Diamond Hill Small Mid Cap Fund Class I (DHMIX) N-CSRS Certified semi-annual shareholder report (management investment company)

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 811-8061

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) 255-3333

Date of fiscal year end: 12/31

Date of reporting period: 06/30/10

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR 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 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.

TABLE OF CONTENTS

	Item 1. Reports to Stockholders
	Item 2. Code of Ethics
	Item 3. Audit Committee Financial Expert
	Item 4. Principal Accountant Fees and Services
	Item 5. Audit Committee of Listed Companies
	Item 6. Schedule of Investments
	Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
	Item 8. Portfolio Managers of Closed-End Management Investment Companies
	Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers
	Item 10. Submission of Matters to a Vote of Security Holders
	Item 11. Controls and Procedures
	Item 12. Exhibits
SIGNATURES
EX-99.CERT
EX-99.906CERT

Item 1. Reports to Stockholders.

Diamond Hill Funds Semiannual Report

This material must be preceded or accompanied by a current prospectus. Semi-Annual Report June 30, 2010 SMALL CAP FUND SMALL-MID CAP FUND LARGE CAP FUND SELECT FUND LONG-SHORT FUND FINANCIAL LONG-SHORT FUND STRATEGIC INCOME FUND Not FDIC Insured May Lose Value No Bank Guarantee

Table of Contents

Letter to Shareholders	1
Mission Statement, Pledge and Fundamental Principles	3
Financial Statements
Schedules of Investments	6
Statements of Assets & Liabilities	21
Statements of Operations	23
Statements of Changes in Net Assets	24
Schedules of Capital Share Transactions	26
Financial Highlights	28
Notes to Financial Statements	35
Other Items	43
Schedule of Shareholder Expenses	45
Management of the Trust	47
Notice of Privacy Policy	48

CAUTIONARY STATEMENT

At Diamond Hill, we pledge that, “we will communicate with our clients about our investment performance in a manner that will allow them to properly assess whether we are deserving of their trust.” Our views and opinions regarding the investment prospects of our portfolio holdings and Funds are “forward looking statements” which may or may not be accurate over the long term. While we believe we have a reasonable basis for our opinions, actual results may differ materially from those we anticipate. Information provided in this report should not be considered a recommendation to purchase or sell any particular security.

You can identify forward looking statements by words like “believe,” “expect,” “anticipate,” or similar expressions when discussing prospects for particular portfolio holdings and/or one of the Funds. We cannot assure future results. You should not place undue reliance on forward-looking statements, which speak only as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. This material is not authorized for distribution to prospective investors unless preceded or accompanied by a Prospectus. Please read the Prospectus carefully for a discussion of fees, expenses, and risks. Current performance may be lower or higher than that quoted herein. You may obtain a current copy of the Prospectus or more current performance information by calling 1-888-226-5595 or at Diamond Hill’s website (www.diamond-hill.com).

Letter to Shareholders

Dear Fellow Shareholders:

We are pleased to provide this 2010 mid-year update for the Diamond Hill Funds. Since our firm’s inception ten years ago, we have been very consistent in our long-term investment horizon. We use rolling five-year periods in quarterly increments to estimate the intrinsic value of securities, as well as to measure the results of our portfolio managers. Our long-term investment horizon generally results in lower turnover rates for our strategies and allows us to be disciplined in our assessment of intrinsic value, looking beyond the short-term market moves that are often emotion-based. We believe that our intrinsic value investment philosophy, absolute return focus and lack of benchmark sensitivity add the most value for investors in our strategies over time.

2010 Year-to-Date Market Review

U.S. equity markets posted losses for the first six months of 2010, with the Russell 1000 and Russell 2000 Indexes declining 6.40% and 1.95%, respectively. First quarter returns were positive as investors focused on stronger than expected corporate earnings and modest signs of economic growth. However, the seeds for a second quarter decline were already being planted with worrisome macro-economic events in China, Greece, and Europe. Indeed, the second quarter of 2010 brought a sharp reversal in the equity market rally that began in March 2009.

Corporate earnings reports were significantly better than expected in April, which initially fueled a continuation of the first quarter rally. However, as the quarter progressed, the Greek debt crisis deteriorated, causing capital markets in other debt-laden European countries to decline as fears of contagion spread. At the same time, there were growing concerns about China’s efforts to slow its booming economy and the resulting negative impact on global economic growth. In addition, the U.S. stock market also had to digest the uncertainty around proposed financial regulatory reform, the oil spill in the Gulf of Mexico, and worries about the potential for a double-dip recession as economic data showed signs of weakening in June. These macro issues clearly overshadowed any positive news, and investors responded by selling stocks and buying U.S. Treasuries and other traditionally less risky assets. As a result, the Bank of America Merrill Lynch U.S. Corporate, Government & Mortgage Index increased 5.30% during the first six months of 2010.

Economic and Sector Results

Economic news was more positive than negative during the first quarter. By May, the economic data was still good, but showing modest signs of slowing momentum. In June, home sales and housing starts were surprisingly weak, following the expiration of the home buyer tax credit, and nonfarm payrolls grew less than estimated. Retail sales also declined for the first time since July 2009. For the first six months of 2010, all market sectors declined, with the materials and energy sectors declining the most. The decline in the energy sector primarily reflected declining energy prices and fallout from the Gulf of Mexico oil spill.

Market Outlook

In general, our strategy results were reflective of market trends in the first six months of 2010. Our Financial Long-Short strategy benefited from the improvements in the financial sector, while our exposure to the energy and healthcare sectors detracted from relative year-to-date investment results in our diversified strategies. Our long-term secular thesis for energy remains intact, due to the continued tight conditions in worldwide supply and demand for oil and the belief that natural gas will be an increasingly important fuel for the foreseeable future. The healthcare sector has proven to be more economically sensitive than in past years; however, we anticipate significant additional expenditures in the healthcare industry as a result of healthcare reform, and we believe that current sector valuations already reflect expectations for lower profit margins. In our Long-Short strategy, short positions in the consumer discretionary sector contributed positively to results in the second quarter after rising painfully faster than the overall market in the first quarter. Again, our long-term secular thesis is unchanged. We continue to believe that consumer discretionary spending will likely face secular headwinds for the foreseeable future, due to high unemployment rates, household deleveraging, and tax increases. Finally, we anticipate economic challenges as a result of the removal of fiscal and monetary stimulus in the coming years.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 1

At the end of the 2010 first quarter, we were finding more attractive valuation opportunities in higher quality securities. As a result, our relative investment results benefited from the flight to quality in the second quarter. Capital markets were extremely volatile during the first six months of 2010, but we remain focused on assessing the long-term economics of the businesses in which we invest.

Ric Dillon, CFA	Chris Welch, CFA
Portfolio Manager,	Portfolio Manager,
Co-Chief Investment Officer	Co-Chief Investment Officer

The views expressed are those of the portfolio manager as of June 30, 2010, are subject to change, and may differ from the views of other portfolio managers or the firm as a whole. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. All data referenced are from sources deemed to be reliable but cannot be guaranteed. Securities and sectors referenced should not be construed as a solicitation or recommendation or be used as the sole basis for any investment decision.

The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000^® Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 90% of the U.S. market. The Russell 1000 Index does not take into account the deduction of expenses associated with a mutual fund, such as investment management and accounting fees. One cannot invest directly in an index. Unlike mutual funds, the index does not incur expenses.

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000^® Index representing approximately 8% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000 Index does not take into account the deduction of expenses associated with a mutual fund, such as investment management and accounting fees. One cannot invest directly in an index. Unlike mutual funds, the index does not incur expenses.

The Bank of America Merrill Lynch US Corporate, Government & Mortgage Index includes a mixture of government bonds, corporate bonds and mortgage pass through securities of investment grade quality, having a maturity greater than or equal to one year. The Bank of America Merrill Lynch US Corporate, Government & Mortgage Index does not take into account the deduction of expenses associated with a mutual fund, such as investment management and accounting fees. One cannot invest directly in an index. Unlike mutual funds, the index does not incur expenses.

Investors should consider the investment objectives, risks, and charges and expenses of the Diamond Hill Funds carefully before investing. This and other information about the Funds is in the prospectus, which can be obtained at www.diamond-hill.com or by calling 888-226-5595. Read the prospectus carefully before you invest. Diamond Hill Capital Management, Inc., a registered investment adviser, serves as Investment Adviser to the Diamond Hill Funds and is paid a fee for its services. The Diamond Hill Funds are distributed by BHIL Distributors, Inc. (Member FINRA), an affiliated company. Like all mutual funds, Diamond Hill Funds are not FDIC insured, may lose value, and have no bank guarantee.

Page 2 Diamond Hill Funds Semi-Annual Report June 30, 2010

Mission Statement, Pledge and Fundamental Principles

Mission	The mission of Diamond Hill is to serve our clients through a disciplined intrinsic value-based approach to investing, while maintaining a long-term perspective, and aligning our interests with those of our clients.
	To successfully pursue our mission, we are:

COMMITTED to the Graham-Buffett investment philosophy, with goals (over 5-year rolling periods) to outperform benchmarks and our peers, and achieve absolute returns sufficient for risk of asset class.

DRIVEN by our conviction to create lasting value for clients and shareholders.

MOTIVATED through ownership of Diamond Hill Funds and company stock.

Investment Philosophy	At Diamond Hill, the investment philosophy, which is rooted in the teachings of Benjamin Graham and the methods of Warren Buffett, drives the investment process — not the opposite.
	Most simply, we invest in a company when its market price is at a discount to our appraisal of the intrinsic value of the business (or at a premium for short positions).

There are four guiding principles to our investment philosophy:

¨ Treat every investment as a partial ownership interest in that company

¨ Always invest with a margin of safety to ensure the protection of capital, as well as return on capital

¨ Possess a long-term investment temperament

¨ Recognize that market price and intrinsic value tend to converge over a reasonable period of time

“Investment is most intelligent when it is most businesslike.”

— BENJAMIN GRAHAM

Pledge	Consistent with our mission & investment philosophy, we pledge the following to all of our clients:
	Our investment discipline is to assess the economics of the underlying business, its management, and the price that must be paid to own a piece of it. We seek to concentrate our investments in businesses that are available at prices below intrinsic value (above intrinsic value for short positions) and are managed or controlled by trustworthy and capable people. Benjamin Graham pioneered this discipline during the 1930s and many others have practiced it with great success ever since, most notably Warren Buffett.
	We will communicate with our clients about our investment performance in a manner that will allow them to properly assess whether we are deserving of their trust.
	Our investment team will be comprised of people with integrity, sound experience and education, in combination with a strong work ethic and independence of thought. Especially important is that each possesses the highest level of character, business ethics and professionalism.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 3

		Our employees will enjoy a working environment that supports professional and personal growth, thereby enhancing employee satisfaction, the productivity of the firm and the experience of our clients.
		“Invest With Us” means we will invest the capital you entrust to us with the same care that we invest our own capital. To this end, Diamond Hill employees and affiliates are significant investors in the same portfolios in which our clients invest and are collectively the largest shareholders in the Diamond Hill Funds. In addition, all Diamond Hill employees are subject to a Code of Ethics, which states that all personal investments must be made in a Diamond Hill fund, unless approved by our Chief Compliance Officer.
Our fundamental investment principles		Valuation Every share of stock has an intrinsic value that is independent of its current stock market price. At any point in time, the stock market price may be either higher or lower than intrinsic value.
		Over short periods of time, as evidenced by extreme stock market volatility, the stock market price is heavily influenced by the emotions of market participants, which are far more difficult to predict than intrinsic value. While stock market prices may experience extreme fluctuations on a particular day, we believe intrinsic value is far less volatile.
		Over sufficiently long periods of time, five years and longer, the stock market price tends to converge with intrinsic value.
		Calculating Intrinsic Value Estimate
	��	We believe that we can determine a reasonable approximation of that intrinsic value in some cases.
		That value can be determined if we have a reasonable basis for projecting the future cash flows of a business and use an appropriate discount rate.
		In estimating intrinsic value, we use an interdisciplinary approach. Not only do we perform financial modeling including discounted cash flow, private market value, and leveraged buyout analyses, we draw from other areas we believe are relevant to our investment decision-making. These include economics, statistics and probability theory, politics, psychology, and consumer behavior.
		In short, we do not want to exclude from our thinking anything that can help us forecast future cash flows, our most important as well as most difficult job.
		The Diamond Hill investment process continually compares market price to our estimate of intrinsic value, which is updated over time as new information arises.
		Suitable Investments
		We only invest in a business when the stock market price is lower than our conservative assessment of per share intrinsic value (or higher than our assessment of per share intrinsic value for short positions).
		We concentrate our investments in businesses whose per share intrinsic value is likely to grow.
		To achieve this, we assess the underlying economics of the businesses in which we invest and the industries and markets in which they participate. We seek to invest in businesses that possess a competitive advantage and significant growth prospects as well as outstanding managers and employees.

Page 4 Diamond Hill Funds Semi-Annual Report June 30, 2010

	Every business in which we invest is “handicapped” by its price. While we would prefer to own only great businesses with superior managers, there are very few businesses that satisfy those criteria and additionally are available at attractive prices. As a result, we may invest in less attractive businesses at more than attractive prices. Depending on the price that we pay, our returns from less than ideal businesses may be even better than our returns from ideal businesses.
	Risk & Return
	We intend to achieve our return from both the closing of the gap between our purchase price and intrinsic value and the growth in per share intrinsic value. For short positions, a growing intrinsic value may shorten the holding period.
	We define risk as the permanent loss of capital. We manage risk by investing in companies selling at a discount (premium) to our estimate of intrinsic value, with a full understanding of the fundamental drivers of intrinsic value. In addition, we carefully consider business risks that could impact our estimate on intrinsic value. We regularly monitor and update our estimate of intrinsic value, adjusting for new information. If we are successful in accurately assessing intrinsic value, we will minimize the risk of loss and increase the return potential.
Our fundamental strategic income principles	Yield Our primary goal is to generate a yield greater than the current rate of inflation without bearing undue credit or interest rate risk. However, we cannot guarantee any specific yield. Approach
	A flexible approach allows us to invest in both investment grade and non-investment grade corporate bonds as well as in preferred securities, real estate investment trusts, master limited partnerships, and closed end funds.
	We can also invest in securities issued by the U.S. government and its agencies when conditions warrant.
	Total Return
	We balance our income objective with a focus on total return. Over the next five years, our objective is to earn equity-like returns in the income markets with lower year-to-year volatility and more importantly, a much lower risk of permanent loss of capital.

“You simply have to behave according to what is rational than
according to what is fashionable.”

— WARREN BUFFETT

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 5

Diamond Hill Small Cap Fund

Schedule of Investments

June 30, 2010 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 80.4%
Consumer Discretionary — 6.8%
Aaron’s, Inc.◊		343,990	$	5,871,909
Callaway Golf Co.◊		731,916		4,420,773
Global Sources Ltd.*		735,250		5,764,360
Hillenbrand, Inc.		353,435		7,559,975
JAKKS Pacific, Inc.*◊		414,587		5,961,761
K-Swiss, Inc., Class A*◊		457,100		5,133,233
Steiner Leisure Ltd.*◊		279,830		10,756,665
				45,468,676
Consumer Staples — 12.8%
American Italian Pasta Co., Class A*		196,753		10,402,331
Del Monte Foods Co.		472,760		6,803,016
Energizer Holdings, Inc.*		500,195		25,149,805
Flowers Foods, Inc.◊		859,161		20,989,303
Hain Celestial Group, Inc., The*◊		165,530		3,338,740
Lance, Inc.◊		360,530		5,945,140
Ralcorp Holdings, Inc.*		184,400		10,105,120
Ruddick Corp.◊		89,275		2,766,632
				85,500,087
Energy — 12.0%
Berry Petroleum Co., Class A◊		469,130		12,066,024
Cimarex Energy Co.		241,295		17,271,896
Denbury Resources, Inc.*		638,515		9,347,859
Exterran Holdings, Inc.*◊		279,728		7,219,780
Forest Oil Corp.*◊		222,020		6,074,467
Hornbeck Offshore Services, Inc.*◊		384,525		5,614,065
Southwestern Energy Co.*		208,230		8,046,007
Whiting Petroleum Corp.*◊		187,650		14,715,513
				80,355,611
Financial — 22.3%
Alleghany Corp.*		35,753		10,486,355
Arch Capital Group Ltd.*◊		186,195		13,871,528
Assurant, Inc.		700,360		24,302,492
Assured Guaranty Ltd.◊		1,902,472		25,245,803
First American Financial Corp.		306,020		3,880,334
First Niagara Financial Group, Inc.		137,800		1,726,634
Hanover Insurance Group, Inc., The◊		91,880		3,996,780
Horace Mann Educators Corp.◊		611,295		9,352,813
Huntington Bancshares, Inc.		1,355,798		7,511,121
Leucadia National Corp.*		244,135		4,763,074
Mid-America Apartment Communities, Inc. REIT◊		127,569		6,565,976
National Penn Bancshares, Inc.◊		659,430		3,963,174
Old Republic International Corp.◊		1,304,365		15,821,947
Popular, Inc.*		1,087,855		2,915,451
Redwood Trust, Inc. REIT◊		356,720		5,222,381
Sterling Bancorp◊		192,740		1,734,660
United Fire & Casualty Co.◊		212,675		4,215,219
Wilmington Trust Corp.◊		364,095		4,037,814
				149,613,556
Health Care — 7.5%
inVentiv Health, Inc.*		174,385		4,464,256
Kinetic Concepts, Inc.*		174,545		6,372,638
King Pharmaceuticals, Inc.*		1,102,195		8,365,660
LifePoint Hospitals, Inc.*◊		295,725		9,285,765
Myriad Genetics, Inc.*		437,300		6,537,635
Res-Care, Inc.*◊		902,453		8,717,696
STERIS Corp.◊		214,640		6,671,011
				50,414,661
Industrial — 8.1%
AirTran Holdings, Inc.*◊		1,316,400		6,384,540
Apogee Enterprises, Inc.◊		514,250		5,569,328
Brink’s Co., The		417,570		7,946,357
Corrections Corp. of America*		352,635		6,728,276
HUB Group, Inc., Class A*◊		228,920		6,869,889
Kaydon Corp.◊		106,285		3,492,525
Saia, Inc.*◊		387,915		5,818,725
Toro Co., The◊		123,305		6,056,742
Trinity Industries, Inc.◊		296,170		5,248,132
				54,114,514
Information Technology — 5.6%
Alliance Data Systems Corp.*◊		203,650		12,121,248
CSG Systems International, Inc.*		209,972		3,848,787
KLA-Tencor Corp.		270,990		7,555,201
Liquidity Services, Inc.*◊		126,660		1,641,514
Verigy Ltd.*		1,427,055		12,401,108
				37,567,858

Page 6 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Small Cap Fund
Schedule of Investments (Continued)
June 30, 2010 (Unaudited)

	Shares/		Fair
	Par Value		Value
Technology — 1.0%
CoreLogic, Inc.		382,865	$	6,761,396
Utilities — 4.3%
Cleco Corp.◊		380,650		10,052,966
UGI Corp.		349,690		8,896,114
WGL Holdings, Inc.◊		283,864		9,659,892
				28,608,972
Total Common Stocks			$	538,405,331
Repurchase Agreement — 14.7%
BNP Paribas Securities Corp., 0.03%, Agreement dated 6/30/10 to be repurchased at $98,133,943 on 7/1/10. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 2%-6%, and maturities from 8/24/2012 through 4/16/2037†	$	98,133,861		98,133,861

Registered Investment Companies — 21.3%
JPMorgan Prime Money Market Fund-Capital Shares	84,059,084		84,059,084
JPMorgan U.S. Government Money Market Fund-Capital Shares	58,754,377		58,754,377
Total Registered Investment Company		$	142,813,461
Total Investment Securities — 116.4% (Cost $768,943,567)**		$	779,352,653
Net Other Assets (Liabilities) — (16.4%)			(109,565,025	)
Net Assets — 100.0%		$	669,787,628

*	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 June 30, 2010, was $94,607,928.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as at June 30, 2010.
REIT – Real Estate Investment Trust
See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 7

Diamond Hill Small-Mid Cap Fund
Schedule of Investments
June 30, 2010 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 87.2%
Consumer Discretionary — 5.8%
Aaron’s, Inc.◊		12,230	$	208,766
Callaway Golf Co.◊		76,455		461,788
GameStop Corp., Class A*◊		20,660		388,202
Hillenbrand, Inc.		26,565		568,225
K-Swiss, Inc., Class A*◊		44,000		494,120
Steiner Leisure Ltd.*		13,980		537,391
				2,658,492
Consumer Staples — 12.5%
American Italian Pasta Co., Class A*◊		8,670		458,383
ConAgra Foods, Inc.		51,140		1,192,585
Del Monte Foods Co.		49,190		707,844
Energizer Holdings, Inc.*		19,775		994,287
Flowers Foods, Inc.◊		49,140		1,200,490
Hain Celestial Group, Inc., The*◊		10,880		219,450
Molson Coors Brewing Co., Class B		17,840		755,702
Ruddick Corp.◊		6,820		211,352
				5,740,093
Energy — 17.1%
Berry Petroleum Co., Class A◊		25,010		643,257
Cimarex Energy Co.		23,855		1,707,541
Denbury Resources, Inc.*		61,723		903,625
Energen Corp.		9,460		419,362
Exterran Holdings, Inc.*◊		19,555		504,714
Forest Oil Corp.*◊		11,025		301,644
Hornbeck Offshore Services, Inc.*◊		30,430		444,278
Noble Energy, Inc.		27,430		1,654,852
Southwestern Energy Co.*		21,480		829,987
Whiting Petroleum Corp.*		5,550		435,231
				7,844,491
Financial — 19.6%
Alleghany Corp.*		2,114		620,036
Allstate Corp.		29,255		840,496
Arch Capital Group Ltd.*◊		13,795		1,027,728
Assurant, Inc.		37,565		1,303,506
Assured Guaranty Ltd.◊		74,035		982,444
First American Financial Corp.		22,875		290,055
Hanover Insurance Group, Inc., The◊		7,300		317,550
Huntington Bancshares, Inc.		76,554		424,109
Marsh & McLennan Cos., Inc.		22,705		511,998
Mid-America Apartment Communities, Inc. REIT		4,790		246,541
National Penn Bancshares, Inc.		54,250		326,043
Old Republic International Corp.◊		114,645		1,390,644
Popular, Inc.*		161,640		433,195
SunTrust Banks, Inc.		8,740		203,642
United Fire & Casualty Co.◊		3,889		77,080
				8,995,067
Health Care — 10.0%
Forest Laboratories, Inc.*		37,255		1,021,905
Kinetic Concepts, Inc.*		12,255		447,430
King Pharmaceuticals, Inc.*		153,595		1,165,786
LifePoint Hospitals, Inc.*		14,915		468,331
Myriad Genetics, Inc.*		26,305		393,260
Quest Diagnostics, Inc.		11,755		585,046
STERIS Corp.		17,265		536,596
				4,618,354
Industrial — 10.6%
AirTran Holdings, Inc.*◊		67,915		329,388
Brink’s Co., The		27,515		523,610
Corrections Corp. of America*		31,845		607,603
Dover Corp.		35,380		1,478,530
Fluor Corp.		11,810		501,925
HUB Group, Inc., Class A*◊		19,480		584,595
Parker Hannifin Corp.		8,345		462,814
Toro Co., The		3,405		167,254
Trinity Industries, Inc.◊		11,420		202,362
				4,858,081
Information Technology — 6.0%
Alliance Data Systems Corp.*◊		11,570		688,646
KLA-Tencor Corp.		30,680		855,358
Linear Technology Corp.◊		13,680		380,441
Verigy Ltd.*		97,740		849,361
				2,773,806
Technology — 0.9%
CoreLogic, Inc.		23,575		416,334

Page 8 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Small-Mid Cap Fund
Schedule of Investments (Continued)
June 30, 2010 (Unaudited)

	Shares/		Fair
	Par Value		Value
Utilities — 4.7%
Cleco Corp.◊		25,190	$	665,268
UGI Corp.		33,590		854,529
WGL Holdings, Inc.◊		19,565	$	665,797
				2,185,594
Total Common Stocks			$	40,090,312
Repurchase Agreement — 10.0%
BNP Paribas Securities Corp., 0.03%, Agreement dated 6/30/10 to be repurchased at $4,601,466 on 7/1/10. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 2%-6%, and maturities from 8/24/2012 through 4/16/2037†	$	4,601,462		4,601,462
Registered Investment Company — 13.2%
JPMorgan U.S. Government Money Market Fund-Capital Shares		6,055,064		6,055,064
Total Investment Securities — 110.4% (Cost $48,403,046)**			$	50,746,838
Net Other Assets (Liabilities) — (10.4%)				(4,795,733	)
Net Assets — 100.0%			$	45,951,105

*	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 June 30, 2010, was $4,458,408.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as at June 30, 2010.
REIT — Real Estate Investment Trust
See accompanying Notes to Financial Statements.

Diamond Hill Large Cap Fund
Schedule of Investments
June 30, 2010 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 94.4%
Consumer Discretionary — 4.0%
McDonald’s Corp.		256,609	$	16,902,835
Wal-Mart Stores, Inc.		342,093		16,444,410
				33,347,245
Consumer Staples — 14.2%
ConAgra Foods, Inc.		710,728		16,574,177
General Mills, Inc.		483,208		17,163,548
Kimberly-Clark Corp.		283,405		17,182,845
PepsiCo, Inc.		410,690		25,031,556
Procter & Gamble Co., The		422,962		25,369,261
Sysco Corp.◊		578,264		16,521,002
				117,842,389
Energy — 15.6%
Anadarko Petroleum Corp.		529,930		19,125,174
Apache Corp.		388,403		32,699,648
Devon Energy Corp.		486,327		29,627,041
Exxon Mobil Corp.		282,065		16,097,449
Occidental Petroleum Corp.		414,492		31,978,058
				129,527,370
Financial — 14.9%
Allstate Corp.		280,696		8,064,396
Bank of New York Mellon Corp.		437,834		10,810,121
JPMorgan Chase & Co.		649,572		23,780,831
Marsh & McLennan Cos., Inc.		595,640		13,431,682
Prudential Financial, Inc.		295,450		15,853,847
SunTrust Banks, Inc.		315,706		7,355,950
Travelers Cos., Inc., The		435,444		21,445,617
U.S. Bancorp		358,748		8,018,018
Wells Fargo & Co.		590,695		15,121,792
				123,882,254
Health Care — 19.8%
Abbott Laboratories		538,852		25,207,497
Baxter International, Inc.		324,107		13,171,708
Johnson & Johnson		368,994		21,792,786
Medtronic, Inc.		768,602		27,877,195
Merck & Co., Inc.		713,680		24,957,390
Pfizer, Inc.		1,695,167		24,173,081
Quest Diagnostics, Inc.		205,955		10,250,380
UnitedHealth Group, Inc.		594,961		16,896,892
				164,326,929

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 9

Diamond Hill Large Cap Fund
Schedule of Investments (Continued)
June 30, 2010 (Unaudited)

	Shares/		Fair
	Par Value		Value
Industrial — 13.6%
3M Co.		214,617	$	16,952,597
Dover Corp.		381,393		15,938,413
Fluor Corp.		182,475		7,755,188
Illinois Tool Works, Inc.		369,944		15,271,288
Parker Hannifin Corp.		279,474		15,499,628
Raytheon Co.		246,769		11,941,152
United Technologies Corp.		445,837		28,939,280
				112,297,546
Information Technology — 7.7%
Alliance Data Systems Corp.*◊		95,770		5,700,230
Cisco Systems, Inc.*		369,961		7,883,869
Dell, Inc.*		963,275		11,617,097
KLA-Tencor Corp.		698,795		19,482,405
Microsoft Corp.		839,150		19,308,841
				63,992,442
Materials — 2.0%
Air Products & Chemicals, Inc.		253,370		16,420,910
Utilities — 2.6%
Dominion Resources, Inc.		550,960		21,344,190
Total Common Stocks			$	782,981,275
Repurchase Agreement — 2.5%
BNP Paribas Securities Corp., 0.03%, Agreement dated 6/30/10 to be repurchased at $20,496,800 on 7/1/10. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 2%-6%, and maturities from 8/24/2012 through 4/16/2037†	$	20,496,783		20,496,783

Registered Investment Company — 6.2%
JPMorgan Prime Money Market Fund-Capital Shares	51,782,263		51,782,263
Total Investment Securities — 103.1% (Cost $867,368,326)**		$	855,260,321
Net Other Assets (Liabilities) — (3.1%)			(25,530,401	)
Net Assets — 100.0%		$	829,729,920

*	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 June 30, 2010, was $19,642,825.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as at June 30, 2010.
See accompanying Notes to Financial Statements.

Page 10 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Select Fund
Schedule of Investments
June 30, 2010 (Unaudited)

	Shares/		Fair
	Par Value		Value
Common Stocks — 92.0%
Consumer Discretionary — 4.0%
McDonald’s Corp.		9,980	$	657,383
Wal-Mart Stores, Inc.		13,350		641,734
				1,299,117
Consumer Staples — 14.7%
ConAgra Foods, Inc.		56,068		1,307,506
General Mills, Inc.		18,110		643,267
PepsiCo, Inc.		10,530		641,803
Procter & Gamble Co., The		16,495		989,370
Sysco Corp.		43,835		1,252,366
				4,834,312
Energy — 15.3%
Anadarko Petroleum Corp.		18,665		673,620
Apache Corp.		11,310		952,189
Cimarex Energy Co.		10,945		783,443
Devon Energy Corp.		13,715		835,518
Exterran Holdings, Inc.*◊		22,045		568,981
Occidental Petroleum Corp.		12,265		946,245
Southwestern Energy Co.*		7,005		270,673
				5,030,669
Financial — 15.6%
Arch Capital Group Ltd.*◊		6,800		506,600
Assurant, Inc.		11,075		384,303
Assured Guaranty Ltd.◊		50,090		664,694
Prudential Financial, Inc.		13,585		728,971
Travelers Cos., Inc., The		21,430		1,055,428
U.S. Bancorp		36,995		826,838
Wells Fargo & Co.		37,920		970,752
				5,137,586
Health Care — 18.8%
Abbott Laboratories		18,700		874,786
Baxter International, Inc.		20,490		832,714
Johnson & Johnson		14,725		869,658
Medtronic, Inc.		26,576		963,912
Merck & Co., Inc.		27,920		976,362
Pfizer, Inc.		63,720		908,647
UnitedHealth Group, Inc.		26,847		762,455
				6,188,534

Industrial — 14.0%
3M Co.		8,710		688,003
AirTran Holdings, Inc.*◊		68,735		333,365
Dover Corp.		24,185		1,010,691
Illinois Tool Works, Inc.		21,243		876,911
Parker Hannifin Corp.		11,910		660,528
United Technologies Corp.		16,025		1,040,183
				4,609,681
Information Technology — 6.2%
Cisco Systems, Inc.*		17,740		378,039
KLA-Tencor Corp.		19,710		549,515
Microsoft Corp.		31,405		722,629
Verigy Ltd.*		44,405		385,880
				2,036,063
Materials — 2.4%
Air Products & Chemicals, Inc.		12,405		803,968
Utilities — 1.0%
Dominion Resources, Inc.		8,500		329,290
Total Common Stocks			$	30,269,220
Repurchase Agreement — 0.6%
BNP Paribas Securities Corp., 0.03%, Agreement dated 6/30/10 to be repurchased at $211,914 on 7/1/10. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 2%-6%, and maturities from 8/24/2012 through 4/16/2037†	$	211,914		211,914
Registered Investment Company — 8.3%
JPMorgan Prime Money Market Fund-Capital Shares		2,727,485		2,727,485

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 11

Diamond Hill Select Fund
Schedule of Investments (Continued)
June 30, 2010 (Unaudited)

	Fair
	Value
Total Investment Securities — 100.9% (Cost $32,842,669)**	$	33,208,619
Net Other Assets (Liabilities) — (0.9%)		(310,136	)
Net Assets — 100.0%	$	32,898,483

*	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 June 30, 2010, was $201,702.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as at June 30, 2010.
See accompanying Notes to Financial Statements.

Diamond Hill Long-Short Fund
Schedule of Investments
June 30, 2010 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 88.2%
Consumer Discretionary — 3.8%
McDonald’s Corp.§		588,554	$	38,768,052
Wal-Mart Stores, Inc.		666,875		32,056,681
				70,824,733
Consumer Staples — 12.3%
ConAgra Foods, Inc.§		1,879,640		43,833,205
General Mills, Inc.§		1,218,632		43,285,809
PepsiCo, Inc.		888,825		54,173,884
Procter & Gamble Co., The		953,035		57,163,039
Sysco Corp.§		1,124,287		32,120,879
				230,576,816
Energy — 16.4%
Anadarko Petroleum Corp.§		1,232,343		44,475,259
Apache Corp.§		872,506		73,456,280
Cimarex Energy Co.		319,205		22,848,694
Devon Energy Corp.§		873,900		53,237,988
Exxon Mobil Corp.		655,818		37,427,533
Occidental Petroleum Corp.§		991,798		76,517,216
				307,962,970
Financial — 13.1%
Assurant, Inc.§		589,230		20,446,281
Assured Guaranty Ltd. פ		1,674,935		22,226,387
JPMorgan Chase & Co.		1,230,505		45,048,788
Prudential Financial, Inc.		770,530		41,346,640
SunTrust Banks, Inc.◊		644,205		15,009,977
Travelers Cos., Inc., The		934,060		46,002,455
U.S. Bancorp§		837,897		18,726,998
Wells Fargo & Co.		1,444,530		36,979,968
				245,787,494
Health Care — 17.2%
Abbott Laboratories§		1,124,300		52,594,754
Baxter International, Inc.		608,641		24,735,170
Johnson & Johnson§		581,575		34,347,819
Medtronic, Inc.§		1,510,552		54,787,721
Merck & Co., Inc.		1,348,180		47,145,855
Pfizer, Inc.		3,016,695		43,018,071
Quest Diagnostics, Inc.		473,340		23,558,132
UnitedHealth Group, Inc.§		1,550,540		44,035,336
				324,222,858

Page 12 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Long-Short Fund
Schedule of Investments (Continued)
June 30, 2010 (Unaudited)

	Shares/		Fair
	Par Value		Value
Industrial — 13.5%
3M Co.		488,590	$	38,593,724
AirTran Holdings, Inc.*§		504,896		2,448,746
Dover Corp.§		1,003,255		41,926,026
Fluor Corp.§		359,335		15,271,737
Illinois Tool Works, Inc.§		766,040		31,622,131
Parker Hannifin Corp.		681,885		37,817,342
Raytheon Co.		546,907		26,464,830
United Technologies Corp.§		928,205		60,249,787
				254,394,323
Information Technology — 7.3%
Alliance Data Systems Corp.*◊		271,060		16,133,491
Cisco Systems, Inc.*		900,279		19,184,946
Dell, Inc.*		1,788,910		21,574,255
KLA-Tencor Corp.		1,469,288		40,963,749
Microsoft Corp.§		1,751,740		40,307,537
				138,163,978
Materials — 1.9%
Air Products & Chemicals, Inc.		563,218		36,502,158
Utilities — 2.7%
Dominion Resources, Inc.		1,286,140		49,825,064
Total Common Stocks			$	1,658,260,394
Repurchase Agreement — 0.9%
BNP Paribas Securities Corp., 0.03%, Agreement dated 6/30/10 to be repurchased at $16,233,201 on 7/1/10. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 2%-6%, and maturities from 8/24/2012 through 4/16/2037†	$	16,233,187		16,233,187
Registered Investment Company — 7.9%
JPMorgan Prime Money Market Fund-Capital Shares		149,299,151		149,299,151

Total Investment Securities — 97.0% (Cost $1,759,936,497)**	$	1,823,792,732
Segregated Cash With Brokers — 32.2%		604,884,804
Securities Sold Short — (28.8)% (Proceeds $439,630,015)		(540,859,855	)
Net Other Assets (Liabilities) — (0.4%)		(7,988,378	)
Net Assets — 100.0%	$	1,879,829,303

*	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 June 30, 2010, was $15,803,441.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as at June 30, 2010.
§	Security position is either entirely or partially held in a segregated account as collateral for securities sold short aggregating a total market value of $630,852,057.
See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 13

Diamond Hill Long-Short Fund
Schedule of Investments Sold Short
June 30, 2010 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 28.8%
Consumer Discretionary — 17.0%
Amazon.com, Inc.*		101,295	$	11,067,492
BJ’s Wholesale Club, Inc.*		220,587		8,163,925
Brunswick Corp.		1,311,835		16,306,109
Career Education Corp.*		1,425,345		32,811,442
CarMax, Inc.*		651,970		12,974,203
DeVry, Inc.		156,055		8,191,327
Gap, Inc.,The		586,130		11,406,090
Gymboree Corp.*		663,025		28,317,798
Jo-Ann Stores, Inc.*		323,410		12,131,109
Life Time Fitness, Inc.*		360,724		11,467,416
Macy’s, Inc.		1,513,935		27,099,436
MGM Mirage*		2,513,391		24,229,089
NetFlix, Inc.*		143,265		15,565,742
Nordstrom, Inc.		435,965		14,033,713
Royal Caribbean Cruises Ltd.*		1,061,271		24,165,141
Sally Beauty Holdings, Inc.*		1,521,610		12,477,202
Tractor Supply Co.		598,128		36,467,864
Urban Outfitters, Inc.*		363,620		12,504,892
				319,379,990
Consumer Staples — 1.7%
H.J. Heinz Co.		212,238		9,172,926
Kraft Foods, Inc., Class A		816,645		22,866,060
				32,038,986
Health Care — 3.0%
Covance, Inc.*		495,990		25,454,207
Omnicare, Inc.		1,258,521		29,826,948
				55,281,155
Industrial — 2.0%
Boeing Co., The		469,555		29,464,576
Werner Enterprises, Inc.		364,910		7,987,880
				37,452,456
Information Technology — 2.8%
Akamai Technologies, Inc.*		627,195		25,445,301
Salesforce.com, Inc.*		323,465		27,759,766
				53,205,067
Materials — 1.7%
Dow Chemical Co.		1,333,830		31,638,448
Telecommunication Services — 0.6%
Sprint Nextel Corp.*		2,798,055		11,863,753
Total Common Stocks Sold Short				540,859,855
Total Securities Sold Short (Proceeds $439,630,015)			$	540,859,855

*	Non-dividend expense producing security.
Percentages disclosed are based on total net assets of the Fund at June 30, 2010.
See accompanying Notes to Financial Statements.

Page 14 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Financial Long-Short Fund
Schedule of Investments
June 30, 2010 (Unaudited)

	Shares/		Fair
	Par Value		Value
Preferred Stocks — 7.0%
Banking Services — 3.7%
Citizens Funding Trust I, 7.50%		9,130	$	151,102
Huntington Bancshares, Inc., 8.50%, Series A		132		130,680
Wachovia Preferred Funding Corp., 7.25%, Series A		8,375		193,797
				475,579
Financial Services — 1.7%
Countrywide Capital V, 7.00%§		10,050		216,779
REITs and Real Estate Management — 1.6%
iStar Financial, Inc., 7.80%, Series F		12,387		159,420
LaSalle Hotel Properties, 8.00%, Series E		2,483		57,283
				216,703
Total Preferred Stocks				909,061
Common Stocks — 83.7%
Asset Management — 0.7%
Affiliated Managers Group, Inc.*		1,560		94,801
Banking Services — 25.8%
BB&T Corp.		3,976		104,608
First California Financial Group, Inc.*		20,971		56,412
First Financial Holdings, Inc.◊		14,664		167,903
First Niagara Financial Group, Inc.		13,320		166,900
First of Long Island Corp.◊		7,635		196,296
Huntington Bancshares, Inc.§		38,926		215,650
National Penn Bancshares, Inc.		33,930		203,919
PNC Financial Services Group, Inc.§		6,594		372,561
Popular, Inc.*		78,360		210,005
Sterling Bancorp		6,400		57,600
SunTrust Banks, Inc.		4,867		113,401
U.S. Bancorp§		21,903		489,532
Wells Fargo & Co.§		30,826		789,146
Wilmington Trust Corp.◊		17,025		188,807
				3,332,740
Consumer Financial Services — 4.3%
American Express Co.		6,385		253,484
Discover Financial Services		21,905		306,232
				559,716

Financial Services — 17.0%
Bank of America Corp.	29,780		427,939
Bank of New York Mellon Corp.§	15,349		378,967
JPMorgan Chase & Co.	22,845		836,355
Leucadia National Corp.*	4,750		92,673
Morgan Stanley§	6,950		161,309
MVC Capital, Inc.◊	10,160		131,267
State Street Corp.	4,963		167,849
			2,196,359
Insurance — 32.8%
Alleghany Corp.*	502		147,237
Allstate Corp.§	11,528		331,199
Arch Capital Group Ltd.*	3,731		277,960
Assurant, Inc.§	14,210		493,087
Assured Guaranty Ltd.◊	33,465		444,081
First American Financial Corp.	2,980		37,786
Hanover Insurance Group, Inc., The§	1,449		63,031
Hartford Financial Services Group, Inc.	7,588		167,922
Horace Mann Educators Corp.◊	12,163		186,094
Marsh & McLennan Cos., Inc.	8,720		196,636
Old Republic International Corp.◊	37,625		456,391
Prudential Financial, Inc.	8,600		461,476
Travelers Cos., Inc., The	12,795		630,154
United Fire & Casualty Co.◊	3,462		68,617
XL Capital Ltd., Class A	17,555		281,056
			4,242,727
REITs and Real Estate Management — 2.7%
Mid-America Apartment Communities, Inc. REIT§	1,076		55,382
Redwood Trust, Inc. REIT	20,040		293,385
			348,767
Technology Services — 0.4%
CoreLogic, Inc.	2,980		52,627
Total Common Stocks		$	10,827,737
Corporate Bonds —1.7%
Banking Services —1.7%
AmSouth Bank, 5.20%, 4/1/15	120,000		114,590
Zions Bancorp., 7.75%, 9/23/14◊	105,000		106,993
Total Corporate Bonds		$	221,583

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 15

Diamond Hill Financial Long-Short Fund
Schedule of Investments (Continued)
June 30, 2010 (Unaudited)

	Shares/		Fair
	Par Value		Value
Repurchase Agreement — 9.9%
BNP Paribas Securities Corp., 0.03%, Agreement dated 6/30/10 to be repurchased at $1,276,848 on 7/1/10. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 2%-6%, and maturities from 8/24/2012 through 4/16/2037†	$	1,276,847	$	1,276,847
Registered Investment Company — 7.3%
JPMorgan U.S. Government Money Market Fund-Capital Shares		938,508		938,508
Total Investment Securities — 109.6% (Cost $13,439,592)**			$	14,173,736
Segregated Cash With Brokers — 5.0%				648,102
Securities Sold Short — (4.7)% (Proceeds $617,209)				(606,705	)
Net Other Assets (Liabilities) — (9.9%)				(1,278,783	)
Net Assets — 100.0%			$	12,936,350

*	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 June 30, 2010, was $1,234,231.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as at June 30, 2010.
§	Security position is either entirely or partially held in a segregated account as collateral for securities sold short aggregating a total market value of $2,082,197.
REIT — Real Estate Investment Trust
See accompanying Notes to Financial Statements.

Diamond Hill Financial Long-Short Fund
Schedule of Securities Sold Short
June 30, 2010 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 4.7%
Banking Services — 4.3%
First Financial Bankshares, Inc.		3,105	$	149,319
Home Bancshares, Inc.		6,338		144,570
M&T Bank Corp.		2,370		201,332
Westamerica Bancorp.		1,145		60,135
				555,356
Capital Markets — 0.4%
KBW, Inc.*		2,395		51,349
Total Securities Sold Short (Proceeds $617,209)			$	606,705

*	Non-dividend expense producing security.
Percentages disclosed are based on total net assets of the Fund at June 30, 2010.
See accompanying Notes to Financial Statements.

Page 16 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Strategic Income Fund
Schedule of Investments
June 30, 2010 (Unaudited)

	Shares/		Fair
	Par Value		Value
Collateralized Debt Obligations — 0.5%
Alesco Preferred Funding III*#	$	724,100	$	97,413
Alesco Preferred Funding Ltd., Series 6A, Class PPNE*#		336,608		80,577
Alesco Preferred Funding Ltd. IV*#		3,373		4,014
Alesco Preferred Funding Ltd. V*#		802		1,002
Alesco Preferred Funding VI PNN*#		621,631		149,558
Fort Sheridan ABS CDO Ltd., Series 2005-1A, Class PPN2*#		611,948		147,553
Taberna Preferred Funding Ltd., Series 2005-1A, Class PPN2*#		1,175,564		259,459
Total Collateralized Debt Obligations				739,576
Preferred Stocks — 1.0%
Eagle Hospitality Properties Trust, Inc., 8.25%, Series A*		21,007		23,108
Innkeepers USA Trust, 8.00%, Series C*		93,250		60,612
XL Capital Ltd., 10.75%		50,000		1,256,500
Total Preferred Stocks				1,340,220
Corporate Bonds — 85.9%
Consumer Discretionary — 9.7%
Expedia, Inc., 8.50%, 7/1/16	$	3,000,000		3,225,000
Expedia, Inc., 7.46%, 8/15/18		1,700,000		1,863,625
Goodyear Tire & Rubber Co., The, 10.50%, 5/15/16◊		3,550,000		3,860,625
Historic TW, Inc., 8.05%, 1/15/16		1,600,000		1,917,915
Jarden Corp., 8.00%, 5/1/16◊		2,650,000		2,722,875
				13,590,040
Consumer Staples — 6.0%
Del Monte Corp., 6.75%, 2/15/15		4,625,000		4,688,594
Fortune Brands, Inc., 4.88%, 12/1/13		3,475,000		3,683,076
				8,371,670
Energy — 4.8%
Anadarko Petroleum Corp., 5.95%, 9/15/16		1,650,000		1,420,150
Bristow Group, Inc., 6.13%, 6/15/13		684,000		673,740
Cimarex Energy Co., 7.13%, 5/1/17		4,640,000		4,663,200
				6,757,090

Financial — 21.9%
AmSouth Bank, Series AI, 4.85%, 4/1/13◊	$	1,850,000	1,832,029
CNA Financial Corp., 6.50%, 8/15/16		2,165,000	2,268,361
Discover Financial Services, 6.45%, 6/12/17		2,700,000	2,724,878
First Horizon National Corp., 4.50%, 5/15/13		1,400,000	1,360,296
First Tennessee Bank NA, 5.05%, 1/15/15◊		4,280,000	4,197,445
Horace Mann Educators Corp., 6.85%, 4/15/16◊		3,490,000	3,697,097
iStar Financial, Inc., Series B, 5.70%, 3/1/14◊		4,275,000	3,152,812
Nuveen Investments, Inc., 10.50%, 11/15/15		3,000,000	2,610,000
Wilmington Trust Corp., 4.88%, 4/15/13◊		4,540,000	4,431,812
Zions Bancorp., 7.75%, 9/23/14◊		4,380,000	4,463,124
			30,737,854
Health Care — 3.8%
DaVita, Inc., 7.25%, 3/15/15		3,550,000	3,550,000
HCA, Inc., 9.25%, 11/15/16		1,725,000	1,828,500
			5,378,500
Industrial — 12.7%
BE Aerospace, Inc., 8.50%, 7/1/18		4,620,000	4,851,000
Corrections Corp. of America, 6.25%, 3/15/13		4,050,000	4,141,875
Iron Mountain, Inc., 7.75%, 1/15/15		1,929,000	1,943,468
Kansas City Southern de Mexico SA de CV, 7.38%, 6/1/14◊		4,855,000	4,944,212
Trinity Industries, Inc., 6.50%, 3/15/14		1,980,000	1,994,850
			17,875,405
Information Technology — 4.7%
KLA-Tencor Corp., 6.90%, 5/1/18		4,478,000	5,009,516
Mantech International Corp., 7.25%, 4/15/18^		1,500,000	1,515,000
			6,524,516

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 17

Diamond Hill Strategic Income Fund
Schedule of Investments (Continued)
June 30, 2010 (Unaudited)

	Shares/		Fair
	Par Value		Value
Materials — 11.0%
Crown Americas LLC / Crown Americas Capital Corp., 7.63%, 11/15/13	$	1,957,000	$	2,010,818
Freeport-McMoRan Copper & Gold, Inc., 8.25%, 4/1/15◊		5,050,000		5,479,250
Nalco Co., 8.88%, 11/15/13◊		4,550,000		4,693,750
Owens-Brockway Glass Container, Inc., 6.75%, 12/1/14◊		3,175,000		3,230,562
				15,414,380
Telecommunication Services — 1.5%
Global Crossing Ltd., 12.00%, 9/15/15^		2,000,000		2,120,000
Utilities — 9.8%
CenterPoint Energy, Inc., 5.95%, 2/1/17		2,525,000		2,730,697
Dominion Resources, Inc., Series C, 5.15%, 7/15/15		2,500,000		2,768,027
Energy Transfer Partners LP, 5.95%, 2/1/15		1,700,000		1,813,733
Enterprise Products Operating LLC, Series O, 9.75%, 1/31/14		1,450,000		1,749,412
NuStar Pipeline Operating Partnership LP, 7.75%, 2/15/12		1,700,000		1,797,531
Source Gas LLC, 5.90%, 4/1/17		3,000,000		2,909,928
				13,769,328
Total Corporate Bonds				120,538,783
Repurchase Agreement — 6.6%
BNP Paribas Securities Corp., 0.03%, Agreement dated 6/30/10 to be repurchased at $9,284,986 on 7/1/10. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 2%-6%, and maturities from 8/24/2012 through 4/16/2037†		9,284,978		9,284,978

Registered Investment Company — 14.8%
JPMorgan U.S. Government Money Market Fund-Capital Shares	20,731,490		20,731,490
Total Investment Securities — 108.8% (Cost $151,878,199)**		$	152,635,047
Other Assets (Liabilities) — (8.8%)			(12,380,466	)
Net Assets — 100.0%		$	140,254,581

*	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 June 30, 2010, was $9,120,305.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as at June 30, 2010.
#	Restricted and illiquid securities valued at fair value and not registered under the Securities Act of 1933:

						Value as
	Acquisition	Current				a % of
	Date	Cost		Value		Net Assets
Alesco Preferred Funding III	March-05	$	724,100	$	97,413		0.1	%
Alesco Preferred Funding Ltd., Series 6A, Class PPNE	May-05		336,608		80,577		0.0	%
Alesco Preferred Funding Ltd. IV	May-05		337,337		4,014		0.0	%
Alesco Preferred Funding Ltd. V	October-04		80,180		1,002		0.0	%
Alesco Preferred Funding VI PNN	March-05		621,630		149,558		0.1	%
Fort Sheridan ABS CDO Ltd., Series 2005-1A, Class PPN2	March-05		510,038		147,553		0.1	%
Taberna Preferred Funding Ltd., Series 2005-1A, Class PPN2	March-05		1,035,898		259,459		0.2	%
		$	3,645,791	$	739,576		0.5	%

^ Restricted securities not registered under the Securities Act of 1933 and deemed iliquid are as follows:

						Value as
	Acquisition	Current				a % of
	Date	Cost		Value		Net Assets
Global Crossing Ltd.	May-10	$	2,230,861	$	2,120,000		1.5	%
Mantech International Corp.	April-10		1,531,223		1,515,000		1.1	%
		$	3,762,084	$	3,635,000		2.6	%

See accompanying Notes to Financial Statements.

Page 18 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds
Tabular Presentation of Schedules of Investments
June 30, 2010 (Unaudited)

The illustrations below provide each Fund’s sector allocation. We hope it will be useful to shareholders as it summarizes key information about each Fund’s investments.

Diamond Hill Small Cap Fund

	% of
Sector Allocation	Net Assets
Consumer Discretionary		7	%
Consumer Staples		13	%
Energy		12	%
Financial		22	%
Health Care		7	%
Industrial		8	%
Information Technology		6	%
Technology		1	%
Utilities		4	%
Cash and Cash Equivalents		20	%
Total		100	%

Diamond Hill Small-Mid Cap Fund

	% of
Sector Allocation	Net Assets
Consumer Discretionary		6	%
Consumer Staples		12	%
Energy		17	%
Financial		20	%
Health Care		10	%
Industrial		10	%
Information Technology		6	%
Technology		1	%
Utilities		5	%
Cash and Cash Equivalents		13	%
Total		100	%

Diamond Hill Large Cap Fund

	% of
Sector Allocation	Net Assets
Consumer Discretionary		4	%
Consumer Staples		14	%
Energy		15	%
Financial		15	%
Health Care		20	%
Industrial		13	%
Information Technology		8	%
Materials		2	%
Utilities		3	%
Cash and Cash Equivalents		6	%
Total		100	%

Diamond Hill Select Fund

	% of
Sector Allocation	Net Assets
Consumer Discretionary		4	%
Consumer Staples		15	%
Energy		15	%
Financial		16	%
Health Care		19	%
Industrial		14	%
Information Technology		6	%
Materials		2	%
Utilities		1	%
Cash and Cash Equivalents		8	%
Total		100	%

Diamond Hill Long-Short Fund

	% of Long			% of Net
Sector Allocation	Portfolio			Assets
Long Portfolio
Consumer Discretionary		3	%		4	%
Consumer Staples		9	%		12	%
Energy		13	%		16	%
Financial		10	%		13	%
Health Care		13	%		17	%
Industrial		10	%		14	%
Information Technology		6	%		7	%
Materials		2	%		2	%
Utilities		2	%		3	%
Cash and Cash Equivalents		32	%		9	%
Total		100	%

	% of Short			% of Net
Sector Allocation	Portfolio			Assets
Short Portfolio
Consumer Discretionary		59	%		-18	%
Consumer Staples		6	%		-1	%
Health Care		10	%		-3	%
Industrial		7	%		-2	%
Information Technology		10	%		-2	%
Materials		6	%		-2	%
Telecommunication Services		2	%		-1	%
		100	%
Other
Segregated Cash with Brokers					32	%
					100	%

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 19

Diamond Hill Funds
Tabular Presentation of Schedules of Investments (Continued)
June 30, 2010 (Unaudited)

Diamond Hill Financial Long-Short Fund

	% of Long			% of Net
Sector Allocation	Portfolio			Assets
Long Portfolio
Common Stocks
Asset Management		1	%		1	%
Banking Services		23	%		26	%
Consumer Financial Services		4	%		4	%
Financial Services		15	%		17	%
Insurance		30	%		33	%
REITs and Real Estate Management		2	%		3	%
Technology Services		0	%		0	%
Corporate Bonds
Banking Services		2	%		2	%
Preferred Stocks
Banking Services		3	%		4	%
Financial Services		2	%		2	%
REITs and Real Estate Management		2	%		1	%
Cash and Cash Equivalents		16	%		7	%
Total		100	%

	% of Short			% of Net
Sector Allocation	Portfolio			Assets
Short Portfolio
Common Stocks
Banking Services		92	%		-4	%
Capital Markets		8	%		-1	%
		100	%
Other
Segregated Cash with Brokers					5	%
					100	%

Diamond Hill Strategic Income Fund

	% of
Sector Allocation	Net Assets
Corporate Bonds		86	%
Preferred Stocks		1	%
Collateralized Debt Obligations		1	%
Cash and Cash Equivalents		12	%
Total		100	%

Page 20 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds
Statements of Assets & Liabilities
June 30, 2010 (Unaudited)

				Small-Mid
	Small Cap			Cap			Large Cap			Select
	Fund			Fund			Fund			Fund
Assets
Investment securities, at cost	$	768,943,567		$	48,403,046		$	867,368,326		$	32,842,669
Investment securities, at fair value — including $94,607,928; $4,458,408; $19,642,825; and $201,702 of securities loaned for the Small Cap Fund, the Small-Mid Cap Fund, the Large Cap Fund and the Select Fund, respectively	$	681,218,792		$	46,145,376		$	834,763,538		$	32,996,705
Repurchase agreements at value		98,133,861			4,601,462			20,496,783			211,914
Total securities at value		779,352,653			50,746,838			855,260,321			33,208,619
Cash		3,167,042			—			411,461			13,987
Receivable for securities sold		—			—			—			275,624
Receivable for fund shares issued		1,215,318			47,437			2,891,649			13,004
Receivable for dividends		451,284			28,751			1,118,695			43,532
Total Assets		784,186,297			50,823,026			859,682,126			33,554,766
Liabilities
Return of collateral for securities on loan		98,133,861			4,601,462			20,496,783			211,914
Payable for securities purchased		14,114,605			173,118			7,522,704			343,062
Payable for fund shares redeemed		1,389,646			50,529			1,164,208			67,526
Payable to Investment Adviser		458,530			28,968			425,854			19,704
Payable to Administrator		198,233			11,746			238,514			9,184
Accrued distribution and service fees		103,794			6,098			104,143			4,893
Total Liabilities		114,398,669			4,871,921			29,952,206			656,283
Net Assets	$	669,787,628		$	45,951,105		$	829,729,920		$	32,898,483
Components of Net Assets
Paid-in capital	$	659,979,823		$	45,435,347		$	917,324,155		$	35,002,502
Accumulated net investment income (loss)		(872,676	)		42,671			6,941,104			284,128
Accumulated net realized gains (losses) from investment transactions		271,395			(1,870,705	)		(82,427,334	)		(2,754,097	)
Net unrealized appreciation (depreciation) on investments		10,409,086			2,343,792			(12,108,005	)		365,950
Net Assets	$	669,787,628		$	45,951,105		$	829,729,920		$	32,898,483
Pricing of Class A Shares
Net assets attributable to Class A shares	$	385,206,214		$	8,714,490		$	380,499,773		$	7,309,554
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		18,003,004			858,435			30,617,853			877,855
Net asset value and redemption price per share	$	21.40		$	10.15		$	12.43		$	8.33
Maximum offering price per share	$	22.53		$	10.68		$	13.08		$	8.77
Pricing of Class C Shares
Net assets attributable to Class C shares	$	24,908,216		$	4,947,904		$	25,703,503		$	3,827,816
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		1,237,714			500,048			2,146,042			465,582
Net asset value, offering price and redemption price per share(A)	$	20.12		$	9.89		$	11.98		$	8.22
Pricing of Class I Shares
Net assets attributable to Class I shares	$	259,673,198		$	32,288,711		$	423,526,644		$	21,761,113
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		12,057,719			3,171,367			33,940,736			2,610,161
Net asset value, offering price and redemption price per share	$	21.54		$	10.18		$	12.48		$	8.34

^(A) Redemption price per share varies based upon holding period.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 21

Diamond Hill Funds

Statements of Assets & Liabilities

June 30, 2010 (Unaudited)

				Financial			Strategic
	Long-Short			Long-Short			Income
	Fund			Fund			Fund
Assets
Investment securities, at cost	$	1,759,936,497		$	13,439,592		$	151,878,199
Investment securities, at market value — including $15,803,441, $1,234,231 and $9,120,305 of securities loaned for the Long-Short Fund, the Financial Long-Short Fund and the Strategic Income Fund, respectively	$	1,807,559,545		$	12,896,889		$	143,350,069
Repurchase agreements at value		16,233,187			1,276,847			9,284,978
Total securities at value		1,823,792,732			14,173,736			152,635,047
Cash		4,626,138			98,407			—
Deposits with brokers for securities sold short		604,884,804			648,102			—
Receivable for securities sold		15,571,668			—			—
Receivable for fund shares issued		10,251,387			7,217			357,539
Receivable for dividends and interest		1,828,762			19,691			2,076,801
Total Assets		2,460,955,491			14,947,153			155,069,387
Liabilities
Return of collateral for securities on loan		16,233,187			1,276,847			9,284,978
Securities sold short, at value (proceeds $439,630,015 for the Long-Short Fund and $617,209 for the Financial Long-Short Fund)		540,859,855			606,705			—
Payable for securities purchased		13,782,152			98,407			5,306,531
Payable for dividends on securities sold short		623,711			1,056			—
Payable for fund shares redeemed		7,325,897			11,076			102,796
Payable to Investment Adviser		1,433,171			10,926			57,905
Payable to Administrator		518,728			2,826			34,448
Accrued distribution and service fees		349,487			2,960			28,148
Total Liabilities		581,126,188			2,010,803			14,814,806
Net Assets	$	1,879,829,303		$	12,936,350		$	140,254,581
Components of Net Assets
Paid-in capital	$	2,473,273,797		$	27,188,323		$	158,528,227
Accumulated net investment income (loss)		(71,831	)		17,215			1,670,317
Accumulated net realized gains (losses) from investment transactions		(555,999,058	)		(15,013,836	)		(20,700,811	)
Net unrealized appreciation (depreciation) on investments		(37,373,605	)		744,648			756,848
Net Assets	$	1,879,829,303		$	12,936,350		$	140,254,581
Pricing of Class A Shares
Net assets attributable to Class A shares	$	787,822,363		$	9,600,559		$	40,945,505
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		53,408,596			909,583			3,880,825
Net asset value and redemption price per share	$	14.75		$	10.55		$	10.55
Maximum offering price per share	$	15.53		$	11.11		$	10.93
Pricing of Class C Shares
Net assets attributable to Class C shares	$	212,965,256		$	1,408,649		$	23,988,681
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		15,209,139			139,857			2,275,110
Net asset value, offering price and redemption price per share(A)	$	14.00		$	10.07		$	10.54
Pricing of Class I Shares
Net assets attributable to Class I shares	$	879,041,684		$	1,927,142		$	75,320,395
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		59,087,361			183,306			7,151,862
Net asset value, offering price and redemption price per share	$	14.88		$	10.51		$	10.53

^(A) Redemption price per share varies based upon holding period.

See accompanying Notes to Financial Statements.

Page 22 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds

Statements of Operations

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

	Small Cap			Small-Mid			Large Cap			Select
	Fund			Cap Fund			Fund			Fund
Investment Income
Dividends	$	2,949,503		$	253,998		$	7,747,537		$	314,298
Total Investment Income		2,949,503			253,998			7,747,537			314,298
Expenses
Investment advisory fees		2,533,385			165,385			2,437,249			119,079
Administration fees		964,813			56,052			1,132,889			43,666
Distribution fees — Class A		562,710			13,229			475,055			9,602
Distribution and service fees — Class C		126,300			24,345			133,128			18,644
Net Expenses		4,187,208			259,011			4,178,321			190,991
Net Investment Income (Loss)		(1,237,705	)		(5,013	)		3,569,216			123,307
Realized and Unrealized Gains (Losses) on Investments
Net realized gains from security sales		37,986,847			1,616,590			3,849,865			386,998
Net change in unrealized appreciation (depreciation) on investments		(40,846,986	)		(2,247,825	)		(87,461,206	)		(3,279,287	)
Net Realized and Unrealized Gains (Losses) on Investments		(2,860,139	)		(631,235	)		(83,611,341	)		(2,892,289	)
Net Change in Net Assets from Operations	$	(4,097,844	)	$	(636,248	)	$	(80,042,125	)	$	(2,768,982	)

				Financial			Strategic
	Long-Short			Long-Short			Income
	Fund			Fund			Fund
Investment Income
Dividends	$	16,605,203		$	93,905		$	—
Interest		—			17,093			4,434,449
Securities lending income		—			1,109			11,695
Total Investment Income		16,605,203			112,107			4,446,144
Expenses
Investment advisory fees		8,895,713			62,491			339,028
Administration fees		2,877,686			19,623			178,619
Distribution fees — Class A		1,158,684			12,106			56,064
Distribution and service fees — Class C		1,208,169			7,199			114,916
Dividend expense on securities sold short		2,871,567			8,652			—
Net Expenses		17,011,819			110,071			688,627
Net Investment Income (Loss)		(406,616	)		2,036			3,757,517
Realized and Unrealized Gains (Losses) on Investments
Net realized gains from security sales		7,298,727			585,862			4,796,933
Net realized gains (losses) on closed short positions		(38,221,533	)		36,266			—
Net change in unrealized appreciation (depreciation) on investments		(168,306,994	)		(643,111	)		360,939
Net Realized and Unrealized Gains (Losses) on Investments		(199,229,800	)		(20,983	)		5,157,872
Net Change in Net Assets from Operations	$	(199,636,416	)	$	(18,947	)	$	8,915,389

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 23

Diamond Hill Funds

Statements of Changes in Net Assets

							Small-Mid
	Small Cap Fund						Cap Fund						Large Cap Fund						Select Fund
	For the						For the						For the						For the
	Six Months			For the Year			Six Months			For the Year			Six Months			For the Year			Six Months			For the Year
	Ended			Ended			Ended			Ended			Ended			Ended			Ended			Ended
	June 30, 2010			December 31,			June 30, 2010			December 31,			June 30, 2010			December 31,			June 30, 2010			December 31,
	(Unaudited)			2009			(Unaudited)			2009			(Unaudited)			2009			(Unaudited)			2009
From Operations
Net investment income (loss)	$	(1,237,705	)	$	(256,931	)	$	(5,013	)	$	95,349		$	3,569,216		$	5,281,842		$	123,307		$	160,821
Net realized gains (losses) from security sales		37,986,847			(30,591,178	)		1,616,590			126,013			3,849,865			(42,399,879	)		386,998			(1,050,906	)
Net change in unrealized appreciation (depreciation) on investments		(40,846,986	)		152,197,640			(2,247,825	)		10,341,281			(87,461,206	)		187,761,340			(3,279,287	)		6,173,332
Net Change in Net Assets from Operations		(4,097,844	)		121,349,531			(636,248	)		10,562,643			(80,042,125	)		150,643,303			(2,768,982	)		5,283,247
Distributions to Shareholders
From net investment income:
Class A		—			—			—			—			—			(343,767	)		—			—
Class C		—			—			—			—			—			—			—			—
Class I		—			(54,353	)		—			(47,498	)		—			(1,566,079	)		—			—
Decrease in Net Assets from Distributions to Shareholders		—			(54,353	)		—			(47,498	)		—			(1,909,846	)		—			—
From Capital Transactions
Class A
Proceeds from shares sold		84,665,967			165,501,703			4,923,533			1,813,950			135,295,246			120,586,896			1,515,735			3,074,230
Reinvested distributions		—			—			—			—			—			324,714			—			—
Payments for shares redeemed		(142,186,957	)		(133,212,347	)		(4,718,990	)		(3,224,100	)		(61,849,357	)		(111,001,731	)		(462,523	)		(1,591,975	)
Net Increase (Decrease) in Net Assets from Class A Share Transactions		(57,520,990	)		32,289,356			204,543			(1,410,150	)		73,445,889			9,909,879			1,053,212			1,482,255
Class C
Proceeds from shares sold		4,019,818			5,040,434			1,214,823			1,013,000			5,682,726			4,801,305			1,043,465			948,652
Reinvested distributions		—			—			—			—			—			—			—			—
Payments for shares redeemed		(2,215,120	)		(3,440,142	)		(536,426	)		(633,515	)		(2,848,660	)		(5,732,858	)		(317,183	)		(1,644,815	)
Net Increase (Decrease) in Net Assets from Class C Share Transactions		1,804,698			1,600,292			678,397			379,485			2,834,066			(931,553	)		726,282			(696,163	)
Class I
Proceeds from shares sold		184,655,754			66,954,429			7,812,138			7,136,181			154,844,203			180,703,538			1,835,637			13,945,012
Reinvested distributions		—			36,435			—			44,093			—			1,357,132			—			—
Payments for shares redeemed		(23,508,187	)		(18,310,499	)		(1,194,745	)		(2,869,276	)		(39,259,237	)		(38,625,467	)		(1,451,691	)		(1,395,089	)
Net Increase (Decrease) in Net Assets from Class I Share Transactions		161,147,567			48,680,365			6,617,393			4,310,998			115,584,966			143,435,203			383,946			12,549,923
Total Increase (Decrease) in Net Assets		101,333,431			203,865,191			6,864,085			13,795,478			111,822,796			301,146,986			(605,542	)		18,619,262
Net Assets
Beginning of period		568,454,197			364,589,006			39,087,020			25,291,542			717,907,124			416,760,138			33,504,025			14,884,763
End of period	$	669,787,628		$	568,454,197		$	45,951,105		$	39,087,020		$	829,729,920		$	717,907,124		$	32,898,483		$	33,504,025
Accumulated Net Investment Income (Loss)	$	(872,676	)	$	365,099		$	42,671		$	47,684		$	6,941,104		$	3,371,996		$	284,128		$	160,821

See accompanying Notes to Financial Statements.

Page 24 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds
Statements of Changes in Net Assets

							Financial						Strategic
	Long-Short Fund						Long-Short Fund						Income Fund
	For the						For the						For the
	Six Months			For the Year			Six Months			For the Year			Six Months			For the Year
	Ended			Ended			Ended			Ended			Ended			Ended
	June 30, 2010			December 31,			June 30, 2010			December 31,			June 30, 2010			December 31,
	(Unaudited)			2009			(Unaudited)			2009			(Unaudited)			2009
From Operations
Net investment income (loss)	$	(406,616	)	$	334,820		$	2,036		$	168,608		$	3,757,517		$	8,238,199
Net realized gains (losses) from security sales		7,298,727			(411,501,248	)		585,862			(4,538,905	)		4,796,933			(2,624,805	)
Net realized gains (losses) on closed short positions		(38,221,533	)		23,617,996			36,266			509,259			—			—
Net change in unrealized appreciation (depreciation) on investments		(168,306,994	)		662,358,292			(643,111	)		5,867,352			360,939			23,787,504
Net Change in Net Assets from Operations		(199,636,416	)		274,809,860			(18,947	)		2,006,314			8,915,389			29,400,898
Distributions to Shareholders
From net investment income:
Class A		—			—			—			(111,864	)		(1,269,640	)		(2,466,249	)
Class C		—			—			—			(8,226	)		(581,595	)		(1,125,025	)
Class I		—			(19,506	)		—			(29,059	)		(2,107,074	)		(4,383,077	)
Decrease in Net Assets from Distributions to Shareholders		—			(19,506	)		—			(149,149	)		(3,958,309	)		(7,974,351	)
From Capital Transactions
Class A
Proceeds from shares sold		215,164,978			326,417,461			5,374,048			2,030,204			17,928,978			17,000,130
Reinvested distributions		—			—			—			101,838			968,759			1,877,048
Payments for shares redeemed		(301,998,827	)		(609,656,533	)		(3,928,592	)		(3,373,922	)		(20,595,375	)		(15,717,064	)
Net Increase (Decrease) in Net Assets from Class A Share Transactions		(86,833,849	)		(283,239,072	)		1,445,456			(1,241,880	)		(1,697,638	)		3,160,114
Class C
Proceeds from shares sold		20,489,206			33,230,041			310,115			244,546			3,790,099			7,386,298
Reinvested distributions		—			—			—			5,050			304,465			545,639
Payments for shares redeemed		(39,716,000	)		(92,651,580	)		(191,182	)		(926,675	)		(3,086,702	)		(3,935,967	)
Net Increase (Decrease) in Net Assets from Class C Share Transactions		(19,226,794	)		(59,421,539	)		118,933			(677,079	)		1,007,862			3,995,970
Class I
Proceeds from shares sold		418,358,647			290,532,180			1,971,168			1,056,937			12,992,416			12,143,607
Reinvested distributions		—			12,153			—			26,688			1,647,784			3,541,762
Payments for shares redeemed		(188,568,560	)		(313,649,974	)		(599,028	)		(1,174,200	)		(6,228,125	)		(12,875,853	)
Net Increase (Decrease) in Net Assets from Class I Share Transactions		229,790,087			(23,105,641	)		1,372,140			(90,575	)		8,412,075			2,809,516
Total Increase (Decrease) in Net Assets		(75,906,972	)		(90,975,898	)		2,917,582			(152,369	)		12,679,379			31,392,147
Net Assets
Beginning of period		1,955,736,275			2,046,712,173			10,018,768			10,171,137			127,575,202			96,183,055
End of period	$	1,879,829,303		$	1,955,736,275		$	12,936,350		$	10,018,768		$	140,254,581		$	127,575,202
Accumulated Net Investment Income (Loss)	$	(71,831	)	$	334,785		$	17,215		$	15,179		$	1,670,317		$	1,871,109

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 25

Diamond Hill Funds

Schedules of Capital Share Transactions

							Small-Mid
	Small Cap Fund						Cap Fund						Large Cap Fund						Select Fund
	For the						For the						For the						For the
	Six Months			For the Year			Six Months			For the Year			Six Months			For the Year			Six Months			For the Year
	Ended			Ended			Ended			Ended			Ended			Ended			Ended			Ended
	June 30, 2010			December 31,			June 30, 2010			December 31,			June 30, 2010			December 31,			June 30, 2010			December 31,
	(Unaudited)			2009			(Unaudited)			2009			(Unaudited)			2009			(Unaudited)			2009
Shares
Class A Shares:
Issued		3,749,363			9,915,026			458,913			206,040			9,876,089			11,032,156			164,053			388,569
Reinvested		—			—			—			—			—			23,583			—			—
Redeemed		(6,330,711	)		(8,013,473	)		(443,475	)		(404,330	)		(4,541,438	)		(10,100,394	)		(52,137	)		(213,578	)
Net increase (decrease) in shares outstanding		(2,581,348	)		1,901,553			15,438			(198,290	)		5,334,651			955,345			111,916			174,991
Shares outstanding, beginning of period		20,584,352			18,682,799			842,997			1,041,287			25,283,202			24,327,857			765,939			590,948
Shares outstanding, end of period		18,003,004			20,584,352			858,435			842,997			30,617,853			25,283,202			877,855			765,939
Class C Shares:
Issued		190,036			294,883			115,032			114,617			427,724			435,501			112,017			114,127
Reinvested		—			—			—			—			—			—			—			—
Redeemed		(103,982	)		(211,267	)		(51,060	)		(86,699	)		(213,090	)		(530,358	)		(34,765	)		(222,124	)
Net increase (decrease) in shares outstanding		86,054			83,616			63,972			27,918			214,634			(94,857	)		77,252			(107,997	)
Shares outstanding, beginning of period		1,151,660			1,068,044			436,076			408,158			1,931,408			2,026,265			388,330			496,327
Shares outstanding, end of period		1,237,714			1,151,660			500,048			436,076			2,146,042			1,931,408			465,582			388,330
Class I Shares:
Issued		8,120,142			3,702,914			733,223			840,763			11,296,822			15,289,754			204,266			1,660,685
Reinvested		—			1,681			—			4,264			—			98,414			—			—
Redeemed		(1,039,810	)		(1,082,213	)		(113,749	)		(336,473	)		(2,843,672	)		(3,381,441	)		(158,590	)		(205,003	)
Net increase (decrease) in shares outstanding		7,080,332			2,622,382			619,474			508,554			8,453,150			12,006,727			45,676			1,455,682
Shares outstanding, beginning of period		4,977,387			2,355,005			2,551,893			2,043,339			25,487,586			13,480,859			2,564,485			1,108,803
Shares outstanding, end of period		12,057,719			4,977,387			3,171,367			2,551,893			33,940,736			25,487,586			2,610,161			2,564,485

See accompanying Notes to Financial Statements.

Page 26 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds
Schedules of Capital Share Transactions

							Financial						Strategic
	Long-Short Fund						Long-Short Fund						Income Fund
	For the						For the						For the
	Six Months			For the Year			Six Months			For the Year			Six Months			For the Year
	Ended			Ended			Ended			Ended			Ended			Ended
	June 30, 2010			December 31,			June 30, 2010			December 31,			June 30, 2010			December 31,
	(Unaudited)			2009			(Unaudited)			2009			(Unaudited)			2009
Shares
Class A Shares:
Issued		13,492,559			22,613,604			483,000			266,862			1,698,086			1,851,057
Reinvested		—			—			—			9,717			92,186			206,797
Redeemed		(19,282,583	)		(43,760,256	)		(345,548	)		(400,451	)		(1,952,804	)		(1,792,642	)
Net increase (decrease) in shares outstanding		(5,790,024	)		(21,146,652	)		137,452			(123,872	)		(162,532	)		265,212
Shares outstanding, beginning of period		59,198,620			80,345,272			772,131			896,003			4,043,357			3,778,145
Shares outstanding, end of period		53,408,596			59,198,620			909,583			772,131			3,880,825			4,043,357
Class C Shares:
Issued		1,339,115			2,381,033			28,147			32,612			361,355			787,746
Reinvested		—			—			—			503			28,987			60,527
Redeemed		(2,632,933	)		(6,823,760	)		(17,885	)		(133,348	)		(295,328	)		(449,334	)
Net increase (decrease) in shares outstanding		(1,293,818	)		(4,442,727	)		10,262			(100,233	)		95,014			398,939
Shares outstanding, beginning of period		16,502,957			20,945,684			129,595			229,828			2,180,096			1,781,157
Shares outstanding, end of period		15,209,139			16,502,957			139,857			129,595			2,275,110			2,180,096
Class I Shares:
Issued		26,273,711			19,632,070			172,754			100,731			1,233,617			1,313,557
Reinvested		—			730			—			2,564			157,139			392,948
Redeemed		(11,892,469	)		(22,353,381	)		(54,209	)		(122,675	)		(594,384	)		(1,427,450	)
Net increase (decrease) in shares outstanding		14,381,242			(2,720,581	)		118,545			(19,380	)		796,372			279,055
Shares outstanding, beginning of period		44,706,119			47,426,700			64,761			84,141			6,355,490			6,076,435
Shares outstanding, end of period		59,087,361			44,706,119			183,306			64,761			7,151,862			6,355,490

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 27

Diamond Hill Funds

Financial Highlights

For a share outstanding throughout each period.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2010			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2009			2008			2007			2006			2005		(A)
Diamond Hill Small Cap Fund — Class A
Net asset value at beginning of period	$	21.31		$	16.53		$	22.53		$	25.03		$	23.95		$	21.41
Income (loss) from investment operations:
Net investment income (loss)		(0.06	)		(0.01	)		0.13			0.08			0.09			0.02
Net realized and unrealized gains (losses) on investments		0.15			4.79			(5.98	)		(1.00	)		1.60			2.74
Total from investment operations		0.09			4.78			(5.85	)		(0.92	)		1.69			2.76
Less distributions:
Dividends from net investment income		—			—			(0.12	)		(0.08	)		(0.09	)		(0.01	)
Distributions from net realized gains		—			—			(0.03	)		(1.50	)		(0.52	)		(0.21	)
Total distributions		—			—			(0.15	)		(1.58	)		(0.61	)		(0.22	)
Net asset value at end of period	$	21.40		$	21.31		$	16.53		$	22.53		$	25.03		$	23.95
Total return(B)		0.42	% (D)		28.92	%		(25.99	%)		(3.79	%)		7.03	%		12.90	%
Net assets at end of period (000s)	$	385,206		$	438,722		$	308,832		$	315,378		$	431,524		$	308,925
Ratio of net expenses to average net assets		1.39	% (E)		1.38	%		1.35	%		1.39	%		1.42	%		1.45	%
Ratio of net investment income (loss) to average net assets		(0.47	%)(E)		(0.09	%)		0.75	%		0.29	%		0.38	%		0.19	%
Ratio of gross expenses to average net assets		1.39	% (E)		1.38	%		1.35	%		1.39	%		1.42	%		1.45	%
Portfolio turnover rate(C)		22	% (D)		47	%		47	%		21	%		30	%		15	%
Diamond Hill Small Cap Fund — Class C
Net asset value at beginning of period	$	20.12		$	15.72		$	21.44		$	24.00		$	23.08		$	20.79
Income (loss) from investment operations:
Net investment income (loss)		(0.12	)		(0.13	)		(0.01	)		(0.15	)		(0.10	)		(0.08	)
Net realized and unrealized gains (losses) on investments		0.12			4.53			(5.68	)		(0.91	)		1.54			2.58
Total from investment operations		—			4.40			(5.69	)		(1.06	)		1.44			2.50
Less distributions:
Distributions from net realized gains		—			—			(0.03	)		(1.50	)		(0.52	)		(0.21	)
Total distributions		—			—			(0.03	)		(1.50	)		(0.52	)		(0.21	)
Net asset value at end of period	$	20.12		$	20.12		$	15.72		$	21.44		$	24.00		$	23.08
Total return(B)		0.00	% (D)		27.99	%		(26.55	%)		(4.51	%)		6.23	%		12.05	%
Net assets at end of period (000s)	$	24,908		$	23,172		$	16,790		$	25,158		$	35,035		$	41,115
Ratio of net expenses to average net assets		2.14	% (E)		2.13	%		2.11	%		2.14	%		2.17	%		2.20	%
Ratio of net investment income (loss) to average net assets		(1.21	%) (E)		(0.83	%)		(0.03	%)		(0.46	%)		(0.37	%)		(0.61	%)
Ratio of gross expenses to average net assets		2.14	% (E)		2.13	%		2.11	%		2.14	%		2.17	%		2.20	%
Portfolio turnover rate(C)		22	% (D)		47	%		47	%		21	%		30	%		15	%
Diamond Hill Small Cap Fund — Class I
Net asset value at beginning of period	$	21.41		$	16.55		$	22.57		$	25.08		$	23.99		$	19.93
Income (loss) from investment operations:
Net investment income (loss)		(0.05	)		0.04			0.17			0.22			0.21			0.04
Net realized and unrealized gains (losses) on investments		0.18			4.83			(5.97	)		(1.05	)		1.59			4.27
Total from investment operations		0.13			4.87			(5.80	)		(0.83	)		1.80			4.31
Less distributions:
Dividends from net investment income		(0.00	) (F)		(0.01	)		(0.19	)		(0.18	)		(0.19	)		(0.04	)
Distributions from net realized gains		—			—			(0.03	)		(1.50	)		(0.52	)		(0.21	)
Total distributions		(0.00	) (F)		(0.01	)		(0.22	)		(1.68	)		(0.71	)		(0.25	)
Net asset value at end of period	$	21.54		$	21.41		$	16.55		$	22.57		$	25.08		$	23.99
Total return		0.61	% (D)		29.43	%		(25.69	%)		(3.41	%)		7.49	%		21.63	% (D)
Net assets at end of period (000s)	$	259,673		$	106,561		$	38,967		$	32,057		$	51,381		$	35,434
Ratio of net expenses to average net assets		1.00	% (E)		0.99	%		0.98	%		0.98	%		0.99	%		0.99	% (E)
Ratio of net investment income (loss) to average net assets		(0.03	%) (E)		0.30	%		1.17	%		0.69	%		0.82	%		0.74	% (E)
Ratio of gross expenses to average net assets		1.01	% (E)		0.99	%		0.98	%		0.98	%		0.99	%		0.99	% (E)
Portfolio turnover rate(C)		22	% (D)		47	%		47	%		21	%		30	%		15	%

(A)	Class I commenced operations on April 29, 2005.
(B)	Total returns shown exclude the effect of applicable sales charges.
(C)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(D)	Not annualized.
(E)	Annualized.
(F)	Amount rounds to less than $0.005.

See accompanying Notes to Financial Statements.

Page 28 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds
Financial Highlights

For a share outstanding throughout each period.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2010			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2009			2008			2007			2006		(A)
Diamond Hill Small-Mid Cap Fund — Class A
Net asset value at beginning of period	$	10.22		$	7.26		$	10.50		$	10.91		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)		0.03			0.10			0.06			0.04
Net realized and unrealized gains (losses) on investments		(0.06	)		2.93			(3.25	)		(0.15	)		0.94
Total from investment operations		(0.07	)		2.96			(3.15	)		(0.09	)		0.98
Less distributions:
Dividends from net investment income		—			—			(0.09	)		(0.04	)		(0.01	)
Distributions from net realized gains		—			—			—			(0.28	)		(0.06	)
Total distributions		—			—			(0.09	)		(0.32	)		(0.07	)
Net asset value at end of period	$	10.15		$	10.22		$	7.26		$	10.50		$	10.91
Total return(B)		(0.68	%) (D)		40.77	%		(30.01	%)		(0.91	%)		9.81	%
Net assets at end of period (000s)	$	8,714		$	8,616		$	7,557		$	10,549		$	9,608
Ratio of net expenses to average net assets		1.34	% (E)		1.33	%		1.32	%		1.33	%		1.21	%
Ratio of net investment income (loss) to average net assets		(0.21	%) (E)		0.17	%		1.11	%		0.54	%		0.49	%
Ratio of gross expenses to average net assets		1.34	% (E)		1.33	%		1.32	%		1.34	%		1.34	%
Portfolio turnover rate(C)		17	% (D)		74	%		91	%		39	%		33	%
Diamond Hill Small-Mid Cap Fund — Class C
Net asset value at beginning of period	$	10.00		$	7.15		$	10.40		$	10.85		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		(0.03	)		(0.04	)		0.04			(0.02	)		(0.02	)
Net realized and unrealized gains (losses) on investments		(0.08	)		2.89			(3.22	)		(0.15	)		0.93
Total from investment operations		(0.11	)		2.85			(3.18	)		(0.17	)		0.91
Less distributions:
Dividends from net investment income		—			—			(0.07	)		—			—
Distributions from net realized gains		—			—			—			(0.28	)		(0.06	)
Total distributions		—			—			(0.07	)		(0.28	)		(0.06	)
Net asset value at end of period	$	9.89		$	10.00		$	7.15		$	10.40		$	10.85
Total return(B)		(1.10	%) (D)		39.86	%		(30.54	%)		(1.65	%)		9.08	%
Net assets at end of period (000s)	$	4,948		$	4,361		$	2,920		$	2,388		$	2,368
Ratio of net expenses to average net assets		2.09	% (E)		2.08	%		2.05	%		2.08	%		2.00	%
Ratio of net investment income (loss) to average net assets		(0.93	%) (E)		(0.59	%)		0.48	%		(0.21	%)		(0.27	%)
Ratio of gross expenses to average net assets		2.09	% (E)		2.08	%		2.05	%		2.09	%		2.11	%
Portfolio turnover rate(C)		17	% (D)		74	%		91	%		39	%		33	%
Diamond Hill Small-Mid Cap Fund — Class I
Net asset value at beginning of period	$	10.23		$	7.25		$	10.50		$	10.91		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.04			0.13			0.09			0.04
Net realized and unrealized gains (losses) on investments		(0.06	)		2.96			(3.26	)		(0.13	)		0.98
Total from investment operations		(0.05	)		3.00			(3.13	)		(0.04	)		1.02
Less distributions:
Dividends from net investment income		—			(0.02	)		(0.12	)		(0.09	)		(0.05	)
Distributions from net realized gains		—			—			—			(0.28	)		(0.06	)
Total distributions		—			(0.02	)		(0.12	)		(0.37	)		(0.11	)
Net asset value at end of period	$	10.18		$	10.23		$	7.25		$	10.50		$	10.91
Total return		(0.49	%) (D)		41.36	%		(29.77	%)		(0.44	%)		10.18	%
Net assets at end of period (000s)	$	32,289		$	26,110		$	14,815		$	18,478		$	11,986
Ratio of net expenses to average net assets		0.96	% (E)		0.94	%		0.93	%		0.93	%		0.90	%
Ratio of net investment income (loss) to average net assets		0.20	% (E)		0.54	%		1.49	%		0.97	%		1.01	%
Ratio of gross expenses to average net assets		0.96	% (E)		0.94	%		0.93	%		0.94	%		0.98	%
Portfolio turnover rate(C)		17	% (D)		74	%		91	%		39	%		33	%

(A)	Class A, Class C, and Class I commenced operations on December 31, 2005, and commenced public offering and investment operations on January 3, 2006.
(B)	Total returns shown exclude the effect of applicable sales charges.
(C)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(D)	Not annualized.
(E)	Annualized.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 29

Diamond Hill Funds
Financial Highlights

For a share outstanding throughout each period.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2010			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2009			2008			2007			2006			2005		(A)
Diamond Hill Large Cap Fund — Class A
Net asset value at beginning of period	$	13.62		$	10.47		$	16.25		$	16.36		$	14.44		$	12.51
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.10			0.15			0.21			0.15			0.05
Net realized and unrealized gains (losses) on investments		(1.22	)		3.06			(5.69	)		0.69			2.03			1.98
Total from investment operations		(1.19	)		3.16			(5.54	)		0.90			2.18			2.03
Less distributions:
Dividends from net investment income		(0.00	) (F)		(0.01	)		(0.14	)		(0.19	)		(0.14	)		(0.06	)
Distributions from net realized gains		—			—			(0.10	)		(0.82	)		(0.12	)		(0.04	)
Total distributions		(0.00	) (F)		(0.01	)		(0.24	)		(1.01	)		(0.26	)		(0.10	)
Net asset value at end of period	$	12.43		$	13.62		$	10.47		$	16.25		$	16.36		$	14.44
Total return(B)		(8.74	%) (D)		30.21	%		(34.06	%)		5.42	%		15.06	%		16.19	%
Net assets at end of period (000s)	$	380,500		$	344,456		$	254,688		$	309,617		$	338,286		$	96,637
Ratio of net expenses to average net assets		1.19	% (E)		1.18	%		1.16	%		1.18	%		1.21	%		1.27	%
Ratio of net investment income (loss) to average net assets		0.71	% (E)		0.91	%		1.23	%		1.15	%		1.32	%		1.08	%
Ratio of gross expenses to average net assets		1.19	% (E)		1.18	%		1.16	%		1.19	%		1.21	%		1.27	%
Portfolio turnover rate(C)		9	% (D)		31	%		28	%		44	%		32	%		15	%
Diamond Hill Large Cap Fund — Class C
Net asset value at beginning of period	$	13.18		$	10.19		$	15.84		$	15.99		$	14.15		$	12.31
Income (loss) from investment operations:
Net investment income (loss)		0.00	(F)		0.02			0.06			0.06			0.06			0.05
Net realized and unrealized gains (losses) on investments		(1.20	)		2.97			(5.55	)		0.70			1.95			1.83
Total from investment operations		(1.20	)		2.99			(5.49	)		0.76			2.01			1.88
Less distributions:
Dividends from net investment income		—			—			(0.06	)		(0.09	)		(0.05	)		—
Distributions from net realized gains		—			—			(0.10	)		(0.82	)		(0.12	)		(0.04	)
Total distributions		—			—			(0.16	)		(0.91	)		(0.17	)		(0.04	)
Net asset value at end of period	$	11.98		$	13.18		$	10.19		$	15.84		$	15.99		$	14.15
Total return(B)		(9.10	%) (D)		29.34	%		(34.64	%)		4.68	%		14.18	%		15.25	%
Net assets at end of period (000s)	$	25,704		$	25,454		$	20,656		$	27,084		$	22,438		$	9,518
Ratio of net expenses to average net assets		1.94	% (E)		1.93	%		1.91	%		1.93	%		1.96	%		2.02	%
Ratio of net investment income (loss) to average net assets		(0.05	%) (E)		0.91	%		0.48	%		0.43	%		0.57	%		0.26	%
Ratio of gross expenses to average net assets		1.94	% (E)		1.93	%		1.91	%		1.93	%		1.96	%		2.02	%
Portfolio turnover rate(C)		9	% (D)		31	%		28	%		44	%		32	%		15	%
Diamond Hill Large Cap Fund — Class I
Net asset value at beginning of period	$	13.65		$	10.49		$	16.29		$	16.40		$	14.47		$	12.38
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.11			0.23			0.25			0.13			0.08
Net realized and unrealized gains (losses) on investments		(1.22	)		3.11			(5.74	)		0.73			2.12			2.13
Total from investment operations		(1.17	)		3.22			(5.51	)		0.98			2.25			2.21
Less distributions:
Dividends from net investment income		—			(0.06	)		(0.19	)		(0.27	)		(0.20	)		(0.08	)
Distributions from net realized gains		—			—			(0.10	)		(0.82	)		(0.12	)		(0.04	)
Total distributions		—			(0.06	)		(0.29	)		(1.09	)		(0.32	)		(0.12	)
Net asset value at end of period	$	12.48		$	13.65		$	10.49		$	16.29		$	16.40		$	14.47
Total return		(8.57	%) (D)		30.71	%		(33.82	%)		5.88	%		15.49	%		17.84	% (D)
Net assets at end of period (000s)	$	423,527		$	347,998		$	141,416		$	84,129		$	59,182		$	10,442
Ratio of net expenses to average net assets		0.81	% (E)		0.79	%		0.78	%		0.78	%		0.78	%		0.80	% (E)
Ratio of net investment income (loss) to average net assets		1.10	% (E)		1.28	%		1.67	%		1.60	%		1.82	%		1.60	% (E)
Ratio of gross expenses to average net assets		0.81	% (E)		0.79	%		0.78	%		0.78	%		0.78	%		0.80	% (E)
Portfolio turnover rate(C)		9	% (D)		31	%		28	%		44	%		32	%		15	%

(A)	Class I commenced operations on January 31, 2005.
(B)	Total returns shown exclude the effect of applicable sales charges.
(C)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(D)	Not annualized.
(E)	Annualized.
(F)	Amount rounds to less than $0.005.

See accompanying Notes to Financial Statements.

Page 30 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds
Financial Highlights

For a share outstanding throughout each period.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2010			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2009			2008			2007			2006		(A)
Diamond Hill Select Fund — Class A
Net asset value at beginning of period	$	9.02		$	6.82		$	10.61		$	11.17		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.04			0.09			0.12			0.10
Net realized and unrealized gains (losses) on investments		(0.71	)		2.16			(3.55	)		0.53			1.27
Total from investment operations		(0.69	)		2.20			(3.46	)		0.65			1.37
Less distributions:
Dividends from net investment income		—			—			(0.08	)		(0.09	)		(0.08	)
Distributions from net realized gains		—			—			(0.25	)		(1.12	)		(0.12	)
Total distributions		—			—			(0.33	)		(1.21	)		(0.20	)
Net asset value at end of period	$	8.33		$	9.02		$	6.82		$	10.61		$	11.17
Total return(B)		(7.65	%) (D)		32.26	%		(32.68	%)		5.63	%		13.66	%
Net assets at end of period (000s)	$	7,310		$	6,910		$	4,030		$	6,841		$	10,036
Ratio of net expenses to average net assets		1.29	% (E)		1.28	%		1.28	%		1.29	%		1.31	%
Ratio of net investment income (loss) to average net assets		0.56	% (E)		0.60	%		1.10	%		0.90	%		1.04	%
Ratio of gross expenses to average net assets		1.29	% (E)		1.28	%		1.28	%		1.29	%		1.32	%
Portfolio turnover rate(C)		8	% (D)		57	%		85	%		55	%		80	%
Diamond Hill Select Fund — Class C
Net asset value at beginning of period	$	8.94		$	6.78		$	10.56		$	11.16		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)		0.01			0.02			0.02			0.02
Net realized and unrealized gains (losses) on investments		(0.71	)		2.15			(3.55	)		0.54			1.30
Total from investment operations		(0.72	)		2.16			(3.53	)		0.56			1.32
Less distributions:
Dividends from net investment income		—			—			—			(0.04	)		(0.04	)
Distributions from net realized gains		—			—			(0.25	)		(1.12	)		(0.12	)
Total distributions		—			—			(0.25	)		(1.16	)		(0.16	)
Net asset value at end of period	$	8.22		$	8.94		$	6.78		$	10.56		$	11.16
Total return(B)		(8.05	%) (D)		31.86	%		(33.48	%)		4.78	%		13.11	%
Net assets at end of period (000s)	$	3,828		$	3,472		$	3,366		$	6,912		$	5,661
Ratio of net expenses to average net assets		2.04	% (E)		2.03	%		2.01	%		2.03	%		2.05	%
Ratio of net investment income (loss) to average net assets		(0.19	%) (E)		0.07	%		0.28	%		0.23	%		0.32	%
Ratio of gross expenses to average net assets		2.04	% (E)		2.03	%		2.02	%		2.04	%		2.06	%
Portfolio turnover rate(C)		8	% (D)		57	%		85	%		55	%		80	%
Diamond Hill Select Fund — Class I
Net asset value at beginning of period	$	9.02		$	6.75		$	10.59		$	11.16		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.05			0.11			0.13			0.09
Net realized and unrealized gains (losses) on investments		(0.72	)		2.22			(3.58	)		0.57			1.32
Total from investment operations		(0.68	)		2.27			(3.47	)		0.70			1.41
Less distributions:
Dividends from net investment income		—			—			(0.12	)		(0.15	)		(0.13	)
Distributions from net realized gains		—			—			(0.25	)		(1.12	)		(0.12	)
Total distributions		—			—			(0.37	)		(1.27	)		(0.25	)
Net asset value at end of period	$	8.34		$	9.02		$	6.75		$	10.59		$	11.16
Total return		(7.54	%) (D)		33.63	%		(32.85	%)		6.10	%		14.04	%
Net assets at end of period (000s)	$	21,761		$	23,122		$	7,489		$	4,667		$	3,220
Ratio of net expenses to average net assets		0.91	% (E)		0.89	%		0.87	%		0.88	%		0.84	%
Ratio of net investment (loss) income to average net assets		0.93	% (E)		1.29	%		1.58	%		1.37	%		1.47	%
Ratio of gross expenses to average net assets		0.91	% (E)		0.89	%		0.87	%		0.89	%		0.86	%
Portfolio turnover rate(C)		8	% (D)		57	%		85	%		55	%		80	%

(A)	Class A, Class C, and Class I commenced operations on December 31, 2005, and commenced public offering and investment operations on January 3, 2006.
(B)	Total returns shown exclude the effect of applicable sales charges.
(C)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(D)	Not annualized
(E)	Annualized.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 31

Diamond Hill Funds
Financial Highlights

For a share outstanding throughout each period.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2010			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2009			2008			2007			2006			2005	(A)
Diamond Hill Long-Short Fund — Class A
Net asset value at beginning of period	$	16.31		$	13.83		$	18.40		$	18.57		$	16.46		$13.67
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)		0.00	(B)		0.16			0.44			0.26		0.10
Net realized and unrealized gains (losses) on investments		(1.55	)		2.48			(4.52	)		0.16			2.52		2.83
Total from investment operations		(1.56	)		2.48			(4.36	)		0.60			2.78		2.93
Less distributions:
Dividends from net investment income		—			—			(0.15	)		(0.42	)		(0.25	)	(0.10	)
Distributions from net realized gains		—			—			(0.06	)		(0.35	)		(0.42	)	(0.04	)
Total distributions		—			—			(0.21	)		(0.77	)		(0.67	)	(0.14	)
Net asset value at end of period	$	14.75		$	16.31		$	13.83		$	18.40		$	18.57		$16.46
Total return(C)		(9.56	%) (F)		17.93	%		(23.65	%)		3.14	%		16.89	%	21.46	%
Net assets at end of period (000s)	$	787,822		$	965,382		$	1,110,982		$	965,259		$	773,161		$180,035
Ratio of net expenses to average net assets		1.78	% (G)		1.85	%		1.62	%		1.69	%		1.77	%	1.82	%
Ratio of net investment income (loss) to average net assets		(0.12	%) (G)		0.00	% (B)		0.95	%		2.46	%		2.15	%	1.12	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		1.50	% (G)		1.48	%		1.45	%		1.48	%		1.51	%	1.55	%
Portfolio turnover rate(D)		16	% (F)		44	%		59	%		59	%		83	%	58	% (E)
Diamond Hill Long-Short Fund — Class C
Net asset value at beginning of period	$	15.54		$	13.28		$	17.65		$	17.88		$	15.92		$13.26
Income (loss) from investment operations:				��
Net investment income (loss)		(0.08	)		(0.12	)		0.04			0.27			0.16		0.03
Net realized and unrealized gains (losses) on investments		(1.46	)		2.38			(4.32	)		0.16			2.38		2.70
Total from investment operations		(1.54	)		2.26			(4.28	)		0.43			2.54		2.73
Less distributions:
Dividends from net investment income		—			—			(0.03	)		(0.31	)		(0.16	)	(0.03	)
Distributions from net realized gains		—			—			(0.06	)		(0.35	)		(0.42	)	(0.04	)
Total distributions		—			—			(0.09	)		(0.66	)		(0.58	)	(0.07	)
Net asset value at end of period	$	14.00		$	15.54		$	13.28		$	17.65		$	17.88		$15.92
Total return(C)		(9.91	%) (F)		17.02	%		(24.26	%)		2.41	%		15.98	%	20.58	%
Net assets at end of period (000s)	$	212,965		$	256,445		$	278,069		$	303,392		$	188,550		$70,891
Ratio of net expenses to average net assets		2.53	% (G)		2.60	%		2.37	%		2.44	%		2.52	%	2.57	%
Ratio of net investment income (loss) to average net assets		(0.86	%) (G)		(0.76	%)		0.22	%		1.72	%		1.40	%	0.37	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		2.25	% (G)		2.23	%		2.20	%		2.23	%		2.26	%	2.30	%
Portfolio turnover rate(D)		16	% (F)		44	%		59	%		59	%		83	%	58	% (E)
Diamond Hill Long-Short Fund — Class I
Net asset value at beginning of period	$	16.42		$	13.87		$	18.46		$	18.63		$	16.49		$13.80
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.05			0.19			0.48			0.28		0.14
Net realized and unrealized gains (losses) on investments		(1.55	)		2.50			(4.51	)		0.19			2.59		2.73
Total from investment operations		(1.54	)		2.55			(4.32	)		0.67			2.87		2.87
Less distributions:
Dividends from net investment income		—			(0.00	) (B)		(0.21	)		(0.49	)		(0.31	)	(0.14	)
Distributions from net realized gains		—			—			(0.06	)		(0.35	)		(0.42	)	(0.04	)
Total distributions		—			(0.00	) (B)		(0.27	)		(0.84	)		(0.73	)	(0.18	)
Net asset value at end of period	$	14.88		$	16.42		$	13.87		$	18.46		$	18.63		$16.49
Total return		(9.38	%) (F)		18.39	%		(23.36	%)		3.59	%		17.37	%	20.81	% (F)
Net assets at end of period (000s)	$	879,042		$	733,909		$	657,662		$	500,425		$	290,734		$56,873
Ratio of net expenses to average net assets		1.41	% (G)		1.47	%		1.24	%		1.29	%		1.34	%	1.39	% (G)
Ratio of net investment income (loss) to average net assets		0.29	% (G)		0.37	%		1.33	%		2.87	%		2.60	%	1.71	% (G)
Ratio of net expenses to average net assets, excluding dividends on securities sold short		1.11	% (G)		1.10	%		1.08	%		1.08	%		1.08	%	1.10	% (G)
Portfolio turnover rate(D)		16	% (F)		44	%		59	%		59	%		83	%	58	% (E)

(A)	Class I commenced operations on January 31, 2005.
(B)	Amount rounds to less than $0.005.
(C)	Total returns shown exclude the effect of applicable sales charges.
(D)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(E)	The portfolio turnover rate for December 31, 2005 has been revised to include long-term short selling transactions.
(F)	Not annualized.
(G)	Annualized.

See accompanying Notes to Financial Statements.

Page 32 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds
Financial Highlights

For a share outstanding throughout each period.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2010			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2009			2008			2007		(A)	2006			2005
Diamond Hill Financial Long-Short Fund — Class A
Net asset value at beginning of period	$	10.43		$	8.48		$	16.20		$	20.90		$	18.48		$	19.10
Income (loss) from investment operations:
Net investment income (loss)		0.00	(D)(G)		0.16	(D)		0.45			0.49			0.23			0.29
Net realized and unrealized gains (losses) on investments		0.12			1.94			(7.74	)		(4.04	)		2.79			(0.24	)
Total from investment operations		0.12			2.10			(7.29	)		(3.55	)		3.02			0.05
Less distributions:
Dividends from net investment income		—			(0.15	)		(0.42	)		(0.47	)		(0.24	)		(0.30	)
Distributions from net realized gains		—			—			(0.01	)		(0.68	)		(0.36	)		(0.37	)
Total distributions		—			(0.15	)		(0.43	)		(1.15	)		(0.60	)		(0.67	)
Net asset value at end of period	$	10.55		$	10.43		$	8.48		$	16.20		$	20.90		$	18.48
Total return(B)		1.15	% (E)		24.73	%		(44.98	%)		(17.05	%)		16.35	%		0.25	%
Net assets at end of period (000s)	$	9,600		$	8,053		$	7,596		$	27,597		$	38,978		$	17,366
Ratio of net expenses to average net assets		1.71	% (F)		1.77	%		1.85	%		1.81	%		1.70	%		1.67	%
Ratio of net investment income (loss) to average net assets		0.08	% (F)		1.92	%		2.37	%		2.17	%		1.80	%		1.41	%
Ratio of gross expenses to average net assets		1.71	% (F)		1.77	%		1.85	%		1.82	%		1.70	%		1.67	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		1.58	% (F)		1.58	%		1.56	%		1.59	%		1.62	%		—
Portfolio turnover rate(C)		30	% (E)		85	%		74	%		55	%		45	%		28	%
Diamond Hill Financial Long-Short Fund — Class C
Net asset value at beginning of period	$	9.99		$	8.12		$	15.60		$	20.10		$	17.84		$	18.42
Income (loss) from investment operations:
Net investment income (loss)		(0.02	)		0.09	(D)		0.21			0.34			0.13			0.15
Net realized and unrealized gains (losses) on investments		0.10			1.84			(7.31	)		(3.88	)		2.63			(0.24	)
Total from investment operations		0.08			1.93			(7.10	)		(3.54	)		2.76			(0.09	)
Less distributions:
Dividends from net investment income		—			(0.06	)		(0.37	)		(0.28	)		(0.14	)		(0.12	)
Distributions from net realized gains		—			—			(0.01	)		(0.68	)		(0.36	)		(0.37	)
Total distributions		—			(0.06	)		(0.38	)		(0.96	)		(0.50	)		(0.49	)
Net asset value at end of period	$	10.07		$	9.99		$	8.12		$	15.60		$	20.10		$	17.84
Total return(B)		0.80	% (E)		23.81	%		(45.49	%)		(17.68	%)		15.47	%		(0.49	%)
Net assets at end of period (000s)	$	1,409		$	1,295		$	1,866		$	3,287		$	4,620		$	2,544
Ratio of net expenses to average net assets		2.46	% (F)		2.52	%		2.58	%		2.56	%		2.45	%		2.42	%
Ratio of net investment income (loss) to average net assets		(0.69	%) (F)		1.17	%		1.76	%		1.42	%		1.03	%		0.67	%
Ratio of gross expenses to average net assets		2.46	% (F)		2.52	%		2.58	%		2.57	%		2.45	%		2.42	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		2.33	% (F)		2.35	%		2.30	%		2.34	%		2.37	%		—
Portfolio turnover rate(C)		30	% (E)		85	%		74	%		55	%		45	%		28	%
Diamond Hill Financial Long-Short Fund — Class I
Net asset value at beginning of period	$	10.37		$	8.43		$	16.18			20.90
																	��
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.21	(D)		0.63			0.37
Net realized and unrealized gains (losses) on investments		0.09			1.92			(7.89	)		(3.83	)
Total from investment operations		0.14			2.13			(7.26	)		(3.46	)
Less distributions:
Dividends from net investment income		—			(0.19	)		(0.48	)		(0.58	)
Distributions from net realized gains		—			—			(0.01	)		(0.68	)
Total distributions		—			(0.19	)		(0.49	)		(1.26	)
Net asset value at end of period	$	10.51		$	10.37		$	8.43			16.18
Total return		1.35	% (E)		25.31	%		(44.79	%)		(16.61	%)
Net assets at end of period (000s)	$	1,927		$	671		$	709			2,464
Ratio of net expenses to average net assets		1.34	% (F)		1.38	%		1.47	%		1.41	%
Ratio of net investment income (loss) to average net assets		0.46	% (F)		2.45	%		2.80	%		2.96	%
Ratio of gross expenses to average net assets		1.34	% (F)		1.38	%		1.47	%		1.42	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		1.20	% (F)		1.19	%		1.18	%		1.18	%
Portfolio turnover rate(C)		30	% (E)		85	%		74	%		55	%

(A)	Class I commenced operations on December 31, 2006, and commenced public offering and investment operations on January 3, 2007.
(B)	Total returns shown exclude the effect of applicable sales charges.
(C)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(D)	Net investment income per share has been calculated using the average daily shares outstanding during the period.
(E)	Not annualized.
(F)	Annualized.
(G)	Amount rounds to less than $0.005.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 33

Diamond Hill Funds
Financial Highlights

For a share outstanding throughout each period.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended				Year Ended
	June 30, 2010			December 31,			December 31,			December 31,			December 31,				December 31,
	(Unaudited)			2009			2008			2007			2006				2005		(A)
Diamond Hill Strategic Income Fund — Class A
Net asset value at beginning of period	$	10.15		$	8.28		$	10.41		$	11.71		$	11.25			$	11.63
Income (loss) from investment operations:
Net investment income (loss)		0.30			0.69			0.71			0.68			0.70				0.66
Net realized and unrealized gains (losses) on investments		0.40			1.86			(2.19	)		(1.20	)		0.42				(0.38	)
Total from investment operations		0.70			2.55			(1.48	)		(0.52	)		1.12		��		0.28
Less distributions:
Dividends from net investment income		(0.30	)		(0.68	)		(0.64	)		(0.67	)		(0.66	)			(0.66	)
Distributions from net realized gains		—			—			—			(0.11	)		—				—
Return of capital		—			—			(0.01	)		—			—				—
Total distributions		(0.30	)		(0.68	)		(0.65	)		(0.78	)		(0.66	)			(0.66	)
Net asset value at end of period	$	10.55		$	10.15		$	8.28		$	10.41		$	11.71			$	11.25
Total return(B)		6.95	% (D)		32.13	%		(14.79	%)		(4.78	%)		10.26	%			2.41	%
Net assets at end of period (000s)	$	40,946		$	41,048		$	31,268		$	54,435		$	49,372			$	31,456
Ratio of net expenses to average net assets		1.08	% (E)		1.08	%		1.06	%		1.08	%		1.12	%			1.17	%
Ratio of net investment income (loss) to average net assets		5.47	% (E)		7.64	%		6.60	%		6.15	%		6.38	%			5.74	%
Ratio of gross expenses to average net assets		1.08	% (E)		1.08	%		1.06	%		1.09	%		1.12	%			1.17	%
Portfolio turnover rate(C)		40	% (D)		83	%		95	%		142	%		43	%			66	%
Diamond Hill Strategic Income Fund — Class C
Net asset value at beginning of period	$	10.15		$	8.27		$	10.41		$	11.70		$	11.24			$	11.63
Income (loss) from investment operations:
Net investment income (loss)		0.24			0.58			0.65			0.62			0.62				0.58
Net realized and unrealized gains (losses) on investments		0.41			1.91			(2.21	)		(1.22	)		0.41				(0.40	)
Total from investment operations		0.65			2.49			(1.56	)		(0.60	)		1.03				0.18
Less distributions:
Dividends from net investment income		(0.26	)		(0.61	)		(0.57	)		(0.58	)		(0.57	)			(0.57	)
Distributions from net realized gains		—			—			—			(0.11	)		—				—
Return of capital		—			—			(0.01	)		—			—				—
Total distributions		(0.26	)		(0.61	)		(0.58	)		(0.69	)		(0.57	)			(0.57	)
Net asset value at end of period	$	10.54		$	10.15		$	8.27		$	10.41		$	11.70			$	11.24
Total return(B)		6.46	% (D)		31.34	%		(15.51	%)		(5.43	%)		9.43	%			1.57	%
Net assets at end of period (000s)	$	23,989		$	22,120		$	14,730		$	24,638		$	26,908			$	20,257
Ratio of net expenses to average net assets		1.83	% (E)		1.83	%		1.80	%		1.83	%		1.87	%			1.91	%
Ratio of net investment income (loss) to average net assets		4.73	% (E)		6.88	%		5.87	%		5.35	%		5.63	%			5.06	%
Ratio of gross expenses to average net assets		1.83	% (E)		1.83	%		1.81	%		1.84	%		1.87	%			1.91	%
Portfolio turnover rate(C)		40	% (D)		83	%		95	%		142	%		43	%			66	%
Diamond Hill Strategic Income Fund — Class I
Net asset value at beginning of period	$	10.13		$	8.26		$	10.40		$	11.69		$	11.23			$	11.65
Income (loss) from investment operations:
Net investment income (loss)		0.29			0.73			0.70			0.71			0.73				0.65
Net realized and unrealized gains (losses) on investments		0.43			1.85			(2.15	)		(1.17	)		0.44				(0.42	)
Total from investment operations		0.72			2.58			(1.45	)		(0.46	)		1.17				0.23
Less distributions:
Dividends from net investment income		(0.32	)		(0.71	)		(0.68	)		(0.72	)		(0.71	)			(0.65	)
Distributions from net realized gains		—			—			—			(0.11	)		—				—
Return of capital		—			—			(0.01	)		—			—				—
Total distributions		(0.32	)		(0.71	)		(0.69	)		(0.83	)		(0.71	)			(0.65	)
Net asset value at end of period	$	10.53		$	10.13		$	8.26		$	10.40		$	11.69			$	11.23
Total return		7.16	% (D)		32.69	%		(14.55	%)		(4.31	%)		10.74	%			2.03	% (D)
Net assets at end of period (000s)	$	75,320		$	64,407		$	50,185		$	70,205		$	54,302			$	25,299
Ratio of net expenses to average net assets		0.70	% (E)		0.69	%		0.67	%		0.68	%		0.68	%			0.70	% (E)
Ratio of net investment income (loss) to average net assets		5.86	% (E)		8.05	%		7.05	%		6.62	%		6.89	%			6.57	% (E)
Ratio of gross expenses to average net assets		0.70	% (E)		0.69	%		0.68	%		0.68	%		0.68	%			0.70	% (E)
Portfolio turnover rate(C)		40	% (D)		83	%		95	%		142	%		43	%			66	%

(A)	Class I commenced operations on January 31, 2005.
(B)	Total returns shown exclude the effect of applicable sales charges.
(C)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(D)	Not annualized.
(E)	Annualized.

See accompanying Notes to Financial Statements.

Page 34 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds

Notes to Financial Statements
June 30, 2010 (Unaudited)

Organization

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, exchange privileges of each class of shares and sales charges. Class A has a maximum sales charge on purchases of 5.00% as a percentage of the original purchase price except for Strategic Income Fund which is 3.50%. Class C has a contingent deferred sales charge of 1.00% for shares redeemed within a year of the purchase date.

Significant Accounting Policies

The following is a summary of the Funds’ significant accounting policies:

Estimates — The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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.

Security valuation — The Fund records its investments at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation techniques used to determine fair value are further described below.

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 debt investments of sufficient credit quality maturing in less than 61 days are valued at amortized cost, which approximates fair value. Investments in other investment companies are valued at their reported net asset value. Securities for which market quotations are not readily available (e.g., an approved pricing service does not provide a price, certain stale prices, or an event occurs that materially affects the furnished price) are valued by the Fair Value Committee. 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.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 35

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2010 (Unaudited)

The valuation techniques described maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. 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 Funds’ own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, short-term debt securities of sufficient credit quality maturing in less than 61 days of the filing are valued using amortized cost, in accordance with rules under the 1940 Act. 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’ investments as of June 30, 2010:

			Level 2 —
	Level 1 —		Other Significant
	Quoted Prices		Observable Inputs
Investments in Securities:
(Assets)
Small Cap Fund
Common Stocks*	$	538,405,331	$	—
Registered Investment Companies		142,813,461		—
Repurchase Agreements		—		98,133,861
Total		681,218,792		98,133,861
Small-Mid Cap Fund
Common Stocks*		40,090,312		—
Registered Investment Companies		6,055,064		—
Repurchase Agreements		—		4,601,462
Total		46,145,376		4,601,462
Large Cap Fund
Common Stocks*		782,981,275		—
Registered Investment Companies		51,782,263		—
Repurchase Agreements		—		20,496,783
Total		834,763,538		20,496,783
Select Fund
Common Stocks*		30,269,220		—
Registered Investment Companies		2,727,485		—
Repurchase Agreements		—		211,914
Total		32,996,705		211,914
Long-Short Fund
Common Stocks*		1,658,260,394		—
Registered Investment Companies		149,299,151		—
Repurchase Agreements		—		16,233,187
Total		1,807,559,545		16,233,187
Financial Long-Short Fund
Common Stocks*		10,827,737		—
Preferred Stocks*		909,061		—
Corporate Bonds*		—		221,583
Registered Investment Companies		938,508		—
Repurchase Agreements		—		1,276,847
Total		12,675,306		1,498,430

Page 36 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2010 (Unaudited)

				Level 2 —
	Level 1 —			Other Significant
	Quoted Prices			Observable Inputs
Investments in Securities:
(Assets) (continued)
Strategic Income Fund
Preferred Stocks*	$	1,317,112		$	23,108
Corporate Bonds*		—			120,538,783
Collateralized Debt Obligations		—			739,576
Registered Investment Companies		20,731,490			—
Repurchase Agreements		—			9,284,978
Total		22,048,602			130,586,445
Investments in Securities Sold Short:
(Liabilities)
Long-Short Fund
Common Stocks*	$	(540,859,855	)	$	—
Financial Long-Short Fund
Common Stocks*		(606,705	)		—

* See Schedule of Investments and Schedule of Securities Sold Short for industry classification.

There were no significant transfers in and out of Levels 1, 2, or 3 during the six months ended June 30, 2010 and the Funds held no Level 3 securities at June 30, 2010.

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. It is included as “Deposits with brokers for securities sold short” on the Statements of Assets & Liabilities.

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 June 30, 2010, the value of securities loaned and the collateral held were as follows:

	Fair Value		Fair Value of
	of Securities Loaned		Collateral Received
Small Cap Fund	$	94,607,928	$	98,133,861
Small-Mid Cap Fund		4,458,408		4,601,462
Large Cap Fund		19,642,825		20,496,783
Select Fund		201,702		211,914
Long-Short Fund		15,803,441		16,233,187
Financial Long-Short Fund		1,234,231		1,276,847
Strategic Income Fund		9,120,305		9,284,978

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 37

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2010 (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. The Funds record distributions received from investments in Real Estate Investment Trusts (REITS) in excess of income from underlying investments as a reduction of cost of investments and/or realized gain. Such amounts are based on estimates if actual amounts are not available and actual amounts of income, realized gain and return of capital may differ from the estimated amounts. The Funds adjust the estimated amounts of the components of distributions (and consequently net investment income) as an increase to unrealized appreciation (depreciation) and realized gain (loss) on investments as necessary once the issuers provide information about the actual composition of the distributions.

Share valuation — The net asset value per share of each class of shares of each Fund is calculated daily by dividing the total value of a Fund’s assets attributable to that class, less liabilities attributable to that class, by the number of shares of that class outstanding.

Federal income taxes — Each Fund’s policy is to continue to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of its taxable net investment income and any net realized capital gains to its shareholders. The Funds have analyzed their tax positions taken on Federal income tax returns for all open tax years (tax years ended December 31, 2006 through 2009) and have concluded that no provision for income tax is required in their financial statements.

Distributions to shareholders — Dividends from net investment income are declared and paid monthly for the Strategic Income Fund. Dividends from net investment income are declared and paid on an annual basis for the Small Cap Fund, Small-Mid Cap Fund, Large Cap Fund, Select Fund, Long-Short Fund, and Financial Long-Short Fund. Dividends are declared separately for each class. No class has preferential dividend rights; differences in per share rates are due to differences in separate class expenses. Net realized capital gains, if any, are distributed at least annually. Distributions from net investment income and from net capital gains are determined in accordance with U.S. income tax regulations, which may differ from GAAP in the United States. These differences are primarily due to differing treatments for paydown gains and losses on mortgage-backed securities, expiring capital loss carry forwards, and deferrals of certain losses. Permanent book and tax basis differences are reclassified among the components of net assets. Certain Funds may utilize earnings and profits distributed to shareholders on redemption of shares as part of the dividends paid deduction for income tax purposes.

Allocations — Investment income earned, realized capital gains and losses, and unrealized appreciation and depreciation for the Funds are allocated daily to each class of shares based upon its proportionate share of total net assets of the Fund. Class specific expenses are charged directly to the class incurring the expense. Common expenses, which are not attributable to a specific class, are allocated daily to each class of shares based upon its proportionate share of total net assets of the Fund. Expenses not directly billed to a Fund are allocated proportionally among all Funds daily in relation to net assets of each Fund or another reasonable measure.

Investment Transactions

For the six months ended June 30, 2010, the purchases and sales (including maturities) of investment securities (excluding short-term securities and U.S. government obligations) were as follows:

	Purchases		Sales
Small Cap Fund	$	192,316,453	$	110,547,752
Small-Mid Cap Fund		14,905,646		6,400,998
Large Cap Fund		257,824,867		64,062,767
Select Fund		5,586,085		2,485,027
Long-Short Fund		511,454,832		308,387,551
Financial Long-Short Fund		5,637,674		3,392,424
Strategic Income Fund		48,944,271		66,266,080

Page 38 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2010 (Unaudited)

The Funds pay commissions on the purchase and sale of investment securities. The commissions are treated as transaction costs and, therefore, are included as part of the cost of purchases or net proceeds on the sale of investment securities and are not included in the presentation of Fund expenses on the Statements of Operations. No portion of the commissions paid during the period was used to purchase so-called “soft dollar” services as defined in Section 28(e) of the Securities Exchange Act of 1934. The Funds paid the following commissions during the six months ended June 30, 2010:

			Total Commissions		Commissions as a %
			Used to Pay for		of Average Net Assets
	Total Commissions		Soft Dollars Services		(not annualized)
Small Cap Fund	$	258,608	$	—		0.04	%
Small-Mid Cap Fund		15,848		—		0.04
Large Cap Fund		212,613		—		0.03
Select Fund		4,021		—		0.01
Long-Short Fund		537,764		—		0.03
Financial Long-Short Fund		7,507		—		0.06
Strategic Income Fund		7,225		—		0.01

Investment Advisory Fees and Other Transactions with Affiliates

The Small Cap Fund, Small-Mid Cap Fund, Large Cap Fund, Select Fund, Long-Short Fund, Financial Long-Short Fund, and Strategic Income Fund each receive investment management and advisory services from Diamond Hill Capital Management, Inc. (“DHCM”) under management agreements that provide for fees to be paid at an annual rate of 0.80%, 0.75%, 0.60%, 0.70%, 0.90%, 1.00%, and 0.50% of the Funds’ average daily net assets, respectively. The advisory agreements are subject to annual approval by the Board of Trustees. In addition, each Fund has entered into an administrative services agreement whereby DHCM (“Administrator”) is paid a fee at an annual rate of 0.30% for Class A and Class C Shares and 0.19% for Class I shares of each class’ average daily net assets. Prior to April 30, 2010, the fees paid by Class A, Class C, and Class I shares were paid at an annual rate of 0.34%, 0.34% and 0.20% of each classes’ average daily net assets, respectively. These administrative fees are used to pay most of the Funds’ operating expenses except advisory, distribution, custody, brokerage, taxes, interest, dividend expense on securities sold short, and extraordinary expenses.

Pursuant to rule 12b-1 of the 1940 Act, each Fund has adopted a distribution plan (together, the “Plans”). Under the Plans, Class A shares pay a distribution fee at an annual rate of 0.25% of Class A average daily net assets. Class C shares pay a distribution and shareholder-servicing fee at an annual rate of 0.75% and 0.25%, respectively, of Class C average daily net assets. Class I shares are not subject to any distribution or shareholder-servicing fees. The Trust entered into a Distribution Agreement on behalf of the Funds with BHIL Distributors, Inc. (“Distributor”), an affiliate of DHCM. Pursuant to the Distribution Agreement, the Distributor acts as principal underwriter of each Fund’s shares.

For the six months ended June 30, 2010, the Distributor received the following amounts in sales commissions from the sales of Class A shares of the Funds as follows:

Small Cap Fund	$	8,268
Small-Mid Cap Fund		1,069
Large Cap Fund		9,468
Select Fund		640
Long-Short Fund		17,182
Financial Long-Short Fund		3,702
Strategic Income Fund		460

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 39

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2010 (Unaudited)

DHCM, as the financing agent for Class C shares, received contingent deferred sales charges relating to the redemptions of Class C shares of the Funds for the six months ended June 30, 2010 as follows:

Small Cap Fund	$	1,328
Small-Mid Cap Fund		100
Large Cap Fund		1,076
Select Fund		80
Long-Short Fund		6,222
Strategic Income Fund		14,702

Certain officers of the Trust are affiliated with DHCM or the Distributor. Such officers receive no compensation from the Funds for serving in their respective roles.

Commitments and Contingencies

The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.

Federal Tax Information

The amount and character of income and capital gain distributions paid by the Funds are determined in accordance with Federal income tax regulations which may differ from GAAP. The tax character of distributions paid differs from the character of distributions shown on the Statements of Changes in Net Assets due primarily to short-term capital gains being treated as ordinary income for tax purposes.

The tax character of distributions paid during the latest tax years ended 2009 and 2008 was as follows:

	Small Cap Fund				Small-Mid Cap Fund				Large Cap Fund				Select Fund
	2009		2008		2009		2008		2009		2008		2009		2008
Distributions paid from:
Ordinary income	$	54,353	$	3,188,253	$	47,498	$	362,049	$	1,909,846	$	6,027,559	$	—	$	170,214
Long-term capital gains		—		—		—		—		—		3,779,308		—		568,314
Total distributions	$	54,353	$	3,188,253	$	47,498	$	362,049	$	1,909,846	$	9,806,867	$	—	$	738,528

	Long-Short Fund				Financial Long-Short Fund				Strategic Income Fund
	2009		2008		2009		2008		2009		2008
Distributions paid from:
Ordinary income	$	19,506	$	22,430,110	$	149,149	$	486,458	$	7,974,351	$	8,683,372
Long-term capital gains		—		9,366,895		—		—		—		—
Return of capital		—		—		—		—		—		166,756
Total distributions	$	19,506	$	31,797,005	$	149,149	$	486,458	$	7,974,351	$	8,850,128

The following components of accumulated earnings (deficit) computed on a tax basis as of the latest tax year ended December 31, 2009:

	Small			Small-Mid			Large			Select
	Cap Fund			Cap Fund			Cap Fund			Fund
Tax cost of portfolio investments	$	639,557,192		$	43,391,543		$	676,803,070			$34,947,688
Gross unrealized appreciation		83,938,948			5,569,274			95,373,812			3,725,906
Gross unrealized depreciation		(34,342,430	)		(2,006,150	)		(20,888,281	)		(926,645	)
Net unrealized appreciation		49,596,518			3,563,124			74,485,531			2,799,261
Undistributed ordinary income		—			47,033			3,371,996			160,821
Capital loss carryforwards		(35,690,799	)		(2,458,151	)		(84,713,390	)		(2,143,874	)
Post-October losses		—			—			(696,139	)		—
Other temporary differences		—			—			—			(151,245	)
Accumulated earnings (deficit)	$	13,905,719		$	1,152,006		$	(7,552,002	)	$	664,963

Page 40 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2010 (Unaudited)

				Financial			Strategic
	Long-Short			Long-Short			Income
	Fund			Fund			Fund
Tax cost of portfolio investments	$	1,852,227,357		$	10,404,693		$	138,727,860
Gross unrealized appreciation		327,466,198			1,747,656			12,400,209
Gross unrealized depreciation		(201,942,536	)		(550,247	)		(12,004,372	)
Net unrealized appreciation		125,523,662			1,197,409			395,837
Undistributed ordinary income		334,785			—			1,871,181
Capital loss carryforwards		(519,005,486	)		(15,430,435	)		(25,497,744	)
Post-October losses		(661,039	)		—			—
Accumulated deficit	$	(393,808,078	)	$	(14,233,026	)	$	(23,230,726	)

The difference between book basis and tax basis net unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales, investments in Real Estate Investment Trusts and contributed securities.

As of the latest tax year ended December 31, 2009, the Funds had net capital loss carryforwards expiring as follows:

			Expires
	Amount		December 31,
Small Cap Fund	$	5,865,271		2016
		29,825,528		2017
	$	35,690,799
Small-Mid Cap Fund	$	995,466		2016
		1,462,685		2017
	$	2,458,151
Large Cap Fund	$	43,434,203		2016
		41,279,187		2017
	$	84,713,390
Select Fund	$	495,737		2016
		1,648,137		2017
	$	2,143,874
Long-Short Fund	$	101,454,175		2016
		417,551,311		2017
	$	519,005,486
Financial Long-Short Fund	$	8,896,517		2016
		6,533,918		2017
	$	15,430,435
Strategic Income Fund	$	18,618,627		2016
		6,879,117		2017
	$	25,497,744

The Funds also elected to defer until their subsequent tax year capital losses incurred after October 31, 2009. These capital loss carryforwards and “Post-October” losses may be utilized in future years to offset net realized capital gains, if any, prior to distributing such gains to shareholders.

The tax character of current year distributions paid and the tax basis of the current components of accumulated earnings (deficit) and any net capital loss carryforwards will be determined at the end of the current tax year.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 41

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2010 (Unaudited)

As of June 30, 2010, the Fund’s federal tax cost of investment securities and net unrealized appreciation (depreciation) were as follows:

							Net
			Gross		Gross		Unrealized
	Federal		Unrealized		Unrealized		Appreciation
Fund	Tax Cost		Appreciation		Depreciation		(Depreciation)
Diamond Hill Small Cap Fund	$	770,968,219	$	67,157,917	$	58,773,483	$	8,384,434
Diamond Hill Small-Mid Cap Fund		49,189,784		4,186,302		2,629,248		1,557,054
Diamond Hill Large Cap Fund		868,242,360		35,944,919		48,926,958		(12,982,039	)
Diamond Hill Select Fund		33,730,349		1,138,768		1,660,498		(521,730	)
Diamond Hill Long-Short Fund		1,765,352,143		160,341,260		101,900,671		58,440,589
Diamond Hill Financial Long-Short Fund		13,632,552		1,156,460		615,276		541,184
Diamond Hill Strategic Income Fund		151,878,271		7,193,390		6,436,614		756,776

Subsequent Events

The Funds evaluated subsequent events from June 30, 2010, through the date these financial statements were issued and available. There were no subsequent events to report that would have a material impact on the Funds’ financial statements.

Page 42 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds

Other Items
June 30, 2010 (Unaudited)

Proxy Voting

The investment adviser is responsible for exercising the voting rights associated with the securities purchased and held by the Funds. A description of the policies and procedures that the Adviser uses in fulfilling this responsibility and information regarding how those proxies were voted during the twelve month period ended June 30 are available without charge upon request by calling toll free 1-888-226-5595 or on the Securities and Exchange Commission’s website at http://www.sec.gov.

Portfolio Disclosure

The Trust files a complete listing of portfolio holdings as of the end of the first and third quarters of each fiscal year on Form N-Q and each second and fourth quarters of each fiscal year on Form N-CSR. The complete listing (i) is available on the Commission’s website; (ii) may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; and (iii) will be made available to shareholders upon request by calling 1-888-226-5595. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Monthly portfolio holdings are also available on www.diamond-hill.com.

Trustee Approval of Investment Advisory Agreements

The Trustees of Diamond Hill Funds (the “Trust”), at a regularly scheduled meeting on May 11, 2010, by a unanimous vote, approved the Management Agreements between the Trust and Diamond Hill Capital Management, Inc. (the “Adviser”), for each series of the Trust (each separately, a “Fund”). The Trustees discussed the following factors, on a Fund-by-Fund basis, in connection with the Trust’s Management Agreements (“investment advisory agreements”):

a)	The nature, extent and quality of the services provided by the Adviser under the investment advisory agreements, including a review of the investment advisory agreements themselves, the services provided thereunder, the fee formula, fees paid, expenses assumed and termination provisions. The Trustees reviewed the performance history of each fund with a five year track record as of January 31, 2010, noting that two Funds ranked in the 1st quartile of their respective peer group, one ranked in the 2nd quartile and two in the 3rd quartile. The Trustees also reviewed the two funds with a track record of less than five years noting that both Funds ranked in the 1st quartile for their three year performance. The Trustees also noted that the Adviser continued to invest significant resources in its investment team, by growing its research team to 17 associates over the last five years to help enhance the delivery of portfolio management services to the Funds.
b)	The reasonableness of the investment advisory fees, with the Trustees noting that the contract rates under the investment advisory agreements as of February 15, 2010 were at or below the mean and median rates of comparable funds within each Fund’s respective peer group.
c)	The reasonableness of the total expenses, with the Trustees noting that the total expenses of each class of shares of each of the Funds were generally at or below the mean and median total expenses of comparable funds within each Fund’s respective peer group, with total expenses for Class I shares of each Fund generally in the lower third of their respective peer groups.
d)	With limited exceptions, investment advisory fees charged by the Adviser to the Funds were comparable to the investment advisory fees the Adviser charges to its other similarly managed accounts (i.e. hedge funds and separate accounts).
e)	The reasonableness of each Fund’s profitability to the Adviser, including the Adviser’s methodology for calculating its profitability, with the Trustees noting that the Adviser’s pre-tax profit margin on the investment advisory agreements of each Fund represented a fair and entrepreneurial profit for managing the Fund. The Trustees also noted the Adviser (who is also the Administrator) has a history of voluntarily reducing its fees under the Administration Agreement when asset growth allows for the sharing of the economies of scale realized by the Administrator.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 43

Diamond Hill Funds
Other Items (Continued)
June 30, 2010 (Unaudited)

f)

The extent to which economies of scale would be realized as each Fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, with the Trustees noting that the current asset size of the Funds, the current advisory fee for each Fund, and other relevant factors did not warrant additional consideration of fee breakpoints for the Funds at the current time.

g)

The ancillary benefits received by the Adviser as a result of its relationship with the Funds. The Board considered that the Adviser has no soft dollar arrangements with respect to securities transactions it executes for the Funds. The Trustees also considered that the Adviser is the Administrator to the Funds (under the Administration Agreement) and is expected to earn fees from the Funds for providing administrative services. The fees were shown separately in the profitability analysis presented to the Trustees. The Trustees also considered revenue and expenses of the Administrator for providing financing arrangements related to the payment of commissions to financial intermediaries for the sale of C Shares of the Funds.

Having considered (1) the nature, extent and quality of the services provided by the Adviser under the investment advisory agreements, including long-term performance, (2) the reasonableness of the investment advisory fees compared to those paid by comparable mutual funds, (3) the reasonableness of the total expenses compared to those paid by comparable mutual funds, (4) the reasonableness of fees charged to other similar clients of the Adviser, (5) the reasonableness of each Fund’s profitability to the Adviser under each investment advisory agreement, (6) the extent to which economies of scale could and should be shared by the Adviser with the Funds, and (7) the ancillary benefits received by the Adviser, as discussed more fully above, the Trustees, all of whom qualify as Independent Trustees under the 1940 Act, concluded it was appropriate to renew the investment advisory agreements.

Page 44 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds

Schedule of Shareholder Expenses
Hypothetical Example of a $1,000 Investment at Beginning of Period
(Unaudited)

As a Fund shareholder, you may incur two types of costs: (1) transaction costs, including wire redemption fees and sales charges (loads) as applicable; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. These 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. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs or other fees that may apply, such as fees for low balance accounts. Therefore, the examples are useful in comparing ongoing costs only and will not help you determine the relative total cost of owning different funds. In addition, if these transactional costs and other fees were included, your costs would have been higher.

These examples are based on an investment of $1,000 invested at January 1, 2010 and held for the entire period from January 1, 2010 through June 30, 2010.

The Actual Expense example below provides information about actual account values and actual expenses. You may use this information, 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 table under the heading entitled “Expenses paid during period” to estimate the expenses you paid on your account during this period.

The Hypothetical Expense example below provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not each 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 this Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

													Fund’s
	Account value				Account value				Expenses paid				annualized
	at the beginning				at the end				during				expense
	of the period ($)				of the period ($)				the period ($)*				ratio (%)
	Actual		Hypothetical		Actual		Hypothetical		Actual		Hypothetical		Actual
Small Cap Fund
Class A		1,000.00		1,000.00		1,004.20		1,017.85		6.96		7.00		1.40
Class C		1,000.00		1,000.00		1,005.50		1,014.18		10.61		10.69		2.14
Class I		1,000.00		1,000.00		1,006.10		1,019.79		5.02		5.06		1.01
Small-Mid Cap Fund
Class A		1,000.00		1,000.00		993.20		1,018.10		6.67		6.76		1.35
Class C		1,000.00		1,000.00		990.00		1,014.43		10.31		10.44		2.09
Class I		1,000.00		1,000.00		995.10		1,019.98		4.80		4.86		0.97
Large Cap Fund
Class A		1,000.00		1,000.00		912.60		1,018.84		5.69		6.01		1.20
Class C		1,000.00		1,000.00		909.00		1,015.12		9.23		9.74		1.95
Class I		1,000.00		1,000.00		914.30		1,020.73		3.89		4.11		0.82
Select Fund
Class A		1,000.00		1,000.00		923.50		1,018.35		6.20		6.51		1.30
Class C		1,000.00		1,000.00		919.50		1,014.68		9.71		10.19		2.04
Class I		1,000.00		1,000.00		924.60		1,020.23		4.39		4.61		0.92
Long-Short Fund
Class A		1,000.00		1,000.00		904.40		1,015.97		8.40		8.90		1.78
Class C		1,000.00		1,000.00		900.90		1,012.20		11.97		12.67		2.54
Class I		1,000.00		1,000.00		906.20		1,017.80		6.66		7.05		1.41

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 45

Diamond Hill Funds
Schedule of Shareholder Expenses (Continued)
Hypothetical Example of a $1,000 Investment at Beginning of Period
(Unaudited)

													Fund’s
	Account value				Account value				Expenses paid				annualized
	at the beginning				at the end				during				expense
	of the period ($)				of the period ($)				the period ($)*				ratio (%)
	Actual		Hypothetical		Actual		Hypothetical		Actual		Hypothetical		Actual
Financial Long-Short Fund
Class A		1,000.00		1,000.00		1,011.50		1,016.22		8.63		8.65		1.73
Class C		1,000.00		1,000.00		1,008.00		1,012.50		12.35		12.37		2.48
Class I		1,000.00		1,000.00		1,013.50		1,018.05		6.79		6.80		1.36
Strategic Income
Class A		1,000.00		1,000.00		1,069.50		1,019.34		5.64		5.51		1.10
Class C		1,000.00		1,000.00		1,064.60		1,015.62		9.47		9.25		1.85
Class I		1,000.00		1,000.00		1,071.60		1,021.22		3.70		3.61		0.72

* Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year (to reflect the one-half year period).

You can find more information about the Fund’s expenses, including annual expense ratios for historical periods in the Financial Statements section of this report. For additional information on operating expenses and other shareholder costs, please refer to the Fund’s prospectus. The prospectus presents hypothetical shareholder costs over various time periods based upon a $10,000 investment and a return of 5% a year. This standardized example, which appears in all mutual fund prospectuses, may be useful to you in comparing the costs of investing in different funds.

Page 46 Diamond Hill Funds Semi-Annual Report June 30, 2010

Diamond Hill Funds

Management of the Trust (Unaudited)

Listed in the charts below is basic information regarding the Trustees and officers of the Trust.

TRUSTEES:

				Number of
				Portfolios in
Name/				Fund Complex
Address/1	Positions	Term of Office2 and	Principal Occupation(s)	Overseen by
Age	Held with Trust	Length of Time Served	At Least The Last 5 Years	Trustee3
Thomas E. Line	Chairman	Since November 2005	Senior Managing Director and Chief Financial Officer, Red Capital Group, October 2005 to the present; Vice President and Treasurer, Red Capital Group, September 2004 to October 2005; President, Focused Financial Consulting, Inc. (financial consulting), March 2002 to September 2004; Chief Operating Officer, Meeder Financial, Inc. (parent of investment adviser and mutual fund servicing companies), June 1998 to March 2002.		7
Year of Birth: 1967	Trustee
Elizabeth P. Kessler	Trustee	Since November 2005	Attorney and Partner-in-charge, Columbus Ohio office - Jones Day		7
Year of Birth: 1968
D’Ray Moore Rice	Trustee	Since August 2007	Retired, Community Volunteer. Trustee of American Performance Funds from October 2004 to October 2007.		7
Year of Birth: 1959
George A. Skestos Year of Birth: 1968	Trustee	Since August 2000	Managing Member, Arcadia Holdings, LLC (private investment banking firm), May 2001 to the present; President of Homewood Corporation (real estate development firm), January 2000 to the present.		7

PRINCIPAL OFFICERS:

Name/
Address/1	Positions	Term of Office and	Principal Occupation(s)
Age	Held with Trust	Length of Time Served	At Least the Last 5 Years
James F. Laird, Jr.4 Year of Birth: 1957	President	Since December 2001	Chief Financial Officer of Diamond Hill Investment Group, Inc., since December 2001. President of Diamond Hill Securities since July 2001. Vice President Corporate Strategy with Nationwide Insurance from January 2001 to July 2001. Senior Vice President Product Development with Villanova Capital from February 1999 through December 2000.
Gary R. Young4 Year of Birth: 1969	Treasurer, Secretary and Chief Compliance Officer	Since May 2004 Since September 2004	Controller of Diamond Hill Investment Group, Inc. since April 2004. Director of Mutual Fund Administration with Banc One Investment Advisors October 1998 through April 2004. Vice President and Manager of Mutual Fund Accounting and Financial Reporting with First Chicago NBD January 1996 through October 1998.

1	The address of each Trustee and Officer is 325 John H. McConnell Boulevard — Suite 200, Columbus, Ohio 43215.
2	Each Trustee is elected to serve in accordance with the Declaration of Trust and Bylaws of the Trust until his or her successor is duly elected and qualified.
3	No other directorships are held by any Trustee.
4	Mr. Laird and Mr. Young are each an “interested person” of the Trust as defined in the Investment Company Act of 1940, as amended, because of their relationship with Diamond Hill Capital Management, Inc.

The Statement of Additional Information contains additional information about the Trustees and is available without charge on www.diamond-hill.com or by calling 1-888-226-5595.

Diamond Hill Funds Semi-Annual Report June 30, 2010 Page 47

NOTICE OF PRIVACY POLICY

In order to enhance our ability to provide you with the best service possible, the Diamond Hill Funds (referred to as “we” or “us”) collects, uses and shares certain information about you. This policy explains what information we collect and with whom we share it. The practices described in this policy are applicable to all customers, including prospective, current and former customers. The policy also explains how we protect the security and confidentiality of certain customer information. We make reference to our “affiliates” in this policy. Affiliates are companies related to us by common control, including Diamond Hill Capital Management, Inc., Diamond Hill Investment Group, Inc., Beacon Hill Fund Services, and BHIL Distributors, Inc.

SAFEGUARDING PRIVACY

We maintain physical, electronic and procedural safeguards that comply with federal standards to ensure the safety of non-public personal customer information.

INFORMATION WE COLLECT AND SOURCES OF INFORMATION

We may collect information about our customers to help identify you, evaluate your application, service and manage your account and offer services and products you may find valuable. We collect this information from a variety of sources including:

• Information we receive from you on applications or other forms (e.g. your name, address, date of birth, social security number and investment information).

• Information about your transactions and experiences with us and our affiliates (e.g. your account balance, transaction history and investment selections); and

• Information we obtain from third parties regarding their brokerage, investment advisory, custodial or other relationships with you (e.g. your account number, account balance and transaction history).

INFORMATION WE SHARE WITH SERVICE PROVIDERS

We may disclose all non-public personal information we collect, as described above, to companies (including affiliates) that perform services on our behalf, including those that assist us in responding to inquiries, processing transactions, preparing and mailing account statements and other forms of shareholder services provided they use the information solely for these purposes and they enter into a confidentiality agreement regarding the information.

INFORMATION WE SHARE WITH AFFILIATES

Our affiliates are financial service providers that offer investment advisory, brokerage and other financial services. In addition to the information we share with affiliates that provide services to us, we may share information among our affiliates to better assist you in achieving your financial goals.

PRIVACY PROMISE FOR CUSTOMERS

We will safeguard, according to federal standards of security and confidentiality, any non-public personal information our customers share with us.

We will limit the collection and use of non-public customer information to the minimum necessary to deliver superior service to our customers that includes advising our customers about our products and services and to administer our business.

We will permit only authorized employees who are trained in the proper handling of non-public customer information to have access to that information.

We will not reveal non-public customer information to any external organization unless we have previously informed the customer in disclosures or agreements, have been authorized by the customer or are required by law or our regulators.

We value you as a customer and take your personal privacy seriously. We will inform you of our policies for collecting, using, securing and sharing non-public personal information the first time we do business and every year that you are a customer of The Diamond Hill Funds or anytime we make a material change to our privacy policy.

Page 48 Diamond Hill Funds Semi-Annual Report June 30, 2010

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Item 2. Code of Ethics.

Not required in Semi-Annual report filing.

Item 3. Audit Committee Financial Expert.

Not required in Semi-Annual report filing.

Item 4. Principal Accountant Fees and Services.

Not required in Semi-Annual report filing.

Item 5. Audit Committee of Listed Companies.

Not applicable.

Item 6. Schedule of Investments.

a) The Schedule of Investments is included in the report to shareholders filed under Item 1 of this Form.

b) Not applicable.

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

Not applicable.

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

Not Applicable.

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

Not Applicable.

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

Not Applicable.

Item 11. Controls and Procedures.

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

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)(1)	Not applicable in Semi-Annual filing.
(a)(2)	Certifications required by Item 12(a) of Form N-CSR are filed herewith.
(a)(3)	Not applicable.
(b)	Certifications required by Item 12(b) of Form N-CSR are furnished herewith.

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: September 2, 2010

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 and Chief Executive Officer

Date: September 2, 2010

By (Signature and Title)

/s/ Gary R. YoungGary R. Young

Treasurer and Chief Financial Officer

Date: September 2, 2010