N-CSRS

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-22037

Stone Harbor Investment Funds

(Exact name of registrant as specified in charter)

1290 Broadway, Suite 1100

Denver, CO 80203

(Address of principal executive offices) (Zip code)

Adam J. Shapiro, Esq.

c/o Stone Harbor Investment Partners LP

31 West 52nd Street, 16th Floor

New York, NY 10019

(Name and address of agent for service)

With copies To:

John M. Loder, Esq.

Ropes & Gray LLP

One International Place

Boston, MA 02110-2624

Registrant’s telephone number, including area code: (303) 623-2577

Date of fiscal year end: May 31

Date of reporting period: June 1, 2010 - November 30, 2010

Item 1.  Report to Stockholders.

    Table of Contents

Letter to Shareholders	1
Disclosure of Fund Expenses	5
Summaries of Portfolio Holdings	6
Growth of a $10,000 Investment	8
Statements of Investments
Emerging Markets Debt Fund	11
High Yield Bond Fund	26
Local Markets Fund	50
Statements of Assets & Liabilities	57
Statements of Operations	59
Statements of Changes in Net Assets
Emerging Markets Debt Fund	60
High Yield Bond Fund	61
Local Markets Fund	62
Financial Highlights
Emerging Markets Debt Fund	64
High Yield Bond Fund	66
Local Markets Fund	68
Notes to Financial Statements	69
Additional Information	81
Trustees and Officers	82

Stone Harbor Investment Funds	Shareholder Letter
	November 30, 2010 (Unaudited)

Dear Shareholder,

After just a year of moderate recovery from the deep global recession and financial crisis, global growth sputtered somewhat in the second half of 2010. Euro area economic and fiscal uncertainty amid weakening fundamentals and downward revisions to growth expectations weighed globally on market sentiment in the early summer and stoked fears of a double-dip recession and deflationary pressures in developed markets. As events unfolded, strong profit reporting and better corporate credit metrics, as well as a tentative stabilization of the European banking system, helped foster a greater tolerance for credit risk as broad fixed income credit markets remained relatively resilient notwithstanding equity instability and declining Treasury yields. In the US, a surge in imports and the failure of corporate hiring to build on momentum that looked to be gathering earlier in the year, despite the most expansive monetary stance seen in a generation, prompted the Federal Reserve to announce a second round of large scale asset purchases, a policy known as quantitative easing, or QE2. As the central bank kicked off its buyback program, investor response turned mixed, and Treasury yields unexpectedly rose sharply higher, with intermediate maturity yields retracing more than half of their decline from April peaks. Volatility in risk assets spiked briefly as lingering disquiet in the eurozone periphery, this time in Ireland, resurfaced and credit-tightening concerns in China returned to the fore. Despite the late retrenchment, fixed income asset classes headed into the last month of the year having achieved double-digit returns and substantive compression in credit spreads.

Market Overview

For the six month period ending November 30, 2010, market momentum was patchy, highlighting the uneven trajectory which the economic recovery has taken. The credit markets witnessed moderate improvement, although below the substantial gains seen in 2009 in the initial stages of the recovery. As represented by the Citigroup High Yield Market Index, high yield spreads began the reporting period at 703 basis points (“bps”) and contracted to a tight level of 589 bps on November 9, although subsequently widening to 618 bps by the end of the reporting period, driven largely by mixed response to Federal Reserve policy action and uncertainty in the global markets. Emerging markets debt trended similarly but sustained steeper losses in November, further weakened by a stronger dollar. Spread levels remained range-bound due to sharply rising Treasury yields. The JP Morgan Emerging Markets Bond Index Global spread levels contracted from 343 bps to 322 bps in the six months ended November 30, although they had narrowed tighter, to 268 bps, on November 9. Investment grade credit had a more muted reaction to event risk. As represented by Barclay’s US Corporate Index, spreads over Treasuries ground tighter by 16 bps, from 187 bps to 171 bps, reaching a low level within the period of 162 bps in early November.

Looking ahead, we remain optimistic that the recovery in the US will accelerate into 2011, sustained by an improving macroeconomic backdrop, a benign inflationary environment and positive demand/supply technicals. While employment levels and the housing market have remained stubbornly depressed, we are encouraged by strong corporate profitability and the recent rebound in consumer spending. Given the Federal Reserve’s commitment to its dual mandate – full employment and price stability – we believe that the central bank will likely continue asset purchases until it sees a shift to convincingly above-trend growth. Beyond that, we remain cautious of the visible downside risks that threaten to undercut upward momentum, including fiscal drag from the inevitable government stimulus unwind, sovereign stress in the eurozone periphery, the stability of growth in China and global trade imbalances, among others. With this in mind, we view current spread levels constructively as compared to underlying credit

    Semi-Annual Report (Unaudited) | November 30, 2010 1  

Stone Harbor Investment Funds	Shareholder Letter
	November 30, 2010 (Unaudited)

risk, and continue to believe Stone Harbor Funds appear to be well-positioned to provide us with favorable opportunities over the coming months.

Performance Review

Stone Harbor Emerging Markets Debt Fund

Fund performance for the six months ended November 30, 2010 was 10.38% (net of expenses) and 10.75% (gross of expenses). This compares to a benchmark return of 8.89% for the JP Morgan Emerging Market Bond Index Global Diversified. Emerging debt markets turned higher following May’s sell off as investors marked down the probability of a US double-dip recession and China reported strong industrial production and retail sales. Gains were also boosted by falling US Treasury yields, though the increase in yields in the final month of the period reduced these gains.

Key economic developments during the period included a continuation of a strong fundamental credit backdrop for emerging markets (EM). While growth in most EM countries continued to moderate as the initial rebound from 2008 and 2009 waned, the growth differential between EM countries and advanced economies remained large. Domestic consumption expanded in all regions. Credit growth rebounded but remained below pre-crisis levels. While headline inflation measures picked up measurably in response to commodity price gains, core inflation remained below targets in most EMs. Throughout the period, gradual policy rate tightening continued, but rates remained accommodative in most countries.

Despite a positive fundamental backdrop for EM economies, global risks increased. The potential for contagion from the fiscal crisis in peripheral European countries escalated over the summer; the issues remained unresolved at the end of the reporting period. Food price inflation and rapid credit growth in China led authorities to call for additional measures to slow the Chinese economy. China hiked rates unexpectedly in October, by 25 basis points. Investors worried that this move and other measures designed to cool property price speculation would lead to a hard landing for China, an expectation that was not realized. The weakening of the US dollar as the US Federal Reserve embarked on another leg of quantitative easing also raised discussion of a global currency war, prompting several EM central banks to intervene more aggressively to slow down the inflow of foreign capital, and reduce the appreciation of EM currencies relative to the US dollar.

These events as well as assessments of fundamental credit—both sovereign and corporate—and analysis of current market valuations led to important shifts in the positioning of the fund. Spread duration was reduced in several countries as yield curves flattened and spreads tightened. Positioning in local currency markets was reduced from 18.6% of the portfolio in market weight terms to 12.1% at the end of the period. Corporate debt exposure was increased from 3.0% to 13.1%, reflecting attractive valuations and improving underlying credit quality, liquidity and transparency in the EM corporate bond sector.

Country selection decisions, including sovereign and corporate credits, accounted for approximately 35% of portfolio returns in excess of the benchmark rate of return; the remainder came from issue selection and a flattening US Treasury yield curve. Key country decisions during the period included an overweight to Argentina sovereign and corporate debt, the largest contributor to returns. Argentina’s debt markets were supported in an environment that favored high yielding debt but positive country developments. During the reporting period, Argentina benefited from the completion of the debt exchange, strong growth numbers and a rating upgrade by Standard & Poor’s. In October, the unexpected death of Nestor Kirchner, Argentina’s former

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Stone Harbor Investment Funds	Shareholder Letter
	November 30, 2010 (Unaudited)

president and husband of current president Cristina Fernandez, also drove spread compression as his demise was viewed as increasing the likelihood of a centralist policy shift leading to 2012 presidential elections. Finally, news that the Argentine government would negotiate to repay the country’s defaulted debt with the Paris Club was looked upon favorably by investors. A portfolio overweight to high beta Venezuela also outperformed, largely driven by the failure of the Chavez administration to clinch a majority necessary to implement constitutional changes and thus aggressively pursue his populist political agenda. Allocations to local currency debt in Brazil, Colombia, Indonesia, Malaysia, Mexico and South Africa enhanced performance. Exposure to long duration debt in each of these countries was also a key source of excess returns.

Stone Harbor Emerging Markets Local Currency Debt Fund

Fund performance for the six months ended November 30, 2010 was 7.70% (net of expenses) and 8.11% (gross of expenses). This compares to a benchmark return of 8.52% for the JP Morgan Government Bond Index - Emerging Markets Global Diversified. Emerging local currency debt markets trended upward following May’s sell off as investors marked down the probability of a US double-dip recession and China reported strong industrial production and retail sales figures. While lower long term interest rates contributed positively to returns of local bonds, foreign exchange rate (EMFX) appreciation relative to the US dollar was the primary source of the rally. On the downside, concerns over lack of export competitiveness due to rising currency values heightened pressures for competitive valuations.

Key economic developments during the period included a continuation of a strong fundamental credit backdrop for emerging markets (EM). While growth in most EM countries moderated from the fast pace of the first half of the year, the growth differential between EM countries and advanced economies remained large. Domestic consumption expanded in all regions. Credit growth rebounded but remained below pre-crisis levels. Headline inflation measures picked up measurably in response to commodity price gains, but core inflation remained below targets in most EMs. Many EM country central banks gradually began to normalize policy rates, though interest rates remained accommodative in most countries.

Despite a positive fundamental backdrop for EM economies, global risks increased. The potential for contagion from the fiscal crisis in peripheral European countries escalated over the summer; the issues remained unresolved at the end of the reporting period. Food price inflation and rapid credit growth in China led authorities to call for additional measures to slow the Chinese economy. China hiked rates unexpectedly in October, by 25 basis points. Investors worried that this move and other measures designed to cool property price speculation would lead to a hard landing for China, an expectation that was not realized. The weakening of the US dollar as the US Federal Reserve embarked on another leg of quantitative easing also raised discussion of a global currency war, prompting several EM central banks to intervene more aggressively to slow down the inflow of foreign capital, and reduce the appreciation of EM currencies relative to the US dollar.

Stone Harbor High Yield Bond Fund

Fund performance for the six months ended November 30, 2010 was 8.62% (net of expenses) and 8.89% (gross of expenses). This compares to a benchmark return of 8.96% for the Citigroup High Yield Market Capped Index. The high yield market recovered lost ground in the trailing six months in the wake of a pullback in May and June as foreign concerns receded and market participants returned to the domestic economic landscape for impetus. Broad-based fundamentals substantiating concerns of a slowdown in growth were largely dismissed as strong corporate

    Semi-Annual Report (Unaudited) | November 30, 2010 3  

Stone Harbor Investment Funds	Shareholder Letter
	November 30, 2010 (Unaudited)

earnings, low Treasury yields and the expectation of further stimulus by the Federal Reserve boosted market sentiment.

An improving tone in economic data, including signs of a stabilizing housing market and small but consistent decreases in initial jobless claims renewed demand for risk assets. New issue activity reached record highs, including three consecutive months in excess of $30 billion. On the demand side, positive high yield mutual fund flows were reported in all but November. Risk appetite ultimately remained healthy as market participants continued to reach for yield.

The high yield market gave back some gains in November as base Treasury rates rose sharply and volatility spiked. Signs of accelerating economic growth and mixed response to Federal Reserve policy exerted upward pressure on bond yields. Market focus then shifted overseas as sovereign debt concerns in the eurozone periphery, this time in Ireland, as well as military tensions in the Korean peninsula and the threat of an overheated Chinese economy sidelined investors. The technical landscape weakened somewhat, with three consecutive weeks of outflows, totaling $1.5 billion, from weekly reporting high yield mutual funds.

Nevertheless, against a backdrop of improving growth, little threat of inflation and continued diminishing refinance and maturity risk, we remain constructive on high yield and believe credit risk assets have room to tighten. Despite potential exogenous shocks and the impact of fiscal policy down the road, we believe the economy is nearing a threshold for self-sustaining growth.

Our investment style has been to focus on industries and companies poised to benefit from a continued moderate economic recovery while properly financed to resist financial stress should growth continue to lag. As a result, we have focused on mid to better quality investments within our universe, which despite strong returns over the past six months, trailed the broader market indices. As investors recede from indiscriminate buying within high yield to focusing on companies that can thrive in a more subdued economic recovery, we believe that more differentiation will take place in the market.

Sincerely,

Thomas W. Brock

Chairman of the Board of Trustees

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Stone Harbor Investment Funds	Disclosure of Fund Expenses
	November 30, 2010 (Unaudited)

Example. As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and/or redemption fees (if applicable) and (2) ongoing costs, including management fees and other Fund expenses. The below examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested on June 1, 2010 and held until November 30, 2010.

Actual Expenses. The first line of each table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes. The second line of each table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Fund and other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect transactional costs, such as redemption fees, sales charges (loads) or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 06/01/2010		Ending Account Value 11/30/2010		Expense Ratio(1)		Expenses Paid During Period(2)
STONE HARBOR EMERGING MARKETS DEBT FUND
Institutional Class shares
Actual		$1,000.00		$1,103.80		0.75%		$3.96
Hypothetical (5% return before expenses)		$1,000.00		$1,021.31		0.75%		$3.80
STONE HARBOR HIGH YIELD BOND FUND
Institutional Class shares
Actual		$1,000.00		$1,086.20		0.55%		$2.88
Hypothetical (5% return before expenses)		$1,000.00		$1,022.31		0.55%		$2.79
STONE HARBOR LOCAL MARKETS FUND
Institutional Class shares
Actual		$1,000.00		$1,077.00		1.00%		$4.35(3)
Hypothetical (5% return before expenses)		$1,000.00		$1,016.77		1.00%		$5.06

⁽¹⁾ Annualized, based on the Fund’s most recent fiscal half-year expenses.

⁽²⁾ Expenses are equal to the Fund’s annualized ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (183), divided by 365. Note this expense example is typically based on a six-month period.

⁽³⁾ The Fund’s expense ratios have been based on the Fund’s inception date of June 30, 2010 through November 30, 2010.

     Semi-Annual Report (Unaudited) | November 30, 2010 5   

Stone Harbor Investment Funds	Summaries of Portfolio Holdings
	November 30, 2010 (Unaudited)

Under SEC Rules, all funds are required to include in their annual and semi-annual shareholder reports a presentation of portfolio holdings in a table, chart or graph by reasonably identifiable categories. The following tables, which present holdings as a percent of total net assets (“TNA”), are provided in compliance with such requirements.

EMERGING MARKETS DEBT FUND
Country Breakdown	% of TNA
Mexico	10.78%
Russia	9.08%
Venezuela	7.49%
Brazil	7.31%
Colombia	5.75%
Indonesia	5.56%
Philippines	5.25%
Malaysia	5.23%
Argentina	4.44%
Ukraine	3.65%
Iraq	3.33%
Panama	3.33%
Poland	2.96%
Peru	2.76%
Turkey	2.61%
Kazakhstan	2.44%
Uruguay	2.15%
Qatar	2.13%
El Salvador	1.50%
South Africa	1.45%
China	1.13%
United Arab Emirates	0.83%
Croatia	0.71%
Tunisia	0.65%
Chile	0.56%
India	0.46%
Pakistan	0.37%
South Korea	0.35%
Barbados	0.19%
Dominican Republic	0.17%
Egypt	0.15%
Jamaica	0.15%
Singapore	0.13%
Gabon	0.02%
Total	95.07%
Money Market Mutual Funds	3.01%
Other Assets in Excess of Liabilities	1.92%
Total Net Assets	100.00%

HIGH YIELD BOND FUND
Industry Breakdown	% of TNA
Healthcare		7.92%
Electric		7.28%
Exploration & Production		6.89%
Retail Non Food/Drug		5.50%
Wirelines		4.99%
Media Cable		4.92%
Services Other		4.86%
Gaming		3.92%
Food and Beverage		3.89%
Wireless		3.68%
Drillers/Services		3.59%
Gas Pipelines		3.38%
Chemicals		3.15%
Technology		2.73%
Paper/Forest Products		2.50%
Media Other		2.38%
Automotive		2.30%
Containers/Packaging		2.25%
Metals/Mining/Steel		2.21%
Consumer Products		1.99%
Leisure		1.59%
Publishing/Printing		1.26%
Satellite		1.19%
Building Products		1.16%
Industrial Other		1.03%
Gas Distributors		0.96%
Aerospace/Defense		0.91%
Textile/Apparel		0.88%
Construction Machinery		0.84%
Banking		0.77%
Retail Food/Drug		0.73%
Non Captive Finance		0.59%
Refining		0.58%
Transportation - Non Air/Rail		0.54%
Restaurants		0.47%
REITS		0.45%
Lodging		0.42%
Environmental Services		0.40%

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Stone Harbor Investment Funds	Summaries of Portfolio Holdings
	November 30, 2010 (Unaudited)

HIGH YIELD BOND FUND (CONTINUED)
Industry Breakdown	% of TNA
Pharmaceuticals	0.37	%
Diversified Manufacturing	0.24	%
Life	0.04	%
Insurance*	0.00	%
Total	95.75	%
Money Market Mutual Funds	2.56	%
Other Assets in Excess of Liabilities	1.69	%
Total Net Assets	100.00	%
LOCAL MARKETS FUND
Country Breakdown	% of TNA
Brazil	12.93	%
Indonesia	11.73	%
Mexico	11.11	%
Poland	7.89	%
European Union	7.66	%
Colombia	5.42	%
South Africa	4.75	%
Turkey	4.72	%
Malaysia	4.52	%
Thailand	3.67	%
Hungary	2.50	%
Russia	1.14	%
Venezuela	1.01	%
Peru	0.43	%
Total	79.48	%
Money Market Mutual Funds	21.25	%
Liabilities in Excess of Other Assets	-0.73	%
Total Net Assets	100.00	%

* Less than 0.005%

     Semi-Annual Report (Unaudited) | November 30, 2010 7   

Stone Harbor Investment Funds	Growth of $10,000 Investment
	November 30, 2010 (Unaudited)

STONE HARBOR EMERGING MARKETS DEBT FUND

Comparison of Change in Value of $10,000 Investment in Stone Harbor Emerging Markets Debt Fund and the JP Morgan Emerging Market Bond Index Global Diversified

The JP Morgan Emerging Market Bond Index Global Diversified is a uniquely-weighted version of the EMBI Global Index, which tracks total returns for U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities such as: Brady bonds, loans and Eurobonds. Currently, the EMBI Global Index covers 196 instruments across 28 countries. It limits the weights of those index countries with larger debt stocks by only including specified portions of these countries’ eligible debt outstanding. The countries covered in the EMBI Global Diversified are identical to those covered by the EMBI Global Index.

Average Annual Total Returns

	1 Year	3 Years	5 Years	10 Years	Since Inception	Inception   Date
Stone Harbor Emerging Markets Debt Fund	15.02%	9.87%	N/A	N/A	11.66%		8/16/07
JP Morgan EMBI Global Diversified Index	13.17%	9.01%	N/A	N/A	10.36%

The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance quoted. Average annual total returns reflect the reinvestment of dividends and capital gains distributions and include all fee waivers and expense reimbursements. Without the fee waivers and expense reimbursements, total return figures would have been lower. The performance data quoted does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will vary, and shares, when redeemed, may be worth more or less than their original cost.

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Stone Harbor Investment Funds	Growth of $10,000 Investment
	November 30, 2010 (Unaudited)

STONE HARBOR HIGH YIELD BOND FUND

Comparison of Change in Value of $10,000 Investment in Stone Harbor High Yield Bond Fund and the Citigroup High Yield Market Capped Index

The Citigroup High Yield Market Capped Index represents a modified version of the High Yield Market Index by delaying the entry of “fallen angel” issues (corporate or municipal bonds that were investment-grade when issued but have since been downgraded) and capping the par value of individual issuers at US $5 billion par amount outstanding.

Average Annual Total Returns

	1 Year	3 Years	5 Years	10 Years	Since Inception	Inception   Date
Stone Harbor High Yield Bond Fund	13.46%	7.06%	N/A	N/A	7.51%		8/16/07
Citigroup High Yield Markets Capped Index	15.59%	8.77%	N/A	N/A	8.71%

The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance quoted. Average annual total returns reflect the reinvestment of dividends and capital gains distributions and include all fee waivers and expense reimbursements. Without the fee waivers and expense reimbursements, total return figures would have been lower. The performance data quoted does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will vary, and shares, when redeemed, may be worth more or less than their original cost.

     Semi-Annual Report (Unaudited) | November 30, 2010 9   

Stone Harbor Investment Funds	Growth of $10,000 Investment
	November 30, 2010 (Unaudited)

STONE HARBOR LOCAL MARKETS FUND

Comparison of Change in Value of $10,000 Investment in Stone Harbor Local Markets Fund and the JP Morgan EM Global Diversified Index.

The JPMorgan Emerging Markets Bond Index Global Diversified (EMBI Global Diversified is one our most comprehensive US-dollar emerging markets debt benchmarks). Included in the EMBI Global Diversified is US-dollar-denominated Brady bonds, Eurobonds, and traded loans issued by sovereign and quasi-sovereign entities. The EMBI Global Diversified expands upon the composition of its predecessor, the Emerging Markets Bond Index Plus (EMBI+), by using a different country selection process and instrument selection process. The EMBI Diversified defines emerging markets countries with a combination of World-Bank-defined per capita income brackets and each country’s debt-restructuring history. These two criteria allow the EMBI Diversified to include a number of higher-rated countries that international investors have nevertheless considered part of the emerging markets universe.

Average Annual Total Returns

	1 Year	3 Years	5 Years	10 Years	Since Inception	Inception   Date
Stone Harbor Local Markets Fund	N/A	N/A	N/A	N/A	7.70%		6/30/10
JP Morgan EM Global Diversified Index	N/A	N/A	N/A	N/A	8.52%

The performance data quoted represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance quoted. Average annual total returns reflect the reinvestment of dividends and capital gains distributions and include all fee waivers and expense reimbursements. Without the fee waivers and expense reimbursements, total return figures would have been lower. The performance data quoted does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Investment return and principal value will vary, and shares, when redeemed, may be worth more or less than their original cost.

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Stone Harbor Emerging Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency		Principal Amount *		Market Value (Expressed in U.S. $)
SOVEREIGN DEBT OBLIGATIONS - 67.87%
Argentina - 3.57%
Republic of Argentina
7.000%, 09/12/2013				$1,766,000		$1,707,281
7.000%, 10/03/2015				5,528,078		4,946,709
7.000%, 04/17/2017				434,550		368,305
8.750%, 06/02/2017				841,922		841,080
0.000%, 03/31/2023(1)				184,000		110,400
6.000%, 03/31/2023(1)				480,000		336,000
5.820%, 12/31/2033(3)		ARS		526,544		202,240
7.820%, 12/31/2033		EUR		666,568		629,458
7.820%, 12/31/2033		EUR		736,972		693,551
8.280%, 12/31/2033				1,912,223		1,668,414
						11,503,438
Brazil - 3.88%
Nota Do Tesouro Nacional
10.000%, 01/01/2021		BRL		5,800,000		2,939,014
Republic of Brazil
6.000%, 01/17/2017				3,839,000		4,443,643
5.875%, 01/15/2019				3,169,000		3,648,311
8.875%, 10/14/2019				100,000		137,250
4.875%, 01/22/2021				1,235,000		1,309,100
10.125%, 05/15/2027				32,000		50,560
						12,527,878
Colombia - 5.75%
Bogota Distrio Capital
9.750%, 07/26/2028(4)		COP		4,954,000,000		3,459,080
Republic of Colombia
7.375%, 01/27/2017				500,000		605,000
7.375%, 03/18/2019				2,764,000		3,399,720
11.750%, 02/25/2020				1,045,000		1,614,525
8.375%, 02/15/2027				25,000		31,500
9.850%, 06/28/2027		COP		3,873,000,000		2,681,858
7.375%, 09/18/2037				4,783,000		5,907,005
6.125%, 01/18/2041				790,000		841,350
						18,540,038

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 11   

Stone Harbor Emerging
Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency		Principal Amount *		Market Value (Expressed in U.S. $)
Croatia - 0.71%
Croatian Government
6.750%, 11/05/2019(4)			$	240,000		$255,300
6.625%, 07/14/2020(5)				1,906,000		2,026,983
						2,282,283
El Salvador - 1.50%
Republic of El Salvador
7.375%, 12/01/2019(5)				220,000		244,200
7.375%, 12/01/2019(4)				2,068,000		2,295,480
8.250%, 04/10/2032(4)				1,000,000		1,140,000
7.650%, 06/15/2035(4)				1,077,000		1,168,545
						4,848,225
Gabon - 0.02%
Republic of Gabon
8.200%, 12/12/2017(5)				50,000		58,875
Indonesia - 3.44%
Republic of Indonesia
6.875%, 01/17/2018(4)				1,278,000		1,512,833
11.625%, 03/04/2019(4)				875,000		1,322,343
11.625%, 03/04/2019(5)				2,070,000		3,128,288
5.875%, 03/13/2020(4)				189,000		212,153
7.750%, 01/17/2038(4)				3,918,000		4,926,884
						11,102,501
Iraq - 3.33%
Republic of Iraq
5.800%, 01/15/2028(4)				12,130,000		10,735,050
Malaysia - 2.09%
Malaysian Government
7.500%, 07/15/2011				495,000		508,219
3.741%, 02/27/2015		MYR		7,745,000		2,475,710
3.835%, 08/12/2015		MYR		11,639,000		3,759,020
						6,742,949

  See Notes to Financial Statements.

     12 www.shiplp.com   

Stone Harbor Emerging
Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency	Principal Amount *		Market Value (Expressed in U.S. $)
Mexico - 7.62%
Mexican Bonos
7.500%, 06/03/2027	MXN	$	10,000,000		$811,243
Mexican Udibonos
5.000%, 06/16/2016	MXN		30,032,575		2,881,459
4.000%, 06/13/2019	MXN		31,034,197		2,856,508
United Mexican States
5.625%, 01/15/2017			2,122,000		2,392,555
5.950%, 03/19/2019			2,732,000		3,124,042
5.125%, 01/15/2020			1,692,000		1,821,015
8.000%, 09/24/2022			3,829,000		5,264,875
8.300%, 08/15/2031			1,903,000		2,588,080
6.750%, 09/27/2034			1,445,000		1,683,425
6.050%, 01/11/2040			1,084,000		1,154,460
					24,577,662
Pakistan - 0.37%
Islamic Republic of Pakistan
7.125%, 03/31/2016(4)			1,300,000		1,183,000
Panama - 3.33%
Republic of Panama
7.250%, 03/15/2015			278,000		329,430
5.200%, 01/30/2020			4,527,000		4,934,430
9.375%, 01/16/2023			25,000		34,750
7.125%, 01/29/2026			600,000		744,000
8.875%, 09/30/2027			603,000		855,506
9.375%, 04/01/2029			2,522,000		3,719,950
6.700%, 01/26/2036			100,000		116,875
					10,734,941
Peru - 2.31%
Republic of Peru
7.125%, 03/30/2019			151,000		184,220
7.350%, 07/21/2025			2,209,000		2,755,728
8.750%, 11/21/2033			3,165,000		4,510,125
					7,450,073

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 13   

Stone Harbor Emerging
Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency	Principal Amount *		Market Value (Expressed in U.S. $)
Philippines - 5.25%
Republic of Philippines
4.000%, 01/15/2021			$563,000		$550,333
7.500%, 09/25/2024			2,620,000		3,320,850
10.625%, 03/16/2025			70,000		110,863
9.500%, 02/02/2030			3,633,000		5,404,087
7.750%, 01/14/2031			3,215,000		4,099,125
6.375%, 01/15/2032			520,000		574,600
6.375%, 10/23/2034			2,599,000		2,858,900
					16,918,758
Poland - 2.96%
Republic of Poland
6.375%, 07/15/2019			7,857,000		8,721,270
4.000%, 03/23/2021	EUR		665,000		822,542
					9,543,812
Qatar - 1.76%
State of Qatar
5.250%, 01/20/2020(5)			2,619,000		2,818,044
5.250%, 01/20/2020(4)			2,647,000		2,848,172
					5,666,216
Russia - 6.85%
Russian Federation
3.625%, 04/29/2015(5)			500,000		498,375
5.000%, 04/29/2020(4)			500,000		497,875
5.000%, 04/29/2020(5)			800,000		796,600
7.500%, 03/31/2030(4)			17,601,222		20,289,809
					22,082,659
South Africa - 1.24%
Republic of South Africa
8.500%, 06/23/2017			45,000		57,600
6.875%, 05/27/2019			975,000		1,163,906
6.750%, 03/31/2021	ZAR		12,370,000		1,555,459
5.875%, 05/30/2022			1,109,000		1,226,831
					4,003,796

  See Notes to Financial Statements.

     14 www.shiplp.com   

Stone Harbor Emerging
Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency	Principal Amount *	Market Value (Expressed in U.S. $)
Turkey - 2.37%
Republic of Turkey
7.000%, 09/26/2016		$159,000	$187,024
7.000%, 03/11/2019		135,000	160,819
7.500%, 11/07/2019		1,305,000	1,605,149
7.000%, 06/05/2020		359,000	426,313
7.375%, 02/05/2025		1,820,000	2,218,124
6.875%, 03/17/2036		1,305,000	1,497,488
7.250%, 03/05/2038		1,285,000	1,551,638
			7,646,555
Ukraine - 3.34%
Ukraine Government
3.200%, 12/19/2010	JPY	340,000,000	4,058,891
6.385%, 06/26/2012(4)		5,205,000	5,188,734
6.875%, 09/23/2015(5)		1,559,000	1,515,153
			10,762,778
Uruguay - 2.15%
Republic of Uruguay
8.000%, 11/18/2022		1,008,499	1,300,964
6.875%, 09/28/2025		1,313,650	1,576,380
7.875%, 01/15/2033(6)		1,710,800	2,206,932
7.625%, 03/21/2036		1,465,000	1,853,225
			6,937,501
Venezuela - 4.03%
Republic of Venezuela
8.500%, 10/08/2014		3,013,000	2,463,128
5.750%, 02/26/2016(4)		2,176,000	1,457,920
13.625%, 08/15/2018(4)		1,601,000	1,504,940
7.000%, 12/01/2018(4)		120,000	75,000
7.750%, 10/13/2019(4)		4,526,000	2,828,750
12.750%, 08/23/2022		1,742,000	1,434,973
9.000%, 05/07/2023(4)		4,514,300	2,849,651
8.250%, 10/13/2024(4)		505,000	303,000
9.250%, 05/07/2028(4)		120,000	75,300
			12,992,662
TOTAL SOVEREIGN DEBT OBLIGATIONS			218,841,650
(Amortized Cost $207,681,420)

See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | November 30, 2010	15

Stone Harbor Emerging Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount *	Market Value (Expressed in U.S. $)
BANK LOANS - 0.77%
Argentina - 0.35%
Capex SA
10.394%, 09/26/2014(2)(5)	$1,118,000	$1,118,000
Indonesia - 0.42%
PT Bumi Resources
11.256%, 08/07/2013	1,337,000	1,363,740
TOTAL BANK LOANS		2,481,740
(Amortized Cost $2,433,462)
CONVERTIBLE CORPORATE BONDS - 0.43%
United Arab Emirates - 0.43%
Aldar Funding Ltd.
5.767%, 11/10/2011	1,447,000	1,399,973
TOTAL CONVERTIBLE CORPORATE BONDS		1,399,973
(Amortized Cost $1,404,550)
CORPORATE BONDS - 22.89%
Argentina - 0.52%
Arcor
7.250%, 11/09/2017(2)(5)	380,000	398,050
Empresa Distribuidora Y Comercializadora Norte
9.750%, 10/25/2022(5)	577,000	609,929
Inversiones y Representaciones SA
11.500%, 07/20/2020(5)	608,000	677,823
		1,685,802
Barbados - 0.19%
Columbus International, Inc.
11.500%, 11/20/2014(4)	545,000	604,950

  See Notes to Financial Statements.

     16 www.shiplp.com   

Stone Harbor Emerging
Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount *		Market Value (Expressed in U.S. $)
Brazil - 2.38%
Banco Cruzeiro do Sul SA
8.875%, 09/22/2020(5)		$841,000		$828,385
BM&FBovespa SA
5.500%, 07/16/2020(5)		842,000		879,302
BR Properties SA
9.000%, 10/07/2015(5)		579,000		583,343
CSN Resources SA
6.500%, 07/21/2020(5)		611,000		647,660
General Shopping Finance Ltd.
10.000%, 11/09/2015(5)		857,000		822,720
Gerdau Trade, Inc.
5.750%, 01/30/2021(5)		424,000		428,749
Minerva Overseas II Ltd.
10.875%, 11/15/2019(4)		238,000		251,602
10.875%, 11/15/2019(5)		633,000		661,485
Odebrecht Drilling Norbe VIII/IX Ltd.
6.350%, 06/30/2021(5)		1,227,000		1,251,540
Telemar Norte Leste SA
5.500%, 10/23/2020(5)		666,000		664,335
Vale Overseas Ltd.
4.625%, 09/15/2020		642,000		649,441
				7,668,562
Chile - 0.56%
Celulosa Arauco y Constitucion SA
5.000%, 01/21/2021(5)		438,000		440,396
Codelco, Inc.
7.500%, 01/15/2019(4)		450,000		560,516
6.150%, 10/24/2036(4)		705,000		793,247
				1,794,159

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 17   

Stone Harbor Emerging Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount *		Market Value (Expressed in U.S. $)
China - 1.13%
Central China Real Estate Ltd.
12.250%, 10/20/2015(5)		$412,000		$429,510
China Oriental Group Co. Ltd.
8.000%, 08/18/2015(5)		1,221,000		1,245,419
Evergrande Real Estate Group Ltd.
13.000%, 01/27/2015(4)		102,000		107,100
13.000%, 01/27/2015(5)		106,000		110,770
Kaisa Group Holdings Ltd.
13.500%, 04/28/2015(4)		223,000		225,788
Sinochem Overseas Capital Co. Ltd.
4.500%, 11/12/2020(5)		1,150,000		1,138,086
Sino-Forest Corp.
6.250%, 10/21/2017(5)		400,000		393,250
				3,649,923
Dominican Republic - 0.17%
Cap Cana SA
10.000%, 04/30/2016(4)		420,900		298,839
10.000%, 04/30/2016(4)		486,213		247,969
				546,808
Egypt - 0.15%
Orascom Telecom Finance SCA
7.875%, 02/08/2014(4)		512,000		483,840
India - 0.46%
Axis Bank Ltd.
4.750%, 05/02/2016(5)		588,000		587,588
ICICI Bank Ltd.
5.750%, 11/16/2020(5)		820,000		812,027
Vedanta Resources PLC
9.500%, 07/18/2018(5)		75,000		79,125
				1,478,740

  See Notes to Financial Statements.

     18 www.shiplp.com   

Stone Harbor Emerging
Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount *		Market Value (Expressed in U.S. $)
Indonesia - 0.37%
Bakrie Telecom Pte Ltd.
11.500%, 05/07/2015(4)		$100,000	$106,500
Bumi Investment Pte Ltd.
10.750%, 10/06/2017(5)		625,000	651,562
Indo Integrated Energy II BV
9.750%, 11/05/2016(4)		151,000	168,365
Indosat Palapa Co. BV
7.375%, 07/29/2020(5)		241,000	264,799
			1,191,226
Jamaica - 0.15%
Digicel Group Ltd.
9.125%, 01/15/2015(5)		308,000	312,620
10.500%, 04/15/2018(4)		150,000	165,750
			478,370
Kazakhstan - 2.44%
BTA Bank JSC
10.750%, 07/01/2018(4)(7)		242,577	254,706
10.750%, 07/01/2018(5)(7)		1,121,283	1,170,339
0.000%, 07/01/2020(3)(5)		2,431,514	141,028
KazMunayGas National Co.
7.000%, 05/05/2020(5)		1,088,000	1,104,320
7.000%, 05/05/2020(4)		3,125,000	3,171,874
6.375%, 04/09/2021(5)		1,071,000	1,038,870
Zhaikmunai Finance BV
10.500%, 10/19/2015(5)		1,037,000	982,558
			7,863,695
Malaysia - 3.14%
Penerbangan Malaysia BHD
5.625%, 03/15/2016(4)		1,195,000	1,355,838
Petroliam Nasional BHD
7.750%, 08/15/2015(5)		335,000	413,362
7.625%, 10/15/2026(4)		840,000	1,111,561
Petronas Capital Ltd.
5.250%, 08/12/2019(5)		530,000	587,194
7.875%, 05/22/2022(4)		5,000,000	6,669,202
			10,137,157

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 19   

Stone Harbor Emerging
Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency	Principal Amount *		Market Value (Expressed in U.S. $)
Mexico - 3.16%
Alestra SA
11.750%, 08/11/2014			$487,000		$555,180
Axtel SAB de CV
7.625%, 02/01/2017(5)			13,000		11,765
9.000%, 09/22/2019(4)			514,000		475,450
Cemex Espana Luxembourg
9.250%, 05/12/2020(5)			71,000		68,338
9.250%, 05/12/2020(4)			519,000		495,645
Cemex Finance Europe BV
4.750%, 03/05/2014	EUR		380,000		408,786
Desarrolla Homex SAB de CV
7.500%, 09/28/2015			207,000		215,280
Hipotecaria Su Casita SA de CV
8.500%, 10/04/2016(4)			63,000		25,232
8.500%, 10/04/2016(5)			182,000		72,891
Pemex Finance Ltd.
9.150%, 11/15/2018			1,200,000		1,429,867
Pemex Project Funding Master Trust
5.500%, 02/24/2025(4)	EUR		2,275,000		2,916,137
6.625%, 06/15/2035			3,034,000		3,155,360
Urbi Desarrollos Urbanos SAB de CV
9.500%, 01/21/2020(4)			308,000		354,200
					10,184,131
Peru - 0.45%
Banco de Credito del Peru
5.375%, 09/16/2020(5)			735,000		736,837
Continental Senior Trustees Cayman Ltd.
5.500%, 11/18/2020(5)			716,000		710,183
					1,447,020
Qatar - 0.37%
Qtel International Finance Ltd.
7.875%, 06/10/2019(4)			429,000		513,728
4.750%, 02/16/2021(5)			367,000		342,686
5.000%, 10/19/2025(5)			379,000		346,311
					1,202,725

  See Notes to Financial Statements.

     20 www.shiplp.com   

Stone Harbor Emerging
Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency	Principal Amount *		Market Value (Expressed in U.S. $)
Russia - 1.50%
Alfa Bank OJSC Via Alfa Bond Issuance PLC
7.875%, 09/25/2017(5)			$658,000	$654,710
ALROSA Finance SA
7.750%, 11/03/2020(5)			578,000	582,335
Gazpram Via Gaz Capital SA
6.510%, 03/07/2022(5)			710,000	717,988
MTS International Funding Ltd.
8.625%, 06/22/2020(5)			660,000	732,600
Severstal OAO Via Steel Capital SA
6.700%, 10/25/2017(5)			613,000	594,610
TNK-BP Finance SA
6.250%, 02/02/2015(5)			160,000	169,200
7.500%, 07/18/2016(5)			525,000	582,750
7.250%, 02/02/2020(5)			100,000	108,000
VIP Finance Ireland Ltd. for OJSC Vimpel Communications
8.375%, 04/30/2013(5)			650,000	702,406
				4,844,599
Singapore - 0.13%
STATS ChipPAC Ltd.
7.500%, 08/12/2015(5)			389,000	413,799
South Africa - 0.21%
Myriad International Holding BV
6.375%, 07/28/2017(5)			650,000	676,000
South Korea - 0.35%
Export-Import Bank of Korea
8.125%, 01/21/2014			985,000	1,137,590
Tunisia - 0.65%
Banque Centrale de Tunisie SA
7.375%, 04/25/2012			545,000	589,182
6.250%, 02/20/2013	EUR		1,084,000	1,513,893
				2,103,075
Turkey - 0.24%
Akbank TAS
5.125%, 07/22/2015(5)			786,000	786,000

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 21   

Stone Harbor Emerging
Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency	Principal Amount *		Market Value (Expressed in U.S. $)
Ukraine - 0.31%
Avangardco Investments Public Ltd.
10.000%, 10/29/2015			$446,000	$418,125
DTEK Finance BV
9.500%, 04/28/2015(4)			310,000	322,400
Metinvest BV
10.250%, 05/20/2015(4)			100,000	102,750
MHP SA
10.250%, 04/29/2015(4)			154,000	159,968
				1,003,243
United Arab Emirates - 0.40%
DP World Ltd.
6.850%, 07/02/2037(4)			1,000,000	887,500
DP World Sukuk Ltd.
6.250%, 07/02/2017(4)			410,000	391,345
				1,278,845
Venezuela - 3.46%
Petroleos de Venezuela SA
4.900%, 10/28/2014			12,724,487	7,682,409
5.000%, 10/28/2015			345,000	188,025
5.250%, 04/12/2017			5,844,100	3,144,126
5.375%, 04/12/2027			323,300	146,051
				11,160,611
TOTAL CORPORATE BONDS				73,820,870
(Amortized Cost $74,468,871)
CREDIT LINKED NOTES - 3.11%
Brazil - 1.05%
Nota Do Tesouro Nacional
10.000%, 01/01/2017(2)(8)	BRL		600,000	318,024
10.000%, 01/01/2017(2)(9)	BRL		2,000,000	1,051,907
10.000%, 01/01/2021(2)(9)	BRL		4,000,000	2,006,532
				3,376,463

See Notes to Financial Statements.
22	www.shiplp.com

Stone Harbor Emerging
Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency	Principal Amount*/Shares		Market Value (Expressed in U.S. $)
Indonesia - 1.33%
Republic of Indonesia
9.500%, 06/15/2015(2)(8)	IDR		$5,892,000,000	$724,532
11.500%, 09/18/2019(2)(10)	IDR		3,900,000,000	539,412
11.000%, 11/16/2020(2)(11)	IDR		4,600,000,000	628,236
11.000%, 09/17/2025(2)(10)	IDR		6,300,000,000	826,099
10.000%, 02/15/2028(2)(12)	IDR		13,000,000,000	1,560,605
				4,278,884
Russia - 0.73%
Russian Federation
10.550%, 07/06/2011(2)(9)	RUB		41,700,000	1,368,470
11.200%, 12/17/2014(2)(10)	RUB		27,000,000	985,795
				2,354,265
TOTAL CREDIT LINKED NOTES				10,009,612
(Cost $10,102,954)
MONEY MARKET MUTUAL FUNDS -3.01%
Dreyfus Cash Advantage Plus Fund
(0.100% 7-Day Yield)			9,698,097	9,698,097
TOTAL MONEY MARKET MUTUAL FUNDS				9,698,097
(Cost $9,698,097)
Total Investments - 98.08%				$316,251,942
(Cost $305,789,354)
Other Assets In Excess of Liabilities -1.92%				6,195,660
Net Assets - 100.00%				$322,447,602

*	The principal/contract amount of each security is stated in the currency in which the bond is denominated (U.S. Dollar unless otherwise notated). See below.
	ARS	Argentine Peso
	BRL	Brazilian Real
	CNY	Chinese Yuan
	COP	Colombian Peso
	EUR	Euro Currency
	IDR	Indonesian Rupiah
	JPY	Japanese Yen

See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | November 30, 2010	23

Stone Harbor Emerging Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

MXN	Mexican Peso
MYR	Malaysian Ringgit
RUB	Russian Ruble
ZAR	South African Rand

⁽¹⁾ Security is currently in default/non-income producing.

⁽²⁾ This security has been valued at its fair value determined in good faith pursuant to procedures approved by the Board of Trustees. Total market value of fair valued securities amounts to $11,525,662, which represents approximately 3.57% of net assets as of November 30, 2010.

⁽³⁾ Floating or variable rate security. Interest rate disclosed is that which is in effect at November 30, 2010.

⁽⁴⁾ Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts securities offered and sold outside of the United States from registration. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. As of November 30, 2010, the aggregate market value of those securities was $89,351,821, representing 27.71% of net assets.

⁽⁵⁾ Security exempt from registration under Rule 144A of the Securities Act of 1933. Under procedures approved by the Board of Trustees, such securities have been determined to be liquid by the Investment Advisor and may normally be sold to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A securities amounts to $41,570,071, which represents approximately 12.89% of net assets as of November 30, 2010.

⁽⁶⁾ Pay-in-kind securities.

⁽⁷⁾ Step bond. Coupon increases periodically based upon a predetermined schedule. Interest rate disclosed is that which is in effect at November 30, 2010.

⁽⁸⁾ The underlying security is issued by Citigroup Global Markets.

⁽⁹⁾ The underlying security is issued by JP Morgan Chase.

⁽¹⁰⁾ The underlying security is issued by Barclays Bank PLC.

⁽¹¹⁾ The underlying security is issued by HSBC Bank.

⁽¹²⁾ The underlying security is issued by Deutsche Bank AG London.

Common Abbreviations:

BHD - Berhad is the Malaysian term for public limited company.

BV - Besloten Vennootschap a Dutch private limited liability company.

Ltd. - Limited.

OJSC - Open Joint Stock Company.

PLC - Public Limited Co.

PT - Perseroan Terbatas an Indonesian limited liability company.

Pte - private.

SA - Generally designates corporations in various countries, mostly those employing the civil law.

SA de CV - A variable capital company.

SAB de CV - A variable capital company.

SCA - Soceite en Commandite par actions is the French equivalent of a limited partnership.

TAS - TüRk Anonim Sirketi.

     24 www.shiplp.com   

Stone Harbor Emerging Markets Debt Fund	Statements of Investments
	November 30, 2010 (Unaudited)

OUTSTANDING FORWARD FOREIGN CURRENCY CONTRACTS

Contract Description	Contracted Amount	Purchase/Sale Contract	Expiration Date	Value On Settlement Date	Current Value	Unrealized Appreciation/ (Depreciation)
BRL	11,531,000 (BRL)	Purchase	12/02/2010	$6,719,304	$6,722,439	$3,135
BRL	11,531,000 (BRL)	Sale	12/02/2010	6,757,897	6,722,439	35,458
CNY	8,000,000 (CNY)	Purchase	05/20/2011	1,191,842	1,204,230	12,388
CNY	14,149,000 (CNY)	Purchase	08/09/2011	2,117,955	2,133,443	15,488
CNY	4,000,000 (CNY)	Purchase	08/09/2011	598,355	603,136	4,781
COP	8,229,000,000 (COP)	Sale	01/26/2011	4,444,504	4,247,664	196,840
EUR	5,325,000 (EUR)	Sale	12/30/2010	7,090,131	6,911,455	178,676
EUR	327,000 (EUR)	Sale	12/30/2010	435,394	424,422	10,972
JPY	342,805,000 (JPY)	Sale	12/30/2010	4,103,189	4,098,136	5,053
						$462,791
CNY	8,000,000 (CNY)	Sale	05/20/2011	$1,192,251	$1,204,230	$(11,979)
COP	8,229,000,000 (COP)	Purchase	01/26/2011	4,275,916	4,247,664	(28,252)
						$(40,231)

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 25   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
CORPORATE BONDS - 91.15%
Aerospace/Defense - 0.84%
TransDigm, Inc.
7.750%, 07/15/2014		$1,875,000		$1,935,938
Triumph Group, Inc.
8.625%, 07/15/2018		1,575,000		1,718,718
				3,654,656
Automotive - 1.91%
Allison Transmission, Inc.
11.000%, 11/01/2015(1)		925,000		1,005,938
11.250%, 11/01/2015(1)(2)		425,000		465,375
American Tire Distributors, Inc.
9.750%, 06/01/2017(1)		950,000		1,009,375
Ford Motor Co.
7.450%, 07/16/2031		910,000		982,800
8.900%, 01/15/2032		25,000		29,125
Ford Motor Credit Co. LLC
8.700%, 10/01/2014		575,000		639,635
8.000%, 12/15/2016		1,385,000		1,523,460
Pinafore LLC
9.000%, 10/01/2018(1)		1,975,000		2,093,499
TRW Automotive, Inc.
8.875%, 12/01/2017(1)		550,000		616,000
				8,365,207
Banking - 0.69%
E*Trade Financial Corp.
12.500%, 11/30/2017(2)		1,670,000		1,933,025
Provident Funding Associates LP
10.250%, 04/15/2017(1)		1,025,000		1,063,438
				2,996,463
Building Products - 1.12%
Associated Materials LLC
9.125%, 11/01/2017(1)		250,000		255,625
Interface, Inc.
Series B, 11.375%, 11/01/2013		475,000		585,438
9.500%, 02/01/2014		211,000		217,858
7.625%, 12/01/2018(1)		1,225,000		1,255,624
Interline Brands, Inc.
7.000%, 11/15/2018(1)		550,000		554,813

  See Notes to Financial Statements.

     26 www.shiplp.com   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Norcraft Cos. LP
10.500%, 12/15/2015		$1,125,000		$1,198,125
Norcraft Holdings LP
9.750%, 09/01/2012		812,000		809,970
				4,877,453
Chemicals - 3.12%
Ineos Group Holdings PLC
8.500%, 02/15/2016(1)		1,815,000		1,583,588
Koppers, Inc.
7.875%, 12/01/2019		1,875,000		2,029,687
Lyondell Chemical Co.
8.375%, 08/15/2015(1)(3)(4)		945,000		0
8.000%, 11/01/2017(1)		500,000		540,625
MacDermid, Inc.
9.500%, 04/15/2017(1)		1,875,000		1,973,438
Momentive Performance Materials, Inc.
9.000%, 01/15/2021(1)		1,825,000		1,820,438
Nalco Co.
8.875%, 11/15/2013		530,000		541,925
8.250%, 05/15/2017		1,050,000		1,149,750
NewMarket Corp.
7.125%, 12/15/2016		1,405,000		1,440,125
Nova Chemicals Corp.
8.375%, 11/01/2016		2,375,000		2,529,375
				13,608,951
Construction Machinery - 0.84%
Case New Holland, Inc.
7.875%, 12/01/2017(1)		950,000		1,052,125
The Manitowoc Co., Inc.
9.500%, 02/15/2018		1,875,000		2,015,625
8.500%, 11/01/2020		100,000		102,750
Maxim Crane Works LP
12.250%, 04/15/2015(1)		550,000		520,438
				3,690,938
Consumer Products - 1.99%
American Achievement Corp.
10.875%, 04/15/2016(1)		660,000		655,050
Central Garden and Pet Co.
8.250%, 03/01/2018		1,875,000		1,926,562

See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | November 30, 2010	27

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Elizabeth Arden, Inc.
7.750%, 01/15/2014		$1,611,000		$1,645,234
FGI Holding Co., Inc.
11.250%, 10/01/2015(1)(2)		565,617		540,164
Libbey Glass, Inc.
10.000%, 02/15/2015(1)		1,125,000		1,209,375
NBTY, Inc.
9.000%, 10/01/2018(1)		800,000		844,000
Viking Acquisition, Inc.
9.250%, 11/01/2018(1)		1,025,000		1,027,563
Visant Corp.
10.000%, 10/01/2017(1)		800,000		828,000
				8,675,948
Containers/Packaging - 2.17%
Ardagh Packaging Finance PLC
9.125%, 10/15/2020(1)		2,050,000		2,121,750
BWAY Holding Co.
10.000%, 06/15/2018(1)		975,000		1,053,000
Greif, Inc.
7.750%, 08/01/2019		1,625,000		1,796,640
Owens-Illinois, Inc.
7.800%, 05/15/2018		325,000		351,813
Radnor Holdings Corp.
11.000%, 03/15/2010(3)(4)		25,000		3
Reynolds Group DL Escrow, Inc.
7.750%, 10/15/2016(1)		1,850,000		1,937,874
Reynolds Group Issuer, Inc.
9.000%, 04/15/2019(1)		1,225,000		1,252,563
Reynolds Group, Inc.
8.500%, 05/15/2018(1)		975,000		975,000
				9,488,643
Diversified Manufacturing - 0.24%
SPX Corp.
7.625%, 12/15/2014		825,000		900,281
6.875%, 09/01/2017(1)		150,000		158,250
				1,058,531
Drillers/Services - 3.43%
Bristow Group, Inc.
7.500%, 09/15/2017		1,205,000		1,271,275

See Notes to Financial Statements.
28	www.shiplp.com

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
CHC Helicopter SA
9.250%, 10/15/2020(1)		$2,025,000		$2,085,750
Complete Production Services, Inc.
8.000%, 12/15/2016		1,975,000		2,034,250
Dresser-Rand Group, Inc.
7.375%, 11/01/2014		2,230,000		2,252,299
Exterran Holdings, Inc.
7.250%, 12/01/2018(1)		1,125,000		1,127,813
Hercules Offshore LLC
10.500%, 10/15/2017(1)		2,330,000		1,864,000
Hornbeck Offshore Services, Inc.
8.000%, 09/01/2017		1,875,000		1,898,438
Offshore Group Investments Ltd.
11.500%, 08/01/2015(1)		400,000		424,000
PHI, Inc.
8.625%, 10/15/2018(1)		800,000		810,000
Precision Drilling Corp.
6.625%, 11/15/2020(1)		500,000		506,250
Stallion Oilfield Holdings Ltd.
10.500%, 02/15/2015(1)		686,000		720,300
				14,994,375
Electric - 6.34%
The AES Corp.
7.750%, 03/01/2014		650,000		692,250
7.750%, 10/15/2015		850,000		905,250
9.750%, 04/15/2016		725,000		808,375
8.000%, 10/15/2017		2,225,000		2,325,124
8.000%, 06/01/2020		325,000		341,250
Calpine Corp.
7.875%, 07/31/2020(1)		2,250,000		2,283,750
7.500%, 02/15/2021(1)		1,925,000		1,900,938
Dynegy Holdings, Inc.
8.375%, 05/01/2016		3,070,000		2,256,450
7.125%, 05/15/2018		500,000		322,500
7.750%, 06/01/2019		460,000		302,450
7.625%, 10/15/2026		25,000		15,125
Edison Mission Energy
7.500%, 06/15/2013		55,000		53,350
7.750%, 06/15/2016		1,825,000		1,569,500
7.000%, 05/15/2017		150,000		118,500
7.200%, 05/15/2019		1,540,000		1,193,500
7.625%, 05/15/2027		1,135,000		822,875

See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | November 30, 2010	29

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Genon Energy, Inc.
9.500%, 10/15/2018(1)		$1,650,000		$1,575,750
9.875%, 10/15/2020(1)		1,875,000		1,795,313
NRG Energy, Inc.
7.375%, 02/01/2016		1,990,000		2,004,925
8.500%, 06/15/2019		3,075,000		3,136,499
8.250%, 09/01/2020(1)		1,175,000		1,183,813
Texas Competitive Electric Holdings Co. LLC
Series A, 10.250%, 11/01/2015		3,500,000		2,100,000
				27,707,487
Environmental Services - 0.40%
Browning-Ferris Industries, Inc.
9.250%, 05/01/2021		35,000		45,720
Clean Harbors, Inc.
7.625%, 08/15/2016		1,591,000		1,686,460
				1,732,180
Exploration & Production - 6.78%
Atlas Energy Operating Co. LLC
12.125%, 08/01/2017		1,600,000		2,104,000
Atlas Pipeline Partners LP
8.125%, 12/15/2015		1,850,000		1,914,750
8.750%, 06/15/2018		200,000		219,000
Denbury Resources, Inc.
8.250%, 02/15/2020		1,346,000		1,473,870
Encore Acquisition Co.
9.500%, 05/01/2016		1,000,000		1,105,000
Gibson Energy ULC
10.000%, 01/15/2018		975,000		979,875
Linn Energy LLC
7.750%, 02/01/2021(1)		2,000,000		2,040,000
Mariner Energy, Inc.
11.750%, 06/30/2016		1,375,000		1,711,875
MarkWest Energy Partners LP
Series B, 8.500%, 07/15/2016		600,000		628,500
Series B, 8.750%, 04/15/2018		850,000		918,000
Newfield Exploration Co.
7.125%, 05/15/2018		875,000		923,125
6.875%, 02/01/2020		1,190,000		1,249,500
NFR Energy LLC
9.750%, 02/15/2017(1)		225,000		223,313
9.750%, 02/15/2017(1)		1,075,000		1,066,938

  See Notes to Financial Statements.

     30 www.shiplp.com   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Penn Virginia Corp.
10.375%, 06/15/2016		$1,450,000	$1,602,250
Pioneer Natural Resources Co.
6.650%, 03/15/2017		3,650,000	3,889,308
Plains Exploration & Production Co.
7.625%, 06/01/2018		800,000	850,040
7.625%, 04/01/2020		1,050,000	1,115,625
Quicksilver Resources, Inc.
8.250%, 08/01/2015		850,000	873,375
11.750%, 01/01/2016		700,000	806,750
SandRidge Energy, Inc.
8.625%, 04/01/2015(2)		2,650,000	2,596,999
8.000%, 06/01/2018(1)		575,000	549,125
8.750%, 01/15/2020		700,000	710,500
Southern Star Central Corp.
6.750%, 03/01/2016		75,000	75,375
			29,627,093
Food and Beverage - 3.73%
Constellation Brands, Inc.
8.375%, 12/15/2014		1,000,000	1,106,250
7.250%, 09/01/2016		1,995,000	2,149,612
7.250%, 05/15/2017		400,000	432,000
Cott Beverages, Inc.
8.375%, 11/15/2017		900,000	960,750
Dean Foods Co.
7.000%, 06/01/2016		2,225,000	2,052,562
Del Monte Corp.
6.750%, 02/15/2015		100,000	103,125
7.500%, 10/15/2019		1,225,000	1,393,438
Dole Food Co., Inc.
8.750%, 07/15/2013		1,125,000	1,192,500
13.875%, 03/15/2014		691,000	841,293
Michael Foods, Inc.
9.750%, 07/15/2018(1)		725,000	786,625
Pinnacle Foods Finance LLC
9.250%, 04/01/2015		1,825,000	1,886,594
10.625%, 04/01/2017		400,000	427,500
8.250%, 09/01/2017		1,550,000	1,577,125
Smithfield Foods, Inc.
10.000%, 07/15/2014(1)		1,225,000	1,390,375
			16,299,749

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 31   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Gaming - 3.42%
American Casino & Entertainment Properties LLC
11.000%, 06/15/2014		$500,000		$497,500
Ameristar Casinos, Inc.
9.250%, 06/01/2014		1,625,000		1,746,875
Boyd Gaming Corp.
9.125%, 12/01/2018(1)		900,000		850,500
CCM Merger, Inc.
8.000%, 08/01/2013(1)		295,000		284,675
Harrah’s Operating Co., Inc.
5.375%, 12/15/2013		1,100,000		1,017,500
Isle of Capri Casinos, Inc.
7.000%, 03/01/2014		1,725,000		1,645,219
MGM Resorts International
6.750%, 04/01/2013		550,000		526,625
5.875%, 02/27/2014		1,375,000		1,203,125
10.000%, 11/01/2016(1)		1,025,000		986,563
11.125%, 11/15/2017		800,000		908,000
9.000%, 03/15/2020(1)		875,000		958,125
Pinnacle Entertainment, Inc.
7.500%, 06/15/2015		2,605,000		2,582,206
8.625%, 08/01/2017		775,000		837,969
Wynn Las Vegas LLC
7.875%, 11/01/2017		825,000		879,656
				14,924,538
Gas Distributors - 0.96%
Inergy LP
6.875%, 12/15/2014		50,000		50,875
8.750%, 03/01/2015		900,000		963,000
8.250%, 03/01/2016		750,000		783,750
Niska Gas Storage Partners LLC
8.875%, 03/15/2018(1)		1,900,000		2,004,500
Regency Energy Partners LP
6.875%, 12/01/2018		400,000		406,000
				4,208,125
Gas Pipelines - 3.30%
ANR Pipeline Co.
7.375%, 02/15/2024		60,000		76,884
7.000%, 06/01/2025		10,000		11,293
Copano Energy LLC
8.125%, 03/01/2016		1,225,000		1,243,375

  See Notes to Financial Statements.

     32 www.shiplp.com   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
7.750%, 06/01/2018		$675,000		$678,375
Crosstex Energy, Inc.
8.875%, 02/15/2018		1,950,000		2,042,625
El Paso Corp.
Series GMTN, 7.375%, 12/15/2012		125,000		133,881
7.250%, 06/01/2018		1,675,000		1,793,201
Series GMTN, 7.800%, 08/01/2031		2,025,000		2,119,002
Series GMTN, 7.750%, 01/15/2032		150,000		157,051
MarkWest Energy Partners LP
6.750%, 11/01/2020		475,000		476,188
Sabine Pass LNG LP
7.250%, 11/30/2013		2,175,000		2,104,313
Southern Union Co.
8.250%, 11/15/2029		1,625,000		1,803,623
Targa Resources Partners LP
11.250%, 07/15/2017		850,000		973,250
7.875%, 10/15/2018(1)		775,000		802,125
				14,415,186
Healthcare - 7.67%
Alere, Inc.
7.875%, 02/01/2016		1,350,000		1,368,563
9.000%, 05/15/2016		1,625,000		1,665,625
American Renal Holdings, Inc.
8.375%, 05/15/2018(1)		900,000		936,000
Community Health Systems, Inc.
8.875%, 07/15/2015		3,525,000		3,696,843
DaVita, Inc.
6.625%, 11/01/2020		2,225,000		2,211,094
HCA Holdings, Inc.
7.750%, 05/15/2021(1)		275,000		271,219
HCA, Inc.
6.750%, 07/15/2013		700,000		719,250
9.125%, 11/15/2014		210,000		219,450
6.375%, 01/15/2015		1,100,000		1,086,250
9.250%, 11/15/2016		2,200,000		2,359,500
9.625%, 11/15/2016(2)		2,013,000		2,156,426
HealthSouth Corp.
10.750%, 06/15/2016		650,000		710,125
8.125%, 02/15/2020		3,425,000		3,728,968
IASIS Healthcare LLC
8.750%, 06/15/2014		1,900,000		1,933,250

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 33   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Multiplan, Inc.
9.875%, 09/01/2018(1)		$850,000		$905,250
Radiation Therapy Services, Inc.
9.875%, 04/15/2017(1)		2,075,000		2,038,688
Surgical Care Affiliates, Inc.
8.875%, 07/15/2015(1)(2)		984,000		998,760
10.000%, 07/15/2017(1)		1,000,000		1,020,000
United Surgical Partners International, Inc.
8.875%, 05/01/2017		125,000		129,063
9.250%, 05/01/2017(2)		1,220,000		1,265,750
Vanguard Health Holding Co. II LLC
8.000%, 02/01/2018		4,025,000		4,085,374
				33,505,448
Industrial Other - 1.03%
Aquilex Holdings LLC
11.125%, 12/15/2016		220,000		222,200
RBS Global, Inc.
8.500%, 05/01/2018		3,550,000		3,656,500
Sensus Metering Systems, Inc.
8.625%, 12/15/2013		600,000		612,000
				4,490,700
Leisure - 1.59%
AMC Entertainment, Inc.
8.000%, 03/01/2014		550,000		554,125
11.000%, 02/01/2016		565,000		601,725
Cinemark USA, Inc.
8.625%, 06/15/2019		1,775,000		1,912,563
Marquee Holdings, Inc.
9.505%, 08/15/2014(5)		2,490,000		2,060,475
Regal Cinemas Corp.
8.625%, 07/15/2019		1,700,000		1,802,000
				6,930,888
Lodging - 0.42%
Host Hotels & Resorts LP - REIT
Series O, 6.375%, 03/15/2015		75,000		76,688
Series Q, 6.750%, 06/01/2016		625,000		643,750
9.000%, 05/15/2017		1,000,000		1,117,500
				1,837,938

  See Notes to Financial Statements.

     34 www.shiplp.com   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Media Cable - 4.68%
Atlantic Broadband Finance LLC
9.375%, 01/15/2014		$1,710,000		$1,748,475
Cablevision Systems Corp.
8.625%, 09/15/2017		925,000		1,010,563
7.750%, 04/15/2018		525,000		559,125
8.000%, 04/15/2020		750,000		808,125
Cequel Communications Holdings I, LLC
8.625%, 11/15/2017(1)		1,175,000		1,210,250
CSC Holdings LLC
8.500%, 06/15/2015		1,700,000		1,853,000
8.625%, 02/15/2019		475,000		545,063
CSC Holdings, Inc.
7.625%, 07/15/2018		325,000		355,875
DISH DBS Corp.
7.750%, 05/31/2015		1,100,000		1,172,875
7.125%, 02/01/2016		960,000		991,200
7.875%, 09/01/2019		1,700,000		1,793,500
Insight Communications Co., Inc.
9.375%, 07/15/2018(1)		650,000		708,500
Mediacom LLC
9.125%, 08/15/2019		500,000		507,500
Unitymedia Hesson GmbH & Co.
8.125%, 12/01/2017(1)		125,000		130,625
UPC Holding BV
9.875%, 04/15/2018(1)		1,750,000		1,889,999
Videotron Ltee
9.125%, 04/15/2018		1,225,000		1,362,813
Virgin Media Finance PLC
9.125%, 08/15/2016		2,125,000		2,268,437
Series 1, 9.500%, 08/15/2016		1,100,000		1,234,750
8.375%, 10/15/2019		275,000		303,188
				20,453,863
Media Other - 2.27%
Bonten Media Acquisition Co.
9.000%, 06/01/2015(1)(2)		490,233		264,726
Fox Acquisition Sub LLC
13.375%, 07/15/2016(1)		1,115,000		1,223,713
Interep National Radio Sales, Inc.
Series B, 10.000%, 07/01/2008(3)(4)		4,000		0
Lamar Media Corp.
6.625%, 08/15/2015		710,000		725,975

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 35   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Series B, 6.625%, 08/15/2015		$1,680,000		$1,701,000
Series C, 6.625%, 08/15/2015		200,000		202,500
Radio One, Inc.
12.500%, 05/11/2016(1)(2)(3)		2,341,661		2,212,869
Sinclair Television Group, Inc.
9.250%, 11/01/2017(1)		800,000		870,000
8.375%, 10/15/2018(1)		750,000		772,500
Univision Communications, Inc.
7.875%, 11/01/2010(1)		1,900,000		1,952,250
				9,925,533
Metals/Mining/Steel - 2.20%
Arch Coal, Inc.
8.750%, 08/01/2016		725,000		799,313
7.250%, 10/01/2020		400,000		440,000
Cloud Peak Energy Resources LLC
8.250%, 12/15/2017		400,000		438,000
8.500%, 12/15/2019		1,450,000		1,602,250
Consol Energy, Inc.
8.000%, 04/01/2017(1)		1,175,000		1,269,000
8.250%, 04/01/2020(1)		800,000		870,000
Drummond Co., Inc.
9.000%, 10/15/2014(1)		325,000		344,500
7.375%, 02/15/2016		1,475,000		1,511,875
FMG Resources August 2006 Pty Ltd.
7.000%, 11/01/2015(1)		1,175,000		1,195,563
Penn Virginia Resource Partners LP
8.250%, 04/15/2018		1,130,000		1,155,425
				9,625,926
Non Captive Finance - 0.38%
Ally Financial, Inc.
6.250%, 12/01/2017(1)		830,000		797,838
GMAC LLC
8.000%, 11/01/2031		400,000		416,000
PHH Corp.
9.250%, 03/01/2016(1)		450,000		463,500
				1,677,338
Paper/Forest Products - 2.50%
Ainsworth Lumber Co. Ltd.
11.000%, 07/29/2015(1)(2)		950,000		855,000

  See Notes to Financial Statements.

     36 www.shiplp.com   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Boise Paper Holdings LLC
8.000%, 04/01/2020		$2,000,000		$2,175,000
Cascades, Inc.
7.750%, 12/15/2017		1,750,000		1,841,874
7.875%, 01/15/2020		225,000		237,375
Catalyst Paper Corp.
11.000%, 12/15/2016(1)		330,000		298,650
Graphic Packaging International, Inc.
9.500%, 06/15/2017		2,155,000		2,348,950
Mercer International, Inc.
9.500%, 12/01/2017(1)		1,050,000		1,055,250
Millar Western Forest Products Ltd.
7.750%, 11/15/2013		810,000		765,450
NewPage Corp.
11.375%, 12/31/2014		990,000		900,900
Verso Paper Holdings LLC
Series B, 11.375%, 08/01/2016		465,000		456,281
				10,934,730
Publishing/Printing - 1.14%
Baker & Taylor, Inc.
11.500%, 07/01/2013(1)		1,295,000		1,029,525
Cenveo Corp.
7.875%, 12/01/2013		1,025,000		1,007,063
8.375%, 06/15/2014		650,000		562,250
10.500%, 08/15/2016(1)		350,000		361,375
8.875%, 02/01/2018		500,000		498,750
Dex One Corp.
12.000%, 01/29/2017(2)		15,236		8,608
IDEARC, Inc.
8.000%, 11/15/2016(3)(4)		1,265,000		0
The McClatchy Co.
11.500%, 02/15/2017		1,010,000		1,063,025
Nielsen Finance LLC
7.750%, 10/15/2018(1)		450,000		460,125
				4,990,721
Refining - 0.58%
Petroplus Finance Ltd.
6.750%, 05/01/2014(1)		1,585,000		1,442,350
7.000%, 05/01/2017(1)		925,000		800,125
9.375%, 09/15/2019(1)		300,000		277,500
				2,519,975

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 37   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
REITS - 0.45%
CB Richard Ellis Services, Inc.
11.625%, 06/15/2017		$1,675,000		$1,949,281
Restaurants - 0.47%
DineEquity, Inc.
9.500%, 10/30/2018(1)		975,000		1,014,000
Dunkin Finance Corp.
9.625%, 12/01/2018(1)		925,000		935,406
Sbarro, Inc.
10.375%, 02/01/2015		225,000		109,125
				2,058,531
Retail Food/Drug - 0.72%
Albertsons, Inc.
8.000%, 05/01/2031		50,000		39,000
American Stores Co.
7.900%, 05/01/2017		550,000		532,125
8.000%, 06/01/2026		1,465,000		1,259,900
Series MTNB, 7.100%, 03/20/2028		600,000		459,000
SUPERVALU, Inc.
7.500%, 11/15/2014		350,000		349,125
8.000%, 05/01/2016		500,000		493,750
				3,132,900
Retail Non Food/Drug - 5.43%
The Bon-Ton Department Stores, Inc.
10.250%, 03/15/2014		1,250,000		1,262,500
Claire’s Stores, Inc.
9.250%, 06/01/2015		550,000		514,250
9.625%, 06/01/2015(2)		1,182,424		1,129,215
10.500%, 06/01/2017		425,000		382,500
Express LLC
8.750%, 03/01/2018		1,300,000		1,384,500
JC Penney Corp., Inc.
7.400%, 04/01/2037		1,475,000		1,390,188
Limited Brands, Inc.
8.500%, 06/15/2019		1,175,000		1,360,063
7.000%, 05/01/2020		1,075,000		1,150,250
6.950%, 03/01/2033		1,350,000		1,269,000
7.600%, 07/15/2037		400,000		394,000

  See Notes to Financial Statements.

     38 www.shiplp.com   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Macy’s Retail Holdings, Inc.
6.900%, 01/15/2032		$175,000		$174,125
7.875%, 08/15/2036		525,000		542,063
Michaels Stores, Inc.
11.375%, 11/01/2016		1,800,000		1,955,249
7.750%, 11/01/2018(1)		725,000		708,688
Neiman-Marcus Group, Inc.
9.000%, 10/15/2015(2)		1,652,116		1,726,460
10.375%, 10/15/2015		1,200,000		1,269,000
Petco Animal Supplies, Inc.
9.250%, 12/01/2018(1)		1,200,000		1,215,000
QVC, Inc.
7.125%, 04/15/2017(1)		500,000		527,500
7.500%, 10/01/2019(1)		1,150,000		1,213,250
Toys R Us Delaware, Inc.
7.375%, 09/01/2016(1)		1,275,000		1,337,156
Toys R Us Property Co. I LLC
10.750%, 07/15/2017		2,500,000		2,824,999
				23,729,956
Satellite - 1.19%
Hughes Network Systems LLC
9.500%, 04/15/2014		75,000		77,250
9.500%, 04/15/2014		1,560,000		1,606,800
Intelsat Corp.
9.250%, 06/15/2016		500,000		528,750
Intelsat Intermediate Holding Co. SA
9.500%, 02/01/2015		275,000		284,625
Intelsat Jackson Holdings SA
9.500%, 06/15/2016		900,000		954,000
11.250%, 06/15/2016		600,000		644,250
8.500%, 11/01/2019(1)		1,025,000		1,107,000
				5,202,675
Services Other - 4.86%
American Residential Services LLC
12.000%, 04/15/2015(1)		1,075,000		1,120,688
ARAMARK Corp.
8.500%, 02/01/2015		3,870,000		4,024,800
Corrections Corp. of America
7.750%, 06/01/2017		1,725,000		1,888,875
Education Management LLC
8.750%, 06/01/2014		1,200,000		1,228,500

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 39   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
10.250%, 06/01/2016		$215,000	$220,375
The Geo Group, Inc.
7.750%, 10/15/2017		2,300,000	2,449,500
GXS Worldwide, Inc.
9.750%, 06/15/2015		1,900,000	1,885,750
Iron Mountain, Inc.
7.750%, 01/15/2015		536,000	541,360
8.750%, 07/15/2018		1,710,000	1,804,050
8.000%, 06/15/2020		375,000	403,125
8.375%, 08/15/2021		325,000	357,500
Mobile Mini, Inc.
7.875%, 12/01/2020(1)		275,000	282,906
Old West Corp.
8.625%, 10/01/2018(1)		350,000	365,750
7.875%, 01/15/2019(1)		1,350,000	1,336,500
The ServiceMaster Co.
10.750%, 07/15/2015(1)(2)		1,800,000	1,939,500
7.450%, 08/15/2027		175,000	138,250
Trans Union LLC
11.375%, 06/15/2018(1)		1,100,000	1,237,500
			21,224,929
Technology - 2.27%
Fidelity National Information Services, Inc.
7.875%, 07/15/2020(1)		575,000	616,688
NXP BV
9.750%, 08/01/2018(1)		2,125,000	2,305,625
SSI Investments II
11.125%, 06/01/2018(1)		1,700,000	1,865,750
SunGard Data Systems, Inc.
7.375%, 11/15/2018(1)		1,625,000	1,616,875
Xerox Capital Trust I
8.000%, 02/01/2027		3,445,000	3,508,911
			9,913,849
Textile/Apparel - 0.88%
Levi Strauss & Co.
8.875%, 04/01/2016		1,200,000	1,266,000
7.625%, 05/15/2020		925,000	952,750
Quiksilver, Inc.
6.875%, 04/15/2015		1,700,000	1,623,500
			3,842,250

  See Notes to Financial Statements.

     40 www.shiplp.com   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Transportation - Non Air/Rail - 0.54%
General Maritime Corp.
12.000%, 11/15/2017		$1,775,000		$1,783,875
Navios Maritime Holdings, Inc.
8.875%, 11/01/2017		525,000		563,063
				2,346,938
Wireless - 3.68%
Crown Castle International Corp.
9.000%, 01/15/2015		3,650,000		4,042,375
7.125%, 11/01/2019		100,000		108,750
MetroPCS Wireless, Inc.
7.875%, 09/01/2018		1,450,000		1,509,813
6.625%, 11/15/2020		975,000		931,125
Nextel Communications, Inc.
Series D, 7.375%, 08/01/2015		2,325,000		2,255,250
SBA Telecommunications, Inc.
8.000%, 08/15/2016		625,000		678,125
8.250%, 08/15/2019		700,000		770,000
Sprint Capital Corp.
8.750%, 03/15/2032		3,825,000		3,805,875
Wind Acquisition Finance SA
11.750%, 07/15/2014(1)		975,000		1,087,125
12.250%, 07/15/2017(1)(2)		767,885		871,549
				16,059,987
Wirelines - 4.92%
Cincinnati Bell, Inc.
8.250%, 10/15/2017		975,000		950,625
Citizens Communications Co.
7.875%, 01/15/2027		125,000		123,125
9.000%, 08/15/2031		3,880,000		4,083,699
Embarq Corp.
7.995%, 06/01/2036		1,975,000		2,150,026
ITC Deltacom, Inc.
10.500%, 04/01/2016		2,025,000		2,181,938
Level 3 Financing, Inc.
9.250%, 11/01/2014		1,040,000		1,008,800
4.344%, 02/15/2015(6)		350,000		295,750
10.000%, 02/01/2018		2,550,000		2,358,750
Qwest Communications International, Inc.
Series B, 7.500%, 02/15/2014		875,000		888,125
7.125%, 04/01/2018(1)		1,975,000		2,063,875

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 41   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency	Principal Amount*		Market Value
Qwest Corp.
7.500%, 06/15/2023			$425,000	$422,875
6.875%, 09/15/2033			2,550,000	2,524,500
Windstream Corp.
8.625%, 08/01/2016			1,000,000	1,042,500
7.875%, 11/01/2017			1,325,000	1,397,875
				21,492,463
TOTAL CORPORATE BONDS				398,172,342
(Amortized Cost $373,548,127)
CONVERTIBLE CORPORATE BONDS - 1.71%
Automotive - 0.16%
ArvinMeritor, Inc.
4.625%, 03/01/2026(5)			125,000	147,031
Cie Generale des Etablissements Michelin
Series ML, 3.402%, 01/01/2017(7)	EUR		166,631	234,418
Suzuki Motor Corp.
Series 4, 0.000%, 03/29/2013(1)(7)	JPY		25,000,000	304,042
				685,491
Containers/Packaging - 0.08%
Owens - Brockway Glass Container, Inc.
3.000%, 06/01/2015(1)			363,000	356,648
Drillers/Services - 0.16%
Acergy SA
Series ACY, 2.250%, 10/11/2013			200,000	225,900
Newpark Resources, Inc.
4.000%, 10/01/2017			290,000	258,825
Transocean, Inc.
Series A, 1.625%, 12/15/2037			205,000	203,463
				688,188
Exploration & Production - 0.04%
InterOil Corp.
2.750%, 11/15/2015			9,000	9,090
Quicksilver Resources, Inc.
1.875%, 11/01/2024			138,000	149,558
				158,648

See Notes to Financial Statements.
42	www.shiplp.com

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Food and Beverage - 0.11%
Smithfield Foods, Inc.
4.000%, 06/30/2013		$95,000		$103,669
Tyson Foods, Inc.
3.250%, 10/15/2013		330,000		386,925
				490,594
Healthcare - 0.25%
Amylin Pharmaceuticals, Inc.
3.000%, 06/15/2014		360,000		311,850
Beckman Coulter, Inc.
2.500%, 12/15/2036		39,000		41,340
Hologic, Inc.
2.000%, 12/15/2037(5)		192,000		179,040
Life Technologies Corp.
3.250%, 06/15/2025		498,000		563,363
				1,095,593
Insurance - 0.00%(8)
Radian Group, Inc.
3.000%, 11/15/2017		18,000		16,515
Pharmaceuticals - 0.37%
Amgen, Inc.
Series A, 0.125%, 02/01/2011		275,000		275,687
Gilead Sciences, Inc.
Series A, 0.500%, 05/01/2011		520,000		536,900
1.000%, 05/01/2014(1)		85,000		88,081
PDL BioPharma, Inc.
2.000%, 02/15/2012		230,000		227,700
Shire PLC
Series SHP, 2.750%, 05/09/2014		475,000		491,030
				1,619,398
Retail Food/Drug - 0.01%
Great Atlantic & Pacific Tea Co.
5.125%, 06/15/2011(4)		65,000		52,975
Technology - 0.46%
Alcatel-Lucent USA, Inc.
Series B, 2.750%, 06/15/2025		90,000		85,837
Comtech Telecommunications Corp.
3.000%, 05/01/2029		215,000		232,738

See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | November 30, 2010	43

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Digital River, Inc.
2.000%, 11/01/2030(1)		$65,000		$65,081
Hon Hai Precision Industry Co. Ltd.
0.000%, 10/12/2013(7)		100,000		99,038
Hutchinson Technology, Inc.
3.250%, 01/15/2026		145,000		102,225
Micron Technology, Inc.
1.875%, 06/01/2014		102,000		93,968
ON Semiconductor Corp.
Series B, 2.280%, 04/15/2024(7)		275,000		286,000
2.625%, 12/15/2026		265,000		284,874
RightNow Technologies, Inc.
2.500%, 11/15/2030(1)		67,000		69,010
SanDisk Corp.
1.500%, 08/15/2017		157,000		168,579
Xilinx, Inc.
3.125%, 03/15/2037		513,000		512,357
				1,999,707
Wirelines - 0.07%
Earthlink, Inc.
3.250%, 11/15/2026(5)		252,000		289,170
TOTAL CONVERTIBLE CORPORATE BONDS				7,452,927
(Amortized Cost $7,272,275)
BANK LOANS - 2.21%(9)
Aerospace/Defense - 0.07%
Sequa Corp. - Term Loan
3.550%, 12/08/2010		11,385		10,854
3.550%, 12/15/2010		9,731		9,276
3.540%, 01/03/2011		316,381		301,617
				321,747
Automotive - 0.22%
Ford Motor Co. - Tranche B-1 Term Loan
3.010%, 12/15/2010		246,239		244,220
3.050%, 12/15/2010		496,629		492,557
3.040%, 01/18/2011		232,272		230,367
				967,144

  See Notes to Financial Statements.

     44 www.shiplp.com   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*		Market Value
Building Products - 0.04%
Collins & Aikman Floorcoverings, Inc. - Loan
2.794%, 12/07/2010		$3,569		$3,252
2.793%, 12/13/2010		178,034		162,234
2.791%, 12/20/2010		18,367		16,737
				182,223
Electric - 0.93%
Texas Competitive Holdings Co. LLC - Initial Tranche B-2 Term Loan
3.753%, 12/09/2010		4,714,999		4,038,834
3.789%, 12/31/2010		12,183		10,436
				4,049,270
Gaming - 0.50%
Harrah’s Operating Co., Inc. - Term B-2 Loan
3.288%, 01/26/2011		2,475,000		2,172,897
Media Other - 0.06%
Citadel Broadcasting Corp. - Loan
11.000%, 12/30/2010		146,093		154,327
Univision Communications, Inc. - Extended First- Lien Term Loan
4.506%, 12/31/2010		132,383		123,633
				277,960
Non Captive Finance - 0.21%
American General Finance Co. - Loan
7.250%, 12/29/2010		925,000		933,961
Publishing/Printing - 0.11%
Merrill Communications LLC - Loan (Second Lien)
14.750%, 12/31/2010		150,000		142,500
15.000%, 02/01/2011		4,295		4,081
R.H. Donnelley, Inc. - Loan
9.000%, 12/31/2010		14,746		10,626
9.000%, 01/31/2011		127,533		91,903
9.000%, 02/28/2011		129,628		93,413
Tribune Co. - Tranche X Advance
5.000%, 12/31/2010		192,000		120,686
				463,209
Retail Non Food/Drug - 0.07%
Claire’s Stores, Inc. - Term B Loan
3.044%, 02/28/2010		294,630		258,313

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 45   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*/Shares		Market Value
3.006%, 12/31/2010		$891		$781
3.038%, 01/31/2011		49,136		43,079
				302,173
TOTAL BANK LOANS				9,670,584
(Amortized Cost $9,423,079)
COMMON STOCKS - 0.28%
Chemicals - 0.03%
LyondellBasell Industries NV(10)		4,658		136,060
Media Cable - 0.24%
Charter Communications, Inc.(10)		31,035		1,040,293
Publishing/Printing - 0.01%
Dex One Corp.(10)		12,498		59,366
SuperMedia, Inc.(10)		998		4,511
				63,877
TOTAL COMMON STOCKS				1,240,230
(Cost $4,147,172)
PREFERRED STOCKS - 0.35%
Automotive - 0.01%
General Motors Co.
4.750%, 12/01/2013		1,050		53,235
Banking - 0.08%
Wells Fargo & Co.
7.500%, 12/31/2049		350		345,450
Electric - 0.01%
AES Trust III
6.750%, 10/15/2029		600		28,950
Exploration & Production - 0.07%
Apache Corp.
6.000%, 08/01/2013		4,610		279,597

  See Notes to Financial Statements.

     46 www.shiplp.com   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Principal Amount*/Shares		Market Value
Food and Beverage - 0.05%
Archer-Daniels-Midland Co.
6.250%, 06/01/2011		$5,700		$215,061
Gas Pipelines - 0.08%
El Paso Corp.
4.990%, 12/31/2049		301		351,035
Life - 0.04%
Hartford Financial Services Group, Inc.
7.250%, 04/01/2013		8,100		187,353
Metals/Mining/Steel - 0.01%
AngloGold Ashanti Ltd.
6.000%, 09/15/2013		950		50,711
TOTAL PREFERRED STOCKS				1,511,392
(Cost $1,472,084)
RIGHTS AND WARRANTS - 0.05%
Media Other - 0.05%
Citadel Broadcasting Corp.
expires 6/3/2030(10)		8,540		230,580
Publishing/Printing - 0.00%
Readers Digest
expires 2/19/2014 (3)(10)		1,498		0
TOTAL RIGHTS AND WARRANTS				230,580
(Cost $576,017)
MONEY MARKET MUTUAL FUNDS - 2.56%
Dreyfus Cash Advantage Plus Fund
(0.100% 7-Day Yield)		11,177,477		11,177,477
TOTAL MONEY MARKET MUTUAL FUNDS				11,177,477
(Cost $11,177,477)

See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | November 30, 2010	47

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

	Market Value
Total Investments - 98.31% (Cost $407,616,231)	$	429,455,532
Other Assets in Excess of Liabilities - 1.69%		7,393,127
Net Assets - 100.00%	$	436,848,659

* The principal/contract amount of each security is stated in the currency in which the bond is denominated (U.S. Dollar unless otherwise notated). See below.

EUR	Euro Currency
JPY	Japanese Yen

Common Abbreviations:

BV - Besloten Vennootschap a Dutch private limited liability company.

GmbH - Gesellschaft mit bescharankter Haftung is the German term for limited liability company.

LLC - Limited Liability Corp.

LP - Limited Partnership.

Ltd. - Limited.

NV - Naamloze Vennootschap is the Dutch term for a public limited liability corporation.

PLC - Public Limited Co.

Pty Ltd. - Propriety Limited

REIT - Real Estate Investment Trust.

SA - Generally designates corporations in various countries, mostly those employing the civil law.

ULC - Unlimited Liability Corp.

⁽¹⁾ Security exempt from registration under Rule 144A of the Securities Act of 1933. Under procedures approved by the Board of Trustees, such securities have been determined to be liquid by the Investment Advisor and may normally be sold to qualified institutional buyers in transactions exempt from registration. Total market value of Rule 144A securities amounts to $111,210,312, which represents approximately 25.46% of net assets as of November 30, 2010.

⁽²⁾ Pay-in-kind securities.

⁽³⁾ This security has been valued at its fair value determined in good faith pursuant to procedures approved by the Board of Trustees. Total market value of fair valued securities amounts to $2,212,872, which represents approximately 0.51% of net assets as of November 30, 2010.

⁽⁴⁾ Security is currently in default/non-income producing.

⁽⁵⁾ Step bond. Coupon increases periodically based upon a predetermined schedule. Interest rate disclosed is that which is in effect at November 30, 2010.

⁽⁶⁾ Floating or variable rate security. Interest rate disclosed is that which is in effect at November 30, 2010.

⁽⁷⁾ Zero coupon bond reflects effective yield on the date of purchase.

⁽⁸⁾ Amount represents less than 0.005% of net assets.

  See Notes to Financial Statements.

     48 www.shiplp.com   

Stone Harbor High Yield Bond Fund	Statements of Investments
	November 30, 2010 (Unaudited)

⁽⁹⁾ Bank loans generally pay interest at rates which are periodically determined by reference to a base lending rate plus a premium. All loans carry a variable rate of interest. These base lending rates are generally (i) the Prime Rate offered by one or more major United States banks, (ii) the lending rate offered by one or more European banks such as the London Interbank Offered Rate (“LIBOR”) or (iii) the Certificate of Deposit rate. Rate shown represents the weighted average rate at November 30, 2010. Bank Loans, while exempt from registration, under the Securities Act of 1933 (the “1933 Act”), contain certain restrictions on resale and cannot be sold publicly. Floating rate bank loans often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturity shown.

⁽¹⁰⁾ Non-income producing security.

OUTSTANDING FORWARD FOREIGN CURRENCY CONTRACTS

Contract Description	Contracted Amount	Purchase/Sale Contract	Expiration Date	Value On Settlement Date	Current Value	Unrealized Appreciation
EUR	182,000 (EUR)	Sale	01/21/2011	$247,136	$236,199	$10,937
JPY	25,637,000 (JPY)	Sale	01/21/2011	307,409	306,570	839
						$11,776

See Notes to Financial Statements.
Semi-Annual Report (Unaudited) | November 30, 2010	49

Stone Harbor Local Markets Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency		Principal Amount *		Market Value (Expressed in U.S. $)
SOVEREIGN DEBT OBLIGATIONS - 50.81%
Brazil - 7.88%
Nota Do Tesouro Nacional
10.000%, 01/01/2014		BRL		$8,360,000		$4,604,667
10.000%, 01/01/2021		BRL		15,700,000		7,955,607
						12,560,274
Colombia - 2.57%
Bogota Distrio Capital
9.750%, 07/26/2028(1)		COP		5,030,000,000		3,512,146
Republic of Colombia
7.750%, 04/14/2021		COP		800,000,000		465,948
9.850%, 06/28/2027		COP		182,000,000		126,026
						4,104,120
Hungary - 2.50%
Hungarian Government
7.500%, 10/24/2013		HUF		56,000,000		256,845
8.000%, 02/12/2015		HUF		812,850,000		3,727,538
						3,984,383
Malaysia - 4.52%
Malaysian Government
3.835%, 08/12/2015		MYR		2,895,000		934,991
4.012%, 09/15/2017		MYR		18,810,000		6,077,991
4.378%, 11/29/2019		MYR		580,000		190,983
						7,203,965
Mexico - 11.11%
Mexican Bonos
7.750%, 12/14/2017		MXN		11,170,000		963,244
8.000%, 06/11/2020		MXN		119,110,000		10,323,668
8.500%, 05/31/2029		MXN		19,120,000		1,689,197
Mexican Udibonos
5.000%, 06/16/2016		MXN		35,722,461		3,427,372
3.500%, 12/14/2017		MXN		3,391,799		301,187
4.000%, 06/13/2019		MXN		10,925,371		1,005,614
						17,710,282
Peru - 0.43%
Republic of Peru
6.950%, 08/12/2031(1)		PEN		1,910,000		690,713

  See Notes to Financial Statements.

     50 www.shiplp.com   

Stone Harbor Local Markets Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency		Principal Amount *		Market Value (Expressed in U.S. $)
Poland - 7.89%
Republic of Poland
5.500%, 04/25/2015		PLN	$	24,845,000	$	8,039,455
3.000%, 08/24/2016		PLN		11,189,459		3,669,264
5.500%, 10/25/2019		PLN		2,755,000		862,603
						12,571,322
South Africa - 4.75%
Republic of South Africa
2.500%, 01/31/2017		ZAR		6,605,650		928,602
8.250%, 09/15/2017		ZAR		4,225,000		599,625
8.000%, 12/21/2018		ZAR		23,230,000		3,227,142
6.750%, 03/31/2021		ZAR		22,380,000		2,814,161
						7,569,530
Thailand - 3.67%
Thailand Government
3.625%, 05/22/2015		THB		99,050,000		3,369,659
3.125%, 12/11/2015		THB		69,600,000		2,317,301
3.875%, 06/13/2019		THB		4,775,000		163,343
						5,850,303
Turkey - 4.72%
Republic of Turkey
10.000%, 02/15/2012		TRY		9,109,580		6,766,009
0.000%, 08/08/2012(2)		TRY		1,300,000		761,329
						7,527,338
Venezuela - 0.77%
Republic of Venezuela
12.750%, 08/23/2022				1,400,000		1,153,250
9.000%, 05/07/2023(1)				115,000		72,594
						1,225,844
TOTAL SOVEREIGN DEBT OBLIGATIONS						80,998,074
(Amortized Cost $82,189,339)

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 51   

Stone Harbor Local Markets Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency	Principal Amount *		Market Value (Expressed in U.S. $)
CORPORATE BONDS - 7.90%
European Union - 7.66%
Asian Development Bank
6.500%, 09/15/2015	ZAR		$4,650,000		$610,428
European Bank for Reconstruction & Development
9.250%, 09/10/2012	BRL		2,500,000		1,471,816
7.300%, 05/23/2013	MXN		8,500,000		709,317
European Investment Bank
6.250%, 03/11/2013	RUB		57,000,000		1,825,207
8.000%, 10/21/2013	ZAR		12,510,000		1,829,055
6.500%, 12/15/2015	RUB		42,000,000		1,312,463
9.000%, 12/21/2018	ZAR		10,000,000		1,468,996
International Bank for Reconstruction & Development
10.000%, 04/05/2012	RUB		39,350,000		1,323,185
0.000%, 05/14/2012(2)	ZAR		6,500,000		834,925
6.000%, 11/29/2012	RUB		21,500,000		679,525
7.500%, 03/02/2017	RUB		4,500,000		149,419
					12,214,336
Venezuela - 0.24%
Petroleos de Venezuela SA
4.900%, 10/28/2014			620,000		374,325
TOTAL CORPORATE BONDS					12,588,661
(Amortized Cost $12,680,064)
CREDIT LINKED NOTES - 20.77%
Brazil - 5.05%
Nota Do Tesouro Nacional
10.000%, 01/01/2014(3)(4)	BRL		5,100,000		2,796,285
10.000%, 01/01/2021(3)(5)	BRL		1,100,000		557,057
10.000%, 01/01/2021(3)(5)	BRL		2,600,000		1,316,680
10.000%, 01/01/2021(3)(6)	BRL		3,000,000		1,520,180
10.000%, 01/01/2021(3)(4)	BRL		3,700,000		1,856,042
					8,046,244

  See Notes to Financial Statements.

     52 www.shiplp.com   

Stone Harbor Local Markets Fund	Statements of Investments
	November 30, 2010 (Unaudited)

Interest Rate/Maturity Date	Currency	Principal Amount *		Market Value (Expressed in U.S. $)
Colombia - 2.85%
Colombia CGM
11.000%, 07/24/2020(3)(5)	COP		$300,000,000		$188,909
11.000%, 07/24/2020(3)(5)	COP		550,000,000		346,333
11.000%, 07/24/2020(3)(5)	COP		983,000,000		618,992
10.000%, 07/24/2024(3)(5)	COP		185,000,000		110,524
10.000%, 07/24/2024(3)(5)	COP		903,000,000		539,476
11.000%, 07/24/2024(3)(5)	COP		1,850,000,000		1,164,938
Colombia Tes
11.000%, 07/24/2020(3)(5)	COP		1,000,000,000		629,696
11.000%, 07/24/2020(3)(5)	COP		1,500,000,000		944,545
					4,543,413
Indonesia - 11.73%
Republic of Indonesia
9.500%, 06/15/2015(3)(4)	IDR		4,400,000,000		541,063
9.500%, 06/15/2015(3)(7)	IDR		7,500,000,000		928,492
9.500%, 06/15/2015(3)(6)	IDR		8,500,000,000		1,048,528
9.500%, 06/15/2015(3)(8)	IDR		18,500,000,000		2,381,880
10.000%, 07/15/2017(3)(9)	IDR		12,000,000,000		1,514,279
11.500%, 09/15/2019(3)(4)	IDR		13,254,000,000		1,829,504
12.800%, 06/15/2021(3)(8)	IDR		5,800,000,000		931,332
12.800%, 06/15/2021(3)(7)	IDR		5,800,000,000		875,072
12.800%, 06/15/2021(3)(7)	IDR		8,000,000,000		1,206,996
12.800%, 06/15/2021(3)(7)	IDR		8,300,000,000		1,252,258
12.800%, 06/15/2021(3)(6)	IDR		19,800,000,000		2,957,726
12.800%, 06/15/2021(3)(8)	IDR		19,800,000,000		3,231,428
					18,698,558
Russia - 1.14%
Russian Federation
10.550%, 07/06/2011(3)(4)	RUB		6,000,000		196,902
10.550%, 07/06/2011(3)(6)	RUB		27,800,000		910,992
6.100%, 07/11/2012(3)(8)	RUB		22,400,000		710,598
					1,818,492
TOTAL CREDIT LINKED NOTES					33,106,707
(Amortized Cost $34,210,851)

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 53   

Stone Harbor Local Markets Fund	Statements of Investments
	November 30, 2010 (Unaudited)

	Shares		Market Value (Expressed  in U.S. $)
MONEY MARKET MUTUAL FUNDS - 21.25%
Dreyfus Cash Advantage Plus Fund
(0.100% 7-Day Yield)		33,875,658		$33,875,658
TOTAL MONEY MARKET MUTUAL FUNDS (Cost $33,875,658)				33,875,658
Total Investments - 100.73% (Cost $162,955,912)				$160,569,100
Liabilities in Excess of Other Assets - (0.73)%				(1,155,773	)
Net Assets - 100.00%				$159,413,327

* The principal/contract amount of each security is stated in the currency in which the bond is denominated (U.S. Dollar unless otherwise notated). See below.

BRL	Brazilian Real
CNY	Chinese Yuan
COP	Colombian Peso
HUF	Hungarian Forint
IDR	Indonesian Rupiah
INR	Indian Rupee
MXN	Mexican Peso
MYR	Malaysian Ringgit
PEN	Peruvian Nuevo
PHP	Philippine Peso
PLN	Polish Zloty
RUB	Russian Ruble
THB	Thai Baht
TRY	Turkish Lira
ZAR	South African Rand

⁽¹⁾ Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts securities offered and sold outside of the United States from registration. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under procedures approved by the Fund’s Board of Trustees. As of November 30, 2010, the aggregate market value of those securities was $4,275,453, representing 2.68% of net assets.

⁽²⁾ These securities are issued with a zero coupon or interest rate.

⁽³⁾ This security has been valued at its fair value determined in good faith pursuant to procedures approved by the Board of Trustees. Total market value of fair valued securities amounts to $33,106,707, which represents approximately 20.77% of net assets as of November 30, 2010.

⁽⁴⁾ The underlying security is issued by JP Morgan Chase.

⁽⁵⁾ The underlying security is issued by Citigroup Global Markets.

⁽⁶⁾ The underlying security is issued by Barclays Bank PLC.

 See Notes to Financial Statements.

   54 www.shiplp.com   

Stone Harbor Local Markets Fund	Statements of Investments
	November 30, 2010 (Unaudited)

⁽⁷⁾ The underlying security is issued by HSBC Bank.

⁽⁸⁾ The underlying security is issued by Deutsche Bank AG London.

⁽⁹⁾ The underlying security is issued by Credit Suisse First Boston.

Common Abbreviations: 

CGM - Citigroup Global Markets

SA - Generally designates corporations in various countries mostly employing civil law.

OUTSTANDING FORWARD FOREIGN CURRENCY CONTRACTS

Contract Description	Contracted Amount	Purchase/Sale Contract	Expiration Date		Value On Settlement Date		Current Value		Unrealized Appreciation/ (Depreciation)
BRL	8,114,000 (BRL)	Purchase		12/02/2010		$4,728,163		$4,730,368		$2,205
BRL	8,114,000 (BRL)	Sale		12/02/2010		4,755,319		4,730,368		24,951
CNY	2,031,000 (CNY)	Purchase		08/09/2011		303,974		306,242		2,268
CNY	2,025,900 (CNY)	Purchase		12/16/2010		300,000		303,819		3,819
CNY	1,336,000 (CNY)	Purchase		08/09/2011		200,000		201,448		1,448
INR	11,354,400 (INR)	Purchase		12/27/2010		240,000		246,210		6,210
INR	4,968,600 (INR)	Purchase		12/27/2010		105,000		107,740		2,740
MYR	4,897,500 (MYR)	Purchase		07/05/2011		1,500,000		1,525,989		25,989
MYR	3,864,000 (MYR)	Purchase		07/05/2011		1,200,000		1,203,966		3,966
PHP	3,300,500 (PHP)	Purchase		01/24/2011		70,000		74,924		4,924
PHP	15,582,000 (PHP)	Purchase		01/24/2011		350,000		353,724		3,724
ZAR	5,729,200 (ZAR)	Purchase		12/24/2010		800,000		804,528		4,528
										$86,772
CNY	6,519,500 (CNY)	Purchase		08/09/2011		$1,000,000		$983,037		$(16,963)
CNY	1,423,515 (CNY)	Purchase		08/09/2011		215,000		214,643		(357)
CNY	1,251,910 (CNY)	Purchase		08/09/2011		190,000		188,768		(1,232)
CNY	2,630,000 (CNY)	Purchase		08/09/2011		400,000		396,562		(3,438)
CNY	2,025,900 (CNY)	Sale		12/16/2010		300,022		303,818		(3,796)
CNY	2,331,000 (CNY)	Purchase		08/09/2011		360,000		351,478		(8,522)
CNY	6,487,000 (CNY)	Purchase		08/09/2011		1,000,000		978,136		(21,864)
CNY	785,400 (CNY)	Purchase		08/09/2011		120,000		118,426		(1,574)
INR	30,348,400 (INR)	Purchase		12/27/2010		680,000		658,078		(21,922)
MYR	3,127,500 (MYR)	Purchase		07/05/2011		1,000,000		974,483		(25,517)
MYR	18,693,000 (MYR)	Purchase		12/24/2010		6,000,000		5,892,272		(107,728)
MYR	881,100 (MYR)	Purchase		07/05/2011		275,000		274,538		(462)
MYR	2,600,000 (MYR)	Purchase		07/05/2011		816,839		810,122		(6,717)
PHP	10,562,400 (PHP)	Purchase		01/24/2011		240,000		239,775		(225)
PLN	2,806,200 (PLN)	Purchase		12/17/2010		972,012		903,890		(68,122)
THB	35,047,350 (THB)	Purchase		01/19/2011		1,170,000		1,158,574		(11,426)
THB	30,240,000 (THB)	Purchase		01/19/2011		1,000,000		999,656		(344)
THB	47,408,000 (THB)	Purchase		01/19/2011		1,600,000		1,567,185		(32,815)
ZAR	21,819,350 (ZAR)	Purchase		12/24/2010		3,100,000		3,064,003		(35,997)
										$(369,021)

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 55   

Stone Harbor Investment Funds

	Stone Harbor			Stone Harbor
	Emerging Markets			High Yield
	Debt Fund			Bond Fund
ASSETS:
Investments , at value(1)	$	316,251,942		$	429,455,532
Cash		478,146			67,992
Foreign currency, at value (Cost $47,021, $0 and $74,541, respectively)		47,196			–
Unrealized appreciation on forward foreign currency contracts		462,791			11,776
Receivable for investments sold		–			887,080
Receivable for fund shares sold		2,400,000			95,007
Interest receivable		5,249,934			8,875,844
Dividends receivable		–			10,891
Prepaid offering costs		–			–
Prepaid and other assets		25,700			27,658
Total Assets		324,915,709			439,431,780
LIABILITIES:
Payable for investments purchased		2,211,974			2,122,744
Payable for fund shares redeemed		–			230,000
Unrealized depreciation on forward foreign currency contracts		40,231			–
Payable to advisor		126,160			143,382
Payable to administrator		20,614			29,315
Payable for trustee fees		7,443			7,443
Other payables		61,685			50,237
Total Liabilities		2,468,107			2,583,121
Net Assets	$	322,447,602		$	436,848,659
NET ASSETS CONSIST OF:
Paid-in capital	$	301,076,302		$	406,705,632
Undistributed/(overdistributed) net investment income		(527,260	)		87,366
Accumulated net realized gain on investments and translation of assets and liabilities denominated in foreign currency		11,042,490			8,204,584
Net unrealized appreciation/(depreciation) on investments and translation of assets and liabilities denominated in foreign currency		10,856,070			21,851,077
Net Assets	$	322,447,602		$	436,848,659
PRICING OF SHARES:
Institutional Class Shares
Net Assets	$	322,447,602		$	436,848,659
Shares of beneficial interest outstanding (unlimited number of shares, par value of $0.001 per share authorized)		28,675,858			44,654,809
Net assets value, offering and redemption price per share	$	11.24		$	9.78
(1)Cost of Investments	$	305,789,354		$	407,616,231

  See Notes to Financial Statements.

     56 www.shiplp.com   

Statements of Assets & Liabilities

November 30, 2010 (Unaudited)

	Stone Harbor     Local Markets     Fund
$	160,569,100
	2,653,782
	74,696
	86,772
	2,729,662
	678,660
	3,946,772
	–
	1,360
	33,450
	170,774,254
	10,837,946
	–
	369,021
	83,539
	10,108
	6,823
	53,490
	11,360,927
$	159,413,327
$	161,190,748
	(173,475)
	1,096,941
	(2,700,887)
$	159,413,327
$	159,413,327
	15,021,198
$	10.61
$	162,955,912

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 57   

Stone Harbor Investment Funds

	Stone Harbor Emerging Markets Debt Fund		Stone Harbor High Yield Bond Fund
INVESTMENT INCOME:
Interest (net of foreign withholding tax of $0, $0 and $15,807, respectively)	$	8,825,590	$	17,330,412
Dividends		–		35,906
Other Income		–		224,278
Total Investment Income		8,825,590		17,590,596
EXPENSES:
Investment advisory fee		774,622		1,047,796
Administration fee		103,301		169,994
Custodian fees		35,095		14,326
Audit fees		33,876		33,876
Printing fees		2,734		2,734
Legal fees		34,244		34,244
Trustee fee		12,646		12,646
Transfer agent fees		17,224		14,283
Registration fees		24,151		8,478
Insurance fees		7,495		27,236
Other		1,278		1,947
Total expenses before waiver		1,046,666		1,367,560
Less fees waived by investment advisor		(78,388)		(214,988)
Total Net Expenses		968,278		1,152,572
Net Investment Income		7,857,312		16,438,024
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on:
Investments		5,326,250		6,734,862
Foreign currency transactions		1,181,011		(10,112)
Net realized gain		6,507,261		6,724,750
Change in unrealized appreciation/(depreciation) on:
Investments		4,737,282		10,766,186
Translation of assets and liabilities denominated in foreign currencies		417,727		11,776
Net change		5,155,009		10,777,962
Net Realized and Unrealized Gain/(Loss) on Investments		11,662,270		17,502,712
Net Increase/(Decrease) in Net Assets Resulting from Operations	$	19,519,582	$	33,940,736

⁽¹⁾ For the period June 30, 2010 (Inception) to November 30, 2010.

  See Notes to Financial Statements.

     58 www.shiplp.com   

Statements of Operations

For the Six Months Ended November 30, 2010 (Unaudited)

Stone Harbor Local Markets Fund (1)
$	1,885,501
	–
	–
	1,885,501
	248,158
	26,462
	24,751
	30,661
	2,788
	19,711
	13,270
	11,637
	5,908
	151
	1,039
	384,536
	(53,656)
	330,880
	1,554,621
	880,291
	216,650
	1,096,941
	(2,386,812)
	(314,075)
	(2,700,887)
	(1,603,946)
$	(49,325)

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 59   

Stone Harbor Emerging Markets Debt Fund Statements of Changes in Net Assets

	For the Six Months Ended November 30, 2010 (Unaudited)			For the Year Ended May 31, 2010
OPERATIONS:
Net investment income	$	7,857,312		$	7,972,731
Net realized gain on investments		6,507,261			11,619,476
Net change in unrealized appreciation on investments and foreign currency translations		5,155,009			1,889,753
Net increase in net assets resulting from operations		19,519,582			21,481,960
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(8,663,185	)		(8,618,487)
From net realized gains on investments		–			(1,703,347)
Net decrease in net assets from distributions to shareholders		(8,663,185	)		(10,321,834)
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares
Proceeds from sale of shares		185,057,982			120,511,062
Issued to shareholders in reinvestment of distributions		8,171,502			9,893,837
Cost of shares redeemed		(59,664,309	)		(55,291,995)
Net increase in net assets from capital share transactions		133,565,175			75,112,904
Net Increase in Net Assets		144,421,572			86,273,030
NET ASSETS:
Beginning of period		178,026,030			91,753,000
End of period (including undistributed/(overdistributed) net investment income of $(527,260) and $278,613, respectively)	$	322,447,602		$	178,026,030
OTHER INFORMATION:
Share Transactions:
Institutional Class Shares
Beginning shares		16,992,367			9,952,470
Shares sold		16,140,488			11,360,440
Shares reinvested		717,428			955,219
Shares redeemed		(5,174,425	)		(5,275,762)
Shares outstanding - end of period		28,675,858			16,992,367

  See Notes to Financial Statements.

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Stone Harbor High Yield Bond Fund Statements of Changes in Net Assets

	For the Six Months Ended November 30, 2010 (Unaudited)		For the         Year Ended     May 31, 2010
OPERATIONS:
Net investment income	$	16,438,024	$      28,652,485
Net realized gain on investments		6,724,750	5,807,602
Net change in unrealized appreciation on investments and foreign currency translations		10,777,962	25,039,605
Net increase in net assets resulting from operations		33,940,736	59,499,692
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(16,255,523)	(28,484,852)
Net decrease in net assets from distributions to shareholders		(16,255,523)	(28,484,852)
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares
Proceeds from sale of shares		34,577,185	168,548,608
Issued to shareholders in reinvestment of distributions		7,496,229	26,880,125
Cost of shares redeemed		(30,874,428)	(41,688,947)
Net increase in net assets from capital share transactions		11,198,986	153,739,786
Net Increase in Net Assets		28,884,199	184,754,626
NET ASSETS:
Beginning of period		407,964,460	223,209,834
End of period (including undistributed/(overdistributed) net investment income of $87,366 and $(95,135), respectively)	$	436,848,659	$    407,964,460
OTHER INFORMATION:
Share Transactions:
Institutional Class Shares
Beginning shares		43,581,412	26,613,415
Shares sold		3,511,906	18,456,848
Shares reinvested		780,045	2,893,977
Shares redeemed		(3,218,554)	(4,382,828)
Shares outstanding - end of period		44,654,809	43,581,412

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 61   

Stone Harbor Local Markets Fund Statements of Changes in Net Assets

	For the Period June 30, 2010 (Inception) to November 30, 2010 (Unaudited)
OPERATIONS:
Net investment income	$	1,554,621
Net realized gain on investments		1,096,941
Net change in unrealized depreciation on investments and foreign currency translations		(2,700,887)
Net decrease in net assets resulting from operations		(49,325)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income		(1,728,096)
Net decrease in net assets from distributions to shareholders		(1,728,096)
CAPITAL SHARE TRANSACTIONS:
Institutional Class Shares
Proceeds from sale of shares		160,315,898
Issued to shareholders in reinvestment of distributions		1,720,049
Cost of shares redeemed		(845,199)
Net increase in net assets from capital share transactions		161,190,748
Net Increase in Net Assets		159,413,327
NET ASSETS:
Beginning of period		–
End of period (including overdistributed net investment income of $(173,475), respectively)	$	159,413,327
OTHER INFORMATION:
Share Transactions:
Institutional Class Shares
Beginning shares		–
Shares sold		14,937,883
Shares reinvested		160,394
Shares redeemed		(77,079)
Shares outstanding - end of period		15,021,198

  See Notes to Financial Statements.

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Intentionally Left Blank

Stone Harbor Emerging Markets Debt Fund

For a share outstanding through the periods presented

The financial highlights table is intended to help you understand each Fund’s financial performance for the six-months ended November 30, 2010 and the most recent preceding fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in a Fund (assuming reinvestment of all dividends and distributions).

Institutional Class Shares

Net asset value - beginning of period

Income/(loss) from investment operations:

Net investment income

Net realized and unrealized gain/(loss) on investments

Total income/(loss) from investment operations

Less distributions to common shareholders:

From net investment income

From net realized gain on investments

From tax return of capital

Total distributions

Net Increase/(Decrease) in Net Asset Value

Net asset value - end of period

Total Return⁽²⁾⁽³⁾

Ratios/Supplemental Data:

Net assets, end of period (in thousands)

Ratio of expenses to average net assets with fee waivers/reimbursements

Ratio of expenses to average net assets without fee waivers/reimbursements

Ratio of net investment income to average net assets with fee waivers/reimbursements

Portfolio turnover rate

* The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchase of the Fund Shares in relation to income earned and/or fluctuating market value of the investment of the Fund.

** Annualized.

⁽¹⁾ Less than $(0.005) per share.

⁽²⁾ Total returns would have been lower had various fees and expenses not been waived and reimbursed during the period.

⁽³⁾ Total returns for periods of less than one year are not annualized.

  See Notes to Financial Statements.

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Financial Highlights*

For the Six Months Ended November 30, 2010 (Unaudited)			For the Year Ended May 31, 2010		For the Year Ended May 31, 2009		For the Period August 16, 2007 (Inception) to May 31, 2008
$	10.48		$	9.22	$	10.34	$	10.00
	0.29			0.75		0.59		0.46
	0.80			1.44		(1.18)		0.58
	1.09			2.19		(0.59)		1.04
	(0.33)			(0.79)		(0.53)		(0.54)
	–			(0.14)		–		(0.16)
	–			–		–		(0.00)(1)
	(0.33)			(0.93)		(0.53)		(0.70)
	0.76			1.26		(1.12)		0.34
$	11.24		$	10.48	$	9.22	$	10.34
	10.38%			24.25%		(5.10)%		10.46%
$	322,448		$	178,026	$	91,753	$	19,587
	0.75%	**		0.75%		0.75%		0.75%**
	0.81%	**		0.91%		1.33%		2.27%**
	6.09%	**		6.80%		9.32%		5.91%**
	48%			125%		84%		143%

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 65   

Stone Harbor High Yield Bond Fund

For a share outstanding through the period presented

The financial highlights table is intended to help you understand each Fund’s financial performance for the six-months ended November 30, 2010 and the most recent preceding fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in a Fund (assuming reinvestment of all dividends and distributions).

Institutional Class Shares

Net asset value - beginning of period

Income/(loss) from investment operations:

Net investment income

Net realized and unrealized gain/(loss) on investments

Total income/(loss) from investment operations

Less distributions to common shareholders:

From net investment income

From net realized gain on investments

From tax return of capital

Total distributions

Net Increase/(Decrease) in Net Asset Value

Net asset value - end of period

Total Return⁽²⁾⁽³⁾

Ratios/Supplemental Data:

Net assets, end of period (in thousands)

Ratio of expenses to average net assets with fee waivers/reimbursements

Ratio of expenses to average net assets without fee waivers/reimbursements

Ratio of net investment income to average net assets with fee waivers/reimbursements

Portfolio turnover rate

^* The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchase of the Fund Shares in relation to income earned and/or fluctuating market value of the investment of the Fund.

^** Annualized.

⁽¹⁾ Less than $(0.005) per share.

⁽²⁾ Total returns would have been lower had various fees and expenses not been waived and reimbursed during the period.

⁽³⁾ Total returns for periods of less than one year are not annualized.

  See Notes to Financial Statements.

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Financial Highlights*

For the Six Months Ended November 30, 2010 (Unaudited)			For the Year Ended May 31, 2010			For the Year Ended May 31, 2009			For the Period August 16, 2007 (Inception) to May 31, 2008
$	9.36		$	8.39		$	9.92		$	10.00
	0.38			0.73			0.70			0.58
	0.42			0.96			(1.53)			(0.08)
	0.80			1.69			(0.83)			0.50
	(0.38)			(0.72)			(0.70)			(0.57)
	–			–			–			(0.01)
	–			–			–			(0.00)(	1)
	(0.38)			(0.72)			(0.70)			(0.58)
	0.42			0.97			(1.53)			(0.08)
$	9.78		$	9.36		$	8.39		$	9.92
	8.62	%		20.53	%		(7.77)	%		5.09	%
$	436,849		$	407,964		$	223,210		$	106,912
	0.55%	**		0.55	%		0.55	%		0.55%	**
	0.65%	**		0.67	%		0.88	%		1.21%	**
	7.84%	**		8.13	%		9.07	%		7.81%	**
	27	%		36	%		16	%		11	%

   See Notes to Financial Statements.

     Semi-Annual Report (Unaudited) | November 30, 2010 67   

Stone Harbor Local Markets Fund	Financial Highlights*
For a share outstanding through the period presented

The financial highlights table is intended to help you understand each Fund’s financial  performance for the six-months ended November 30, 2010 and the most recent preceding fiscal years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in a Fund (assuming reinvestment of all dividends and distributions).

Institutional Class Shares	For the Period June 30, 2010 (Inception) to November 30, 2010 (Unaudited)
Net asset value - beginning of period	$	10.00
Income from investment operations:
Net investment income		0.15
Net realized and unrealized gain on investments		0.62
Total income from investment operations		0.77
Less distributions to common shareholders:
From net investment income		(0.16)
Total distributions		(0.16)
Net Increase in Net Asset Value		0.61
Net asset value - end of period	$	10.61
Total Return(1)(2)		7.70%
Ratios/Supplemental Data:
Net assets, end of period (in thousands)	$	159,413
Ratio of expenses to average net assets with fee waivers/reimbursements		1.00%**
Ratio of expenses to average net assets without fee waivers/reimbursements		1.16%**
Ratio of net investment income to average net assets with fee waivers/reimbursements		4.70%**
Portfolio turnover rate		68%

^* The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchase of the Fund Shares in relation to income earned and/or fluctuating market value of the investment of the Fund.

^** Annualized.

⁽¹⁾ Total returns would have been lower had various fees and expenses not been waived and reimbursed during the period.

⁽²⁾ Total returns for periods of less than one year are not annualized.

   See Notes to Financial Statements.

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Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Stone Harbor Investment Funds, which consist of Stone Harbor Emerging Markets Debt Fund, Stone Harbor High Yield Bond Fund and Stone Harbor Local Markets Fund (each, a “Fund and together, the Funds”), is a Massachusetts business trust, organized on February 20, 2007 and registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. Each Fund is a non-diversified portfolio with an investment objective to maximize total return. Shares of each Fund are currently divided into two classes, designated Institutional Class Shares and Distributor Class Shares. As of the date of this report, there were no outstanding shares for the Distributor Class of each Fund. The Declaration of Trust permits the Trustees to create additional funds and share classes.

The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (GAAP). The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

(a) Investment Valuation: Debt securities, bank loans and linked notes are valued at the mean between the bid and asked prices provided by an independent pricing service that are based on transactions in debt obligations, quotations from dealers, market transactions in comparable securities and various other relationships between securities. Equity securities for which market quotations are available are valued at the last sale price or official closing price on the primary market or exchange on which they trade. Publicly traded foreign government debt securities are typically traded internationally in the over-the-counter market, and are valued at the mean between the bid and asked prices as of the close of business of that market. When prices are not readily available, or are determined not to reflect fair value, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Funds calculate their net asset value, the Funds may value these investments at fair value as determined in accordance with the procedures approved by the Funds’ Board of Trustees. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates market value. Available cash is invested into a money market fund by the custodian.

A three-tier hierarchy has been established to measure fair value based on the extent of use of “observable inputs” as compared to “unobservable inputs” for disclosure purposes and requires additional disclosures about these valuations measurements. Inputs refer broadly to the assumptions that market participants would use in pricing a security. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the security developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the security developed based on the best information available in the circumstances.

     Semi-Annual Report (Unaudited) | November 30, 2010 69   

Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

The three-tier hierarchy is summarized as follows:

Level 1	–	Quoted and Unadjusted Prices in active markets for identical investments
Level 2	–	Other Significant Observable Inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
Level 3	–	Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments).

The following is a summary of the inputs used as of November 30, 2010 in valuing the Funds’ assets:

Investments in Securities at Value*	Level 1 - Quoted and Unadjusted Prices		Level 2 - Other Significant Observable Inputs		Level 3 - Significant Unobservable Inputs		Total
Stone Harbor Emerging Markets Debt Fund
Sovereign Debt Obligations	$	–	$	218,841,650	$	–	$	218,841,650
Bank Loans		–		1,363,740		1,118,000		2,481,740
Convertible Corporate Bonds		–		1,399,973		–		1,399,973
Corporate Bonds		–		73,422,820		398,050		73,820,870
Credit Linked Notes		–		10,009,612		–		10,009,612
Money Market Mutual Funds		–		9,698,097		–		9,698,097
TOTAL	$	–	$	314,735,892	$	1,516,050	$	316,251,942
Other Financial Instruments**
Assets
Forward Foreign Currency Contracts	$	–	$	462,791	$	–	$	462,791
Liabilities
Forward Foreign Currency Contracts		–		(40,231)		–		(40,231)
TOTAL	$	–	$	422,560	$	–	$	422,560

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Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

Investments in Securities at Value*	Level 1 - Quoted and Unadjusted Prices		Level 2 - Other Significant Observable Inputs		Level 3 - Significant Unobservable Inputs		Total
Stone Harbor High Yield Bond Fund
Corporate Bonds	$	–	$	395,959,470	$	2,212,872	$	398,172,342
Convertible Corporate Bonds		–		7,452,927		–		7,452,927
Bank Loans		–		9,670,584		–		9,670,584
Common Stocks		1,240,230		–		–		1,240,230
Preferred Stocks		–		1,511,392		–		1,511,392
Rights and Warrants		–		230,580		–		230,580
Money Market Mutual Funds		–		11,177,477		–		11,177,477
TOTAL	$	1,240,230	$	426,002,430	$	2,212,872	$	429,455,532
Other Financial Instruments**
Assets
Forward Foreign Currency Contracts	$	–	$	11,776	$	–	$	11,776
TOTAL	$	–	$	11,776	$	–	$	11,776
Investments in Securities at Value*	Level 1 - Quoted and Unadjusted Prices		Level 2 - Other Significant Observable Inputs		Level 3 - Significant Unobservable Inputs		Total
Stone Harbor Local Markets Fund
Sovereign Debt Obligations	$	–	$	80,998,074	$	–	$	80,998,074
Corporate Bonds		–		12,588,661		–		12,588,661
Credit Linked Notes		–		33,106,707		–		33,106,707
Money Market Mutual Funds		–		33,875,658		–		33,875,658
TOTAL	$	–	$	160,569,100	$	–	$	160,569,100
Other Financial Instruments**
Assets
Forward Foreign Currency Contracts	$	–	$	86,772	$	–	$	86,772
Liabilities
Forward Foreign Currency Contracts		–		(369,021)		–		(369,021)
TOTAL	$	–	$	(282,249)	$	–	$	(282,249)

^* For detailed Industry/Country descriptions, see accompanying Statement of Investments.

^** Other financial instruments are derivative instruments not reflected in the Statement of Investments.

     Semi-Annual Report (Unaudited) | November 30, 2010 71   

Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:

Investments in Securities at Value	Balance as of May 31, 2010		Realized Gain/ (Loss)*		Change in Unrealized Appreciation/ (Depreciation)*			Net Purchases/ (Sales)			Transfers in and/or (out) of Level 3			Balance as of November 30, 2010
Stone Harbor Emerging Markets Debt Fund
Sovereign Debt Obligations	$	414,800	$	–	$	56,257		$	10,093		$	(481,150	)		$              –
Bank Loans		–		–		(2,649	)		1,120,649			–			1,118,000
Corporate Bonds		812,778		–		(4,570	)		1,692,917			(2,103,075	)		398,050
Credit Linked Notes		10,408,722		960,657		3,523			(8,901,435	)		(2,471,467	)		–
TOTAL	$	11,636,300	$	960,657	$	52,561		$	(6,077,776	)	$	(5,055,692	)		$1,516,050
Stone Harbor High Yield Bond Fund
Corporate Bonds	$	2,230,500	$	124,569	$	11,018		$	(433,059	)	$	279,844			$2,212,872
Bank Loans		399,936		10,046		(63,807	)		(29,546	)		(316,629	)		–
TOTAL	$	2,630,436	$	134,615	$	(52,789	)	$	(462,605	)	$	(36,785	)		$2,212,872

* Realized gain and change in unrealized appreciation are included in the related amounts on investments in the Statement of Operations.

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

(b) Security Transactions and Investment Income: Security transactions are accounted for on a trade date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. Foreign dividend income is recorded on the ex-dividend date or as soon as practical after the Funds determine the existence of a dividend declaration after exercising reasonable due diligence. The cost of investments sold is determined by use of the specific identification method. To the extent any issuer defaults on an expected interest payment, the Funds’ policy is to generally halt any additional interest income accruals and consider the realizability of interest accrued up to the date of default.

(c) Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and foreign currency contracts are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates from the changes in the market prices of the securities.

(d) Foreign Securities: The Funds may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the ability to repatriate funds, less complete

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Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

financial information about companies and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers.

(e) Risk Exposure and the Use of Derivative Instruments: The Funds’ investment objectives not only permit the Funds to purchase investment securities, they also allow the Funds to enter in various types of derivatives contracts. In doing so, the Funds will employ strategies in differing combinations to permit them to increase, decrease, or change the level or types of exposure to market factors. Central to those strategies are features inherent in derivatives that make them more attractive for this purpose than equity or debt securities; they require little or no initial cash investment, they can focus exposure on only certain selected risk factors, and they may not require the ultimate receipt or delivery of the underlying security (or securities) to the contract. This may allow the Funds to pursue their objectives more quickly and efficiently than if they were to make direct purchases or sales of securities capable of effecting a similar response to market factors.

Market Risk Factors. In pursuit of its investment objectives, the Fund’s may seek to use derivatives to increase or decrease its exposure to the following market risk factors:

Interest Rate Risk. Interest rate risk refers to the fluctuations in value of fixed-income securities resulting from the inverse relationship between price and yield. For example, an increase in general interest rates will tend to reduce the make value of already issued fixed-income investments, and a decline in general interest rates will tend to increase their value. In addition, debt securities with longer maturities, which tend to have higher yields, are subject to potentially greater fluctuations in value from changes in interest rates than obligations with shorter maturities.

Credit Risk. Credit risk relates to the ability of the issuer to meet interest and principal payments, or both, as they come due. In general, lower-grade, higher-yield bonds are subject to credit risk to a greater extent than lower-yield, higher-quality bonds.

Foreign Exchange Rate Risk. Foreign exchange rate risk relates to the change in the U.S. dollar value of a security held that is denominated in a foreign currency. The U.S. dollar value of a foreign currency denominated security will decrease as the dollar appreciates against the currency, while the U.S. dollar value will increase as the dollar depreciates against the currency.

Equity Risk. Equity risk relates to the change in value of equity securities as they relate to increases or decreases in the general market.

Risk of Investing in Derivatives. The Funds’ use of derivatives can result in losses due to unanticipated changes in the market risk factors and the overall market. In instances where the Funds are using derivatives to decrease, or hedge, exposures to market risk factors for securities held by the Funds, there are also risks that those derivatives may not perform as expected resulting in losses for the combined or hedged positions.

Derivatives may have little or no initial cash investment relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This use of embedded leverage allows the Fund to increase its market value exposure relative to it net assets and can substantially increase the volatility of the Funds’ performance.

     Semi-Annual Report (Unaudited) | November 30, 2010 73   

Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Funds. Typically, the associated risks are not the risks that the Funds is attempting to increase or decrease exposure to, per their investment objectives, but are the additional risks from investing in derivatives.

Examples of these associated risks are liquidity risk, which is the risk that the Funds will not be able to sell or close out the derivative in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Funds. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

Forward Foreign Currency Contracts: The Funds may engage in currency transactions with counterparties to hedge the value of portfolio securities denominated in particular currencies against fluctuations in relative value, to gain or reduce exposure to certain currencies, or to generate income or gains. A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The contract is marked-to-market daily and the change in value is recorded by the Funds as an unrealized gain or loss. When a forward foreign currency contract is extinguished, through either delivery or offset by entering into another forward foreign currency contract, the Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it was extinguished.

Forward foreign currency contracts involve elements of market risk in excess of the amounts reflected in the Statements of Assets and Liabilities. The Funds bear the risk of an unfavorable change in the foreign exchange rate underlying the forward foreign currency contract. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.

Credit Default Swaps: The Funds may enter into credit default swap contracts for hedging purposes, to gain market exposure or to add leverage to their portfolios. When used for hedging purposes, a Fund would be the buyer of a credit default swap contract. In that case, the Fund would be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation, index or other investment from the counterparty to the contract in the event of a default by a third party, such as a U.S. or foreign issuer, on the referenced debt obligation. In return, the Fund would pay to the counterparty a periodic stream of payments over the term of the contract provided that no event of default has occurred. If no default occurs, the Fund would have spent the stream of payments and received no benefit from the contract. When the Fund is the seller of a credit default swap contract, it receives the stream of payments but is obligated to pay upon default of the referenced debt obligation. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total assets, the Fund would be subject to investment exposure on the notional amount of the swap.

In addition to the risks applicable to derivatives generally, credit default swaps involve special risks because they are difficult to value, are highly susceptible to liquidity and credit risk, and generally pay a return to the party that has paid the premium only in the event of an actual default by the issuer of the underlying obligation, as opposed to a credit downgrade or other indication of financial difficulty.

No swaps were held in the Funds as of November 30, 2010.

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Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

The effect of derivative instruments on each Fund’s Balance Sheet as of November 30, 2010 is as follows:

	Asset Derivatives			Liability Derivatives
Derivatives Not   Accounted for as  Hedging Instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Stone Harbor Emerging Markets Debt Fund
Foreign Exchange  Contracts	Unrealized appreciation on forward foreign currency contracts		$462,791	Unrealized depreciation on forward foreign currency contracts	$  40,231
Total			$462,791		$  40,231
Stone Harbor High Yield Bond Fund
Foreign Exchange  Contracts	Unrealized appreciation on forward foreign currency contracts		$11,776	Unrealized depreciation on forward foreign currency contracts	$            -
Total			$11,776		$            -
Stone Harbor Local Markets Fund
Foreign Exchange  Contracts	Unrealized appreciation on forward foreign currency contracts		$86,772	Unrealized depreciation on forward foreign currency contracts	$369,021
Total			$86,772		$369,021

     Semi-Annual Report (Unaudited) | November 30, 2010 75   

Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

The effect of derivative instruments on each Fund’s Statement of Operations for the period ended November 30, 2010 is as follows:

Derivatives Not Accounted for as   Hedging Instruments	Location of Gain/(Loss) On Derivatives Recognized in Income	Realized Gain/(Loss) On Derivatives Recognized in Income		Change in Unrealized Gain/(Loss) On Derivatives Recognized in Income
Stone Harbor Emerging Markets Debt Fund
Foreign Exchange   Contracts	Net realized gain/(loss) on Foreign currency transactions/Change in unrealized appreciation/(depreciation) on Translation of assets and liabilities denominated in foreign currencies		$(173,873)		$437,261
Total			$(173,873)		$437,261
Stone Harbor High Yield Bond Fund
Foreign Exchange   Contracts	Net realized gain/(loss) on Foreign currency transactions/Change in unrealized appreciation/(depreciation) on Translation of assets and liabilities denominated in foreign currencies		$(10,138)		$11,776
Total			$(10,138)		$11,776
Stone Harbor Local Markets Fund
Foreign Exchange   Contracts	Net realized gain/(loss) on Foreign currency transactions/Change in unrealized appreciation/(depreciation) on Translation of assets and liabilities denominated in foreign currencies		$164,662		$(282,249)
Total			$164,662		$(282,249)

(f) Loan Participations: The High Yield Bond Fund may invest in loans arranged through private negotiation between one or more financial institutions. The Fund’s investment in any such loan may be in the form of a participation in or an assignment of the loan. In connection with purchasing participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the participation.

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Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

The Fund assumes the credit risk of the borrower, the lender that is selling the participation and any other persons interpositioned between the Fund and the borrower. In the event of the insolvency of the lender selling the participation, the Fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower.

(g) Credit and Market Risk: The Funds invest in high yield and emerging market instruments that are subject to certain credit and market risks. The yields of high yield and emerging market debt obligations reflect, among other things, perceived credit and market risks. The Funds’ investment in securities rated below investment grade typically involves risks not associated with higher rated securities including, among others, greater risk related to timely and ultimate payment of interest and principal, greater market price volatility and less liquid secondary market trading. The consequences of political, social, economic or diplomatic changes may have disruptive effects on the market prices of investments held by the Funds. The Funds’ investment in non-dollar denominated securities may also result in foreign currency losses caused by devaluations and exchange rate fluctuations.

(h) Distributions to Shareholders: Dividends and distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-date. Income distributions, if any are declared and paid on a quarterly basis. Capital gain distributions, if any, are declared and paid at least annually.

(i) Classifications of Distributions: Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by a Fund. Stone Harbor Local Markets Fund had not commenced operations as of May 31, 2010 and therefore information relating to the tax classification of its distributions is not shown.

The tax character of the distributions paid by the Funds during the year ended May 31, 2010, was as follows:

	Stone Harbor Emerging Markets Debt Fund	Stone Harbor High Yield Bond Fund
Ordinary Income	$  10,321,834	$  28,484,852

     Semi-Annual Report (Unaudited) | November 30, 2010 77   

Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

As of May 31, 2010, the components of distributable earnings on a tax basis were as follows:

	Stone Harbor Emerging Markets Debt Fund	Stone Harbor High Yield Bond Fund
Undistributed Ordinary Income	$    2,739,372	$    1,853,773
Accumulated Capital Gains	2,551,314	-
Unrealized Appreciation	5,347,171	10,047,152
Cumulative Effect of Other Timing Differences*	(122,954)	(427,069)
	$  10,514,903	$  11,473,856

* Other temporary differences due to timing, consist primarily of mark-to-market under section 1256 of the Internal Revenue Code and dividends payable.

The tax components of distributable earnings are determined in accordance with income tax regulations which may differ from the composition of net assets reported under accounting principles generally accepted in the United States. Accordingly, for the period ended May 31, 2010, certain differences were reclassified. These differences were primarily due to the differing tax treatment of certain investments and the amounts reclassified did not affect net assets.

The reclassifications were as follows:

	Stone Harbor Emerging Markets Debt Fund	Stone Harbor High Yield Bond Fund
Paid-in Capital	$                 -	$     361,097
(Over)/Undistributed Income	$       860,912	$    (127,724)
Accumulated Net Realized Losses	$      (860,912)	$    (233,373)

(j) Expenses: Direct expenses are charged to the Funds; general expenses of the Series are allocated to the Funds based on each Fund’s relative net assets.

(k) Federal and Other Taxes: No provision for income taxes is included in the accompanying financial statements, as the Funds intend to distribute to shareholders all taxable investment income and realized gains and otherwise comply with Subchapter M of the Internal Revenue Code applicable to regulated investment companies.

The Funds evaluate tax positions taken (or expected to be taken) in the course of preparing the Funds’ tax returns to determine whether these positions meet a “more-likely-than-not” standard that, based on the technical merits, have a more than fifty percent likelihood of being sustained by a taxing authority upon examination. A tax position that meets the “more-likely-than-not” recognition threshold is measured to determine the amount of benefit to recognize in the financial statements.

Management of the Funds analyzes all open tax years, as defined by the Statute of Limitations, for all major jurisdictions, including federal tax authorities and certain state tax authorities. As of and during the fiscal year ended May 31, 2010, the Funds did not have a liability for any unrecognized tax benefits. The Funds’ federal and state income and federal excise tax returns for tax years since inception are subject to examination by the Internal Revenue Service and state departments of revenue.

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Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

2. ADVISORY FEES

Stone Harbor Investment Partners LP is the Trust’s investment adviser. Under the investment advisory agreement the Trust pays an investment advisory fee calculated daily and paid monthly of 0.60%, 0.50% and 0.75% of the average daily net assets for Stone Harbor Emerging Markets Debt Fund, Stone Harbor High Yield Bond Fund and Stone Harbor Local Markets Fund, respectively.

The Adviser has contractually agreed to waive fees and reimburse expenses with respect to each of the Funds so that the Net Annual Operating Expenses (exclusive of acquired Fund fees and expenses, brokerage expenses, interest expense, taxes and extraordinary expenses) of the Stone Harbor Emerging Markets Debt Fund Institutional Class, Stone Harbor Emerging Markets Debt Fund Distributor Class, Stone Harbor High Yield Bond Fund Institutional Class, Stone Harbor High Yield Bond Fund Distributor Class, Stone Harbor Local Markets Fund Institutional Class and Stone Harbor Local Markets Fund Distributor Class will not exceed 0.75%, 1.00%, 0.55%, 0.80%, 1.00% and 1.25%, respectively. This undertaking is in effect through September 30, 2011 and is reevaluated on an annual basis.

The Adviser will be permitted to recover, on a class by class basis, expenses it has borne through the undertakings described above to the extent that a Fund’s expenses in later periods fall below the annual rates set forth in the relevant undertaking. A Fund will not be obligated to pay any such deferred fees and expenses more than one year after the end of the fiscal year in which the fee and expense was deferred.

3. INVESTMENTS

During the period ended November 30, 2010 the aggregate cost of purchases and proceeds from sales of investments (excluding short-term investments) were as follows:

	Stone Harbor Emerging Markets Debt Fund	Stone Harbor High Yield Bond Fund		Stone Harbor Local Markets Fund
Purchases of investments	$    221,826,408	$	120,434,053	$  181,623,132
Sales of investments	$    115,990,945	$	106,215,218	$    53,834,302

At November 30, 2010 the aggregate gross unrealized appreciation and depreciation of investments for federal income purposes were substantially as follows:

	Stone Harbor Emerging Markets Debt Fund		Stone Harbor High Yield Bond Fund		Stone Harbor Local Markets Fund
Gross appreciation (excess of value over tax cost)	$	15,884,698	$	29,977,606	$    1,604,469
Gross depreciation (excess of tax cost over value)		(5,789,862)		(8,180,738)	(4,090,378)
Net unrealized appreciation/(depreciation)	$	10,094,836	$	21,796,868	$  (2,485,909)
Cost of investments for income tax purposes	$	306,157,106	$	407,658,665	$ 163,055,009

     Semi-Annual Report (Unaudited) | November 30, 2010 79   

Stone Harbor Investment Funds	Notes to Financial Statements
	November 30, 2010 (Unaudited)

4. SHARES OF BENEFICIAL INTEREST

At November 30, 2010, the Trust had an unlimited number of shares of beneficial interest authorized with a par value of $0.001 per share. The Funds have the ability to issue multiple classes of shares. Each share of a class represents an identical interest and has the same rights, except that each class bears certain direct expenses, including those specifically related to the distribution of its shares. Transactions in shares of the Institutional Class can be found shown on the Statement of Changes in Net Assets.

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Stone Harbor Investment Funds	Additional Information
	November 30, 2010 (Unaudited)

FUND PORTFOLIO HOLDINGS

The SEC has adopted a requirement that all registered investment companies file a complete schedule of portfolio holdings with the SEC for their first and third fiscal quarters on Form N-Q. For the Funds, this would be for the fiscal quarters ending August 31 and February 28. The Form N-Q filing must be made within 60 days of the end of the quarter. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov., or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (call 1-800-732-0330 for information on the operation of the Public Reference Room).

PROXY VOTING

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how the Funds voted proxies relating to portfolio securities for the 12 month period ended June 30, 2010 is available without a charge, upon request, by contacting Stone Harbor Investment Funds at 1-866-699-8158 or on the SEC website at http://www.sec.gov.

     Semi-Annual Report (Unaudited) | November 30, 2010 81   

Stone Harbor Investment Funds	Trustees & Officers
	November 30, 2010 (Unaudited)

The business and affairs of each Fund are managed under the direction of its Board of Trustees. The Board of Trustees approves all significant agreements between a Fund and the persons or companies that furnish services to the Fund, including agreements with its distributor, investment adviser, administrator, custodian and transfer agent. The day-to-day operations of the Fund are delegated to the Fund’s Adviser and administrator.

The name, age and principal occupations for the past five years of the Trustees and officers of the Funds are listed below, along with the number of portfolios in the Fund complex overseen by and the other directorships held by each Trustee. Except as otherwise noted, the address of each Trustee and officer is c/o Stone Harbor Investment Partners LP, 31 W. 52nd Street, 16th Floor, New York, New York 10019. The Trust’s Statement of Additional Information includes additional information about the Trustees and is available without a charge, upon request, by calling 1-866-699-8158.

INDEPENDENT TRUSTEES

Name & Age	Position with the Trust	Term of Office and Length of Time Served (1)	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex Overseen by Trustee(2)	Other Directorships by Trustee
Alan Brott Age: 67	Chairman of Audit Committee; Trustee	Since June 21, 2007	Columbia University Graduate School of Business – Associate Professor, 2000-Present; Consultant, 1991-Present.	5	Bank of America – two closed-end registered hedge funds.
Heath B. McLendon Age: 77	Trustee	Since June 21, 2007	Citigroup – Chairman of Equity Research Oversight Committee (retired December 31, 2006).	5	None
Patrick Sheehan Age: 62	Trustee	Since June 21, 2007	Retired; formerly, Citigroup Asset Management – Managing Director and Fixed Income Portfolio Manager, 1991-2002.	5	None

⁽¹⁾ Officers are typically elected every year, unless an officer early retires, resigns or is removed from office.

⁽²⁾ For purposes of this table, the Stone Harbor Fund Complex includes each series of the Stone Harbor Investment Funds (the “Funds”) and the Stone Harbor Emerging Markets Income Fund, which shares an investment adviser with the Funds.

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Stone Harbor Investment Funds	Trustees & Officers
	November 30, 2010 (Unaudited)

INTERESTED TRUSTEE

Name & Age	Position with the Trust	Term of Office and Length of Time Served(1)	Principal Occupation(s) During Past Five Years	Number of Portfolios in Fund Complex Overseen by Trustee(2)	Other Directorships by Trustee
Thomas W. Brock* Age: 64	Chairman; Trustee	Since June 21, 2007	Stone harbor Investment Partners LP – Chief Executive Officer, 2006-Present; Columbia University Graduate School of Business – Associate Professor, 1998-2006.	5	Bank of America – two closed-end registered hedge funds; Liberty All Star Funds – two closed-end funds.

* Mr. Brock is an interested Trustee because of his position with Stone Harbor.

OFFICERS

Name & Age	Position with the Trust	Term of Office and Length of Time Served(1)	Principal Occupation(s) During Past Five Years	Other Directorships by Trustee
Peter J. Wilby Age: 52	President	Since June 21, 2007	Co-portfolio manager of the Funds; since April 3, 2006, Chief Investment Officer of Stone Harbor Investment Partners LP; prior to April 3, 2006, Chief Investment Officer – North American Fixed Income; joined Citigroup or its predecessor firms in 1989.	N/A

⁽¹⁾ Officers are typically elected every year, unless an officer early retires, resigns or is removed from office.

⁽²⁾ For purposes of this table, the Stone Harbor Fund Complex includes each series of the Stone Harbor Investment Funds (the “Funds”) and the Stone Harbor Emerging Markets Income Fund, which shares an investment adviser with the Funds.

     Semi-Annual Report (Unaudited) | November 30, 2010 83   

Stone Harbor Investment Funds	Trustees & Officers
	November 30, 2010 (Unaudited)

OFFICERS (CONTINUED)

Name & Age	Position with the Trust	Term of Office and Length of Time Served(1)	Principal Occupation(s) During Past Five Years	Other Directorships by Trustee
Pablo Cisilino Age: 43	Executive Vice President	Since June 21, 2007	Co-portfolio manager of Emerging Markets Debt Fund; since July 1, 2006, Senior Portfolio Manager of Stone Harbor Investment Partners LP; from June 1, 2004 to July 1, 2006, Executive Director for Sales and Trading in Emerging Markets at Morgan Stanley Inc; prior to June 1, 2004, Vice President for local markets and FX sales and trading, Goldman Sachs; joined Goldman Sachs in 1994.	N/A
James E. Craige Age: 43	Executive Vice President	Since June 21, 2007	Co-portfolio manager of Emerging Markets Debt Fund; since April 3, 2006, Senior Portfolio Managerof Stone Harbor Investment Partners LP; prior to April 3, 2006, Managing Director and Senior Portfolio Manager at Salomon Brothers Asset Management Inc.; joined Salomon Brothers Asset Management Inc. in 1992.	N/A

⁽¹⁾ Officers are typically elected every year, unless an officer early retires, resigns or is removed from office.

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Stone Harbor Investment Funds	Trustees & Officers
	November 30, 2010 (Unaudited)

OFFICERS (CONTINUED)

Name & Age	Position with the Trust	Term of Office and Length of Time Served(1)	Principal Occupation(s) During Past Five Years	Other Directorships by Trustee
Thomas K. Flanagan Age: 58	Executive Vice President	Since June 21, 2007	Co-portfolio manager of Emerging Markets Debt Fund; since April 3, 2006, Senior Portfolio Manager of Stone Harbor Investment Partners LP; prior to April 3, 2006, Managing Director and Senior Portfolio Manager at Salomon Brothers Asset Management Inc.; joined Salomon Brothers Asset Management Inc. in 1991.	N/A
David Oliver Age: 51	Executive Vice President	Since September 29, 2008	Co-portfolio manager of Emerging Markets Debt Fund; since June 1, 2008 Senior Portfolio Manager of Stone Harbor, from 1986 to June 1, 2008 Managing Director in Emerging Market sales and trading Citigroup.	N/A

⁽¹⁾ Officers are typically elected every year, unless an officer early retires, resigns or is removed from office.

     Semi-Annual Report (Unaudited) | November 30, 2010 85 

Stone Harbor Investment Funds	Trustees & Officers
	November 30, 2010 (Unaudited)

OFFICERS (CONTINUED)

Name & Age	Position with the Trust	Term of Office and Length of Time Served(1)	Principal Occupation(s) During Past Five Years	Other Directorships by Trustee
Beth A. Semmel Age: 50	Executive Vice President	Since June 21, 2007	Co-portfolio manager of High Yield Bond Fund; since April 3, 2006, Senior Portfolio Manager of Stone Harbor Investment Partners LP; Prior to April 3, 2006, Managing Director, Senior Portfolio Manager and Senior Trader for all high yield securities portfolios at Salomon Brothers Asset Management Inc.; joined Salomon Brothers Asset Management Inc. in 1993.	N/A
Jeffrey S. Scott Age: 51	Chief Compliance Officer	Since June 21, 2007	Since April 3, 2006, Chief Compliance Officer of Stone Harbor Investment Partners LP; from October 2006 to March 2007, Director of Compliance, New York Life Investment Management LLC; from July 1998 to September 2006, Chief Compliance Officer, Salomon Brothers Asset Management Inc.	N/A

⁽¹⁾ Officers are typically elected every year, unless an officer early retires, resigns or is removed from office.

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Stone Harbor Investment Funds	Trustees & Officers
	November 30, 2010 (Unaudited)

OFFICERS (CONTINUED)
Name & Age	Position         with the         Trust	Term of Office   and Length of   Time Served(1)	Principal Occupation(s)   During Past Five Years	Other Directorships by Trustee
James J. Dooley Age: 55	Treasurer	Since June 21, 2007	Since April 3, 2006, Head of Operations, Technology and Finance of Stone Harbor Investment Partners LP; from August 2004 to March 2006, Senior Operations Manager of Institutional Asset Management, Citigroup Asset Management; from October 2002 to August 2004, Managing Director, Global Operations & Application Development, AIG Global Investment Group; from May 2001 to September 2002, President and Chief Operating Officer, Financial Technologies International.	N/A
Adam J. Shapiro Age: 46	Secretary; Anti-Money Laundering Officer	Since June 21, 2007	Since April 3, 2006, General Counsel of Stone Harbor Investment Partners LP; from April 2004 to March 2006, General Counsel, North American Fixed Income, Salomon Brothers Asset Management Inc.; from August 1999 to March 2004, Director of Product and Business Development, Citigroup Asset Management.	N/A

⁽¹⁾ Officers are typically elected every year, unless an officer early retires, resigns or is removed from office.

     Semi-Annual Report (Unaudited) | November 30, 2010 87   

Stone Harbor Investment Funds	Trustees & Officers
	November 30, 2010 (Unaudited)

OFFICERS (CONTINUED)
Name & Age	Position with the Trust	Term of Office and Length of Time Served(1)	Principal Occupation(s) During Past Five Years	Other Directorships by Trustee
Patrick D. Buchanan Age: 38	Assistant Treasurer	Since April 23, 2008	Since October 15, 2007, Senior Fund Controller for ALPS Fund Services, Inc.; from February 2005 to October 2007, Director of Accounting for Madison Capital Management LLC; from August 2003 to February, 2005, Manager of Fund Accounting for Janus Capital Group	N/A

⁽¹⁾ Officers are typically elected every year, unless an officer early retires, resigns or is removed from office.

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Stone Harbor Investment Funds Notes

     Semi-Annual Report (Unaudited) | November 30, 2010 89   

Stone Harbor Investment Funds Notes

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Stone Harbor Investment Funds Notes

OFFICERS AND TRUSTEES

Alan Brott, Trustee

Heath B. McLendon, Trustee

Patrick Sheehan, Trustee

Thomas W. Brock, Chairman

Peter J. Wilby, President

Pablo Cisilino, Exec. Vice President

James E. Craige, Exec. Vice President

Thomas K. Flanagan, Exec. Vice President

David Oliver, Exec. Vice President

Beth A. Semmel, Exec. Vice President

Jeffrey S. Scott, Chief Compliance Officer

Adam Shapiro, Secretary/Anti-Money Laundering Officer

James J. Dooley, Treasurer

Patrick Buchanan, Assistant Treasurer

INVESTMENT ADVISER

Stone Harbor Investment Partners LP

31 W. 52nd Street 16th Floor

New York, New York 10019

ADMINISTRATOR & FUND ACCOUNTANT

ALPS Fund Services, Inc.

1290 Broadway, Suite 1100

Denver, Colorado 80203

DISTRIBUTOR

ALPS Distributors, Inc.

1290 Broadway, Suite 1100

Denver, Colorado 80203

TRANSFER AGENT

ALPS Fund Services, Inc.

1290 Broadway, Suite 1100

Denver, Colorado 80203

CUSTODIAN

The Bank of New York Mellon

One Wall Street

New York, New York 10286

LEGAL COUNSEL

Ropes & Gray LLP

1211 Avenue of the Americas

New York, New York 10036

INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

Deloitte & Touche LLP

555 17th Street, Suite 3600

Denver, Colorado 80202

This report and its financial statements are submitted for the general information of the shareholders of the Funds. The report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by a prospectus.

SHF000130 6/11

Item 2. Code of Ethics.

Not applicable to this Report.

Item 3. Audit Committee Financial Expert.

Not applicable to this Report.

Item 4. Principal Accountant Fees and Services.

Not applicable to this Report.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Investments.

(a) Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this
Form N-CSR.

(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to Registrant.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to Registrant.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.

Not applicable to Registrant.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees, where those changes were implemented after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2) of Regulation S-K, or this Item.

Item 11. Controls and Procedures.

(a) The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.

(b) There was no change in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)(1) Not applicable to this Report.

(a)(2) The certifications required by Rule 30a-2(a) of the Investment Company Act of 1940, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99.Cert.

(a)(3) Not applicable to Registrant.

(b)     The certifications by the Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(b) of the Investment Company Act of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99.906Cert.

SIGNATURES

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

Stone Harbor Investment Funds
By:	/s/ Peter J. Wilby
	Peter J. Wilby
	President/Principal Executive Officer
Date:	February 4, 2011

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/ Peter J. Wilby
	Peter J. Wilby
	President/Principal Executive Officer
Date:	February 4, 2011
By:	/s/ James J. Dooley
	James J. Dooley
	Treasurer, Chief Financial Officer/ Principal Financial Officer
Date:	February 4, 2011

EX-99.CERT

Exhibit 99.Cert

I, Peter J. Wilby, President and Principal Executive Officer of Stone Harbor Investment Funds, certify that:

1. I have reviewed this report on Form N-CSR of Stone Harbor Investment Funds;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

d. Disclosed in the report any change in the Registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

By:	/s/ Peter J. Wilby
	Peter J. Wilby
	President/Principal Executive Officer

Date:     February 4, 2011

I, James J. Dooley, Treasurer and Chief Financial Officer/Principal Financial Officer of Stone Harbor Investment Funds, certify that:

1. I have reviewed this report on Form N-CSR of Stone Harbor Investment Funds;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in the report any change in the Registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

By:	/s/ James J. Dooley
	James J. Dooley
	Treasurer, Chief Financial Officer/ Principal Financial Officer
Date:	February 4, 2011

EX-99.906CERT

Exhibit 99.906Cert

This certification is furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the report on Form N-CSR for the period ended November 30, 2010 (the “Form N-CSR”) of Stone Harbor Investment Funds (the “Company”).

I, Peter J. Wilby, the President and Principal Executive Officer of the Company, certify that:

(i) the Form N-CSR fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(ii) the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	February 4, 2011
By:	/s/ Peter J. Wilby
	Peter J. Wilby (Principal Executive Officer)
	President

This certification is furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the report on Form N-CSR for the period ended November 30, 2010 (the “Form N-CSR”) of Stone Harbor Investment Funds (the “Company”).

I, James J. Dooley, the Treasurer, Chief Financial Officer and Principal Financial Officer of the Company, certify that:

(i) the Form N-CSR fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(ii) the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	February 4, 2011
By:	/s/ James J. Dooley
	James J. Dooley (Principal Financial Officer)
	Treasurer, Chief Financial Officer