that you advise presently hold securities of
                 the issuer of this proposed investment (e.g., common stock, preferred
                 stock,  corporate debt, loan participations, partnership interests,
                 etc),? If yes, please provide the names of the  funds/clients  and
                 security description.

              d) Do you presently have or will you have any managerial role with the
                 company/issuer as a result of your investment?  If yes, please explain
                 in detail your responsibilities, including any compensation you will
                 receive.

              e) Will you have any investment control or input to the investment decision
                 making process?


              f) Will you receive reports of portfolio holdings? If yes, when and how
                 frequently will these be provided?


         REMINDER:  PERSONAL SECURITIES TRANSACTIONS THAT DO NOT GENERATE BROKERAGE
         CONFIRMATIONS (E.G., INVESTMENTS IN PRIVATE PLACEMENTS) MUST BE REPORTED TO
         THE CODE OF ETHICS ADMINISTRATION DEPARTMENT ON SCHEDULE B NO LATER THAN 30
         CALENDAR DAYS AFTER THE END OF THE CALENDAR QUARTER THE TRANSACTION TOOK
         PLACE.

         -------------------------------------------------------------------------------
                                                             DATE
         EMPLOYER'S NAME (PRINT)         SIGNATURE        SUMBITTED       EMPLOYEE ID
         -------------------------------------------------------------------------------


         -------------------------------------------------------------------------------
         "I CONFIRM,  TO THE BEST OF MY KNOWLEDGE  AND BELIEF,  THAT I HAVE REVIEWED THE
         PRIVATE  PLACEMENT AND DO NOT BELIEVE THAT THE PROPOSED  PERSONAL TRADE WILL BE
         CONTRARY TO THE BEST INTERESTS OF ANY OF OUR FUNDS' OR CLIENTS' PORTFOLIOS." I
         ALSO UNDERSTAND THAT BECAUSE OF THIS CLEARANCE, NO INVESTMENT IN THE SAME
         ISSUER MAY BE MADE OF A FUND OR CLIENT UNLESS AN EXECUTIVE OFFICER OF FRANKLIN
         RESOURCES, INC., WITH NO INTEREST IN THE ISSUER, APPROVES THE TRANSACTION."

         -------------------------------------------------------------------------------
         CHIEF INVESTMENT OFFICER'S NAME
         (APPLICABLE TO PROTFOLIO PERSONS ONLY)            SIGNATURE             DATE
         -------------------------------------------------------------------------------

         -------------------------------------------------------------------------------

         -------------------------------------------------------------------------------
         CHIEF INVESTMENT OFFICER APPROVING            SIGNATURE             DATE
         -------------------------------------------------------------------------------


         -------------------------------------------------------------------------------

         -------------------------------------------------------------------------------
                         CODE OF ETHICS ADMINISTRATION DEPARTMENT USE ONLY
         -------------------------------------------------------------------------------

         DATE RECEIVED:___________  DATE FORWARDED TO FRI EXECUTIVE OFFICER:____________



                      SCHEDULE G: REQUEST FOR APPROVAL TO SERVE AS A DIRECTOR


         INSTRUCTIONS:  Print form, complete, sign and date.  Submit completed form to
         Code of Ethics Administration Department via:

         Inter-office: Code of Ethics Administration SM-920/2   Fax: (650) 312-5646

         U.S. Mail:  Franklin Templeton Investments      E-mail: Preclear-Code of Ethics
            Attn: Code of Ethics Administration Dept.            (internal)
            P.O. Box 25050                                       Lpreclear@frk.com
            San Mateo, CA 94402-5050                            (external)

         ----------------------------------------------------------------------------

         EMPLOYEE:                                      EMPLOYEE ID:
         ----------------------------------------------------------------------------

         DEPARTMENT:                                    PHONE EXTENSION:
         ----------------------------------------------------------------------------

         JOB TITLE:                                     SITE/LOCATION:
         ----------------------------------------------------------------------------

         SUPERVISOR:                                    SUP. EXTENSION:
         ----------------------------------------------------------------------------


         ----------------------------------------------------------------------------

         Company Name:
         ----------------------------------------------------------------------------
         Nature of company's
         business:
         ----------------------------------------------------------------------------
         Is this a public or
         private company?
         ----------------------------------------------------------------------------

         Title/Position:
         ----------------------------------------------------------------------------
         Justification for
         servicing as a
         director with
         the company:
         ----------------------------------------------------------------------------
         Estimate of hours
         to be devoted to
         the company:
         ----------------------------------------------------------------------------
         Compensation
         received:                  [ ] Yes     [ ] No
         ----------------------------------------------------------------------------
         If compensated, how?
         ----------------------------------------------------------------------------
         Starting date:
         ----------------------------------------------------------------------------

                 CODE OF ETHICS DESIGNATION              NASD REGISTERED/LICENSED?
         -----------------------------------------------------------------------------
         [ ] Non Access Person  [ ] Supervised Person
         [ ] Access Person [ ]  [ ] Portfolio Person        [ ] Yes    [ ] No
         ----------------------------------------------------------------------------


         Signature: ___________________________           Date: ______________________
         ------------------------------------------------------------------------------
                                     [ ] Approved [ ] Denied


         Signatory Name ____________________    Signatory Title: _____________________

         Signature: ________________________    Date: ______________________





         APPENDIX C: INVESTMENT ADVISER AND BROKER-DEALER AND OTHER SUBSIDIARIES OF
                     FRANKLIN RESOURCES, INC. - MAY 2008
         -----------------------------------------------------------------------------
         Franklin Advisers, Inc.        IA/FIA  Templeton Global Advisors Ltd.  IA
                                                (Bahamas)
         -----------------------------------------------------------------------------
         Franklin Advisory Services,    IA/FIA  Franklin Templeton Italia       FBD/FIA
         LLC                                    Societa di Gestione del
                                                Risparmio per Axioni  (Italy)
         -----------------------------------------------------------------------------
         Franklin Investment Advisory   IA      Franklin Templeton Investment   FBD
         Services, LLC                          Services GmbH (Germany)
         -----------------------------------------------------------------------------
         Franklin Templeton Portfolio   IA      Fiduciary Trust International   Trust
         Advisors, Inc.                         of the South
         -----------------------------------------------------------------------------
         Franklin Mutual Advisers, LLC  IA/FIA  Fiduciary Trust Company of      FIA
                                                Canada
         -----------------------------------------------------------------------------
         Franklin/Templeton             BD      Franklin Templeton Investments  IA/FIA/
         Distributors, Inc.                     Corp. (Ontario)                 FBD
         -----------------------------------------------------------------------------
         Franklin Templeton Services,   FA/BM   Fiduciary Trust Company         Trust
         LLC                                    International
         -----------------------------------------------------------------------------
         Franklin Templeton             FBD     Fiduciary International, Inc    IA/FIA
         International Services S.A.
         (Luxembourg)
         -----------------------------------------------------------------------------
         Franklin Templeton             FIA     Fiduciary Investment            IA
         Investments Australia Limited          Management International Inc
         -----------------------------------------------------------------------------
         Franklin Templeton Investor    TA      Fiduciary Trust International   IA/FIA
         Services, LLC                          Limited (UK)
         -----------------------------------------------------------------------------
         Franklin Templeton             IA      Franklin Templeton Investment   FIA
         Institutional, LLC                     Trust Management Co., Ltd (Korea)
         -----------------------------------------------------------------------------
         Franklin Templeton Financial   BD      Franklin Templeton Asset        IA/FIA
         Services, Corp.                        Management (India) Private
                                                Limited (India)
         -----------------------------------------------------------------------------
         Franklin Templeton Asset       FIA     Franklin Templeton Investimentos  FIA
         Management S.A. (France)               Ltda. (Brazil)
         -----------------------------------------------------------------------------
         Franklin Templeton             FBD/IA  FTC Investor Services, Inc.       FBD
         Investments (Asia) Limited             (Canada)
         (Hong Kong)
         -----------------------------------------------------------------------------
         Franklin Templeton Investment  IA/FIA  Fiduciary Trust International    Trust
         Management Limited (UK)                 of Delaware
         -----------------------------------------------------------------------------
         Templeton/Franklin Investment  BD      Fiduciary Trust International    Trust
         Services, Inc                          of California
         -----------------------------------------------------------------------------
         Templeton Investment Counsel,  IA
         LLC
         -----------------------------------------------------------------------------
         Templeton Asset Management,    IA/FIA
         Ltd.
         -----------------------------------------------------------------------------
         Franklin Templeton             FIA
         Investments Japan Ltd.
         -----------------------------------------------------------------------------

         Codes:     IA:    US registered investment adviser
                    BD:    US registered broker-dealer
                    FIA:   Foreign equivalent investment adviser
                    FBD:   Foreign equivalent broker-dealer
                    TA:    US registered transfer agent
                    FA:    Fund Administrator
                    BM:    Business manager to the funds
                    REA:   Real estate adviser
                    Trust: Trust company


                         INSIDER TRADING COMPLIANCE POLICY AND PROCEDURES

         A. LEGAL REQUIREMENT
              Pursuant to the Insider  Trading and Securities  Fraud  Enforcement  Act of
         1988, No officer, director,  employee,  consultant acting in a similar capacity,
         or other person associated with Franklin Templeton Investments may trade, either
         personally or on behalf of clients,  including all client assets  managed by the
         entities in Franklin Templeton  Investments,  on material non-public information
         or communicating  material non-public  information to others in violation of the
         law.  This  conduct is  frequently  referred to as "insider  trading."  Franklin
         Templeton  Investment's Insider Trading Compliance Policy and Procedures applies
         to every officer,  director,  employee or other person  associated with Franklin
         Templeton  Investments and extends to activities within and outside their duties
         with Franklin Templeton Investments.  Every officer,  director and employee must
         read  and  retain  this  policy  statement.  Any  questions  regarding  Franklin
         Templeton  Investments  Insider Trading  Compliance Policy and Procedures or the
         Compliance Procedures should be referred to the Legal Department.

               The term "insider trading" is not defined in the federal securities
         laws, but generally is used to refer to the use of material non-public
         information to trade in securities (whether or not one is an "insider") or to
         communications of material non-public information to others.

               While the law concerning insider trading is not static, it is generally
         understood that the law prohibits:

               (1)  trading by an insider, while in possession of material non-public
                    information; or

               (2)  trading by a non-insider, while in possession of material
                    non-public information, where the information either was disclosed
                    to the non-insider in violation of an insider's duty to keep it
                    confidential or was misappropriated; or

               (3)  communicating material non-public information to others.

               The elements of insider trading and the penalties for such unlawful
         conduct are discussed below.  If, after reviewing this policy statement, you
         have any questions, you should consult the Legal Department.

         B. WHO IS AN INSIDER?
               The concept of "insider" is broad.  It includes officers, directors and
         employees of a company.  In addition, a person can be a "temporary insider"
         if he or she enters into a special confidential relationship in the conduct
         of a company's affairs and as a result is given access to information solely
         for the company's purposes.  A temporary insider can include, among others, a
         company's outside attorneys, accountants, consultants, bank lending officers,
         and the employees of such organizations.  In addition, an investment adviser
         may become a temporary insider of a company it advises or for which it
         performs other services.  According to the U.S. Supreme Court, the company
         must expect the outsider to keep the disclosed non-public information
         confidential and the relationship must at least imply such a duty before the
         outsider will be considered an insider.

         C. WHAT IS MATERIAL INFORMATION?
               Trading on inside information is not a basis for liability unless the
         information is material.  "Material information" generally is defined as
         information for which there is a substantial likelihood that a reasonable
         investor would consider it important in making his or her investment
         decisions, or information that is reasonably certain to have a substantial
         effect on the price of the company's securities.  Information that officers,
         directors and employees should consider material includes, but is not limited
         to:  dividend changes, earnings estimates, changes in previously released
         earnings estimates, significant merger or acquisition proposals or
         agreements, major litigation, liquidation problems, and extraordinary
         management developments.

               Material information does not have to relate to a company's business.
         For example, in CARPENTER V. U.S., 108 U.S. 316 (1987), the Supreme Court
         considered as material certain information about the contents of a
         forthcoming newspaper column that was expected to affect the market price of
         a security.  In that case, a WALL STREET JOURNAL reporter was found
         criminally liable for disclosing to others the dates that reports on various
         companies would appear in the WALL STREET JOURNAL and whether those reports
         would be favorable or not.

         D.  WHAT IS NON-PUBLIC INFORMATION?
               Information is non-public until it has been effectively communicated to
         the marketplace.  One must be able to point to some fact to show that the
         information is generally public.  For example, information found in a report
         filed with the Securities and Exchange Commission ("SEC"), or appearing in
         Dow Jones, Reuters Economic Services, THE WALL STREET JOURNAL or other
         publications of general circulation would be considered public.

         E. BASIS FOR LIABILITY

               1. FIDUCIARY DUTY THEORY
               In 1980, the Supreme Court found that there is no general duty to
         disclose before trading on material non-public information, but that such a
         duty arises only where there is a fiduciary relationship.  That is, there
         must be a relationship between the parties to the transaction such that one
         party has a right to expect that the other party will not disclose any
         material non-public information or refrain from trading.  CHIARELLA V. U.S.,
         445 U.S. 22 (1980).

               In DIRKS V. SEC, 463 U.S. 646 (1983), the Supreme Court stated alternate
         theories under which non-insiders can acquire the fiduciary duties of
         insiders.  They can enter into a confidential relationship with the company
         through which they gain information (E.G., attorneys, accountants), or they
         can acquire a fiduciary duty to the company's shareholders as "tippees" if
         they are aware or should have been aware that they have been given
         confidential information by an insider who has violated his fiduciary duty to
         the company's shareholders.

               However, in the "tippee" situation, a breach of duty occurs only if the
         insider personally benefits, directly or indirectly, from the disclosure.
         The benefit does not have to be pecuniary but can be a gift, a reputational
         benefit that will translate into future earnings, or even evidence of a
         relationship that suggests a quid pro quo.

               2. MISAPPROPRIATION THEORY

               Another basis for insider trading liability is the "misappropriation"
         theory, under which liability is established when trading occurs on material
         non-public information that was stolen or misappropriated from any other
         person.  In U.S. V. CARPENTER, SUPRA, the Court found, in 1987, a columnist
         defrauded THE WALL STREET JOURNAL when he stole information from the WALL
         STREET JOURNAL and used it for trading in the securities markets.  It should
         be noted that the misappropriation theory can be used to reach a variety of
         individuals not previously thought to be encompassed under the fiduciary duty
         theory.

         F. PENALTIES FOR INSIDER TRADING
               Penalties for trading on or communicating material non-public
         information are severe, both for individuals involved in such unlawful
         conduct and their employers A violation of the Code resulting in a violation
         of the law will be severely sanctioned, with disciplinary action including
         but not limited to termination.  Please refer to Part 7 - Penalties for
         Violations of the Code.
         A person can be subject to some or all of the penalties below even if he or
         she does not personally benefit from the violation.  Penalties include:

                   o civil injunctions;
                   o treble damages;
                   o disgorgement of profits;
                   o jail sentences;
                   o fines for the person who committed the violation of up to three
                     times the profit gained or loss avoided, whether or not the
                     person actually benefited; and
                   o fines for the employer or other controlling person of up to the
                     greater of $1,000,000 or three times the amount of the profit
                     gained or loss avoided.

              In addition,  any violation of this policy  statement can result in serious
         sanctions  by the Franklin  Templeton  Investments,  including  dismissal of any
         person involved.

         G. INSIDER TRADING PROCEDURES
               All employees shall comply with the following procedures.

               1. IDENTIFYING INSIDE INFORMATION
              Before trading for yourself or others,  including  investment  companies or
         private  accounts  managed  by  the  Franklin  Templeton  Investments,   in  the
         securities of a company about which you may have potential  inside  information,
         ask yourself the following questions:

                        o Is the information material?

                        o Is this information that an investor would consider important
                          in making his or her investment decisions?

                        o Is this information that would substantially affect the market
                          price of the securities if generally disclosed?

                        o Is the information non-public?

                        o To whom has this information been provided?

                        o Has the information been effectively communicated to the
                          marketplace (e.g., published in REUTERS, THE WALL STREET
                          JOURNAL or other publications of general circulation)?

         If, after consideration of these questions, you believe that the information
         may be material and non-public, or if you have questions as to whether the
         information is material and non-public, you should take the following steps:

              (i)   Report the matter immediately to the designated Compliance Officer,
                    or if he or she is not available, to the Legal Department.

              (ii)  Do not purchase  or sell the securities on behalf of  yourself or
                    others, including investment companies or private accounts managed by
                    Franklin Templeton Investments.

              (iii) Do not  communicate  the information inside or outside Franklin
                    Templeton Investments, other than to the Compliance Officer or the
                    Legal Department.

              (iv)  The Compliance Officer shall immediately contact the Legal Department
                    for advice concerning any possible material, non-public information.

              (v)   After the Legal Department has reviewed the issue and consulted with
                    the Compliance Officer, you will be instructed either to continue
                    the prohibitions  against trading and communication noted in (ii)
                    and (iii),  or you will be allowed to trade and  communicate  the
                    information.

              (vi) In the event the information in your possession is determined by the
                   Legal  Department  or the  Compliance  Officer to be material and
                   non-public,  it may  not be  communicated  to  anyone,  including
                   persons within Franklin Templeton Investments, except as provided
                   in (i)  above.  In  addition,  care  should  be taken so that the
                   information  is  secure.   For  example,   files  containing  the
                   information  should  be  sealed  and  access  to  computer  files
                   containing material  non-public  information should be restricted
                   to  the  extent  practicable.   Securities  for  which  there  is
                   material,  non-public information shall be placed on the personal
                   trading  restricted  list  for  a  timeframe  determined  by  the
                   Compliance Officer.

               2. RESTRICTING ACCESS TO OTHER SENSITIVE INFORMATION

               All Franklin Templeton Investments personnel also are reminded of the
         need to be careful to protect from disclosure other types of sensitive
         information that they may obtain or have access to as a result of their
         employment or association with  Franklin Templeton Investments.

               3. SEC RULE 10B5-1(C) PLANS

              We many permit  exemptions from the insider trading policies and procedures
         set forth above for transactions in securities  issued by FRI effected  pursuant
         to  pre-approved,  written  trading plans or  arrangements  complying  with Rule
         10b5-1(c) under the Securities Exchange Act of 1934, as amended.  Rule 10b5-1(c)
         plans or  arrangements  may not be entered into or modified  either during FRI's
         trading  blackout  periods  or  when  you  are  aware  of  material,  non-public
         information  relating to FRI or its  securities.  All such plans or arrangements
         (and any  modification  of termination  thereof) must be  pre-approved  by FRI's
         General Counsel (or such person's designee).

         H.  GENERAL ACCESS CONTROL PROCEDURES

                     Franklin Templeton Investments has established a process by which
         access to company files that may contain sensitive or non-public information
         such as the Bargain List and the Source of Funds List is carefully limited.
         Since most of Franklin Templeton Investments files, which contain sensitive
         information, are stored in computers, personal identification numbers,
         passwords and/or code access numbers are distributed to Franklin Templeton
         Investments computer Access Persons only.  This activity is monitored on an
         ongoing basis.  In addition, access to certain areas likely to contain
         sensitive information is normally restricted by access codes.


         Revised May 2008/Effective July 1, 2008

EX-99.(P)(4)

Exhibit (p)(4)

WALL STREET ASSOCIATES

CODE OF ETHICS

AND

STATEMENT OF POLICY AND PROCEDURES
REGARDING PERSONAL SECURITIES
TRANSACTIONS

TABLE OF CONTENTS
	Topic		Page
I.	Introduction		1
	A.	Individuals and Entities Covered by the Code	1
	B.	Fiduciary Duty	1
		1.         The Clients Come First	1
		2.         Avoid Taking Advantage	1
		3.         Comply with the Code	1
	C.	Compliance with Laws and Regulations	1
II.	Personal Securities Transactions		2
	A.	Pre-clearance Requirements for Access Persons	2
		1.         General Requirement	2
		2.         Trade Authorization Request Forms	2
		3.         Review of Form	2
		4.         Length of Trade Authorization Approval	3
		5.         No Explanation Required for Refusals	3
	B.	Prohibited Transactions	4
		1.      Always Prohibited Securities Transactions	4
		a.         Inside Information	4
		b.         Market Manipulation	4
		c.         Short Sales	4
		d.         Others	4
		2.      Generally Prohibited Securities Transactions	4
		a.         Initial Public Offerings	4
		b.         One Day Blackout	4
		c.         Seven-Day Blackout	4
		d.         60-Day Blackout (short-term trading is discouraged)	5
		e.         Private Placements	5
	C.	Exemptions
		1.      Exemptions from Pre-clearance and Treatment as a Prohibited Transaction	5
		a.         Mutual Funds	5
		b.         No Knowledge	6
		c.         Certain Corporate Actions	6
		d.         Systematic Investment Plans	6
		e.         Previously Approved Option-Related Activity	6
		f.         Commodities, Futures, and Options on Futures	6
		g.         Rights	7
		h.         Miscellaneous	7
		2.      Exemption from Treatment as a Prohibited Transaction	7
		a.         Broad Based Indices and Options on Broad-Based Indices
		b.         Exchange Traded Funds (ETFs)
		c.         Related Mutual Funds

	D.         Reporting Requirements		8
	1.         Initial and Periodic Disclosure of Personal Holdings by Access Persons		8
	2.         Transaction and Periodic Statement Reporting		8
	3.         Disclaimers		8
	4.         Availability of Reports		9
III.	Fiduciary Duties		10
	A.         Confidentiality		10
	B.         Gifts and Entertainment		10
	1.         Gifts		10
	2.         Entertainment		11
	3.         Documented Approval and Reporting		11
	C.         Corporate Opportunities		11
	D.         Undue Influence		12
	E.         Service as a Director		12
	F.          Purchases and Sales of "Related" Mutual Funds		12
IV.	Compliance with the Code of Ethics		13
	A.         Code of Ethics Review Committee		13
	1.         Membership, Voting and Quorum		13
	2.         Investigating Violations of the Code		13
	3.         Annual Reports		13
	B.         Remedies		14
	1.	Sanctions	14
	2.	Sole Authority	14
	3.	Review	14
	C.         Exceptions to the Code		15
	D.         Inquiries Regarding the Code		15

I. INTRODUCTION

A.		Individuals and Entities Covered by the Code. Unless the use of another Code of Ethics has been approved in writing by the Compliance Officer, all Access Persons are subject to the provisions of this Code. Access Persons are defined in Section V and listed in Appendix 1. Currently, all employees of Wall Street Associates are considered Access Persons under the Code.
B.		Fiduciary Duty. The Code is based on the principle that Access Persons owe a fiduciary duty to the clients of Wall Street Associates and must avoid activities, interests and relationships that might interfere with making decisions in the best interests of any clients of Wall Street Associates.
As fiduciaries, Access Persons must at all times comply with the following principles:
		1.	The Clients Come First. Access Persons must scrupulously avoid serving their personal interests ahead of the interests of the clients of Wall Street Associates. An Access Person may not take action, or not take action, for the Access Person's personal benefit, rather than for the benefit of the client. For example, an Access Person would violate this Code by causing a client account to purchase a Security the Access Person owns personally for the purpose of increasing the price of that Security.
		2.	Avoid Taking Advantage. Access Persons may not use their knowledge of open, executed, or pending portfolio transactions to profit by the market effect of such transactions. Additionally, receipt of investment opportunities, perquisites, or gifts from persons seeking business with Wall Street Associates could call into question the exercise of an Access Person's independent judgment.
		3.	Comply With the Code. Doubtful situations should be resolved in favor of the client. Technical compliance with the Code's procedures will not automatically insulate from scrutiny any Securities Transactions that indicate an abuse of fiduciary duties. Access Persons are required to report violations of the Code promptly to the Chief Compliance Officer and the firm's President.
	C.	Compliance with Laws and Regulations. All Access Persons must comply with applicable federal securities laws. The Code does not permit Access Persons, in connection with the purchase or sale, directly or indirectly, of a Security held or to be acquired by a Client:
		1.	To defraud such client in any manner.
		2.	To mislead such client, including by making a statement that omits material facts.
		3.	To engage in any act, practice or course of conduct which operates or would operate as a fraud or deceit upon such client.
		4.	To engage in any manipulative practice with respect to such client.
		5.	To engage in any manipulative practice with respect to Securities, including price manipulation.

II. PERSONAL SECURITIES TRANSACTIONS

A.	Pre-clearance Requirements for Access Persons.
	1.	General Requirement. Except for the transactions specified in Section II.C.1, any Securities Transaction in which an Access Person has or acquires a Beneficial Interest must be pre-cleared with a Pre-clearance Officer.
	2.	Trade Authorization Request Forms. Prior to entering an order for a Securities Transaction that requires pre-clearance, the Access Person must complete a Personal Trade Authorization Request Form (Appendix 3) and submit the completed form to the Trading Desk and to a Pre-clearance Officer or the Compliance Officer. The form requires Access Persons to provide certain information and to make certain representations.
		In the event an Access Person is unable to complete a Trade Authorization Request form, the Access Person may designate another individual to complete the form on his or her behalf. The Access Person's designee should complete the Trade Authorization Request form and the Certification of Access Person's Designee (Appendix 4) and submit both forms to the Trading Desk and to a Preclearance Officer or the Compliance Officer.
		Proposed Securities Transactions of a Pre-clearance Officer that require preclearance must be submitted to the Trading Desk and another Pre-clearance Officer or the Compliance Officer.
	3.	Review of Form. After receiving a completed Trade Authorization Request form, the Trading Desk and a Pre-clearance Officer will (a) review the information set forth in the form, (b) review information regarding past, pending, and contemplated transactions in any Client accounts, as necessary, and (c) as soon as reasonably practicable, determine whether to authorize the proposed Securities Transaction. The granting of authorization, and the date and time that authorization was granted must be reflected on the form. The Access Person should keep one copy of the completed form and provide one copy to the Compliance Officer.

NOTE:	No order for a Securities transaction for which pre-clearance authorization is required may be placed prior to the receipt of written authorization of the transaction by a pre-clearance officer. Verbal approvals are not permitted.
4.	Length of Trade Authorization Approval. The authorization provided by a Pre-clearance Officer is effective until the earlier of:
	(1)	its revocation;
	(2)	the close of business on the trading day that the authorization is granted (for example, if authorization is provided on a Monday, it is effective until the close of business that Monday); or,
	(3)	the moment the Access Person learns that the information in the Trade Authorization Request form is not accurate.
	If the order for the Securities Transaction is not placed within that period, a new authorization must be obtained before the Securities Transaction is placed. If the Securities Transaction order is placed but has not been executed before the authorization expires (as, for example, in the case of a limit order), a new authorization must be obtained before the Securities Transaction is executed.
5.	No Explanation Required for Refusals. In some cases, the Trading Desk, the Compliance Officer, or a Pre-clearance Officer may refuse to authorize a Securities Transaction for a reason that is confidential. The Trading Desk, the Compliance Officer, or Pre-clearance Officers are not required to give an explanation for refusing to authorize any Securities Transaction.

B.	Prohibited Transactions.
	1.	Always Prohibited Securities Transactions. The following Securities Transactions are prohibited and will not be authorized under any circumstances:
		a.	Inside Information. Any transaction in a Security by an individual who possesses material nonpublic information regarding the Security or the issuer of the Security;
		b.	Market Manipulation. Transactions intended to raise, lower, or maintain the price of any Security or to create a false appearance of active trading;
		c.	Short Sales. Short sales of Securities owned in any client account,
		d.	Others. Any other transaction or patterns deemed by the Pre-clearance Officer or the Compliance Officer to involve a conflict of interest, excessive trading, possible diversions of corporate opportunity, or an appearance of impropriety (e.g., Front-running).
	2.	Generally Prohibited Securities Transactions. Unless exempted by Section II.C, the following Securities Transactions are prohibited and will not be authorized by a Pre-clearance Officer absent exceptional circumstances. The prohibitions apply to Access Persons of Wall Street Associates.
		a.	Initial Public Offerings. Any purchase of a Security by WSA Access Persons and employees in an initial public offering (other than a new offering of a registered open-end investment company);
		b.	One Day Blackout. Any sale of a Security by an Access Person or employee for 24 hours after which WSA client accounts have disposed of all of the interests in that particular Security (or Equivalent Security);
		c.	Seven-Day Blackout. Any purchase or sale of a Security by an Access Person or employee within seven calendar days (seven days prior to or seven days after) of a purchase or sale of the same Security (or Equivalent Security) by a WSA client account. For example, if a client account trades a Security on day one, day eight is the first day the Access Person may trade that Security for an account in which he or she has a Beneficial Interest;
		d.	60-Day Blackout (short-term trading is discouraged). Short-term trading is discouraged. Access Persons and employees are prohibited from profiting from the (1) purchase and sale or (2) sale and purchase of the same (or an equivalent) Security in a personal Securities transaction within 60 calendar days. Should such a trade occur that results in a profit, Access Persons and employees must agree to give up all profits on the transaction to a charitable organization specified in accordance with Section IV.B.I. Such transactions are generally not prohibited if they result in a loss. Of course, Access Persons must place the interests of WSA clients first; they may not avoid or delay purchasing or selling a Security for a WSA client account in order to profit personally.

NOTE: Appendix 10 contains more information on how Wall Street Associates views and treats matters pertaining to Blackout Periods.

		e.	Private Placements (all Access Persons). Acquisition of a Beneficial Interest in Securities in a private placement by Access Persons is discouraged. A Pre-clearance Officer and the Compliance Officer will give permission only after considering, among other facts, whether the investment opportunity should be reserved for a WSA client account and whether the opportunity is being offered to the person by virtue of that person's position as an Access Person. Access Persons who have acquired a Beneficial Interest in Securities in a private placement are required to disclose their Beneficial Interest to the Compliance Officer. If the Access Person is subsequently involved in a decision to buy or sell a Security (or an Equivalent Security) from the same issuer for a WSA client account, then the decision to purchase or sell the Security (or an Equivalent Security) must be independently authorized by a Portfolio Manager with no personal interest in the issuer.
C.	Exemptions.
	1.	Exemptions from Pre-clearance and Treatment as a Prohibited Transaction. The following Transactions are exempt from the pre-clearance requirements set forth in Section II.A. and the prohibited transaction restrictions set forth in Section II.B.2:
		a.	Mutual Funds. Any purchase or sale of fund shares issued by any registered open-end investment companies, with the exception of mutual funds sub-advised by Wall Street Associates ("related mutual funds"). "Related mutual funds" (those mutual funds sub-advised by Wall Street Associates) are subject to pre-clearance requirements. Purchases and sales of "related mutual funds" by Access Persons will also be monitored for any improper activity or pattern that could be viewed as a breach of fiduciary duty, as defined and in accordance with Section III.F of this Code.
		b.	No Knowledge. Securities Transactions where the Access Person has no knowledge of the transaction before it is completed (for example, Securities Transactions effected for an Access Person on a fully discretionary basis, by a trustee of a blind trust, or discretionary trades involving an investment partnership or investment club, in connection with which the Access Person is neither consulted nor advised of the trade before it is executed);
		c.	Certain Corporate Actions. Any acquisition of Securities through stock dividends, dividend reinvestments, stock splits, reverse stock splits, mergers, consolidations, spin-offs, or other similar corporate reorganizations or distributions generally applicable to all holders of the same class of Securities;
		d.	Systematic Investment Plans. Any acquisition of a Security pursuant to a systematic investment plan that has previously been approved by the Compliance Officer. A systematic investment plan is one pursuant to which a prescribed investment will be made automatically on a regular, predetermined basis without affirmative action by the Access Person.
		e.	Previously Approved Options-Related Activity. Any acquisition or disposition of a Security in connection with an option-related Securities Transaction that has been previously approved pursuant to the Code. For example, if an Access Person receives approval to write a covered call, and the call is later exercised, the provisions of Sections II.A. and II.B. are not applicable to the sale of the underlying Security.
		f.	Commodities, Futures, and Options on Futures. Any Securities Transaction involving commodities, futures (including currency futures and futures on Securities comprising part of a broad-based, publicly traded market based index of stocks) and options on futures.
		g.	Rights. Any acquisition of Securities through the exercise of rights issued by an issuer pro rata to all holders of a class of its Securities, to the extent the rights were acquired in the issue; and
		h.	Miscellaneous. Any transaction in the following: (1) bankers acceptances, (2) bank certificates of deposit, (3) commercial paper, (4) repurchase agreements, (5) Securities that are direct obligations of the U.S. Government, and (6) other Securities as may from time to time be designated in writing by the Code of Ethics Review Committee on the ground that the risk of abuse is minimal or nonexistent.
	2.	Exemption from Treatment as a Prohibited Transaction. The following Securities Transactions are exempt from the prohibited transaction restrictions that are set forth in Section II.B.2. They are not exempt from the pre-clearance requirements set forth in Section II.A:
		a.	Broad-Based Indices and Options on Broad-Based Indices. The prohibitions in Section II.B.2. b, c, and d are not applicable to any Securities Transaction involving certain broad-based indices and options on certain broad-based indices designated by the Compliance Officer. The broad-based indices designated by the Compliance Officer may be changed from time to time and presently consist of those listed in Appendix 5.
		b.	Exchange Traded Funds (ETFs). The prohibitions in Section II.B.2. b, c, and d are not applicable to any Securities Transaction involving Exchange Traded Funds designated by the Compliance Officer. The Exchange Traded Funds designated by the Compliance Officer may be changed from time to time and presently consist of those ETFs listed in Appendix 6.
		c.	Related Mutual Funds. The prohibitions in Section II.B.2. b, c, and d are not applicable to any Securities Transaction involving Related Mutual Funds. Transactions involving Related Mutual Funds are subject to the requirements set forth in section III.F. of this Code.
D.	Reporting Requirements
	1.	Initial and Periodic Disclosure by Access Persons. Within ten (10) days of being designated as an Access Person and thereafter on an annual basis, an Access Person must acknowledge receipt and review of the Code and disclose all Securities (current as of a date not more than 45 days before the date the person becomes an Access Person) in which such Access Person has a Beneficial Interest on the Acknowledgement of Receipt of Code of Ethics and Personal Holdings Report (Appendix 2). The Chief Compliance Officer will provide all Access Persons with a copy of any amendments to the Code, and will require Access Persons to provide written acknowledgments of their receipt of the amendments to the Code.
	2.	Transaction and Periodic Statement Reporting Requirements. An Access Person must arrange for the Compliance Officer to receive directly from any broker, dealer, or bank that effects any Securities Transaction in which the Access Person has or acquires a Beneficial Interest, duplicate copies of each confirmation for each such transaction and periodic statements (at least quarterly) for each account in which such Access Person has a Beneficial Interest. Access Persons must also arrange for the Compliance Officer to receive directly from any mutual fund that effects any Securities Transaction in which the Access Person has or acquires a Beneficial Interest duplicate copies of periodic statements (no less frequently than quarterly) for each account in which such Access Person has a Beneficial Interest. Attached, as Appendix 7 is a form of letter that may be used to request such documents from such entities. No later than 30 days after the end of each calendar quarter, Access Persons must also submit a signed statement certifying that they have provided all statements of account and trade authorizations for covered Securities transactions for all accounts in which they have a Beneficial Interest; or certifying that they have had no personal Securities transactions for any account in which they have a Beneficial Interest.
		If Access Persons or employees open an account (either for themselves or with/for someone else wherein they would have a Beneficial Interest or discretion of the account) at a broker, dealer, bank, or mutual fund that has not previously been disclosed, the Access Person or employee must immediately notify the Compliance Officer in writing of the existence of the account and make arrangements to comply with the requirements set forth herein. Access Persons or employees may report the opening of a new account by completing the New Account Report that is attached as Appendix 9.
	3.	Disclaimers. Any report of a Securities Transaction for the benefit of a person other than the individual in whose account the transaction is placed may contain a statement that the report should not be construed as an admission by the person making the report that he or she has any direct or indirect beneficial ownership in the Security to which the report relates.
	4.	Availability of Reports. All information supplied pursuant to this Code may be made available for inspection to the Board of Directors of Wall Street Associates, the Board of Directors of each fund for which Wall Street Associates acts as a sub-advisor, the Code of Ethics Review Committee, the Compliance Officer, Pre-clearance Officers, the Access Person's department manager (or designee), any party to which any investigation is referred by any of the foregoing, the Securities Exchange Commission, any self-regulatory organization of which Wall Street Associates is a member, any state securities commission, and any attorney or agent of the foregoing.

III. FIDUCIARY DUTIES

A.	Confidentiality. Access Persons are prohibited from revealing information relating to the investment intentions, activities or portfolios of WSA client accounts, except to persons whose responsibilities require knowledge of the information.
B.	Gifts and Entertainment. A conflict of interest occurs when the personal interests of employees interfere or could potentially interfere with their responsibilities to the firm and its clients. The overriding principle is that employees should not accept inappropriate gifts, favors, entertainment, special accommodations, or other things of material value (or considered "extravagant by market") that could influence their decision-making or make them feel beholden to another person. Similarly, employees should not offer gifts, favors, entertainment or other things of value that could be viewed as overly generous, "extravagant by market," or aimed at influencing decision-making or making a client feel beholden to the firm or the employee. The following provisions on gifts apply to all employees, Investment Personnel and Marketing/Client Service Personnel.
	1.	Gifts. No employee may accept any gift, service, or other thing of more than "de minimis" value from any person or entity that does business with or on behalf of the adviser without documented approval of the Compliance Officer. The firm's President will receive notice of all such approvals for review. Additionally, no employee may give or offer any gift of more than a "de minimis" value to existing clients, prospective clients, or any entity that does business with or on behalf of the firm without documented approval of the Compliance Officer. The firm's President will receive notice of all such approvals for review.
		Solicitation of gifts or gratuities is prohibited. Specifically, Investment Personnel and all other employees are expressly prohibited from soliciting for themselves or the firm gifts or anything of value from a client, supplier, person with whom the employee does business, or any other entity with which the firm does business.
		For the purpose of this Code "de minimis" is defined as no more than $300 for gifts, services or any other things received or given by employees.
		In all cases, should an Investment Person or any employee expectedly or unexpectedly receive any gift that might be prohibited under this Code, the Investment Person or employee must immediately inform either the President or the Compliance Officer to determine whether that gift is prohibited and the proper course of action in accordance with the Code.
	2.	Entertainment. No employee may accept or provide extravagant or excessive entertainment ("extravagant by market") to or from a client, prospective client, or any person or entity that does or seeks to do business with or on behalf of the firm. Employees may, without pre-approval, accept or provide a business entertainment event of "reasonable value," for example a dinner or a sporting event, if the person or entity providing the entertainment is present.
		For the purpose of this Code "reasonable value" is generally defined as no more than $300 per person, per event, for a business entertainment event received or given by employees. However, this $300 standard may not be applicable to all regions it may be too low (or too high), depending on the city (or "market"). Employees are required to obtain documented approval from the Compliance Officer for a business entertainment event above "reasonable value" or that could be perceived to be "extravagant by market." The firm's President will receive notice of all such approvals for review.
	3.	Documented Approval and Reporting. The Compliance Officer must give documented approval for gifts above a "de minimis" value and business entertainment above a "reasonable value." The firm's President will receive notice of all such approvals for review (see points 1 and 2 above). Approval must be obtained and documented on a case-by-case basis. The Compliance Officer will report all such instances to the Code of Ethics Review Committee on an annual basis. On a quarterly basis, employees will be required to verify that (1) they have obtained documented approval for gifts above a "de minimis" value and/or business entertainment above a "reasonable value," or (2) they have neither given nor received gifts above a "de minimis" value and/or business entertainment above a "reasonable value."
C.	Corporate Opportunities. Access Persons may not take personal advantage of any opportunity properly belonging to any WSA client. For example, an Investment Person should not acquire a Beneficial Interest in a Security of limited availability without first offering the opportunity to purchase such Security for WSA client accounts.

D.	Undue Influence. Access Persons may not cause or attempt to cause any WSA client account to purchase, sell or hold any Security in a manner calculated to create any personal benefit to the Access Person. If an Access Person stands to benefit materially from an investment decision for a WSA client account, and the Access Person is making or participating in the investment decision, then the Access Person must disclose the potential benefit to those persons with authority to make investment decisions for the WSA client account (or, if the Access Person in question is a person with authority to make investment decisions for the WSA client account, to the Compliance Officer). The person to whom the Access Person reports the interest, in consultation with the Compliance Officer, must determine whether or not the Access Person will be restricted in making or participating in the investment decision.
E.	Service as a Director. No Investment Person may serve on the board of directors of a publicly held company absent prior written authorization by the Code of Ethics Review Committee. This authorization will rarely, if ever, be granted and, if granted, will normally require that the affected Investment Person be isolated, through a Chinese Wall or other procedures, from those making investment decisions related to the issuer on whose board the Investment Person sits.
F.	Purchases and Sales of "Related" Mutual Funds. "Related" mutual funds are those funds that are sub-advised by Wall Street Associates for its investment company clients. Purchases and sales of "related" mutual funds by Wall Street Associates Access Persons and employees are subject to the pre-clearance requirements set forth in Section II of this Code. Such purchases and sales will also be monitored by the Compliance Officer for any activities that could be viewed as a possible breach in fiduciary duty, specifically:
	"Rapid Trading" is defined by this Code as a pattern of purchase and sale activity of "related" mutual funds by an Access Person or employee occurring within a period of 7 days; and,
	"Trading Ahead" is defined by this Code as a pattern of purchases or sales of a "related" mutual fund by an Access Person or employee directly ahead of any material and nonpublic event expected to impact the "related" mutual fund's net asset value.
	The above is not an all-inclusive list. Any trading activity of "related" mutual funds by Access Persons that could possibly be viewed as harmful to the long-term interests of mutual fund shareholders is prohibited by this Code. The Compliance Officer will conduct monitoring of "related" mutual fund trades by Access Persons via periodic review of account statements.

IV. COMPLIANCE WITH THE CODE OF ETHICS

A.	Code of Ethics Review Committee
	1.	Membership, Voting and Quorum. The Code of Ethics Review Committee is comprised of the individuals identified in Appendix 1. The Committee shall vote by majority vote with two members serving as a quorum. Vacancies may be filled and, in the case of extended absences or periods of unavailability, alternates may be selected, by a majority vote of the remaining members of the Committee; provided, however, that at least one member of the Committee shall also be the Compliance Officer.
	2.	Investigating Violations of the Code. The Compliance Officer is responsible for investigating any suspected violation of the Code and shall report the results of each investigation to the Code of Ethics Review Committee. The Code of Ethics Review Committee is responsible for reviewing the results of any investigation of any reported or suspected violation of the Code. Any violation of the Code by an Access Person will be reported to the Boards of Directors of all WSA mutual fund clients with which WSA has sub-advisory agreements no less frequently than each quarterly meeting.
	3.	Annual Reports. The Code of Ethics Review Committee will review the Code at least once a year, in light of legal and business developments and experience in implementing the Code, and will report to the Board of Directors of all WSA mutual fund clients with which WSA has sub-advisory agreements:
		a.	Summarizing existing procedures concerning personal investing and any changes in the procedures made during the past year;
		b.	Identifying any violation requiring significant remedial action during the past year; and
		c.	Identifying any recommended changes in existing restrictions or procedures based on its experience under the Code, evolving industry practices, or developments in applicable laws or regulations.

B.	Remedies
	1.	Sanctions. If the Code of Ethics Review Committee determines that an Access Person has committed a violation of the Code, the Committee may impose sanctions and take other actions as it deems appropriate, including a letter of caution or warning, suspension of personal trading rights, suspension of employment (with or without compensation), fine, civil referral to the Securities and Exchange Commission, criminal referral, and termination of the employment of the violator for cause. The Code of Ethics Review Committee may also require the Access Person to reverse the transaction in question and forfeit any profit or absorb any loss associated or derived as a result. The amount of profit shall be calculated by the Code of Ethics Review Committee and shall be forwarded to a charitable organization selected by the Code of Ethics Review Committee. No member of the Code of Ethics Review Committee may review his or her own transaction.
	2.	Sole Authority. The Code of Ethics Review Committee has sole authority, subject to the review set forth in Section IV.B.3 below, to determine the remedy for any violation of the Code, including appropriate disposition of any monies forfeited pursuant to this provision. Failure to promptly abide by a directive to reverse a trade or forfeit profits may result in the imposition of additional sanctions.
	3.	Review. Whenever the Code of Ethics Review Committee determines that an Access Person has committed a violation of this Code that merits remedial action, it will report no less frequently than quarterly to the Boards of Directors of all WSA mutual fund clients with which WSA has sub-advisory agreements, information relating to the investigation of the violation, including any sanctions imposed. The Boards of Directors of all WSA mutual fund clients with which WSA has sub-advisory agreements may modify such sanctions as they deem appropriate. Such Boards shall have access to all information considered by the Code of Ethics Review Committee in relation to the case. The Code of Ethics Review Committee may determine whether or not to delay the imposition of any sanctions pending review by the applicable Board of Directors.

C.

Exceptions to the Code. Although exceptions to the Code will rarely, if ever, be granted, the Compliance Officer may grant exceptions to the requirements of the Code on a case by case basis if the Compliance Officer finds that the proposed conduct involves negligible opportunity for abuse. All such exceptions must be in writing and must be reported as soon as practicable to the Code of Ethics Review Committee and to the Board of Directors of all WSA mutual fund clients with which WSA has sub-advisory agreements at their next regularly scheduled meeting after the exception is granted.

D.

Inquiries Regarding the Code. The Compliance Officer will answer any questions about this Code or any other compliance-related matters.

V. DEFINITIONS

When used in the Code, the following terms have the meanings set forth below:
"Access Person" means:
(1)	every director or officer of Wall Street Associates;
(2)	every employee of Wall Street Associates, who in connection with his or her regular functions, makes, participates in, or obtains information regarding the purchase or sale of a Security by a WSA client account;
(3)	every natural person in a control relationship with Wall Street Associates who obtains information concerning recommendations made to a WSA client account with regard to the purchase or sale of a Security, prior to its dissemination or prior to the execution of all resulting trades;
(4)	any director, officer or employee of Wall Street Associates who in the ordinary course of his or her business makes, participates in or obtains information regarding the purchase or sale of Securities for any of WSA's client accounts, or whose functions or duties as a part of the ordinary course of his or her business relate to the making of any recommendation to such investment company concerning the purchase or sale of Securities; and,
(5)	such other persons as the Compliance Officer shall designate.

         Access Persons of Wall Street Associates are listed in Appendix 1, which is amended from time to time when necessary. Any uncertainty as to whether an individual is an Access Person should be brought to the attention of the Compliance Officer. Such questions will be resolved in accordance with, and this definition shall be subject to the definition of "Access Person" found in Rule 17j-1(e) (1) promulgated under the Investment Company Act of 1940, as amended.

         "Beneficial Interest" means the opportunity, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, to profit or share in any profit derived from a transaction in the subject Securities.

         An Access Person is deemed to have a Beneficial Interest in the following:

(1)	any Security owned individually by the Access Person;
(2)	any Security owned jointly by the Access Person with others (for example, joint accounts, spousal accounts, partnerships, trusts and controlling interests in corporations); and
(3)	any Security in which a member of the Access Person's Immediate Family has a Beneficial Interest if:
	a.	the Security is held in an account over which the Access Person has decision making authority (for example, the Access Person acts as trustee, executor, or guardian); or
	b.	the Security is held in an account for which the Access Person acts as a broker or investment adviser representative.

         In addition, an Access Person is presumed to have a Beneficial Interest in any Security in which a member of the Access Person's Immediate Family has a Beneficial Interest if the Immediate Family member resides in the same household as the Access Person. This presumption may be rebutted if the Access Person is able to provide the Compliance Officer with satisfactory assurances that the Access Person has no material Beneficial Interest in the Security and exercises no control over investment decisions made regarding the Security. Access Persons may use the form attached as Appendix 8 (Certification of No Beneficial Interest) in connection with such requests.

         Any uncertainty as to whether an Access Person has a Beneficial Interest in a Security should be brought to the attention of the Compliance Officer. Such questions will be resolved in accordance with, and this definition shall be subject to, the definition of "beneficial owner" found in Rules 16a-1(a) (2) and (5) promulgated under the Securities Exchange Act of 1934, as amended.

          "Code" means this Code of Ethics, as amended.

         "Compliance Officer" means the person designated by Wall Street Associates' Board of Directors as the Chief Compliance Officer pursuant to Rule 206(4)-7 of the Investment Advisers Act of 1940. Appendix 1 lists the name of the Compliance Officer, as such Appendix shall be amended from time to time.

          "Equivalent Security" means any Security issued by the same entity as the issuer of a subject Security, including options, rights, stock appreciation rights, warrants, preferred stock, restricted stock, phantom stock, bonds, and other obligations of that company or Security otherwise convertible into that Security. Options on Securities are included even if, technically, they are issued by the Options Clearing Corporation or a similar entity.

         "Immediate Family" of an Access Person means any of the following persons:

child	grandparent	son-in-law
stepchild	spouse	daughter-in-law
grandchild	sibling	brother-in-law
parent	mother-in-law	sister-in-law
stepparent	father-in-law

         Immediate Family includes adoptive relationships and other relationships (whether or not recognized by law) that the Compliance Officer determines could lead to the possible conflicts of interest, diversions of corporate opportunity, or appearances of impropriety which this Code is intended to prevent.

         "Investment Personnel" and "Investment Person" mean each Portfolio Manager and any Access Person who, in connection with his or her regular functions or duties, provides information and advice to a Portfolio Manager or who helps execute a Portfolio Manager's decisions. Investment Personnel are listed in Appendix 1, which shall be amended from time to time.

         "Portfolio Manager" means a person who has or shares principal day-to-day responsibility for managing the portfolio of a Fund. Portfolio Managers are listed in Appendix 1, which shall be amended from time to time.

         "Pre-clearance Officer" means the persons designated as a Pre-clearance Officer in Appendix 1 hereof or such person's designee.

         "Securities Transaction" means a purchase or sale of Securities in which an Access Person has or acquires a Beneficial Interest.

         "Security" includes stock, notes, bonds, debentures, and other evidences of indebtedness (including loan participations and assignments), limited partnership interests, investment contracts, and all derivative instruments of the foregoing, such as options and warrants. "Security" does not include open-ended mutual funds, futures or options on futures, but the purchase and sale of such instruments are nevertheless subject to the reporting requirements of the Code.

VI. APPENDICES TO THE CODE

The following appendices are attached to and are a part of the Code:

Appendix 1.	Contact Persons
Appendix 2.	Acknowledgement of Receipt of Code of Ethics and Personal Holdings Report
Appendix 3.	Personal Trade Authorization Request Form
Appendix 4.	Certification of Access Person's Designee
Appendix 5.	Designated Broad Based Indices
Appendix 6.	Designated Exchange Traded Funds
Appendix 7.	Form Letter to Broker, Dealer, Bank, or Mutual Fund
Appendix 8.	Certification of No Beneficial Interest
Appendix 9.	New Account(s) Report
Appendix 10.	Matters Pertaining to Blackout Periods

 

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 Appendix 1

  CONTACT PERSONS

PRE-CLEARANCE OFFICERS

William Jeffery

Ken McCain

Paul LeCoq

Paul Ariano

Carl Wiese

COMPLIANCE OFFICER

Ted Smith

CODE OF ETHICS REVIEW COMMITTEE

William Jeffery

William Gastil

Paul LeCoq

Ted Smith

Kimberly Taylor

ACCESS PERSONS

William Jeffery	Ken McCain	Ashley Williams	Denise VandeMerwe
Paul Ariano	Alexis Waadt	Carl Wiese	Brett Hyland
William Gastil	Ted Smith	Maritie Blancet	Joseph Tarantino
Paul LeCoq	Debby Holden	Bouavone Hanesana	Lori Youkhanna
Darci Irvin	Kimberly Taylor	Luke Jacobson	Matt McCain
Denny Danque

PORTFOLIO MANAGERS

William Jeffery	Ken McCain	Paul Ariano
Paul LeCoq	Carl Wiese

INVESTMENT PERSONNEL

William Jeffery	Ken McCain	Paul Ariano	Luke Jacobson
Alexis Waadt	Carl Wiese	Ted Smith	Matt McCain
Paul LeCoq	William Gastil

 Appendix 2

ACKNOWLEDGEMENT OF RECEIPT OF CODE OF ETHICS AND
PERSONAL HOLDINGS REPORT

I acknowledge that I have received the Code of Ethics dated December -2007 and represent that:

1.	I have read the Code of Ethics and I understand that it applies to me and to all Securities in which I have or acquire any Beneficial Interest. I have read the definition of "Beneficial Interest" and understand that I may be deemed to have a Beneficial Interest in Securities owned by members of my Immediate Family and that Securities Transactions effected by members of my Immediate Family may therefore be subject to this Code.
2.	In accordance with Section II.A. of the Code, I will obtain prior written authorization for all Securities Transactions in which I have or acquire a Beneficial Interest, except for transactions exempt from pre-clearance under Section II.C.1 of the Code.
3.	In accordance with Section II.D.2. of the Code of Ethics, I will report all non-exempt Securities Transactions in which I have or acquire a Beneficial Interest.
4.	I agree to disgorge and forfeit any profits on prohibited transactions in accordance with the requirements of the Code.
5.	I will comply with the Code of Ethics in all other respects.
6.	In accordance with Section II.D.1. of the Code, the following is a list of all Securities in which I have a Beneficial Interest:

STEP 1: Provide the information requested below for each account that you maintain with a broker, dealer, bank, or mutual fund. Indicate "None" if appropriate.

NAME OF BROKER, DEALER, BANK OR MUTUAL FUND ACCOUNT TITLE ACCOUNT NUMBER

(Attach a separate sheet if necessary)

STEP 2: Attach the most recent account statement for each account identified above.



STEP 3: If you own Beneficial Interests in Securities that are not listed on an attached account statement list them in the table below. Include private equity investments. Indicate "None" if appropriate.

NAME OF BROKER,
DEALER, BANK OR
MUTUAL FUND ACCOUNT
TITLE ACCOUNT
NUMBER NAME OF
SECURITY NUMBER OF
SHARES/PRINCIPAL
AMOUNT

(Attach a separate sheet if necessary)

7. (Investment Personnel Only) In accordance with Section III.E. of the Code, the following is a list of publicly held companies on which I serve as a member of the board of directors. Indicate "NA" or "None" if appropriate.

NAME OF COMPANY BOARD MEMBER SINCE

8. I certify that the information on this form is accurate and complete.

Name	Date
Signature

 Appendix 3

WSA PERSONAL TRADE AUTHORIZATION REQUEST FORM

1. Employee Name:

2. Name (and symbol) of Security:

3. Maximum number of shares (or units) to
be purchased or sold (or amount of bond):

4. Check applicable box: 
Purchase
Sale

5. Is this issue currently being considered
    for purchase or sale in client accounts?
YES
NO

If "NO," state REASON:

VERIFIED WITH (Name of Investment Person):

6. In connection with the foregoing transaction, I hereby make the following representations and warranties:

(a)	I do not possess any material nonpublic information regarding the Security or the issuer of the Security.
(b)*	I am not aware that any WSA client account has an open order to buy or sell the Security or Equivalent Security.
(c)*	By entering this order, I am not using knowledge of any open, executed, or pending transaction by a WSA client account to profit by the market effect of such transaction.
(d)	(Investment Personnel Only). The Security is not being acquired in an initial public offering or in a private placement. If the Security is being acquired in a private placement, I have reviewed Section II.B.2. of the Code and have attached hereto a written explanation of such transaction.
(e)*	This transaction satisfies the One Day, Seven Day and Sixty Day Blackout Period requirements set forth in Section II.B.2. of this Code.
(f)*	If I am purchasing the Security, and if the same or an Equivalent Security has been held within the past 60 days, I have not directly or indirectly (through any member of my Immediate Family, any account in which I have a Beneficial Interest or otherwise) sold the Security or an Equivalent Security in the prior 60 days.
(g)*	If I am selling the Security for a gain, and if the same or an Equivalent Security has been held within the past 60 days, I have not directly or indirectly (through any member of my Immediate Family, any account in which I have a Beneficial Interest or otherwise) purchased the Security or an Equivalent Security in the prior 60 days.
(h)	I believe that the proposed trade fully complies with the requirements of the Code.

*Applies only to Securities not exempt from Section II.B.2 of the Code.

Employee or Designee Signature	Date			Time
TRADE AUTHORIZATION OR DENIAL
Trading Desk Signature		Date			Time
			Approved			Denied
Pre-clearance Officer Signature		Compliance Officer Acknowledgement

 Appendix 4

CERTIFICATION OF ACCESS PERSON'S DESIGNEE

         The undersigned hereby certifies that the Access Person named on the attached Trade Authorization Request for Access Persons (a) directly instructed me to complete the attached form on his or her behalf, (b) to the best of my knowledge, was out of the office at the time of such instruction and has not returned, and (c) confirmed to me that the representations and warranties contained in the attached Form are accurate.

Access Person's Designee

Print Name

Date

 Appendix 5

DESIGNATED BROAD-BASED INDICES

Transactions involving certain broad-based indices and options on certain broad-based indices are exempt from the prohibited transaction restrictions set forth in Section II.B.2 of Wall Street Associates' Code of Ethics. Access Persons may conduct transactions in certain broad-based indices and options on broad-based indices such as the ones listed below (not an all-inclusive listing). Although such transactions are not prohibited, they are subject to the pre-clearance requirements set forth in Section II.A of Wall Street Associates' Code of Ethics.

Dow Jones Industrials	Russell 1000 Index	S&P 100 Index
Dow Jones Composite	Russell 1000 Growth Index	S&P 500 Index
Dow Jones Transports	Russell 1000 Value Index	S&P 500 Growth Index
Dow Jones Utilities	Russell 2500 Index	S&P 500 Value Index
Dow Jones Internet	Russell 2500 Growth Index	S&P MidCap 400 Index
Nasdaq Composite	Russell 2500 Value Index	S&P MidCap 400 Growth Index
Nasdaq 100	Russell 2000 Index	S&P MidCap 400 Value Index
Wilshire 5000 Index	Russell 2000 Growth Index	S&P SmallCap 600 Index
Nikkei 225 Average*	Russell 2000 Value Index	S&P SmallCap 600 Growth Index
CAC-40 Stock Index*		S&P SmallCap 600 Value Index
FTSE 100 Index*
DJ Euro STOXX 50 Index*
DJ STOXX 50 Index*
*Transactions in most other broad-based International Stock Market Indexes are not prohibited.

 Appendix 6

DESIGNATED EXCHANGE TRADED FUNDS (ETFs)

Transactions involving certain exchange traded funds (ETFs) are exempt from the prohibited transaction restrictions set forth in Section II.B.2 of Wall Street Associates' Code of Ethics. Access Persons may conduct transactions in the exchange traded funds (ETFs) such as the ones listed below (not an all-inclusive listing). Although such transactions are not prohibited, they are subject to the pre-clearance requirements set forth in Section II.A of Wall Street Associates' Code of Ethics.

ETF TYPE	FULL NAME	TRACKS
DIAMONDS	Diamonds Trust Series	Dow Jones Industrial Average
FITRs	Fixed Income Exchange Traded Securities	Various Treasuries
HOLDRs	Holding Company Depository Receipts	Narrow Industry Groups
i-Shares	i-Shares possibly "index shares"	Various Indexes
QUBEs	Nasdaq-100 Tracking Stock	Nasdaq 100 Index
Spiders	Standard & Poors' Depository Receipts	Various S&P Indexes
StreetTracks	StreetTracks-State Street Global ETFs	Various Indexes
VIPERS	Vanguard Index Participation Receipts	Several Vanguard Index Funds

 Appendix 7

FORM OF LETTER TO BROKER, DEALER, BANK, OR MUTUAL FUND

(Date)

(Your Name)

(Your Address)

         Subject:           Account # ________________________

         Dear___________________ :

         By my signature below, pursuant to NASD Conduct Rule 3050 or NYSE Rule 407, I acknowledge that my employer is an investment adviser to an investment company.

         Pursuant to the employer's Code of Ethics and Rule 17j-1 under the Investment Company Act of 1940, please send duplicate confirmations of individual transactions as well as duplicate periodic (at least quarterly) statements for the referenced account directly to:

Compliance Officer
Wall Street Associates
1200 Prospect Street, Suite 100
La Jolla, CA 92037

         Thank you for your cooperation. If you have any questions, please contact me at (your phone number) or Ted Smith, Chief Compliance Officer at (858) 551-6335.

Sincerely,

(Your name)

Signed,

Ted C. Smith, CFA, CIC
Chief Compliance Officer
Wall Street Associates

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 Appendix 8

CERTIFICATION OF NO BENEFICIAL INTEREST

I have read the Code of Ethics and I understand that it applies to me and to all Securities in which I have or acquire any Beneficial Interest. I have read the definition of "Beneficial Interest" and understand that I may be deemed to have a Beneficial Interest in Securities owned by members of my Immediate Family and that Securities Transactions effected by members of my Immediate Family may therefore be subject to this Code.

The following accounts are maintained by one or more members of my Immediate Family who reside in my household:

Account Name Relationship of
Immediate
Family Member Account Number Brokerage Firm

I certify that with respect to each of the accounts listed above (please initial appropriate boxes):

[      ]	I do not own individually or jointly with others any of the Securities held in the account.
[      ]	I do not possess or exercise decision making authority over the account.
[      ]	I do not act as an investment adviser representative for the account.

I agree that I will notify the Compliance Officer immediately if any of the information I have provided in this certification becomes inaccurate or incomplete.

Signature

Print Name

Date

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 Appendix 9

NEW ACCOUNT(S) REPORT

I recently opened the following account(s) in which I have a Beneficial Interest:

Date Opened Name of Broker, Dealer,
Bank or Mutual Fund Account Title Account Number

Name (Please Print)

Signature

Date

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Appendix 10

MATTERS PERTAINING TO BLACKOUT PERIODS

         Wall Street Associates recognizes that situations may occur which would necessitate the use of "Blackout Periods." The dynamic nature of events may cause, for example, an issue being held personally by an employee to be possibly considered for purchase in a Client account. Although Wall Street Associates attempts to avoid situations where cross-ownership of issues occur between Client accounts and employee personal accounts, such situations can and do occur. By ensuring Clients are not damaged by employee personal transactions, "Blackout Periods" thereby provide a way to avoid even the appearance of a conflict of interest that may compromise the trust Clients place in Wall Street Associates.

         Wall Street Associates' Rule on Blackout Periods. Employees are subject to a 7-day Blackout Period (no trades 7 days before and after in a particular Security) where transactions are prohibited in the following circumstances:

• If the client has executed or withdrawn a pending "buy" order in that same or related Security.
• If the client has executed or withdrawn a pending "sell" order in that same or related Security.

However, if the Client's pending "sell" order in the same or related Security disposes of all of the Client's interest in that Security, employees are allowed to sell their direct or beneficial interest in that Security 24 hours after the sale of the Client's entire interest has been finalized.

         "Blackout Periods" are strictly for the benefit of Clients. The establishment of "Blackout Periods" is not intended to be a loophole through which employees may profit from conducting transactions in Securities held in Client accounts, being purchased or sold for Clients, or possibly being considered for Clients. As a fiduciary, Wall Street Associates evaluates situations on a case-by-case basis, realizing that more than 7 days may be required for the market effect of certain Client transactions to be over. Wall Street Associates' Code of Ethics, which requires all personal account transactions be conducted in a manner that avoids any actual or potential conflict of interest, specifies:

• Employees are prohibited from purchasing or selling (either directly or indirectly) a Security in a personal account if, at the time of the transaction, they have actual knowledge that the Security:
  • is being considered for purchase or sale in a Client account; or,
  • is actually being purchased or sold in a Client account.
• When requesting pre-clearance of a personal Securities transaction, employees are required to give an explanation of the reason(s) why they are not proposing to purchase or sell the Security for Client accounts. Typical reasons (not an inclusive list) for an issue to be "not under consideration for purchase in a Client account" include:
  • The issue's market capitalization is too large for Client accounts.
  • The issue lacks the required liquidity for inclusion in Client accounts.
  • The issue's price is too low (generally, below $5.00 per share) for inclusion in Client accounts.
  • The issue does not exhibit the requisite growth characteristics for inclusion in Client accounts.
  • The investment team may have no investment opinion on the issue.
  • The investment team may have a negative opinion on the issue.
  • The issue is not listed on a major US exchange (i.e., it is a "pink sheets" or "bulletin board" stock).

         Wall Street Associates recognizes that exceptions to "Blackout Periods" must be made in some circumstances to avoid constraining Portfolio Managers from acting in a Client's best interest. A hesitancy to act on behalf of Client accounts because of transactions that may have occurred in employee personal accounts within the 7-day "Blackout Period" must be eliminated. Certain transactions of an opposite nature may be allowed within the 7-day "Blackout Period," so long as there appears to be no "front running" and the transactions are approved and documented by the Compliance Officer and the Senior Portfolio Management Team. The following "cases" illustrate such opposing transactions:

CASE 1

• CLIENT ACCOUNT: Currently holds "XYZ."
  • "XYZ" is not being considered for sale in the Client's account.
• EMPLOYEE: Purchases "XYZ" in his/her personal account.
• SITUATION: Within 7 days of the employee's purchase of "XYZ," the issue becomes a candidate for sale in the Client's account. Possible reasons for this may include:
  • Client withdraws money from the account, necessitating the sale of "XYZ."
  • Market conditions change, necessitating the sale of "XYZ" in the Client's account.
  • Issue-specific changes in "XYZ" (i.e., negative news, market capitalization above account guidelines, corporate actions, etc.) necessitate the sale of the issue in the Client's account.

• RESOLUTION: The Compliance Officer, who will make recommendations to Senior Management in writing, will conduct a review of all circumstances. In his review, the Compliance Officer will determine if any impropriety has actually or appears to have occurred, and will investigate the employee trades to determine if a pattern exists which could be construed as front running, scalping, or otherwise improper. After reviewing and documenting the situation to ensure no impropriety has actually or appears to have occurred, the Compliance Officer and Senior Portfolio Management Team can approve this opposing transaction in "XYZ" within the 7 day "Blackout Period."

CASE 2

• CLIENT ACCOUNT: Either currently holds or does not hold "XYZ."
  • "XYZ" is not being considered for purchase in the Client's account.
• EMPLOYEE: Sells "XYZ" from his/her personal account.
• SITUATION: Within 7 days of the employee's sale of "XYZ," the issue becomes a candidate for purchase in the Client's account. Possible reasons for this may include:
  • In the case where the Client currently holds "XYZ," Client contributes money to the account, necessitating the purchase of "XYZ."
  • Market conditions change, making "XYZ" a candidate for purchase in the Client's account.
  • Issue-specific changes in "XYZ" (i.e., positive news, market capitalization moves within account guidelines, corporate actions, etc.) makes "XYZ" a candidate for purchase in the Client's account.

• RESOLUTION: The Compliance Officer, who will make recommendations to Senior Management in writing, will conduct a review of all circumstances. In his review, the Compliance Officer will determine if any impropriety has actually or appears to have occurred, and will investigate the employee trades to determine if a pattern exists which could be construed as front running, scalping, or otherwise improper. After reviewing and documenting the situation to ensure no impropriety has actually or appears to have occurred, the Compliance Officer and Senior Portfolio Management Team can approve this opposing transaction in "XYZ" within the 7 day "Blackout Period."
  
  
  
  

COVER

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS

6300 LAMAR AVENUE

P. O. BOX 29217

SHAWNEE MISSION, KANSAS 66201-9217

April 29, 2009


Securities and Exchange Commission
100 F Street NE
Washington DC 20549

Re:	Ivy Funds Variable Insurance Portfolios (Registrant)
	File Nos. 33-11466 and 811-5017/CIK No. 810016

Dear Sir or Madam:

We are hereby transmitting for filing through EDGAR Post-Effective Amendment No. 49 to the Registration Statement under the Securities Act of 1933 and Amendment No. 49 under the Investment Company Act of 1940 for the above-referenced Registrant. This transmission contains a conformed signature page and a conformed opinion of counsel. The manually signed originals of these documents are maintained at the offices of the Registrant.

The Amendment reflects changes which are responsive to comments received by the Registrant from its SEC examiner, as well as non-material language, organizational and editorial changes regarding the reorganization of the Registrant. As stated on the cover page of the Amendment, upon effectiveness of the Amendment, the Registrant will be the successor issuer to the Predecessor Registrant and is expressly adopting the Registration Statement of the Predecessor Registrant as its own. This filing is being made pursuant to paragraph (b) of Rule 485. It is proposed that this filing will become effective on April 30, 2009.

If you have any questions or comments concerning the foregoing, please contact me at 913-236-1923.

Very truly yours,



/s/Kristen A. Richards
Kristen A. Richards
Vice President, Assistant Secretary
and Associate General Counsel