-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M8BqxGLlD6hiWdWTe0bi+JsFeQ/qsbWuVqMRBSWdm/pGF7KkILvEMRtfmdFzG5M3 4Fd4SJHx1gOvkdQ32EKhaA== 0001144204-09-061353.txt : 20091123 0001144204-09-061353.hdr.sgml : 20091123 20091123110814 ACCESSION NUMBER: 0001144204-09-061353 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20090930 FILED AS OF DATE: 20091123 DATE AS OF CHANGE: 20091123 EFFECTIVENESS DATE: 20091123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAMOND HILL FUNDS CENTRAL INDEX KEY: 0001032423 IRS NUMBER: 316547095 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-08061 FILM NUMBER: 091200586 BUSINESS ADDRESS: STREET 1: 325 JOHN H. MCCONNELL BOULEVARD STREET 2: SUITE 200 CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 614-255-3333 MAIL ADDRESS: STREET 1: 325 JOHN H. MCCONNELL BOULEVARD STREET 2: SUITE 200 CITY: COLUMBUS STATE: OH ZIP: 43215 FORMER COMPANY: FORMER CONFORMED NAME: BSG FUNDS DATE OF NAME CHANGE: 19970206 0001032423 S000003154 Diamond Hill Small Cap Fund C000008530 Diamond Hill Small Cap Fund Class A DHSCX C000008531 Diamond Hill Small Cap Fund Class C DHSMX C000008532 Diamond Hill Small Cap Fund Class I DHSIX 0001032423 S000003155 Diamond Hill Large Cap Fund C000008533 Diamond Hill Large Cap Fund Class A DHLAX C000008534 Diamond Hill Large Cap Fund Class C DHLCX C000008535 Diamond Hill Large Cap Fund Class I DHLRX 0001032423 S000003156 Diamond Hill Long-Short Fund C000008536 Diamond Hill Long-Short Fund Class A DIAMX C000008537 Diamond Hill Long-Short Fund Class C DHFCX C000008538 Diamond Hill Long-Short Fund Class I DHLSX 0001032423 S000003157 Diamond Hill Financial Long-Short Fund C000008539 Diamond Hill Financial Long-Short Fund Class I C000008540 Diamond Hill Financial Long-Short Fund Class A BANCX C000008541 Diamond Hill Financial Long-Short Fund Class C BSGCX 0001032423 S000003158 Diamond Hill Strategic Income Fund C000008542 Diamond Hill Strategic Income Fund Class A DSIAX C000008543 Diamond Hill Strategic Income Fund Class C DSICX C000008544 Diamond Hill Strategic Income Fund Class I DHSTX 0001032423 S000012190 Diamond Hill Small-Mid Cap Fund C000033256 Diamond Hill Small-Mid Cap Fund Class A DHMAX C000033257 Diamond Hill Small-Mid Cap Fund Class C DHMCX C000033258 Diamond Hill Small-Mid Cap Fund Class I DHMIX 0001032423 S000012191 Diamond Hill Select Fund C000033259 Diamond Hill Select Fund Class A DHTAX C000033260 Diamond Hill Select Fund Class C DHTCX C000033261 Diamond Hill Select Fund Class I DHLTX N-Q 1 v167100_nq.htm FORM N-Q Unassociated Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-8061

Diamond Hill Funds
(Exact name of registrant as specified in charter)

325 John H. McConnell Boulevard, Suite 200, Columbus, Ohio 43215
(Address of principal executive offices)                (Zip code)

James F. Laird, Jr., 325 John H. McConnell Boulevard, Suite 200, Columbus, Ohio 43215
(Name and address of agent for service)

Registrant's telephone number, including area code: (614) 255-3341

Date of fiscal year end: 12/31

Date of reporting period: 09/30/09

Form N-Q is to be used by registered management investment companies, other than a small business investment company registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5).  The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policy making roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget ("OMB") control number.  Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.  The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 
Item 1. Schedule of Investments
 
Diamond Hill Small Cap Fund
Schedule of Investments
September 30, 2009 (Unaudited)

         
Market
  
   
Shares
    
Value
  
             
Common Stocks — 82.2%
            
Consumer Discretionary — 9.8%
            
Aaron's, Inc. ◊
     144,975     $ 3,827,340  
Brink's Home Security Holdings, Inc.*
     114,340       3,520,529  
Callaway Golf Co. ◊
     631,916       4,808,881  
Hanesbrands, Inc.* ◊
     355,100       7,599,140  
Hillenbrand, Inc.
     259,590       5,287,848  
JAKKS Pacific, Inc.* ◊
     348,753       4,994,143  
K-Swiss, Inc.*
     457,100       4,017,909  
Steiner Leisure Ltd.* ◊
     484,325       17,319,462  
              51,375,252  
                 
Consumer Staples — 8.8%
                
American Italian Pasta Co. - Class A*
     91,750       2,493,765  
Chattem, Inc.* ◊
     204,925       13,609,069  
Del Monte Foods Co.
     610,160       7,065,653  
Flowers Foods, Inc. ◊
     506,530       13,316,674  
Hain Celestial Group, Inc., The*
     4,755       91,153  
Lance, Inc.
     73,622       1,900,920  
Ruddick Corp. ◊
     275,945       7,345,656  
              45,822,890  
                 
Energy — 14.2%
                
Berry Petroleum Co. ◊
     179,460       4,805,939  
Cimarex Energy Co. ◊
     373,145       16,164,641  
Encore Acquisition Co.*
     418,108       15,637,239  
Exterran Holdings, Inc.* ◊
     45,308       1,075,612  
Forest Oil Corp.*
     148,855       2,913,092  
Helmerich & Payne, Inc. ◊
     66,150       2,614,910  
Hornbeck Offshore Services, Inc.* ◊
     271,525       7,483,229  
Lufkin Industries, Inc. ◊
     112,750       5,996,045  
Southwestern Energy Co.*
     178,230       7,606,856  
Whiting Petroleum Corp.*
     170,055       9,791,767  
              74,089,330  
                 
Financial — 20.3%
                
Alleghany Corp.*
     29,746       7,705,701  
Assurant, Inc.
     399,980       12,823,359  
Assured Guaranty Ltd. ◊
     841,492       16,341,775  
City National Corp. ◊
     158,685       6,177,607  
First American Corp.
     237,945       7,702,280  
First Niagara Financial Group, Inc.
     107,800       1,329,174  
Hanover Insurance Group
     167,197       6,910,252  
Horace Mann Educators Corp.
     313,030       4,373,029  
 
 
 

Huntington Bancshares, Inc.
     1,305,798       6,150,309  
LaSalle Hotel Properties - REIT◊
     156,105       3,069,024  
Leucadia National Corp.* ◊
     286,645       7,085,864  
Mid-America Apartment Communities, Inc. - REIT◊
     125,069       5,644,364  
National Penn Bancshares, Inc.
     199,710       1,220,228  
Old Republic International Corp. ◊
     1,018,765       12,408,558  
Redwood Trust, Inc.
     286,720       4,444,160  
Taylor Capital Group, Inc.* ◊
     22,404       147,866  
United Fire & Casualty Co. ◊
     171,509       3,070,011  
              106,603,561  
                 
Health Care — 7.2%
                
Analogic Corp.
     66,298       2,454,352  
InVentiv Health, Inc.*
     383,780       6,420,639  
King Pharmaceuticals, Inc.*
     494,365       5,324,311  
LifePoint Hospitals, Inc.* ◊
     339,805       9,195,124  
Res-Care, Inc.*
     520,695       7,399,076  
STERIS Corp. ◊
     184,640       5,622,288  
Waters Corp.*
     17,663       986,655  
              37,402,445  
                 
Industrial — 10.6%
                
AirTran Holdings, Inc.* ◊
     1,086,405       6,790,031  
Apogee Enterprises, Inc. ◊
     499,250       7,498,735  
BE Aerospace, Inc.* ◊
     380,150       7,656,221  
Brink's Co., The
     284,570       7,657,779  
Hub Group, Inc. - Class A*
     261,430       5,973,676  
Kaydon Corp. ◊
     161,270       5,228,373  
Toro Co., The◊
     257,045       10,222,680  
Trinity Industries, Inc. ◊
     246,170       4,231,662  
              55,259,157  
                 
Information Technology — 7.1%
                
Alliance Data Systems Corp.* ◊
     152,530       9,316,532  
CSG Systems International, Inc.*
     430,477       6,891,937  
KLA-Tencor Corp.
     262,130       9,399,982  
Verigy Ltd.*
     987,055       11,469,579  
              37,078,030  
                 
Utilities — 4.2%
                
Cleco Corp. ◊
     318,925       7,998,639  
UGI Corp.
     243,200       6,094,592  
WGL Holdings, Inc. ◊
     238,319       7,897,892  
              21,991,123  
Total Common Stocks
           $ 429,621,788  
 
 
Registered Investment Companies — 40.7%
            
JPMorgan Prime Money Market Fund, Capital Shares††
     117,534,809     $ 117,534,809  
JPMorgan U.S. Government Money Market Fund, Capital Shares
     95,142,609       95,142,609  
Total Registered Investment Companies
           $ 212,677,418  
                 
Total Investment Securities — 122.9%
           $ 642,299,206  
(Cost $601,901,774)**
                
Liabilities In Excess Of Other Assets — (22.9%)
             (119,867,358 )
Net Assets — 100.0%
           $ 522,431,848  
 
*
Non-income producing security.
**
Represents cost for financial reporting purposes.
◊
All or a portion of the security is on loan.  The total market value of the securities on loan, as of September 30, 2009, was $113,524,727.
††
The entire security represents collateral for securities loaned as of September 30, 2009.
REIT – Real Estate Investment Trust

See accompanying Notes to Schedule of Investments.
 
 
 
 
Diamond Hill Small-Mid Cap Fund
Schedule of Investments
September 30, 2009 (Unaudited)
 
         
Market
  
   
Shares
    
Value
  
             
Common Stocks — 83.1%
            
Consumer Discretionary — 8.6%
            
Aaron's, Inc.
     13,680     $ 361,152  
Brink's Home Security Holdings, Inc.*
     9,345       287,733  
Callaway Golf Co. ◊
     73,080       556,139  
Hanesbrands, Inc.* ◊
     11,845       253,483  
Harley - Davidson, Inc. ◊
     9,080       208,840  
Hillenbrand, Inc.
     17,445       355,355  
K-Swiss, Inc.* ◊
     33,945       298,377  
Steiner Leisure Ltd.* ◊
     18,770       671,214  
              2,992,293  
                 
Consumer Staples — 10.3%
                
American Italian Pasta Co. - Class A*
     6,130       166,613  
Chattem, Inc.* ◊
     12,215       811,198  
ConAgra Foods, Inc.
     41,440       898,419  
Del Monte Foods Co.
     39,940       462,505  
Flowers Foods, Inc. ◊
     32,230       847,327  
Hain Celestial Group, Inc., The*
     320       6,134  
Lance, Inc.
     4,940       127,551  
Ruddick Corp. ◊
     9,475       252,225  
              3,571,972  
                 
Energy — 15.1%
                
Berry Petroleum Co. ◊
     6,570       175,945  
Cimarex Energy Co. ◊
     29,740       1,288,336  
Encore Acquisition Co.*
     30,835       1,153,229  
Forest Oil Corp.*
     10,245       200,495  
Hornbeck Offshore Services, Inc.* ◊
     11,010       303,436  
Noble Energy, Inc.
     18,150       1,197,173  
Southwestern Energy Co.*
     15,885       677,972  
Whiting Petroleum Corp.*
     4,410       253,928  
              5,250,514  
                 
Financial — 17.2%
                
Alleghany Corp.*
     1,390       360,080  
Allstate Corp.
     22,505       689,103  
Assurant, Inc.
     25,565       819,613  
Assured Guaranty Ltd. ◊
     39,695       770,877  
City National Corp. ◊
     8,660       337,134  
First American Corp.
     8,105       262,359  
Hanover Insurance Group, Inc.
     11,745       485,421  
Huntington Bancshares, Inc. ◊
     108,864       512,749  
Marsh & McLennan Co's., Inc.
     19,365       478,896  
 
 
 
 
Mid-America Apartment Communities, Inc. - REIT ◊
     3,840       173,299  
National Penn Bancshares, Inc.
     13,155       80,377  
Old Republic International Corp. ◊
     61,670       751,141  
SunTrust Banks, Inc.
     5,425       122,334  
United Fire & Casualty Co.
     9,024       161,530  
              6,004,913  
                 
Health Care — 6.6%
                
Analogic Corp.
     3,875       143,453  
Cardinal Health, Inc.
     18,820       504,376  
Forest Laboratories, Inc.*
     11,850       348,864  
King Pharmaceuticals, Inc.*
     49,770       536,023  
LifePoint Hospitals, Inc.* ◊
     13,865       375,187  
Steris Corp. ◊
     13,305       405,137  
              2,313,040  
                 
Industrial — 12.4%
                
AirTran Holdings, Inc.*
     54,605       341,281  
Avery Dennison Corp.
     11,310       407,273  
Brink's Co., The
     15,235       409,974  
Dover Corp.
     28,040       1,086,830  
Fluor Corp.
     7,580       385,443  
Hub Group, Inc. - Class A*
     23,110       528,064  
Southwest Airlines Co.
     47,250       453,600  
Toro Co., The◊
     6,105       242,796  
Trinity Industries, Inc. ◊
     25,840       444,190  
              4,299,451  
                 
Information Technology — 6.4%
                
Alliance Data Systems Corp.* ◊
     8,300       506,964  
KLA-Tencor Corp.
     19,390       695,325  
Paychex, Inc. ◊
     9,065       263,338  
Verigy Ltd.*
     65,880       765,526  
              2,231,153  
                 
Utilities — 6.5%
                
Cleco Corp. ◊
     20,800       521,664  
Energen Corp.
     17,760       765,456  
UGI Corp.
     18,305       458,723  
WGL Holdings, Inc.
     15,255       505,551  
              2,251,394  
                 
Total Common Stocks
           $ 28,914,730  
                 
Registered Investment Companies — 38.6%
                
JPMorgan Prime Money Market Fund, Capital Shares††
     8,929,043       8,929,043  
JPMorgan U.S. Government Money Market Fund, Capital Shares
     4,506,059       4,506,059  
                 
Total Registered Investment Companies
           $ 13,435,102  
 
 
Total Investment Securities — 121.7%
           $ 42,349,832  
(Cost $38,826,234)**
                
Liabilities In Excess Of Other Assets — (21.7%)
             (7,554,957 )
Net Assets — 100.0%
           $ 34,794,875  
 
*
Non-income producing security.
**
Represents cost for financial reporting purposes.
◊
All or a portion of the security is on loan.  The total market value of the securities on loan, as of September 30, 2009, was $7,407,178.
††
A portion of this security represents collateral for securities loaned.  The total value of the collateral, as of September 30, 2009, was $7,626,503.
REIT – Real Estate Investment Trust
 
See accompanying Notes to Schedule of Investments.
 
 
Diamond Hill Large Cap Fund
Schedule of Investments
September 30, 2009 (Unaudited)
 
         
Market
  
   
Shares
    
Value
  
Common Stocks — 92.3%
            
Consumer Discretionary — 3.0%
            
Hanesbrands, Inc.* ◊
     324,613     $ 6,946,718  
McDonald’s Corp.
     206,800       11,802,076  
              18,748,794  
                 
Consumer Staples — 13.7%
                
ConAgra Foods, Inc. ◊
     499,140       10,821,355  
General Mills, Inc.
     175,770       11,316,073  
Kimberly-Clark Corp.
     177,285       10,456,269  
PepsiCo, Inc.
     178,730       10,484,302  
Procter & Gamble Co., The
     327,995       18,997,470  
Sysco Corp. ◊
     487,710       12,119,594  
Wal-Mart Stores, Inc.
     225,145       11,052,368  
              85,247,431  
                 
Energy — 20.1%
                
Anadarko Petroleum Corp.
     459,150       28,802,480  
Apache Corp.
     317,650       29,169,799  
Devon Energy Corp. ◊
     372,740       25,096,584  
Occidental Petroleum Corp.
     310,427       24,337,477  
Transocean, Ltd.*
     66,490       5,686,890  
XTO Energy, Inc.
     288,727       11,930,200  
              125,023,430  
                 
Financial — 11.6%
                
Allstate Corp. ◊
     202,555       6,202,234  
American Express Co. ◊
     350,780       11,891,442  
Bank of New York Mellon Corp.
     285,051       8,263,628  
Marsh & McLennan Co's., Inc.
     360,165       8,906,880  
SunTrust Banks, Inc. ◊
     385,845       8,700,805  
Travelers Companies, Inc., The◊
     263,310       12,962,751  
U.S. Bancorp
     272,010       5,946,139  
Wells Fargo & Co.
     328,675       9,262,062  
              72,135,941  
                 
Health Care — 18.0%
                
Abbott Laboratories
     407,790       20,173,370  
Baxter International, Inc.
     219,055       12,488,326  
Cardinal Health, Inc. ◊
     249,370       6,683,116  
CareFusion Corp.* ◊
     294,715       6,424,787  
Johnson & Johnson
     257,080       15,653,601  
Medtronic, Inc.
     509,987       18,767,522  
 
 
Pfizer, Inc. ◊
     650,060       10,758,493  
Schering-Plough Corp.
     384,640       10,866,080  
UnitedHealth Group, Inc.
     396,890       9,938,126  
              111,753,421  
                 
Industrial — 14.5%
                
Avery Dennison Corp.
     282,460       10,171,385  
Dover Corp.
     295,065       11,436,719  
Fluor Corp. ◊
     106,550       5,418,068  
Illinois Tool Works, Inc. ◊
     262,245       11,200,484  
Parker Hannifin Corp. ◊
     228,845       11,863,325  
Raytheon Co.
     196,630       9,432,341  
Southwest Airlines Co.
     1,069,670       10,268,832  
United Technologies Corp.
     329,670       20,086,792  
              89,877,946  
                 
Information Technology — 9.0%
                
Alliance Data Systems Corp.* ◊
     141,965       8,671,222  
Cisco Systems*
     506,375       11,920,068  
Dell, Inc.* ◊
     543,900       8,299,914  
KLA-Tencor Corp. ◊
     303,040       10,867,014  
Microsoft Corp.
     615,460       15,934,260  
              55,692,478  
                 
Utilities — 2.4%
                
Dominion Resources, Inc.
     433,280       14,948,160  
                 
Total Common Stocks
           $ 573,427,601  
                 
Registered Investment Companies — 17.5%
                
JPMorgan Prime Money Market Fund, Capital Shares††
     57,197,158       57,197,158  
JPMorgan U.S. Government Money Market Fund, Capital Shares
     51,293,873       51,293,873  
                 
Total Registered Investment Companies
           $ 108,491,031  
                 
Total Investment Securities — 109.8%
           $ 681,918,632  
(Cost $642,950,685)**
                
                 
Liabilities In Excess Of Other Assets — (9.8%)
             (61,070,197 )
Net Assets — 100.0%
           $ 620,848,435  
 
*
 Non-income producing security.
**
Represents cost for financial reporting purposes.
◊
All or a portion of the security is on loan.  The total market value of the securities on loan, as of September 30, 2009, was $55,523,938.
††
The entire security represents collateral for securities loaned as of September 30, 2009.

See accompanying Notes to Schedule of Investments.

 
 
 
Diamond Hill Select Fund
Schedule of Investments
September 30, 2009 (Unaudited)

         
Market
  
   
Shares
    
Value
  
Common Stocks — 94.5%
            
Consumer Discretionary — 4.0%
            
Hanesbrands, Inc.* ◊
     18,161     $ 388,645  
McDonald’s Corp.
     6,155       351,266  
              739,911  
                 
Consumer Staples — 14.4%
                
ConAgra Foods, Inc.
     28,643       620,980  
General Mills, Inc.
     6,250       402,375  
PepsiCo, Inc.
     5,090       298,579  
Procter & Gamble Co., The
     9,765       565,589  
Sysco Corp.
     21,235       527,690  
Wal-Mart Stores, Inc.
     5,045       247,659  
              2,662,872  
                 
Energy — 18.5%
                
Anadarko Petroleum Corp.
     10,210       640,473  
Apache Corp. ◊
     8,185       751,629  
Cimarex Energy Co. ◊
     11,260       487,783  
Devon Energy Corp.
     8,315       559,849  
Exterran Holdings, Inc.* ◊
     8,175       194,075  
Occidental Petroleum Corp.
     7,915       620,536  
Southwestern Energy Co.* ◊
     4,115       175,628  
              3,429,973  
                 
Financial — 9.9%
                
American Express Co.
     9,645       326,966  
Assurant, Inc.
     6,300       201,978  
Travelers Companies, Inc., The
     11,105       546,699  
U.S. Bancorp◊
     16,550       361,783  
Wells Fargo & Co.
     14,040       395,647  
              1,833,073  
                 
Health Care — 19.6%
                
Abbott Laboratories
     11,230       555,548  
Baxter International, Inc.
     10,845       618,273  
Cardinal Health, Inc.
     13,800       369,840  
Johnson & Johnson
     6,120       372,647  
Medtronic, Inc.
     14,806       544,861  
Pfizer, Inc.
     23,545       389,670  
Schering-Plough Corp.
     14,360       405,670  
UnitedHealth Group, Inc.
     14,682       367,637  
              3,624,146  

 
 
 
Industrial — 13.9%
            
AirTran Holdings, Inc.* ◊
     10,600       66,250  
Dover Corp.
     15,430       598,067  
Illinois Tool Works, Inc.
     15,073       643,768  
Parker Hannifin Corp.
     5,550       287,712  
Trinity Industries, Inc. ◊
     10,795       185,566  
United Technologies Corp.
     13,055       795,441  
              2,576,804  
                 
Information Technology — 11.8%
                
Alliance Data Systems Corp.* ◊
     4,615       281,884  
Cisco Systems*
     22,190       522,353  
KLA-Tencor Corp. ◊
     12,340       442,512  
Microsoft Corp.
     25,985       672,752  
Verigy Ltd.* ◊
     22,955       266,737  
              2,186,238  
                 
Utilities — 2.4%
                
Dominion Resources, Inc.
     13,100       451,950  
                 
Total Common Stocks
           $ 17,504,967  
                 
Registered Investment Companies — 21.8%
                
JPMorgan Prime Money Market Fund, Capital Shares††
     2,953,011       2,953,011  
JPMorgan U.S. Government Money Market Fund, Capital Shares
     1,082,946       1,082,946  
                 
Total Registered Investment Companies
           $ 4,035,957  
                 
Total Investment Securities — 116.3%
           $ 21,540,924  
(Cost $18,890,708)**
                
                 
Liabilities In Excess Of Other Assets — (16.3%)
             (3,019,145 )
Net Assets — 100.0%
           $ 18,521,779  

*
 Non-income producing security.
**
Represents cost for financial reporting purposes.
◊
All or a portion of the security is on loan.  The total market value of the securities on loan, as of September 30, 2009, was $2,882,585.
††
The entire security represents collateral for securities loaned as of September 30, 2009.

See accompanying Notes to Schedule of Investments.

 
 

Diamond Hill Long-Short Fund
Schedule of Investments
September 30, 2009 (Unaudited)

         
Market
  
   
Shares
    
Value
  
Common Stocks — 91.7%
            
Consumer Discretionary — 3.2%
            
Hanesbrands, Inc.* נ
     1,029,786     $ 22,037,420  
McDonald’s Corp. †
     619,529       35,356,520  
              57,393,940  
                 
Consumer Staples — 13.5%
                
ConAgra Foods, Inc. †
     1,978,570       42,895,398  
General Mills, Inc. †
     641,386       41,292,431  
PepsiCo, Inc.
     664,330       38,969,598  
Procter & Gamble Co., The
     1,003,195       58,105,054  
Sysco Corp. †
     1,183,457       29,408,906  
Wal-Mart Stores, Inc.
     701,975       34,459,953  
              245,131,340  
                 
Energy — 21.2%
                
Anadarko Petroleum Corp. †
     1,298,775       81,472,156  
Apache Corp. †
     918,431       84,339,518  
Cimarex Energy Co. ◊
     560,005       24,259,417  
Devon Energy Corp. †
     919,895       61,936,530  
Occidental Petroleum Corp. †
     1,043,998       81,849,443  
Transocean, Ltd.*
     183,386       15,685,005  
XTO Energy, Inc. †
     896,387       37,038,711  
              386,580,780  
                 
Financial — 7.6%
                
American Express Co.
     952,240       32,280,936  
SunTrust Banks, Inc. ◊
     1,141,520       25,741,276  
Travelers Companies, Inc., The
     855,830       42,132,511  
U.S. Bancorp†
     735,427       16,076,434  
Wells Fargo & Co.
     762,760       21,494,577  
              137,725,734  
                 
Health Care — 18.9%
                
Abbott Laboratories†
     1,183,475       58,546,508  
Baxter International, Inc.
     640,675       36,524,882  
Cardinal Health, Inc. †
     751,960       20,152,528  
CareFusion Corp.* †
     924,240       20,148,432  
Johnson & Johnson†
     612,185       37,275,945  
Medtronic, Inc. †
     1,590,052       58,513,914  
Pfizer, Inc.
     2,136,675       35,361,971  
 
 
 

Schering-Plough Corp. †
     1,297,725       36,660,731  
UnitedHealth Group, Inc. †
     1,632,145       40,868,911  
              344,053,822  
                 
Industrial — 14.5%
                
AirTran Holdings, Inc.* †
     531,471       3,321,694  
Avery Dennison Corp.
     732,754       26,386,472  
Dover Corp. †
     1,056,055       40,932,692  
Fluor Corp. †
     378,245       19,233,758  
Illinois Tool Works, Inc. †
     806,360       34,439,636  
Parker Hannifin Corp.
     717,775       37,209,456  
Raytheon Co.
     575,692       27,615,945  
Trinity Industries, Inc. נ
     862,194       14,821,115  
United Technologies Corp. †
     977,055       59,531,960  
              263,492,728  
                 
Information Technology — 10.2%
                
Alliance Data Systems Corp.* ◊
     398,855       24,362,063  
Cisco Systems, Inc.*
     1,895,325       44,615,951  
Dell, Inc.*
     1,883,060       28,735,496  
KLA-Tencor Corp. ◊
     1,088,865       39,046,699  
Microsoft Corp. †
     1,843,935       47,739,477  
              184,499,686  
                 
Utilities — 2.6%
                
Dominion Resources, Inc.
     1,353,830       46,707,135  
                 
Total Common Stocks
           $ 1,665,585,165  
                 
Registered Investment Companies — 13.0%
                
JPMorgan 100% U.S. Treasury Securities Money Market Fund, Capital Shares
     89,476,049       89,476,049  
JPMorgan Prime Money Market Fund, Capital Shares††
     89,363,413       89,363,413  
JPMorgan U.S. Government Money Market Fund, Capital Shares
     57,464,202       57,464,202  
                 
Total Registered Investment Companies
           $ 236,303,664  
                 
Total Investment Securities — 104.7%
           $ 1,901,888,829  
(Cost $1,776,500,398)**
                
                 
Segregated Cash With Brokers — 38.6%
             700,966,283  
                 
Securities Sold Short—(38.5%)
             (698,993,094 )
(Proceeds $610,733,121)
                
                 
Liabilities In Excess Of Other Assets — (4.8%)
             (87,764,249 )
Net Assets — 100.0%
           $ 1,816,097,769  
 
 
 

*
Non-income producing security.
**
Represents cost for financial reporting purposes.
◊
All or a portion of the security is on loan.  The total market value of the securities on loan, as of September 30, 2009, was $87,161,690.
† 
Security position is either entirely or partially held in a segregated account as collateral for securities sold short aggregating a total market value of $730,658,642.
†† 
The entire security represents collateral for securities loaned as of September 30, 2009.
 
See accompanying Notes to Schedule of Investments.

 
 

Diamond Hill Long-Short Fund
Schedule of Securities Sold Short
September 30, 2009 (Unaudited)

         
Market
  
   
Shares
    
Value
  
Common Stocks — 93.7%
            
Consumer Discretionary — 43.2%
            
Amazon.com, Inc.*
     162,070     $ 15,130,855  
Career Education Corp.*
     1,753,620       42,753,256  
CarMax, Inc.*
     651,970       13,626,173  
Chipotle Mexican Grill, Inc.*
     84,240       8,175,492  
Corinthian Colleges, Inc.*
     627,705       11,650,205  
Gap, Inc., The
     444,035       9,502,349  
Gymboree Corp., The*
     602,750       29,161,045  
J.C. Penny Company, Inc.
     243,990       8,234,662  
LIFE TIME FITNESS, Inc.*
     360,724       10,118,308  
Macy's, Inc.
     740,650       13,546,488  
MGM MIRAGE*
     3,490,821       42,029,485  
NetFlix, Inc.*
     143,265       6,614,546  
Nordstrom, Inc.
     396,330       12,103,918  
Royal Caribbean Cruises, Ltd.*
     1,179,190       28,394,895  
Sally Beauty Holdings, Inc.*
     1,521,610       10,818,647  
Tractor Supply Co.*
     598,128       28,961,358  
Urban Outfitters, Inc.*
     363,620       10,970,415  
              301,792,097  
                 
Consumer Staples — 13.6%
                
BJ's Wholesale Club, Inc.*
     220,587       7,989,661  
Colgate-Palmolive Co.
     395,646       30,179,877  
Dean Foods Co.*
     923,048       16,421,024  
Green Mountain Coffee Roasters, Inc.*
     129,410       9,555,634  
H.J. Heinz Co.
     235,820       9,373,845  
Kraft Foods, Inc.
     816,645       21,453,264  
              94,973,305  
                 
Financial — 3.6%
                
Principal Financial Group, Inc.
     331,980       9,092,932  
PrivateBancorp, Inc.
     259,795       6,354,587  
Prosperity Bancshares, Inc.
     287,385       9,998,124  
              25,445,643  
                 
Health Care — 14.5%
                
Covance*
     342,575       18,550,436  
Laboratory Corp. of America Holdings*
     598,488       39,320,662  
Omnicare, Inc.
     1,258,521       28,341,893  
Quest Diagnostics, Inc.
     289,850       15,127,271  
              101,340,262  
 
 
 

Industrial — 6.0%
            
Boeing Co., The
     522,635       28,300,685  
Old Dominion Freight Line, Inc.*
     233,115       7,093,689  
Werner Enterprises, Inc.
     364,910       6,798,274  
              42,192,648  
                 
Information Technology — 5.0%
                
Akamai Technologies, Inc.*
     627,195       12,343,198  
Salesforce.com, Inc.*
     398,195       22,669,241  
              35,012,439  
                 
Materials — 6.1%
                
Dow Chemical Co.
     1,646,703       42,929,547  
                 
Telecommunication — 1.7%
                
Sprint Nextel Corp.*
     2,798,055       11,052,318  
                 
Total Common Stocks Sold Short
           $ 654,738,259  
                 
Exchange Traded Funds — 6.3%
                
SPDR S&P Retail ETF
     1,296,655     $ 44,254,835  
                 
Total Securities Sold Short
           $ 698,993,094  
(Proceeds $610,733,121)
                

*
Non-dividend expense producing security.

See accompanying Notes to Schedule of Investments.

 
 

Diamond Hill Financial Long-Short Fund
Schedule of Investments
September 30, 2009 (Unaudited)
 
         
Market
  
   
Shares
    
Value
  
Preferred Stocks — 14.1%
            
Finance - Banks & Thrifts — 9.0%
            
Huntington Bancshares, 8.50%◊
     396     $ 344,520  
National City Capital Trust IV, 8.00%
     15,310       368,205  
Regions Financing Trust III, 8.88%◊
     2,861       68,578  
Wachovia Preferred Funding
     8,375       170,347  
              951,650  
                 
Financial Specialties — 3.3%
                
Countrywide Capital V, 7.00%נ
     17,050       350,719  
                 
Real Estate Investment Trust — 1.8%
                
iStar Financial, Inc., Series F
     17,057       141,403  
LaSalle Hotel Properties, Series E
     2,483       54,626  
              196,029  
Total Preferred Stocks
           $ 1,498,398  
                 
Common Stocks — 71.3%
                
Finance - Banks & Thrifts — 26.8%
                
Bank of New York Mellon Corp. †
     9,429       273,347  
City National Corp. נ
     4,115       160,197  
Comerica, Inc. †
     3,394       100,700  
Fifth Third Bancorp
     4,732       47,935  
First Financial Holdings, Inc. ◊
     7,050       112,589  
First Niagara Financial Group, Inc.
     8,760       108,011  
Huntington Bancshares, Inc. נ
     37,540       176,813  
National Penn Bancshares, Inc.
     16,720       102,159  
PNC Financial Services Group, Inc. †
     6,935       336,972  
Seacoast Banking Corp. of Florida*
     7,210       18,169  
SunTrust Banks, Inc. ◊
     9,469       213,526  
Synovus Financial Corp. †
     27,930       104,738  
Taylor Capital Group, Inc.* נ
     250       1,650  
U.S. Bancorp†
     19,012       415,602  
Wells Fargo & Co. †
     23,960       675,192  
              2,847,600  
 
 
 
 
Financial - Diversified — 9.4%
            
Affiliated Managers Group, Inc.* ◊
     720       46,807  
JPMorgan Chase & Co.
     13,925       610,193  
                 
Leucadia National Corp.*
     3,155       77,992  
Morgan Stanley†
     3,935       121,513  
Paychex, Inc. ◊
     3,145       91,362  
State Street Corp.
     943       49,602  
              997,469  
                 
Financial Specialties — 3.5%
                
American Express Co.
     9,275       314,422  
Discover Financial Services†
     3,621       58,769  
              373,191  
                 
Insurance — 28.6%
                
Alleghany Corp.*
     315       81,601  
Allstate Corp. †
     12,000       367,440  
Assurant, Inc. †
     12,135       389,048  
Assured Guaranty Ltd. ◊
     20,860       405,101  
First American Corp. ◊
     2,170       70,243  
Hanover Insurance Group, Inc. נ
     3,820       157,881  
Hartford Financial Services Group, Inc., The◊
     4,600       121,900  
Horace Mann Educators Corp. ◊
     13,018       181,861  
Marsh & McLennan Co's., Inc.
     9,875       244,209  
Old Republic International Corp. ◊
     23,650       288,057  
Prudential Financial, Inc.
     5,975       298,212  
Travelers Companies, Inc., The
     7,275       358,148  
United Fire & Casualty Co. †
     3,987       71,367  
              3,035,068  
                 
Real Estate Investment Trust — 3.0%
                
Mid-America Apartment Communities, Inc. נ
     2,471       111,516  
Redwood Trust, Inc. ◊
     13,565       210,258  
              321,774  
                 
Total Common Stocks
           $ 7,575,102  
                 
Registered Investment Companies — 27.4%
                
JPMorgan Prime Money Market Fund, Capital Shares††
     2,093,015       2,093,015  
JPMorgan U.S. Government Money Market Fund, Capital Shares
     824,244       824,244  
                 
Total Registered Investment Companies
           $ 2,917,259  
 
 
         
Market
  
   
Par Value
    
Value
  
Corporate Bonds — 4.0%
            
Finance - Banks & Thrifts — 4.0%
            
AmSouth Bank NA, 5.20%, 4/1/15
     120,000     $ 103,956  
First Horizon National, 4.50%, 5/15/13
     250,000       219,519  
Huntington National Bank, 4.90%, 1/15/14
     125,000       106,271  
                 
Total Corporate Bonds
           $ 429,746  
                 
Total Investment Securities — 116.8%
           $ 12,420,505  
(Cost $10,792,604)**
                
                 
Segregated Cash With Brokers — 9.1%
             965,319  
                 
Securities Sold Short—(8.8%)
             (939,990 )
(Proceeds $1,035,439)
                
                 
Liabilities In Excess Of Other Assets — (17.1%)
             (1,812,522 )
Net Assets — 100.0%
           $ 10,633,312  
 
*
Non-income producing security.
**
Represents cost for financial reporting purposes.
◊
All or a portion of the security is on loan.  The total market value of the securities on loan, as of September 30, 2009, was $2,020,178.
† 
Security position is either entirely or partially held in a segregated account as collateral for securities sold short aggregating a total market value of $2,819,967.
†† 
The entire security represents collateral for securities loaned as of September 30, 2009.
 
See accompanying Notes to Schedule of Investments

 
 
 
Diamond Hill Financial Long-Short Fund
Schedule of Securities Sold Short
September 30, 2009 (Unaudited)

         
Market
  
   
Shares
    
Value
  
Common Stocks — 100.0%
            
Finance - Banks & Thrifts — 76.1%
            
First Financial Bankshares, Inc.
     2,825     $ 139,724  
Home Bancshares, Inc.
     6,410       140,507  
Peoples Bancorp, Inc.
     2,565       33,474  
PrivateBancorp, Inc.
     6,405       156,666  
Prosperity Bancshares, Inc.
     4,312       150,014  
WesBanco, Inc.
     6,150       95,080  
              715,465  
                 
Finance - Broker Dealer — 8.2%
                
KBW, Inc.*
     2,395       77,167  
                 
Financial - Diversified — 15.7%
                
Principal Financial Group, Inc.
     5,380       147,358  
                 
Total Securities Sold Short
                
(Proceeds $1,035,439)
           $ 939,990  

*   Non-dividend expense producing security.

See accompanying Notes to Schedule of Investments.

 
 
 
Diamond Hill Strategic Income Fund
Schedule of Investments
September 30, 2009 (Unaudited)

   
Shares/
    
Market
  
   
Par Value
    
Value
  
Common Stocks — 0.2%
            
Real Estate Investment Trust — 0.2%
            
iStar Financial, Inc. ◊
     94,500     $ 287,280  
                 
Collateralized Debt Obligations — 0.5%
                
Alesco Preferred Funding III†
     724,100       89,506  
Alesco Preferred Funding IV†
     337       4,014  
Alesco Preferred Funding V†
     80       1,002  
Alesco Preferred Funding VI†
     621,631       130,853  
Alesco Preferred Funding VI Series E†
     336,608       70,496  
Fort Sheridan, Ltd. †
     489,231       110,493  
Taberna Preferred Funding, Ltd. †
     1,008,118       202,270  
                 
Total Collateralized Debt Obligations
           $ 608,634  
                 
Preferred Stocks — 6.9%
                
Countrywide Capital V, 7.00%◊
     94,600       1,945,922  
Eagle Hospitality Properties Trust, Inc., 8.25%, Series A - REIT
     21,007       7,352  
Innkeepers USA Trust
     93,250       102,575  
iStar Financial, 7.80%, Series F
     138,500       1,148,165  
National City Capital IV, 8.00%
     50,300       1,209,715  
Wachovia Preferred Funding - REIT
     62,550       1,272,267  
XL Capital Ltd., 10.75%
     88,000       2,433,200  
                 
Total Preferred Stocks
           $ 8,119,196  
                 
Registered Investment Companies — 5.6%
                
JPMorgan Prime Money Market Fund, Capital Shares††
     4,838,763       4,838,763  
JPMorgan U.S. Government Money Market Fund, Capital Shares
     1,725,290       1,725,290  
                 
Total Registered Investment Companies
           $ 6,564,053  

         
Market
  
   
Par Value
    
Value
  
Corporate Bonds — 89.6%
            
Consumer Discretionary — 11.1%
            
Expedia, Inc., 8.50%, 7/1/16◊^
     4,500,000       4,747,499  
Fortune Brands, 4.875%, 12/1/13
     3,475,000       3,481,905  
Hanesbrands, Inc., 4.59%, 12/15/14∆
     3,505,000       3,075,638  
Historic Time Warner, Inc., 8.05%, 1/15/16
     1,600,000       1,746,650  
              13,051,692  
                 
Energy — 9.7%
                
Centerpoint Energy, Inc., 5.95%, 2/1/17
     2,525,000       2,465,015  
Cimarex Energy, 7.125%, 5/1/17     1,650,000       1,534,500  
 
 
 
 
Energy Transfer Partners, 5.95%, 2/1/15
     1,700,000       1,784,640  
Enterprise Products Operation, 9.75%, 1/31/14
     1,450,000       1,750,711  
Kaneb Pipeline, 7.75%, 2/15/12
     1,700,000       1,785,439  
Pacific Energy Partners, 7.125%, 6/15/14
     2,000,000       2,071,260  
              11,391,565  
                 
Finance — 45.3%
                
American Express, 7.00%, 3/19/18
     2,000,000       2,200,156  
AmSouth Bank NA, 4.85%, 4/1/13
     1,850,000       1,660,924  
AmSouth Bank NA, 5.20%, 4/1/15
     2,640,000       2,287,029  
CNA Financial Corp., 6.50%, 8/15/16
     1,465,000       1,381,384  
Fifth Third Bancorp, 5.45%, 1/15/17
     2,000,000       1,742,094  
Fifth Third Bancorp, 4.75%, 2/1/15
     3,023,000       2,824,265  
First Horizon National Corp., 4.50%, 05/15/13
     1,400,000       1,229,306  
First Tennessee Bank, 4.63%, 5/15/13
     2,545,000       2,197,422  
First Tennessee Bank, 5.05%, 1/15/15
     1,150,000       953,406  
First Tennessee Bank, 5.65%, 4/1/16
     400,000       328,752  
Hartford Financial Services Group, 6.30%, 3/15/18
     4,900,000       4,774,061  
Huntington National Bank, 4.90%, 1/15/14
     1,325,000       1,126,469  
Huntington National Bank, 6.60%, 6/15/18
     4,525,000       3,536,663  
Key Bank, 7.413%, 5/6/15
     4,125,000       4,132,730  
Marsh & McLennan Co.'s, Inc., 5.75%, 9/15/15◊
     3,000,000       3,163,518  
Mercantile Bankshares, 4.63%, 4/15/13
     3,650,000       3,620,431  
Nuveen Investments, Inc., 10.50%, 11/15/15^
     3,000,000       2,595,000  
OneBeacon U.S. Holdings, 5.88%, 5/15/13
     2,800,000       2,675,064  
Prudential Financial, Inc., 5.10%, 9/20/14◊
     2,720,000       2,748,595  
Prudential Financial, Inc., 6.10%, 6/15/17
     2,000,000       2,008,822  
Transatlantic Holdings, 5.75%, 12/14/15
     5,075,000       4,573,484  
Wachovia Corp., 5.75%, 6/15/17◊
     1,635,000       1,727,335  
              53,486,910  
                 
Industrial — 23.5%
                
BE Aerospace, Inc., 8.50%, 7/1/18
     3,300,000       3,382,500  
Fisher Scientific International, Inc., 6.75%, 8/15/14
     3,350,000       3,468,503  
Freeport McMoRan Copper & Gold, Inc., 8.25%, 4/1/15◊
     5,050,000       5,371,937  
KLA Instruments Corp., 6.90%, 5/1/18
     4,478,000       4,680,706  
Martin Marietta Materials, 6.60%, 4/15/18
     2,500,000       2,593,865  
National Semiconductor, 6.60%, 6/15/17
     4,475,000       4,422,459  
Trinity Industries, Inc., 6.50%, 3/15/14
     3,870,000       3,831,300  
              27,751,270  
                 
Utilities — 0.0%
                
International Telephone, 7.50%, 7/1/11
     40,000       40,120  
                 
Total Corporate Bonds
           $ 105,721,557  
 
 
Total Investment Securities — 102.8%
   $ 121,300,720  
(Cost $122,052,623)**
        
Liabilities In Excess Of Other Assets — (2.8%)
     (3,355,392 )
Net Assets — 100.0%
   $ 117,945,328  
 
**
Represents cost for financial reporting purposes.
◊
All or a portion of the security is on loan.  The total market value of the securities on loan, as of September 30, 2009, was $4,642,723.
∆
Variable notes earn interest at a coupon rate which fluctuates at specified intervals, usually daily, monthly or semi-annually.  The rates shown in the Schedule of Investments are the coupon rates in effect at September 30, 2009.
†
Restricted and illiquid securities valued at fair value and not registered under the Securities Act of 1933:

   
Acquisition Date
  
Acquisition Cost
    
Value
    
Value as a % of
Net Assets
Alesco Preferred Funding III
  
March-05
   $ 724,100     $ 89,506       0.1 %
Alesco Preferred Funding IV
  
May-04
     337,338       4,014       0.0 %
Alesco Preferred Funding V
  
October-04
     80,180       1,002       0.0 %
Alesco Preferred Funding VI
  
December-04
     621,631       130,853       0.1 %
Alesco Preferred Funding VI Series E
  
March-05
     336,608       70,496       0.0 %
Fort Sheridan, LTD
  
March-05
     489,065       110,493       0.1 %
Taberna Preferred Funding, LTD
  
March-05
     1,010,811       202,270       0.2 %
        $ 3,599,733     $ 608,634       0.5 %

††
 The entire security represents collateral for securities loaned as of September 30, 2009.
^
Restricted securities not registered under the Securities Act of 1933.   Nuveen Investments, Inc., 10.50%, 11/15/15, acquisition date January-08, current cost $2,915,000 and Expedia, Inc., 8.50%, 7/1/16, acquisition date October-08, current cost $3,794,375.  At September 30, 2009, these securities had a market value of $2,595,000 and $4,747,499, respectively, representing 2.2% and 4.0% of net assets, respectively.
REIT – Real Estate Investment Trust
 
See accompanying Notes to Schedule of Investments.

 
 
Diamond Hill Funds
Notes to Schedule of Investments
September 30, 2009 (Unaudited)

The Diamond Hill Small Cap Fund (“Small Cap Fund”), Diamond Hill Small-Mid Cap Fund (“Small-Mid Cap Fund”), Diamond Hill Large Cap Fund (“Large Cap Fund”), Diamond Hill Select Fund (“Select Fund”), Diamond Hill Long-Short Fund (“Long-Short Fund”), Diamond Hill Financial Long-Short Fund (“Financial Long-Short Fund”) and Diamond Hill Strategic Income Fund (“Strategic Income Fund”), are each a series of the Diamond Hill Funds (the “Trust”) (each a “Fund” and collectively the “Funds”). The Trust is an Ohio business trust, which is registered under the Investment Company Act of 1940, as amended, (the “1940 Act”) as an open-end, management investment company.  Each Fund is a diversified series of the Trust.

The Funds offer three classes of shares: Class A, Class C and Class I.  Each class of shares for each Fund has identical rights and privileges except with respect to distribution (12b-1) and service fees, voting rights on matters affecting a single class of shares, and the exchange privileges of each class of shares.

Security valuation — Listed securities for which market quotations are readily available are valued at the closing prices as determined by the primary exchange where the securities are traded.  Unlisted securities or listed securities for which the latest sales prices are not readily available are valued at the closing bid price in the principal market where such securities are normally traded.  Debt securities are valued on the basis of valuations provided by dealers or by an independent pricing service that determines valuations based upon market transactions for normal, institutional-size trading units of similar securities. Short-term investments maturing in less than 61 days are valued at amortized cost, which approximates market.  Securities for which market quotations are not readily available are valued at their “fair value”.  In these cases, the Fair Value Committee established and appointed by the Trustees determines in good faith, subject to Trust procedures, the fair value of portfolio securities held by a Fund (“good faith fair valuation”).  When a good faith fair valuation of a security is required, consideration is generally given to a number of factors, including, but not limited to the following: dealer quotes, published analyses by dealers or analysts of the situation at issue, transactions implicitly valuing the security (such as a merger, tender offer, etc.), the value of other securities or contracts which derive their value from the security at issue, and the implications (whether negative or positive) of the circumstances which have caused trading in the security to halt.  Approximately 0.5% of the Strategic Income Fund's net assets are being valued using estimates provided by the Fair Value Committee.  The Fair Value Committee relied heavily upon analysis of the fund's portfolio manager in the absence of readily ascertainable market values.  These values may differ from the values that would have been used had a ready market for these securities existed, and the differences could be material.

The Funds adopted “Fair Value Measurements.” Fair Value Measurements establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. Under Fair Value Measurements various inputs are used in determining the value of the Funds investments.  These inputs are summarized in the three broad levels listed below:
 
·
Level 1 – quoted prices in active markets for identical securities
 
·
Level 2 – other significant observable inputs (including quoted prices for similar securities, 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)

 
 

Diamond Hill Funds
Notes to Schedule of Investments (Continued)
September 30, 2009 (Unaudited)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.  For example, securities maturing in less than 61 days of the filing are valued using amortized cost, in accordance with rules under the Investment Company Act of 1940.  Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

The following is a summary of the inputs used to value the Funds net assets as of September 30, 2009:
 
   
Level 1 –
Quoted
Prices
  
Level 2 –
Other
Significant
Observable
Inputs
Investments in Securities: (Assets)
        
Small Cap Fund
        
     Common Stocks*
$
429,621,788
$
-
     Registered Investment Companies
  
212,677,418
  
-
Small-Mid Cap Fund
        
     Common Stocks*
  
28,914,730
  
-
     Registered Investment Companies
  
13,435,102
  
-
Large Cap Fund
        
     Common Stocks*
  
573,427,601
  
-
     Registered Investment Companies
  
108,491,031
  
-
Select Fund
        
     Common Stocks*
  
17,504,967
  
-
     Registered Investment Companies
  
4,035,957
  
-
Long-Short Fund
        
     Common Stocks*
  
1,665,585,165
  
-
     Registered Investment Companies
  
236,303,664
  
-
Financial Long-Short Fund
        
     Common Stocks*
  
7,575,102
  
-
     Preferred Stocks
  
1,498,398
  
-
     Corporate Bonds
  
-
  
429,746
     Registered Investment Companies
  
2,917,259
  
-
Strategic Income Fund
        
     Collateralized Debt Obligations
  
-
  
608,634
     Common Stocks*
  
287,280
  
-
     Preferred Stocks
  
8,111,844
  
7,352
     Corporate Bonds
  
-
  
105,721,557
     Registered Investment Companies
  
6,564,053
  
-
 
 
 
 
Diamond Hill Funds
Notes to Schedule of Investments (Continued)
September 30, 2009 (Unaudited)
 
Investments in Securities Sold Short: (Liabilities)
        
Long-Short Fund
        
     Common Stocks*
$
(698,993,094)
$
-
Financial Long-Short Fund
        
     Common Stocks*
  
(939,990)
  
-
The Funds had no Level 3 securities at September 30, 2009.
*See Schedule of Investments for industry classification.

Short sales — The Long-Short Fund, Financial Long-Short Fund and Strategic Income Fund may sell a security they do not own in anticipation of a decline in the value of that security.  When the Funds sell a security short, they must borrow the security sold short and deliver it to the broker-dealer through which they made the short sale.  A gain, limited to the price at which the Funds sold the security short, or a loss, unlimited in size, will be recognized upon closing a short sale. Cash received from short sales is maintained by brokers and is used to meet margin requirements for short calls.

Securities Lending — Under the terms of the securities lending agreement with JPMorgan Chase Bank N.A.
(“JPMorgan”), JPMorgan is authorized to loan securities on behalf of the Funds to approved borrowers. In exchange, the Funds receive cash collateral in the amount of at least 100% of the value of the securities loaned. The cash collateral is invested in short term instruments as noted in the Schedules of Investments.  Although risk is mitigated by the collateral, the Funds could experience a delay in recovering their securities and possible loss of income or value if the borrower fails to return them. The agreement indemnifies the Funds from losses incurred in the event of a borrower’s material default of the terms and conditions of the borrower agreement. The agreement provides that after predetermined rebates to brokers, net securities lending income shall first be solely paid as credits and offset against costs and other charges incurred by each Fund with JPMorgan. Any remaining securities lending revenue is then paid to the Funds as securities lending income.

As of September 30, 2009, the value of securities loaned and the collateral held were as follows:

   
Market Value
    
Value of
  
   
of Securities Loaned
    
Collateral Received
  
Small Cap Fund
   $ 113,524,727     $ 117,534,809  
Small-Mid Cap Fund
   $ 7,407,178     $ 7,626,503  
Large Cap Fund
   $ 55,523,938     $ 57,197,158  
Select Fund
   $ 2,882,585     $ 2,953,011  
Long-Short Fund
   $ 87,161,690     $ 89,363,413  
Financial Long-Short Fund
   $ 2,020,178     $ 2,093,015  
Strategic Income Fund
   $ 4,642,723     $ 4,838,763  

 
 

Diamond Hill Funds
Notes to Schedule of Investments (Continued)
September 30, 2009 (Unaudited)

Security transactions — Changes in holdings of portfolio securities shall be reflected no later than in the first calculation on the first business day following trade date. However, for financial reporting purposes, portfolio security transactions are reported on trade date. The specific identification method is used for determining realized gains or losses for financial statements and income tax purposes. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Discounts and premiums on securities purchased are amortized using the daily effective yield method.

Federal tax information — As of September 30, 2009, the Funds had the following federal tax cost resulting in unrealized appreciation (depreciation) as follows:

 
Federal Tax
Cost
Gross
Unrealized
Appreciation
Gross
Unrealized
Depreciation
Net
Unrealized
Appreciation
(Depreciation)
Small Cap Fund
$603,236,807
$73,837,609
$(34,775,210)
$39,062,399
Small-Mid Cap Fund
41,023,274
4,024,854
(2,698,296)
1,326,558
Large Cap Fund
642,994,981
75,176,957
(36,253,306)
38,923,651
Select Fund
20,186,802
2,558,025
(1,203,903)
1,354,122
Long-Short Fund
1,779,095,814
261,850,915
(227,317,873)
34,533,042
Financial Long-Short Fund
10,919,159
2,037,446
(440,651)
1,596,795
Strategic Income Fund
122,060,044
11,495,986
(12,255,310)
(759,324)

Subsequent events — The Funds evaluated subsequent events from September 30, 2009, the date of this report, through November 19, 2009, the date this report was issued and available.  There were no subsequent events to report that would have a material impact on this report.

 
 
 
Item 2. 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 document.

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

Item 3. Exhibits.

The certifications required by Rule 30a-2 under the Investment Company Act of 1940, as amended, are attached hereto.

 
 

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.

(Registrant)  Diamond Hill Funds

By (Signature and Title)

/s/ James F. Laird, Jr.
James F. Laird, Jr.
President

Date:  November 18, 2009
 
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 (Signature and Title)
 
/s/ James F. Laird, Jr.
James F. Laird, Jr.
President
 
Date:  November 18, 2009
 
By (Signature and Title)
 
Gary R. Young
Gary R. Young.
Treasurer
 
Date:  November 18, 2009
 
 
 
EX-99.CERT 2 v167100_ex99-cert.htm CERTIFICATION PURSUANT TO RULE 302
CERTIFICATIONS

I, James F. Laird, Jr., President of Diamond Hill Funds, certify that:

1.           I have reviewed this report on Form N-Q of the Diamond Hill 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 schedules of investments included in this report, fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;

4.           The registrant's other certifying officer(s) 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 this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter 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(s) 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.
 
Date: November 18, 2009
Signature:
/s/ James F. Laird, Jr.
   
James F. Laird, Jr.
   
President

 
 
 

CERTIFICATIONS

I, Gary R. Young, Treasurer of Diamond Hill Funds, certify that:

1.           I have reviewed this report on Form N-Q of the Diamond Hill 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 schedules of investments included in this report, fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;

4.           The registrant's other certifying officer(s) 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 this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter 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(s) 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.
 
Date: November 18, 2009
Signature:
/s/ Gary R. Young
   
Gary R. Young
   
Treasurer
 
 
 
 
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