IVY High Income Opportunities Fund

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-22800

Ivy High Income Opportunities Fund

(Exact name of registrant as specified in charter)

6300 Lamar Avenue, Overland Park, Kansas 66202

(Address of principal executive offices) (Zip code)

Mara D. Herrington

6300 Lamar Avenue

Overland Park, Kansas 66202

(Name and address of agent for service)

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

Date of fiscal year end: September 30

Date of reporting period: December 31, 2013

ITEM 1.    SCHEDULE OF INVESTMENTS.

SCHEDULE OF INVESTMENTS

Ivy High Income Opportunities Fund (in thousands)

    DECEMBER 31, 2013 (UNAUDITED)

 

 

CORPORATE DEBT SECURITIES    Principal        Value  

Aerospace & Defense – 4.9%

        

Silver II Borrower SCA and Silver II US Holdings,

        

7.750%, 12–15–20 (A)(F)

    $ 15,000         $ 15,900   
       

 

 

  

Agricultural Products – 2.5%

        

American Seafoods Group LLC,

        

10.750%, 5–15–16 (A)(F)

      7,750           8,021   
       

 

 

  

Air Freight & Logistics – 4.1%

        

TRAC Intermodal LLC and TRAC Intermodal Corp.,

        

11.000%, 8–15–19 (F)

      11,711           13,380   
       

 

 

  

Airlines – 0.6%

        

United Continental Holdings, Inc. (GTD by United Air Lines, Inc.):

        

8.000%, 7–15–24

      1,136           1,139   

6.000%, 7–15–26

      482           415   

6.000%, 7–15–28

      482           406   
       

 

 

  
          1,960   
       

 

 

  

Aluminum – 0.4%

        

Wise Metals Group LLC,

        

8.750%, 12–15–18 (A)

      1,221           1,285   
       

 

 

  

Application Software – 0.3%

        

ACI Worldwide, Inc.,

        

6.375%, 8–15–20 (A)

      971           1,015   
       

 

 

  

Auto Parts & Equipment – 3.2%

        

IDQ Holdings, Inc.,

        

11.500%, 4–1–17 (A)

      132           137   

Schaeffler Holding Finance B.V.:

        

6.875%, 8–15–18 (A)(B)(C)

      EUR5,471           8,054   

6.875%, 8–15–18 (A)(C)(F)

    $ 2,132           2,260   
       

 

 

  
          10,451   
       

 

 

  

Automotive Retail – 0.2%

        

Sonic Automotive, Inc.,

        

5.000%, 5–15–23

      819           768   
       

 

 

  

Banking – 0.2%

        

Barclays plc,

        

8.250%, 12–29–49

      753           777   
       

 

 

  

Broadcasting – 3.3%

        

Clear Channel Worldwide Holdings, Inc., Series B,

        

7.625%, 3–15–20 (F)

      10,000           10,513   

Spanish Broadcasting System, Inc.,

        

12.500%, 4–15–17 (A)

      160           174   
       

 

 

  
          10,687   
       

 

 

  

Building Products – 3.0%

        

CPG Merger Sub LLC,

        

8.000%, 10–1–21 (A)

      1,061           1,103   

HD Supply, Inc.,

        

7.500%, 7–15–20

      8,100           8,728   
       

 

 

  
          9,831   
       

 

 

  

Cable & Satellite – 8.9%

        

Cablevision Systems Corporation,

        

5.875%, 9–15–22 (F)

      10,000           9,575   

DISH DBS Corporation:

        

6.750%, 6–1–21 (F)

      10,500           11,129   

5.875%, 7–15–22

      2,000           2,000   

Univision Communications Inc.,

        

6.750%, 9–15–22 (A)(F)

      5,926           6,489   
       

 

 

  
          29,193   
       

 

 

  

Casinos & Gaming – 0.7%

        

MCE Finance Limited,

        

5.000%, 2–15–21 (A)

      2,390           2,330   
       

 

 

  

Communications Equipment – 3.8%

        

Eagle Midco, Inc.,

        

9.000%, 6–15–18 (A)(C)(F)

      12,000           12,510   
       

 

 

  

Construction Materials – 0.5%

        

Hillman Group, Inc. (The),

        

10.875%, 6–1–18

      1,500           1,620   
       

 

 

  

Consumer Finance – 2.3%

        

Creditcorp,

        

12.000%, 7–15–18 (A)(F)

      5,000           4,950   

MISA Investments Limited,

        

8.625%, 8–15–18 (A)

      2,552           2,641   
       

 

 

  
          7,591   
       

 

 

  

Data Processing & Outsourced Services – 0.4%

  

     

Bankrate, Inc.,

        

6.125%, 8–15–18 (A)

      1,360           1,414   
       

 

 

  

Diversified Capital Markets – 1.2%

        

Patriot Merger Corp.,

        

9.000%, 7–15–21 (A)(F)

      3,827           4,018   
       

 

 

  

Diversified Metals & Mining – 5.7%

        

Crystal Merger Sub, Inc.,

        

7.625%, 10–15–21 (A)

      391           415   

FMG Resources Pty Ltd.:

        

8.250%, 11–1–19 (A)(F)

      2,500           2,806   

6.875%, 4–1–22 (A)(F)

      12,000           13,080   

Magnetation LLC and Mag Finance Corp.,

        

11.000%, 5–15–18 (A)

      2,000           2,180   
       

 

 

  
          18,481   
       

 

 

  

Diversified Support Services – 4.6%

        

Algeco Scotsman Global Finance plc,

        

8.500%, 10–15–18 (A)(F)

      10,575           11,447   

Nexeo Solutions, LLC,

        

8.375%, 3–1–18 (F)

      3,600           3,573   
       

 

 

  
          15,020   
       

 

 

  

Electronic Components – 4.9%

        

WireCo WorldGroup Inc.,

        

9.500%, 5–15–17 (F)

      15,139           15,688   
       

 

 

  

Electronic Manufacturing Services – 0.6%

        

KEMET Corporation,

        

10.500%, 5–1–18 (F)

      2,000           1,975   
       

 

 

  

Finance – 4.5%

        

Mobile Challenger Intermediate Group S.A.:

        

8.750%, 3–15–19 (A)(B)(C)

      EUR2,000           2,861   

8.750%, 3–15–19 (A)(B)(C)

      CHF2,000           2,326   

Stearns Holdings Inc.,

        

9.375%, 8–15–20 (A)

    $ 3,571           3,643   

TMX Finance LLC and TitleMax Finance Corporation,

        

8.500%, 9–15–18 (A)(F)

      5,293           5,638   
       

 

 

  
          14,468   
       

 

 

  

Food Distributors – 0.9%

        

U.S. Foodservice, Inc.,

        

8.500%, 6–30–19

      2,775           3,039   
       

 

 

  

Gaming – 0.6%

        

Gateway Casinos & Entertainment Limited,

        

8.500%, 11–26–20 (A)(B)

      CAD667           630   
 

Wynn Macau, Limited,

        

5.250%, 10–15–21 (A)

    $ 1,290           1,292   
       

 

 

  
          1,922   
       

 

 

  

Health Care Facilities – 5.1%

        

ConvaTec Finance International S.A.,

        

8.250%, 1–15–19 (A)(C)

      1,236           1,265   

HCA Holdings, Inc.,

        

6.250%, 2–15–21 (F)

      8,335           8,721   

Tenet Healthcare Corporation:

        

6.000%, 10–1–20 (A)

      1,592           1,662   

8.125%, 4–1–22

      4,337           4,673   
       

 

 

  
          16,321   
       

 

 

  

Health Care Services – 1.7%

        

MedImpact Holdings, Inc.,

        

10.500%, 2–1–18 (A)(F)

      5,000           5,488   
       

 

 

  

Health Care Supply – 1.8%

        

HCA Inc.,

        

7.500%, 2–15–22 (F)

      5,500           6,036   
       

 

 

  

Hotels & Gaming – 0.9%

        

Hilton Worldwide Finance, LLC,

        

5.625%, 10–15–21 (A)

      2,937           3,047   
       

 

 

  

Industrial Machinery – 0.6%

        

Dynacast International LLC and Dynacast Finance Inc.,

        

9.250%, 7–15–19

      293           323   

Gardner Denver, Inc. and Renaissance Acquisition Corp.,

        

6.875%, 8–15–21 (A)

      1,656           1,652   
       

 

 

  
          1,975   
       

 

 

  

Integrated Telecommunication Services – 4.0%

  

     

CenturyLink, Inc.:

        

5.625%, 4–1–20

      349           355   

5.800%, 3–15–22 (F)

      13,000           12,838   
       

 

 

  
          13,193   
       

 

 

  

Leasing – 1.7%

        

Flexi-Van Leasing, Inc.,

        

7.875%, 8–15–18 (A)

      5,208           5,520   
       

 

 

  

Leisure Facilities – 0.6%

        

Regal Entertainment Group,

        

5.750%, 2–1–25

      2,000           1,885   
       

 

 

  

Metal & Glass Containers – 0.8%

        

Consolidated Container Company LLC and Consolidated Container Capital, Inc.,

        

10.125%, 7–15–20 (A)

      2,500           2,663   
       

 

 

  

Movies & Entertainment – 0.6%

        

Cinemark USA, Inc.:

        

5.125%, 12–15–22

      533           516   

4.875%, 6–1–23

      1,651           1,552   
       

 

 

  
          2,068   
       

 

 

  

Oil & Gas Refining & Marketing – 5.1%

        

Offshore Drilling Holding S.A.,

        

8.375%, 9–20–20 (A)

      3,074           3,274   

Samson Investment Company,

        

10.500%, 2–15–20 (A)(D)(F)

      5,000           5,450   

Shelf Drilling Holdings, Ltd.,

        

8.625%, 11–1–18 (A)(F)

      7,608           8,217   
       

 

 

  
          16,941   
       

 

 

  

Oil Services – 0.7%

        

Foresight Energy LLC and Foresight Energy Finance Corporation,

   

     

7.875%, 8–15–21 (A)

      2,075           2,132   
       

 

 

  

Paper Packaging – 3.7%

        

Beverage Packaging Holdings II Issuer Inc. and Beverage Packaging Holdings (Luxembourg) II S.A.,

        

6.000%, 6–15–17 (A)

      591           598   

Reynolds Group Holdings Limited:

        

9.000%, 4–15–19 (F)

      6,000           6,435   

9.875%, 8–15–19 (F)

      4,500           5,006   
       

 

 

  
          12,039   
       

 

 

  

Pharmaceuticals – 2.4%

        

Forest Laboratories, Inc.,

        

5.000%, 12–15–21 (A)

      3,358           3,370   

Salix Pharmaceuticals, Ltd.,

        

6.000%, 1–15–21 (A)

      1,421           1,457   

Valeant Pharmaceuticals International, Inc.,

        

6.375%, 10–15–20 (A)

      3,000           3,161   
       

 

 

  
          7,988   
       

 

 

  

Precious Metals & Minerals – 1.0%

        

Prince Mineral Holding Corp,

        

11.500%, 12–15–19 (A)

      3,000           3,338   
       

 

 

  

Retail Stores – 1.1%

        

Jo-Ann Stores, Inc.,

        

8.125%, 3–15–19 (A)

      81           85   

PC Nextco Holdings, LLC and PC Nextco Finance, Inc.,

        

8.750%, 8–15–19 (A)(C)

      826           848   

Pinnacle Operating Corporation,

        

9.000%, 11–15–20 (A)

      2,618           2,778   
       

 

 

  
          3,711   
       

 

 

  

Satellite – 2.4%

        

Sirius XM Radio Inc.:

        

5.875%, 10–1–20 (A)

      1,079           1,101   

5.750%, 8–1–21 (A)

      2,399           2,423   

5.250%, 8–15–22 (A)

      96           97   

4.625%, 5–15–23 (A)(F)

      4,586           4,150   
       

 

 

  
          7,771   
       

 

 

  

Specialized Consumer Services – 2.8%

  

     

AA Bond Co Limited,

        

9.500%, 7–31–19 (A)(B)

      GBP1,931           3,509   

B-Corp Merger Sub, Inc.,

        

8.250%, 6–1–19 (F)

    $ 4,000           3,990   

Carlson Wagonlit B.V.,

        

6.875%, 6–15–19 (A)

      214           222   

Nielsen Finance,

        

5.500%, 10–1–21 (A)

      1,396           1,417   
       

 

 

  
          9,138   
       

 

 

  

Specialized REITs – 1.1%

        

CNL Lifestyles Properties, Inc.,

        

7.250%, 4–15–19 (F)

      3,539           3,645   
       

 

 

  

Specialty Stores – 2.3%

        

Takko Luxembourg 2 S.C.A.,

        

9.875%, 4–15–19 (A)(B)

      EUR5,500           7,411   
       

 

 

  

Technology – 1.1%

        

Artesyn Escrow, Inc.,

        

9.750%, 10–15–20 (A)

    $ 1,085           1,139   

NCR Escrow Corp.:

        

5.875%, 12–15–21 (A)

      1,154           1,176   

6.375%, 12–15–23 (A)

      1,233           1,259   
       

 

 

  
          3,574   
       

 

 

  

Textiles – 0.2%

        

Quiksilver, Inc. and QS Wholesale, Inc.,

        

7.875%, 8–1–18 (A)

      577           626   
       

 

 

  

Thrifts & Mortgage Finance – 3.2%

        

Provident Funding Associates, L.P. and PFG Finance Corp.:

        

10.125%, 2–15–19 (A)

      2,725           2,970   

6.750%, 6–15–21 (A)(F)

      7,500           7,464   
       

 

 

  
          10,434   
       

 

 

  

Tobacco – 0.5%

        

Prestige Brands, Inc.,

        

5.375%, 12–15–21 (A)

      1,630           1,646   
       

 

 

  

Wireless – 4.1%

        
 

Sprint Corporation:

        

7.250%, 9–15–21 (A)

      5,074           5,448   

7.875%, 9–15–23 (A)

      4,459           4,793   

T-Mobile USA, Inc.:

        

6.464%, 4–28–19

      788           837   

6.542%, 4–28–20

      788           839   

6.633%, 4–28–21

      382           403   

6.125%, 1–15–22

      372           379   

6.731%, 4–28–22

      158           165   

6.836%, 4–28–23

      158           164   

6.500%, 1–15–24

      372           377   
       

 

 

  
          13,405   
       

 

 

  

TOTAL CORPORATE DEBT SECURITIES – 111.8%

  

      $ 365,339   

(Cost: $355,531)

        

MUNICIPAL BONDS

                    

Puerto Rico – 0.4%

        

PR Aqueduct and Sewer Auth Rev Bonds, Ser 2012A (Sr Lien):

        

5.750%, 7–1–37

      515           348   

5.250%, 7–1–42

      515           322   

PR Elec Power Auth, Power Rev Bonds, Ser 2010XX,

        

5.750%, 7–1–36

      155           100   

PR Elec Power Auth, Power Rev Bonds, Ser 2013A,

        

7.000%, 7–1–33

      205           166   

PR Elec Power Auth, Power Rev Bonds, Ser WW,

        

5.500%, 7–1–38

      620           394   
       

 

 

  
          1,330   
       

 

 

  

TOTAL MUNICIPAL BONDS – 0.4%

  

      $ 1,330   

(Cost: $1,432)

        

LOANS

                    

Apparel Retail – 5.6%

        

True Religion Apparel, Inc.:

        

5.875%, 7–29–19 (D)

      15,000           14,224   

11.000%, 1–29–20 (D)

      4,000           3,820   
       

 

 

  
          18,044   
       

 

 

  

Application Software – 0.8%

        

Misys plc and Magic Newco, LLC:

        

0.000%, 6–12–19 (D)

      400           459   

12.000%, 6–12–19 (D)

      2,000           2,292   
       

 

 

  
          2,751   
       

 

 

  

Auto Parts & Equipment – 0.3%

        

Direct ChassisLink, Inc.,

        

8.500%, 11–7–19 (D)

      942           941   
       

 

 

  

Broadcasting – 2.5%

        

PAW LUXCO II S.A.R.L.,

        

5.163%, 7–29–17 (B)(D)

      EUR6,000           7,972   
       

 

 

  

Casinos & Gaming – 0.2%

        

Gateway Casinos & Entertainment Ltd.,

        

5.647%, 11–4–19 (B)(D)

      CAD743           698   
       

 

 

  

Construction Materials – 0.6%

  

     

Continental Building Products, LLC,

        

8.750%, 2–15–21 (D)

    $ 1,388           1,389   

Quickrete Holdings, Inc.:

        

4.000%, 9–19–20 (D)

      385           386   

7.000%, 3–19–21 (D)

      295           301   
       

 

 

  
          2,076   
       

 

 

  

General Merchandise Stores – 0.3%

  

     

Hudson’s Bay Company,

        

8.250%, 10–7–21 (D)

      909           939   
       

 

 

  

Health Care Facilities – 0.6%

  

     

Surgery Center Holdings, Inc.,

        

9.750%, 4–11–20 (D)

      2,000           2,000   
       

 

 

  

Hotels & Gaming – 1.7%

      

Hilton Worldwide Finance, LLC,

      

3.750%, 9–23–20 (D)

      5,526         5,568   
     

 

 

  

Hotels, Resorts & Cruise Lines – 0.2%

      

Four Seasons Hotels Limited,

      

6.250%, 12–13–20 (D)

      799         817   
     

 

 

  

Independent Power Producers & Energy Traders – 1.3%

  

   

Alinta Energy Finance PTY Limited:

      

6.375%, 8–7–19 (D)

      3,944         3,948   

0.000%, 8–13–19 (D)

      259         259   
     

 

 

  
        4,207   
     

 

 

  

Industrial Machinery – 0.3%

      

Gardner Denver, Inc.,

      

4.750%, 7–23–20 (B)(D)

      EUR631         872   
     

 

 

  

IT Consulting & Other Services – 1.9%

      

Active Network, Inc. (The):

      

5.500%, 11–7–20 (D)

    $ 1,890         1,897   

9.500%, 11–7–21 (D)

      1,984         2,014   

Digital Insight Corporation:

      

4.750%, 10–11–19 (D)

      272         272   

8.750%, 10–11–20 (D)

      117         119   

Triple Point Group Holdings, Inc.,

      

5.250%, 7–11–20 (D)

      2,008         1,787   
     

 

 

  
        6,089   
     

 

 

  

Leisure Facilities – 0.8%

      

Northfield Park Associates LLC,

      

9.000%, 11–9–18 (D)

      2,711         2,725   
     

 

 

  

Metal & Glass Containers – 2.4%

  

   

Evergreen Tank Solution, Inc.,

      

9.500%, 9–11–18 (D)

      5,055         5,030   

KIK Custom Products, Inc.:

      

0.000%, 5–23–19 (D)

      1,890         1,858   

0.000%, 11–17–19 (D)

      527         530   

0.000%, 11–23–19 (D)

      189         190   
     

 

 

  
        7,608   
     

 

 

  

Movies & Entertainment – 4.8%

      

Yonkers Racing Corporation,

      

8.750%, 7–22–20 (D)

      15,889         15,730   
     

 

 

  

Oil & Gas Refining & Marketing – 1.5%

  

   

Fieldwood Energy, LLC,

      

8.375%, 9–30–20 (D)

      1,787         1,823   

Shelf Drilling Midco, Ltd.,

      

10.000%, 10–7–18 (D)

      3,209         3,248   
     

 

 

  
        5,071   
     

 

 

  

Oil & Gas Storage & Transportation – 1.3%

  

   

Bowie Resources Holdings, LLC:

      

6.750%, 8–9–20 (D)

      2,582         2,589   

11.750%, 2–15–21 (D)

      1,569         1,530   
     

 

 

  
        4,119   
     

 

 

  

Other Diversified Financial Services – 1.1%

  

   

Cetera Financial Group, Inc.,

      

6.500%, 7–15–19 (D)

      3,500         3,539   
     

 

 

  

Paper Packaging – 0.7%

      

FPC Holdings, Inc.,

      

9.250%, 5–16–20 (D)

      2,500         2,377   
     

 

 

  

Research & Consulting Services – 1.6%

  

   

Larchmont Resources, LLC,

      

8.250%, 8–1–19 (D)

      5,279         5,345   
     

 

 

  

Specialized Finance – 1.3%

      

Orchard Acquisition Company, LLC,

      

7.000%, 2–4–19 (D)

      4,197         4,239   
     

 

 

  

Specialty Chemicals – 0.3%

      

Chromaflo Technologies Corporation:

      

4.500%, 11–20–19 (D)

      371         371   
 

8.250%, 5-20-20 (D)

      706           709   
       

 

 

  
          1,080   
       

 

 

  

TOTAL LOANS – 32.1%

  

      $ 104,807   

(Cost: $103,302)

        

TOTAL INVESTMENT SECURITIES – 144.3%

  

      $ 471,476   

(Cost: $460,265)

        

BORROWINGS (E) – (46.5%)

                 (152,000 ) 

CASH AND OTHER ASSETS, NET OF
LIABILITIES – 2.2%

   

        7,326   

NET ASSETS – 100.0%

               $ 326,802   
 

Notes to Schedule of Investments

 

(A) Securities were purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2013, the total value of these securities amounted to $221,475 or 67.8% of net assets.

 

(B) Principal amounts are denominated in the indicated foreign currency, where applicable (CAD - Canadian Dollar, CHF - Swiss Franc, EUR - Euro and GBP - British Pound).

 

(C) Payment-in-kind bonds.

 

(D) Variable rate security. Interest rate disclosed is that which is in effect at December 31, 2013.

 

(E) Borrowings Payable as a percentage of Total Investments is 32.2%.

 

(F) All or a portion of the security position has been pledged as collateral on open borrowings.

The following forward foreign currency contracts were outstanding at December 31, 2013:

 

    
Type    Currency      Counterparty    Principal Amount
of Contract
(Denominated in
Indicated Currency)		      Settlement Date      Unrealized
Appreciation		      Unrealized
Depreciation		  

Sell

   

British Pound

     

Morgan Stanley International

      2,112         1-27-14       $ —      $ 87   

Sell

   

Euro

     

Morgan Stanley International

      19,636         1-27-14         —        562   

Sell

   

Swiss Franc

     

Morgan Stanley International

      2,000         1-27-14         —        55   
                 $ —       $ 704   

Each Fund’s investments are reported at fair value. Fair value is defined as the price that each Fund would receive upon selling an asset or would pay upon satisfying a liability in an orderly transaction between market participants at the measurement date.

Accounting standards establish a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the factors that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Reoccurring fair value measurements of Level 3 securities shall include a reconciliation of the beginning to ending balances for reported fair market values. A fair value hierarchy and Level 3 reconciliation, if applicable, have been included in the Notes to Schedule of Investments for each respective Fund.

An individual investment’s fair value measurement is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized as follows:

Level 1 – Observable input such as quoted prices, available in active markets, for identical assets or liabilities.

Level 2 – Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs.

Level 3 – Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, which may include assumptions made by the Board or persons acting at their direction that are used in determining the fair market value of investments.

The following table summarizes the valuation of the Fund’s investments by the above fair value hierarchy levels as of December 31, 2013:

 

     Level 1      Level 2      Level 3  

Assets

        

Investments in Securities

        

Corporate Debt Securities

   $ —       $ 356,962       $ 8,377   

Municipal Bonds

     —         1,330         —   

Loans

     —         56,481         48,326   

Total

   $ —       $ 414,773       $ 56,703   

Liabilities

        

Forward Foreign Currency Contracts

   $ —       $ 704       $ —   

Payable for Borrowing

   $ —       $ 152,000       $ —   

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

 

     Corporate
Debt
Securities		     Loans  

Beginning Balance 10-1-13

   $ —      $ 35,321   

Net realized gain (loss)

     —        — * 

Net change in unrealized appreciation (depreciation)

     227        154   

Purchases

     —        4,427   

Sales

     —        (111 ) 

Amortization/Accretion of premium/discount

     (1 )      15   

Transfers into Level 3 during the period

     8,151        9,620   

Transfers out of Level 3 during the period

     —        (1,100 ) 

Ending Balance 12-31-13

   $ 8,377      $ 48,326   

Net change in unrealized appreciation (depreciation) for all Level 3 investments still held as of 12-31-13

   $ 227      $ 154   

Transfers from Level 2 to Level 3 occurred primarily due to the lack of observable market data due to decreased market activity or information for these securities. Transfers from Level 3 to Level 2 occurred primarily due to the increased availability of observable market data due to increased market activity or information. As shown above, transfers in and out of Level 3 represent the values as of the beginning of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013.

Information about Level 3 fair value measurements:

 

    

Fair Value at

12-31-13

      Valuation Technique(s)      Unobservable Input(s)  

Assets

        

Corporate Debt Securities

   $ 8,377         Third-party valuation service         Broker quotes   

Loans

   $ 48,326         Third-party valuation service         Broker quotes   

The following acronyms are used throughout this schedule:

GTD = Guaranteed

REIT = Real Estate Investment Trust

For Federal income tax purposes, cost of investments owned at December 31, 2013 and the related unrealized appreciation (depreciation) were as follows:

 

Cost

    $ 460,265   

Gross unrealized appreciation

      13,372   

Gross unrealized depreciation

      (2,161 ) 

Net unrealized appreciation

    $ 11,211   

 

 

ITEM 2.    CONTROLS AND PROCEDURES.

 

(a) The Registrant’s Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, based on their evaluation of the Registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, have concluded that such controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective and adequately designed to ensure that information required to be disclosed by the Registrant in its reports that it files or submits is accumulated and communicated to the Registrant’s management, including the Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

 

(b) There were no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

ITEM 3.    EXHIBITS.

A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)).

Attached hereto as Exhibit 99.CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Ivy High Income Opportunities Fund
(Registrant)
By       /s/ Mara D. Herrington
  Mara D. Herrington, Vice President and Secretary

Date: February 27, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By       /s/ Henry J. Herrmann
  Henry J. Herrmann, Principal Executive Officer

Date: February 27, 2014

 

By       /s/ Joseph W. Kauten
  Joseph W. Kauten, Principal Financial Officer

Date: February 27, 2014