Diamond Hill Small-Mid Cap Fund (DHMYX) 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: 06/30/11

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.

Item 1. Reports to Stockholders.

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	27
Notes to Financial Statements	34
Other Items	42
Schedule of Shareholder Expenses	44

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 2011 mid-year update for the Diamond Hill Funds. Since our firm’s inception, 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.

2011 Year-to-Date Market Review

U.S. equity markets rose during the first six months of 2011 with the Russell 1000 and Russell 2000 Indexes increasing 6.37% and 6.21%, respectively. Most of the year-to-date gains were achieved in the first quarter despite turmoil in the Middle East and the devastating earthquake and tsunami on March 11^th in Japan. Central bank monetary policies served to absorb some of the fallout from these events. The U.S. Federal Reserve, European Central Bank, and Bank of Japan flooded the markets with money as oil prices surged and the world’s third largest economy, Japan, suffered.

By the second quarter, financial markets were buffeted by rapidly changing investor sentiment. News headlines were dominated by the sovereign debt concerns in Greece and weak U.S. economic data. The continuing political debate over raising the U.S. debt ceiling and the potential impact of a technical default on government obligations created additional uncertainty for financial markets. Reflecting the growing uncertainty, trading volumes declined significantly in the second quarter as investors fled to the sidelines. In addition, the Federal Reserve’s second round of quantitative easing (QE2) ended during the quarter, which some believe will contribute to continued market volatility. There was also a renewed exit of investors from U.S. stock funds. In the first four months of 2011, $18 billion flowed into U.S. stock funds, while $26 billion flowed out during the eight-week period ended June 22, 2011.

Economic and Sector Results

There were encouraging signs of economic recovery early in the year, including a significant decline in the unemployment rate and optimistic forecasts for GDP and earnings per share growth. However, domestic economic growth of approximately 2% in the first half of the year was a significant disappointment and far less than most expected at the beginning of the year. At least some of the disappointment was due to temporary factors such as the economic disruptions following the Japanese earthquake and tsunami in March. However, consumer spending was also a major factor in the weaker than expected economic growth, with consumer confidence remaining low. Housing prices showed a small positive up-tick in the most recent Case-Shiller Home Price report, but continued to be weak overall. Six markets posted new lows in home prices since the peak, and home prices in 19 out of 20 markets declined from a year ago. Despite lower housing prices and low interest rates, many potential home buyers are unable to take advantage of the current environment as banks have tightened lending standards over the past year making it more difficult for home buyers to qualify for a loan. As a result, existing home sales were 15% below last year’s pace and 35% below the 2005 pace.

Year-to-date, the best performing sectors were the healthcare (+14%), energy (+11%), and utilities (+9%) sectors. The energy sector was the best performing sector in the first quarter, reflecting the spike in oil prices in response to the Middle East turmoil. However, as the year progressed, investors increasingly shifted to more defensive, less economically sensitive sectors such as healthcare, utilities, and consumer staples.

Market Outlook

During the last week of June, more positive economic reports pushed the equity markets and interest rates higher, providing some hopeful signs for economic improvement in the second half of 2011. Crude oil prices were down $15 per barrel, and retail gasoline prices were back to levels last seen at the end of 2010. Although still declining in many markets,

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 1

the latest housing reports suggest some stabilization. Additionally, consumer debt service levels continue to decline, and household credit quality has improved. However, the early signs of strength are tenuous at best.

The worldwide economic recovery continues to be led by China and other emerging economies, while the mature economies (such as the U.S. and Europe) continue to require fiscal and monetary stimulus, pulling forward economic activity at the cost of future growth. As a result of China’s strong economic growth, Chinese inflation has steadily increased to over 5%. China has taken numerous steps to slow their economy. If they are not successful in achieving a “soft landing”, there could be meaningful implications for the U.S. economy.

Reflecting our outlook and current market valuations, our portfolios generally continue to be more defensively positioned. We continue to emphasize higher quality companies with strong balance sheets, quality management, and competitive positioning within the industry. As a result of our portfolio positioning, our equity strategies lagged their respective benchmarks during the first quarter of 2011, but benefitted from the flight to higher quality, more defensive stocks in the second quarter. With the exception of our Financial Long-Short Fund, our equity strategy returns trailed benchmark returns year-to-date. The Strategic Income Fund also exceeded its benchmark return during the period.

We continue to believe that equities, in general, appear more attractive than cash or fixed income securities and that large cap stock valuations appear more attractive than small and mid-cap stock valuations. From current levels, our expectation is for slightly below average equity market returns over the next five years.

Capital markets were extremely volatile during the first six months of 2011, 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, 2011, 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 is a market capitalization-weighted index measuring performance of the largest 1,000 companies on a market capitalization basis, in the Russell 3000 Index.The Russell 2000 index is a market capitalization-weighted index measuring performance of the smallest 2,000 companies, on a market capitalization basis, in the Russell 3000 Index. Both the Russell 1000 and Russell 2000 Indexes are unmanaged, do not incur fees, and cannot be invested in directly.

Past performance does not guarantee future results.

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. 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. Investors may obtain a copy of the current prospectus at 888-226-5595 or www.diamond-hill.com. 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, 2011

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 to outperform benchmarks and our peers over 5-year rolling periods and achieve absolute returns sufficient for the risk of the 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, 2011 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, 2011

	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, 2011 Page 5

Diamond Hill Small Cap Fund

Schedule of Investments

June 30, 2011 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 85.2%
Consumer Discretionary — 9.6%
Aaron’s, Inc.◊		435,310	$	12,301,861
Callaway Golf Co.◊		731,916		4,552,517
Carter’s, Inc.*◊		137,905		4,241,958
Global Sources Ltd.*		524,661		4,821,635
Hillenbrand, Inc.◊		574,910		13,596,621
K-Swiss, Inc., Class A*◊		766,040		8,143,005
Liquidity Services, Inc.*		155,061		3,660,990
Steiner Leisure Ltd.*◊		501,127		22,891,481
Tenneco, Inc.*◊		227,280		10,016,230
				84,226,298
Consumer Staples — 9.6%
B&G Foods, Inc.◊		247,965		5,113,038
Energizer Holdings, Inc.*		431,250		31,205,250
Flowers Foods, Inc.◊		910,457		20,066,461
Ralcorp Holdings, Inc.*		142,385		12,327,694
Ruddick Corp.◊		190,230		8,282,614
Snyders-Lance, Inc.◊		360,530		7,798,264
				84,793,321
Energy — 13.8%
Berry Petroleum Co., Class A◊		515,645		27,396,219
Carrizo Oil & Gas, Inc.*◊		306,405		12,792,409
Cimarex Energy Co.		241,295		21,697,246
Denbury Resources, Inc.*		638,515		12,770,300
Exterran Holdings, Inc.*◊		428,843		8,503,957
Forest Oil Corp.*		303,235		8,099,407
Southwestern Energy Co.*		208,230		8,928,902
Whiting Petroleum Corp.*		375,300		21,358,323
				121,546,763
Financials — 23.8%
Alleghany Corp.*		40,532		13,501,615
Arch Capital Group Ltd.*◊		409,905		13,084,168
Assurant, Inc.		846,700		30,709,809
Assured Guaranty Ltd.		2,183,177		35,607,617
City National Corp.		101,775		5,521,294
First American Financial Corp.◊		306,020		4,789,213
First Niagara Financial Group, Inc.		248,790		3,284,028
HCC Insurance Holdings, Inc.		212,545		6,695,167
Horace Mann Educators Corp.		683,490		10,669,279
Huntington Bancshares, Inc.		1,355,798		8,894,035
iStar Financial, Inc. REIT*		1,130,915		9,171,721
Mid-America Apartment Communities, Inc. REIT◊		127,569		8,607,080
National Penn Bancshares, Inc.◊		659,430		5,229,280
Old Republic International Corp.◊		2,170,380		25,501,965
Popular, Inc.*		1,634,955		4,512,476
Redwood Trust, Inc. REIT◊		356,720		5,393,606
Sterling Bancorp		493,537		4,683,666
United Fire & Casualty Co.◊		212,675		3,694,165
White Mountains Insurance Group Ltd.		11,347		4,767,555
Winthrop Realty Trust REIT◊		378,925		4,524,364
				208,842,103
Health Care — 5.0%
Greatbatch, Inc.*◊		250,445		6,716,935
LifePoint Hospitals, Inc.*		429,225		16,774,113
Myriad Genetics, Inc.*◊		794,180		18,035,828
STERIS Corp.◊		62,035		2,169,984
				43,696,860
Industrials — 14.3%
AAR Corp.◊		397,572		10,770,225
Allegiant Travel Co.*◊		276,570		13,690,215
Apogee Enterprises, Inc.◊		514,250		6,587,542
Brink’s Co., The◊		417,570		12,456,113
Corrections Corp. of America*		352,635		7,634,548
HUB Group, Inc., Class A*◊		228,920		8,621,127
Kaydon Corp.◊		121,285		4,526,356
Kennametal, Inc.		637,093		26,891,696
Saia, Inc.*◊		720,620		12,214,509
Southwest Airlines Co.		422,564		4,825,681
Toro Co., The		63,725		3,855,363
Trinity Industries, Inc.◊		375,845		13,109,474
				125,182,849
Information Technology — 6.6%
Alliance Data Systems Corp.*◊		38,330		3,605,703
Broadridge Financial Solutions, Inc.◊		274,155		6,598,911
CoreLogic, Inc.*		742,830		12,412,689
CSG Systems International, Inc.*		561,947		10,384,780
Verigy Ltd.*		1,662,075		24,881,263
				57,883,346

Page 6 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Small Cap Fund
Schedule of Investments (Continued)
June 30, 2011 (Unaudited)

	Shares/		Fair
	Par Value		Value
Utilities — 2.5%
Cleco Corp.◊		308,315	$	10,744,778
UGI Corp.		349,690		11,151,614
				21,896,392
Total Common Stocks			$	748,067,932
Repurchase Agreement — 11.1%
BNP Paribas Securities Corp., 0.03%, Agreement dated 06/30/2011 to be repurchased at $97,488,136 on 07/01/2011. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 0.0% — 6.3%, and maturities from 08/02/2011 through 06/12/2037†	$	97,488,055	$	97,488,055
Registered Investment Companies — 15.0%
JPMorgan Prime Money Market Fund, Capital Shares		84,184,160	$	84,184,160
JPMorgan U.S. Government Money Market Fund, Capital Shares		47,274,642		47,274,642
Total Registered Investment Companies			$	131,458,802
Total Investment Securities — 111.3% (Cost $831,478,110)**			$	977,014,789
Net Other Assets (Liabilities) — (11.3%)				(99,562,180	)
Net Assets — 100.0%			$	877,452,609

*	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, 2011, was $102,135,175.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2011.

REIT — Real Estate Investment Trust

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 7

Diamond Hill Small-Mid Cap Fund
Schedule of Investments
June 30, 2011 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 90.7%
Consumer Discretionary — 7.4%
Callaway Golf Co.◊		111,165	$	691,446
Carter’s, Inc.*		24,290		747,160
Hillenbrand, Inc.◊		50,320		1,190,068
K-Swiss, Inc., Class A*◊		87,015		924,970
Leggett & Platt, Inc.		28,445		693,489
Mattel, Inc.		33,460		919,815
Steiner Leisure Ltd.*◊		21,595		986,460
				6,153,408
Consumer Staples — 12.4%
ConAgra Foods, Inc.		119,710		3,089,715
Energizer Holdings, Inc.*◊		32,520		2,353,147
Flowers Foods, Inc.◊		79,298		1,747,717
Molson Coors Brewing Co., Class B		33,570		1,501,922
Ralcorp Holdings, Inc.*		9,810		849,350
Ruddick Corp.◊		18,450		803,313
				10,345,164
Energy — 16.7%
Berry Petroleum Co., Class A◊		23,880		1,268,744
Cimarex Energy Co.		36,010		3,238,019
Denbury Resources, Inc.*		111,328		2,226,560
Energen Corp.		18,830		1,063,895
Exterran Holdings, Inc.*◊		30,105		596,982
Forest Oil Corp.*		16,400		438,044
Noble Energy, Inc.		36,745		3,293,454
Southwestern Energy Co.*		24,655		1,057,207
Whiting Petroleum Corp.*		13,080		744,383
				13,927,288
Financials — 20.6%
Alleghany Corp.*		3,149		1,048,963
Arch Capital Group Ltd.*◊		52,560		1,677,715
Assurant, Inc.		58,350		2,116,355
Assured Guaranty Ltd.		171,470		2,796,676
First Niagara Financial Group, Inc.		64,615		852,918
HCC Insurance Holdings, Inc.		26,825		844,987
Huntington Bancshares, Inc.		156,334		1,025,551
iStar Financial, Inc. REIT*		105,560		856,092
National Penn Bancshares, Inc.		124,500		987,285
Old Republic International Corp.		240,020		2,820,235
Popular, Inc.*		286,225		789,981
SunTrust Banks, Inc.		13,960		360,168
White Mountains Insurance Group Ltd.◊		1,455		611,333
XL Group plc.		20,045		440,589
				17,228,848
Health Care — 12.1%
Forest Laboratories, Inc.*		72,585		2,855,494
Greatbatch, Inc.*		22,870		613,373
Life Technologies Corp.*		21,730		1,131,481
LifePoint Hospitals, Inc.*◊		20,970		819,508
Myriad Genetics, Inc.*		44,325		1,006,621
Pharmaceutical Product Development, Inc.		40,345		1,082,860
Quest Diagnostics, Inc.		44,270		2,616,357
				10,125,694
Industrials — 11.2%
Brink’s Co., The		34,955		1,042,708
Corrections Corp. of America*		55,505		1,201,683
Dover Corp.		51,490		3,491,022
Fluor Corp.		7,020		453,913
HUB Group, Inc., Class A*◊		23,225		874,654
Parker Hannifin Corp.		6,545		587,348
Southwest Airlines Co.		152,145		1,737,496
				9,388,824
Information Technology — 8.2%
Broadridge Financial Solutions, Inc.◊		76,715		1,846,530
CoreLogic, Inc.*		85,995		1,436,976
CSG Systems International, Inc.*		45,335		837,791
Linear Technology Corp.		32,680		1,079,094
Verigy Ltd.*		111,970		1,676,191
				6,876,582

Page 8 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Small-Mid Cap Fund
Schedule of Investments (Continued)
June 30, 2011 (Unaudited)

	Shares/		Fair
	Par Value		Value
Utilities — 2.1%
Cleco Corp.◊		17,440	$	607,784
UGI Corp.		36,895		1,176,581
				1,784,365
Total Common Stocks			$	75,830,173
Repurchase Agreement — 11.1%
BNP Paribas Securities Corp., 0.03%,Agreement dated 06/30/2011 to be repurchased at $9,313,709 on 07/01/2011. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 0.0% — 6.3%, and maturities from 08/02/2011 — 06/12/2037†	$	9,313,701		9,313,701
Registered Investment Company — 9.1%
JPMorgan 100% U.S. Treasury Securities Money Market Fund, Capital Shares		7,582,491		7,582,491
Total Investment Securities — 110.9% (Cost $80,450,084)**			$	92,726,365
Net Other Assets (Liabilities) — (10.9%)				(9,119,899	)
Net Assets — 100.0%			$	83,606,466

*	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, 2011, was $9,865,009.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2011.

REIT — Real Estate Investment Trust

See accompanying Notes to Financial Statements.

Diamond Hill Large Cap Fund
Schedule of Investments
June 30, 2011 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 98.7%
Consumer Discretionary — 3.4%
Mattel, Inc.		508,350	$	13,974,542
McDonald’s Corp.		317,719		26,790,066
				40,764,608
Consumer Staples — 14.4%
ConAgra Foods, Inc.		994,323		25,663,477
Energizer Holdings, Inc.*		25,930		1,876,295
General Mills, Inc.		673,153		25,054,755
Kimberly-Clark Corp.◊		232,155		15,452,237
PepsiCo, Inc.		543,225		38,259,337
Procter & Gamble Co., The		571,087		36,304,000
Sysco Corp.		803,009		25,037,820
Walgreen Co.		139,330		5,915,952
				173,563,873
Energy — 18.9%
Anadarko Petroleum Corp.		626,385		48,081,313
Apache Corp.		244,823		30,208,710
Devon Energy Corp.		537,197		42,336,495
EOG Resources, Inc.		274,030		28,649,836
Exxon Mobil Corp.		304,505		24,780,617
Occidental Petroleum Corp.		517,022		53,790,969
				227,847,940
Financials — 17.4%
Assurant, Inc.		106,717		3,870,626
Bank of New York Mellon Corp.		557,144		14,274,029
Chubb Corp., The		200,285		12,539,844
JPMorgan Chase & Co.		814,127		33,330,359
Marsh & McLennan Cos., Inc.		523,659		16,332,924
PNC Financial Services Group, Inc.		495,125		29,514,401
Prudential Financial, Inc.◊		372,330		23,676,465
Travelers Cos., Inc., The		500,109		29,196,364
U.S. Bancorp		977,488		24,935,719
Wells Fargo & Co.		747,420		20,972,605
				208,643,336
Health Care — 21.0%
Abbott Laboratories◊		701,342		36,904,616
Amgen, Inc.*		264,800		15,451,080
Baxter International, Inc.		381,707		22,784,091
Johnson & Johnson		446,454		29,698,120

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 9

Diamond Hill Large Cap Fund
Schedule of Investments (Continued)
June 30, 2011 (Unaudited)

			Fair
	Shares		Value
Health Care — continued
Medtronic, Inc.		898,082	$	34,603,099
Merck & Co., Inc.		922,015		32,537,909
Pfizer, Inc.		1,772,737		36,518,382
Quest Diagnostics, Inc.◊		331,775		19,607,903
United Health Group, Inc.		476,751		24,590,817
				252,696,017
Industrials — 14.2%
3M Co.		266,057		25,235,507
Dover Corp.		381,393		25,858,445
Fluor Corp.		102,980		6,658,687
Illinois Tool Works, Inc.◊		439,934		24,851,872
Parker Hannifin Corp.◊		286,999		25,755,290
Raytheon Co.◊		362,379		18,064,593
United Technologies Corp.		495,277		43,836,967
				170,261,361
Information Technology — 6.4%
Cisco Systems, Inc.		820,971		12,815,357
International Business Machines Corp.		144,460		24,782,113
Linear Technology Corp.◊		359,185		11,860,289
Microsoft Corp.		1,050,595		27,315,470
				76,773,229
Materials — 3.0%
Air Products & Chemicals, Inc.◊		253,370		24,217,105
PPG Industries, Inc.◊		134,855		12,243,485
				36,460,590
Total Common Stocks			$	1,187,010,954

	Shares/		Fair
	Par Value		Value
Repurchase Agreement — 2.5%
BNP Paribas Securities Corp., 0.03%, Agreement dated 06/30/2011 to be repurchased at $29,577,050 on 07/01/2011. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 0.0% — 6.3%, and maturities from 08/02/2011 through 06/12/2037†	$	29,577,025	$	29,577,025
Registered Investment Company — 1.7%
JPMorgan 100% U.S. Treasury Securities Money Market Fund, Capital Shares		20,644,527		20,644,527
Total Investment Securities — 102.9% (Cost $1,052,535,857)**			$	1,237,232,506
Net Other Assets (Liabilities) — (2.9%)				(35,273,898	)
Net Assets — 100.0%			$	1,201,958,608

*	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, 2011, was $29,400,955.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2011.

See accompanying Notes to Financial Statements.

Page 10 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Select Fund
Schedule of Investments
June 30, 2011 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 98.7%
Consumer Discretionary — 4.4%
McDonald’s Corp.		12,435	$	1,048,519
Wal-Mart Stores, Inc.		17,765		944,032
				1,992,551
Consumer Staples — 15.7%
ConAgra Foods, Inc.		77,568		2,002,030
General Mills, Inc.		25,330		942,783
PepsiCo, Inc.		14,110		993,767
Procter & Gamble Co., The		22,130		1,406,804
Sysco Corp.		60,260		1,878,907
				7,224,291
Energy — 16.8%
Anadarko Petroleum Corp.		12,925		992,123
Apache Corp.		13,770		1,699,080
Cimarex Energy Co.		12,745		1,146,030
Devon Energy Corp.		17,225		1,357,502
Exterran Holdings, Inc.*◊		24,060		477,110
Occidental Petroleum Corp.		14,970		1,557,479
Southwestern Energy Co.*◊		11,270		483,258
				7,712,582
Financials — 20.7%
Arch Capital Group Ltd.*◊		21,885		698,569
Assurant, Inc.		18,870		684,415
Assured Guaranty Ltd.		99,620		1,624,802
JPMorgan Chase & Co.		36,860		1,509,049
Prudential Financial, Inc.		26,310		1,673,053
Travelers Cos., Inc., The		7,530		439,601
U.S. Bancorp		48,320		1,232,643
Wells Fargo & Co.		57,635		1,617,238
				9,479,370
Health Care — 19.0%
Abbott Laboratories		23,225		1,222,099
Baxter International, Inc.		21,145		1,262,145
Johnson & Johnson		18,775		1,248,913
Medtronic, Inc.		34,671		1,335,874
Merck & Co., Inc.		32,800		1,157,512
Pfizer, Inc.		59,835		1,232,601
UnitedHealth Group, Inc.		24,517		1,264,587
				8,723,731

	Shares/		Fair
	Par Value		Value
Industrials — 15.8%
3M Co.		10,220	$	969,367
Dover Corp.		22,355		1,515,669
Illinois Tool Works, Inc.		25,083		1,416,939
Parker Hannifin Corp.		5,325		477,865
Southwest Airlines Co.◊		121,705		1,389,871
United Technologies Corp.		16,570		1,466,611
				7,236,322
Information Technology — 3.6%
Cisco Systems, Inc.		28,550		445,666
Microsoft Corp.		46,880		1,218,880
				1,664,546
Materials — 2.7%
Air Products & Chemicals, Inc.		13,050		1,247,319
Total Common Stocks			$	45,280,712
Repurchase Agreement — 2.5%
BNP Paribas Securities Corp., 0.03%, Agreement dated 06/30/2011 to be repurchased at $1,168,360 on 07/01/2011. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 0.0% - 6.3%, and maturities from 08/02/2011 through 06/12/2037†	$	1,168,359		1,168,359
Registered Investment Company — 1.3%
JPMorgan U.S. Government Money Market Fund, Capital Shares		605,073		605,073

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 11

Diamond Hill Select Fund
Schedule of Investments (Continued)
June 30, 2011 (Unaudited)

	Fair
	Value
Total Investment Securities — 102.5% (Cost $39,705,183)**	$	47,054,144
Net Other Assets (Liabilities) — (2.5%)		(1,146,826	)
Net Assets — 100.0%	$	45,907,318

*	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, 2011, was $1,137,583.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2011.

See accompanying Notes to Financial Statements.

Diamond Hill Long-Short Fund
Schedule of Investments
June 30, 2011 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 86.2%
Consumer Discretionary — 3.1%
Mattel, Inc.◊		809,720	$	22,259,203
McDonald’s Corp.§		459,704		38,762,241
				61,021,444
Consumer Staples — 10.7%
ConAgra Foods, Inc.§		1,468,110		37,891,919
Energizer Holdings, Inc.*◊		42,280		3,059,381
General Mills, Inc.		951,827		35,427,001
PepsiCo, Inc.		694,230		48,894,619
Procter & Gamble Co., The		744,370		47,319,601
Sysco Corp.§		878,132		27,380,156
Walgreen Co.§		226,345		9,610,608
				209,583,285
Energy — 19.6%
Anadarko Petroleum Corp.		1,077,183		82,684,567
Apache Corp.		402,166		49,623,263
Cimarex Energy Co.◊		231,635		20,828,619
Devon Energy Corp.		711,005		56,034,304
EOG Resources, Inc.◊		450,450		47,094,548
Exxon Mobil Corp.		512,238		41,685,928
Occidental Petroleum Corp.		820,628		85,378,137
				383,329,366
Financials — 14.1%
Assurant, Inc.§		611,615		22,183,276
Assured Guaranty Ltd.◊ §		1,774,190		28,937,039
JPMorgan Chase & Co.		961,090		39,347,025
PNC Financial Services Group, Inc.		678,335		40,435,549
Prudential Financial, Inc.		601,835		38,270,688
Travelers Cos., Inc., The§		729,560		42,591,713
U.S. Bancorp§		1,275,607		32,540,734
Wells Fargo & Co.§		1,147,405		32,196,184
				276,502,208
Health Care — 17.8%
Abbott Laboratories§		878,140		46,207,727
Amgen, Inc.*		407,620		23,784,627
Baxter International, Inc.		475,386		28,375,790
Johnson & Johnson§		454,240		30,216,045
Medtronic, Inc.◊		1,179,837		45,459,120

Page 12 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Long-Short Fund
Schedule of Investments (Continued)
June 30, 2011 (Unaudited)

	Shares/		Fair
	Par Value		Value
Health Care — continued
Merck & Co., Inc.		1,053,005	$	37,160,546
Pfizer, Inc.		2,356,220		48,538,132
Pharmaceutical Product Development, Inc.		511,955		13,740,872
Quest Diagnostics, Inc. ◊		488,015		28,841,687
UnitedHealth Group, Inc.§		896,730		46,253,333
				348,577,879
Industrials — 13.2%
3M Co.		381,615		36,196,183
Dover Corp.		783,600		53,128,080
Fluor Corp. ◊		146,175		9,451,675
Illinois Tool Works, Inc. ◊		598,330		33,799,662
Parker Hannifin Corp.		439,505		39,441,179
Raytheon Co.		427,172		21,294,524
United Technologies Corp.§		724,985		64,168,422
				257,479,725
Information Technology — 4.7%
Cisco Systems, Inc.		1,072,519		16,742,021
International Business Machines Corp. ◊		233,400		40,039,770
Microsoft Corp.§		1,368,215		35,573,590
				92,355,381
Materials — 3.0%
Air Products & Chemicals, Inc. ◊		395,913		37,841,365
PPG Industries, Inc. ◊		218,455		19,833,529
				57,674,894
Total Common Stocks			$	1,686,524,182
Repurchase Agreement — 4.7%
BNP Paribas Securities Corp., 0.03%, Agreement dated 06/30/2011 to be repurchased at $91,107,970 on 07/01/2011. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 0.0% - 6.3%, and maturities from 08/02/2011 through 06/12/2037†	$	91,107,894		91,107,894

			Fair
	Shares		Value
Registered Investment Company — 14.0%
JPMorgan 100% U.S. Treasury Securities Money Market Fund, Capital Shares		274,709,914	$	274,709,914
Total Investment Securities — 104.9% (Cost $1,686,222,514)**			$	2,052,341,990
Segregated Cash With Brokers — 24.4%				476,911,860
Securities Sold Short — (24.6)%
(Proceeds $362,122,706)				(480,599,188	)
Net Other Assets (Liabilities) — (4.7%)				(92,553,372	)
Net Assets — 100.0%			$	1,956,101,290

*	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, 2011, was $90,090,561.
§	Security position is either entirely or partially held in a segregated account as collateral for securities sold short aggregating a total market value of $379,638,468.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2011.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 13

Diamond Hill Long-Short Fund
Schedule of Investments Sold Short
June 30, 2011 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 22.5%
Consumer Discretionary — 13.6%
Apollo Group, Inc., Class A*		417,785	$	18,248,849
Brunswick Corp.		1,726,360		35,217,744
ITT Educational Services, Inc.*		230,075		18,001,068
J.C. Penney Co., Inc.		282,070		9,742,698
Life Time Fitness, Inc.*		535,339		21,365,379
Macy’s, Inc.		1,427,690		41,745,656
MGM Resorts International*		1,536,146		20,292,489
NetFlix, Inc.*		36,785		9,663,052
Nordstrom, Inc.		443,555		20,820,472
Red Robin Gourmet Burgers, Inc.*		340,195		12,376,294
Royal Caribbean Cruises Ltd.*		285,716		10,754,350
Sally Beauty Holdings, Inc.*		1,203,375		20,577,712
Sonic Corp.*		415,430		4,416,021
Tractor Supply Co.		329,244		22,019,839
				265,241,623
Consumer Staples — 2.5%
Avon Products, Inc.		354,025		9,912,700
Colgate-Palmolive Co.		242,850		21,227,518
H.J. Heinz Co.		332,483		17,714,694
				48,854,912
Health Care — 1.4%
Covance, Inc.*		445,390		26,442,804
Industrials — 2.3%
Avery Dennison Corp.		262,005		10,121,253
Boeing Co., The		469,555		34,714,201
				44,835,454
Information Technology — 2.8%
Advent Software, Inc.*		703,927		19,829,624
Akamai Technologies, Inc.*		462,245		14,546,850
Monster Worldwide, Inc.*		757,125		11,099,453
Salesforce.com, Inc.*		67,745		10,092,650
				55,568,577
Total Common Stocks Sold Short				440,943,370

Exchange Traded Fund — 2.0%
iShares Russell 2000 Index Fund	478,935	$	39,655,818
Total Securities Sold Short (Proceeds $362,122,706)		$	480,599,188

* Non-dividend expense producing security.

Percentages disclosed are based on total net assets of the Fund at June 30, 2011.

See accompanying Notes to Financial Statements.

Page 14 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Financial Long-Short Fund
Schedule of Investments
June 30, 2011 (Unaudited)

			Fair
	Shares		Value
Preferred Stocks — 1.9%
Banking Services — 1.2%
Citizens Funding Trust I, 7.50%*		7,130	$	147,947
Reits & Real Estate Management — 0.7%
iStar Financial, Inc., 7.80%, Series F		4,247		83,963
Total Preferred Stocks				231,910
Common Stocks — 86.4%
Banking Services — 30.8%
BB&T Corp.		3,776		101,348
City National Corp.		1,500		81,375
First California Financial Group, Inc.*		28,801		102,387
First Financial Holdings, Inc.		15,579		139,744
First Niagara Financial Group, Inc.◊		12,655		167,046
First of Long Island Corp.◊		6,860		191,325
Huntington Bancshares, Inc.§		33,301		218,455
National Penn Bancshares, Inc.		22,185		175,927
PNC Financial Services Group, Inc.§		8,289		494,107
Popular, Inc.*		80,440		222,014
Sterling Bancorp		18,425		174,853
SunTrust Banks, Inc.		9,087		234,445
U.S. Bancorp§		21,658		552,496
Wells Fargo & Co.§		30,726		862,172
				3,717,694
Consumer Financial Services — 3.6%
American Express Co.		3,640		188,188
Discover Financial Services		9,385		251,049
				439,237
Financial Services — 15.0%
Bank of America Corp.		15,845		173,661
Bank of New York Mellon Corp.§		15,084		386,452
CME Group, Inc.		770		224,524
JPMorgan Chase & Co.		19,995		818,596
Morgan Stanley§		6,600		151,866
State Street Corp.		1,223		55,145
				1,810,244

	Shares/		Fair
	Par Value		Value
Insurance — 30.7%
ACE Ltd.		3,465	$	228,066
Alleghany Corp.*		178		59,294
Arch Capital Group Ltd.*◊		2,643		84,365
Assurant, Inc.§		9,270		336,223
Assured Guaranty Ltd.		37,565		612,685
Chubb Corp., The		1,555		97,358
Hartford Financial Services Group, Inc.		13,013		343,153
HCC Insurance Holdings, Inc.		4,005		126,157
Horace Mann Educators Corp.		11,738		183,230
Marsh & McLennan Cos., Inc.		2,740		85,461
Old Republic International Corp.		41,930		492,677
Prudential Financial, Inc.		8,090		514,443
Travelers Cos., Inc., The		2,950		172,221
White Mountains Insurance Group Ltd.		210		88,234
XL Group plc		12,395		272,442
				3,696,009
IT Services — 1.5%
CoreLogic, Inc.*		10,665		178,212
REITs & Real Estate Management — 4.8%
iStar Financial, Inc. REIT*		29,420		238,596
Redwood Trust, Inc. REIT◊		16,090		243,281
Winthrop Realty Trust REIT◊		8,205		97,968
				579,845
Total Common Stocks			$	10,421,241
Corporate Bond — 0.8%
Banking Services —0.8%
Synovus Financial Corp., 4.88%, 2/15/13		105,000		99,628

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 15

Diamond Hill Financial Long-Short Fund
Schedule of Investments (Continued)
June 30, 2011 (Unaudited)

	Shares/		Fair
	Par Value		Value
Repurchase Agreement — 4.5%
BNP Paribas Securities Corp., 0.03%, Agreement dated 06/30/2011 to be repurchased at $534,874 on 07/01/2011. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 0.0% - 6.3%, and maturities from 08/02/2011 through 06/12/2037†	$	534,874	$	534,874
Registered Investment Company — 9.8%
JPMorgan 100% U.S. Treasury Securities Money Market Fund, Capital Shares		1,174,461		1,174,461
Total Investment Securities — 103.4% (Cost $11,058,688)**			$	12,462,114
Segregated Cash With Brokers — 4.6%				556,666
Securities Sold Short — (5.7)%
(Proceeds $679,566)				(688,922	)
Net Other Assets (Liabilities) — (2.3%)				(273,014	)
Net Assets — 100.0%			$	12,056,844

*	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, 2011, was $521,429.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2011.
§	Security position is either entirely or partially held in a segregated account as collateral for securities sold short aggregating a total market value of $1,668,408.

REIT — Real Estate Investment Trust

See accompanying Notes to Financial Statements.

Diamond Hill Financial Long-Short Fund
Schedule of Securities Sold Short
June 30, 2011 (Unaudited)

			Fair
	Shares		Value
Common Stocks — 5.7%
Banking Services — 5.0%
Eagle Bancorp, Inc.*		8,190	$	108,927
First Financial Bankshares, Inc.		4,312		148,548
Home Bancshares, Inc.		5,610		132,620
United Bankshares, Inc.		2,630		64,382
WesBanco, Inc.		7,770		152,758
				607,235
Financial Services — 0.7%
Moody’s Corp.		2,130		81,686
Total Securities Sold Short (Proceeds $679,566)			$	688,921

* Non-dividend expense producing security.

Percentages disclosed are based on total net assets of the Fund at June 30, 2011.

Page 16 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Strategic Income Fund
Schedule of Investments
June 30, 2011 (Unaudited)

	Shares/		Fair
	Par Value		Value
Collateralized Debt Obligations — 0.5%
Alesco Preferred Funding III, 5/4/2034* ††	$	724,100	$	81,316
Alesco Preferred Funding Ltd., Series 6A, Class PPNE, 3/23/2035* ††		336,608		75,532
Alesco Preferred Funding VI PNN, 3/23/2035* ††		621,631		140,196
Fort Sheridan ABS CDO Ltd., Series 2005-1A, Class PPN2, 11/5/2041* ††		611,948		149,132
Taberna Preferred Funding Ltd., Series 2005-1A, Class PPN2, 7/5/2035* ††		1,175,564		252,899
Total Collateralized Debt Obligations				699,075
Preferred Stocks — 1.1%
Eagle Hospitality Properties Trust, Inc., 8.25%, Series A REIT*^		21,007		105,035
Hartford Financial Services Group, Inc., 7.25%, Series F◊		60,135		1,542,835
Total Preferred Stocks				1,647,870
Corporate Bonds — 88.8%
Consumer Discretionary — 8.7%
Expedia, Inc., 7.46%, 8/15/18		4,700,000		5,169,750
Goodyear Tire & Rubber Co., The, 10.50%, 5/15/16		2,305,000		2,593,125
Jarden Corp., 8.00%, 5/1/16		2,650,000		2,875,250
Tenneco, Inc., 7.75%, 8/15/18		2,615,000		2,739,213
				13,377,338
Consumer Staples — 2.2%
B&G Foods, Inc., 7.63%, 1/15/18		1,850,000		1,947,125
TreeHouse Foods, Inc., 7.75%, 3/1/18		1,350,000		1,434,375
				3,381,500
Energy — 11.5%
Anadarko Petroleum Corp., 5.95%, 9/15/16		4,400,000		4,952,583
ATP Oil & Gas Corp., 11.88%, 5/1/15		1,900,000		1,928,500
Carrizo Oil & Gas, Inc., 8.63%, 10/15/18		2,000,000		2,060,000
Cimarex Energy Co., 7.13%, 5/1/17		4,640,000		4,872,000

			Fair
	Par Value		Value
Energy — continued
Hornbeck Offshore Services, Inc., Series B, 6.13%, 12/1/14	$	3,800,000	$	3,762,000
				17,575,083
Financials — 23.9%
AmSouth Bank, Series AI, 4.85%, 4/1/13		1,850,000		1,848,592
CNA Financial Corp., 6.50%, 8/15/16		2,165,000		2,416,218
Discover Financial Services, 6.45%, 6/12/17		2,700,000		2,994,915
First Horizon National Corp., 5.38%, 12/15/15		4,400,000		4,635,760
First Tennessee Bank NA, 5.05%, 1/15/15		1,150,000		1,202,131
iStar Financial, Inc., Series B, 5.70%, 3/1/14◊		4,275,000		3,922,312
Nuveen Investments, Inc., 10.50%, 11/15/15		3,000,000		3,067,500
Regions Financial Corp., 5.75%, 6/15/15		3,000,000		2,955,000
Symetra Financial Corp., 6.13%, 4/1/16^		4,000,000		4,211,940
Synovus Financial Corp., 4.88%, 2/15/13		1,530,000		1,451,727
Wilmington Trust Corp., 4.88%, 4/15/13		3,040,000		3,190,763
Zions Bancorp., 7.75%, 9/23/14		4,380,000		4,802,473
				36,699,331
Health Care — 5.4%
HCA, Inc., 9.25%, 11/15/16		3,725,000		3,953,156
Mylan, Inc., 7.63%, 7/15/17^		4,000,000		4,360,000
				8,313,156
Industrials — 22.1%
Avis Budget Car Rental, 9.63%, 3/15/18		4,380,000		4,675,650
BE Aerospace, Inc., 8.50%, 7/1/18		4,620,000		5,041,575
Bristow Group, Inc., 7.50%, 9/15/17		1,665,000		1,744,088
Corrections Corp. of America, 7.75%, 6/1/17		2,050,000		2,231,937
Graham Packaging Co. LP/GPC Capital Corp. I, 8.25%, 10/1/18		2,000,000		2,225,000

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 17

Diamond Hill Strategic Income Fund
Schedule of Investments (Continued)
June 30, 2011 (Unaudited)

	Shares/		Fair
	Par Value		Value
Industrials — continued
Iron Mountain, Inc., 6.63%, 1/1/16	$	4,075,000	$	4,075,000
Silgan Holdings, Inc., 7.25%, 8/15/16		1,625,000		1,714,375
Triumph Group, Inc., 8.00%, 11/15/17		3,525,000		3,710,062
United Rentals North America, Inc., 10.88%, 6/15/16		4,110,000		4,598,063
Westinghouse Air, 6.88%, 7/31/13		3,650,000		3,905,500
				33,921,250
Information Technology — 4.3%
KLA-Tencor Corp., 6.90%, 5/1/18		4,478,000		5,058,429
Mantech International Corp., 7.25%, 4/15/18		1,500,000		1,567,500
				6,625,929
Materials — 4.8%
Crown Americas LLC / Crown Americas Capital Corp. II, 7.63%, 5/15/17		1,710,000		1,831,837
Nalco Co., 8.25%, 5/15/17		3,000,000		3,277,500
NewMarket Corp., 7.13%, 12/15/16		2,200,000		2,293,500
				7,402,837
Telecommunication Services — 1.4%
Level 3 Financing, Inc., 10.00%, 2/1/18		2,025,000		2,174,344
Utilities — 4.5%
CenterPoint Energy, Inc., 5.95%, 2/1/17		2,525,000		2,826,427
Source Gas LLC, 5.90%, 4/1/17^		4,000,000		4,035,564
				6,861,991
Total Corporate Bonds				136,332,759
Repurchase Agreement — 1.1%
BNP Paribas Securities Corp., 0.03%, Agreement dated 06/30/2011 to be repurchased at $1,644,184 on 07/01/2011. Repurchase agreement is fully collateralized by various U.S. Government Agency securities with a range of rates from 0.0% - 6.3%, and maturities from 08/02/2011 through 06/12/2037†	$	1,644,183		1,644,183

			Fair
	Shares		Value
Registered Investment Company — 8.1%
JPMorgan 100% U.S. Treasury Securities Money Market Fund, Capital Shares		12,478,830	$	12,478,830
Total Investment Securities — 99.6% (Cost $147,804,934)**			$	152,802,717
Net Other Assets (Liabilities) — 0.4%				681,498
Net Assets — 100.0%			$	153,484,215

*	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, 2011, was $1,613,031.
†	This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2011.
	REIT — Real Estate Investment Trust
^	Restricted securities not registered under the Securities Act of 1933 and deemed liquid based on procedures approved by the Board of Trustees are as follows:

						Value as
	Acquisition	Current				a % of
	Date	Cost		Value		Net Assets
Mylan, Inc.	September-10	$	4,280,208	$	4,360,000		2.8	%
Source Gas LLC	March-10		3,861,120		4,035,564		2.6	%
Eagle Hospitality Properties Trust, Inc.	February-07		494,217		105,035		0.1	%
Symetra Financial Corp.	February-11		4,165,279		4,211,940		2.7	%
		$	12,800,824	$	12,712,539		8.2	%

†† Restricted and illiquid securities not registered under the Securities Act of 1933 and valued at fair value by management:

						Value as
	Acquisition	Current				a % of
	Date	Cost		Value		Net Assets
Alesco Preferred Funding III	March-05	$	724,100	$	81,316		0.1	%
Alesco Preferred Funding Ltd., Series 6A, Class PPNE	May-05		336,608		75,532		0.0	%
Alesco Preferred Funding VI PNN	March-05		621,631		140,196		0.1	%
Fort Sheridan ABS CDO Ltd., Series 2005-1A, Class PPN2	March-05		511,258		149,132		0.1	%
Taberna Preferred Funding Ltd., Series 2005-1A, Class PPN2	March-05		1,037,797		252,899		0.2	%
		$	3,231,394	$	699,075		0.5	%

See accompanying Notes to Financial Statements.

Page 18 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Tabular Presentation of Schedules of Investments
June 30, 2011 (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		10	%
Consumer Staples		10	%
Energy		14	%
Financials		24	%
Health Care		5	%
Industrials		14	%
Information Technology		6	%
Utilities		2	%
Cash and Cash Equivalents		15	%
Total		100	%

Diamond Hill Small-Mid Cap Fund

	% of
Sector Allocation	Net Assets
Consumer Discretionary		7	%
Consumer Staples		13	%
Energy		17	%
Financials		21	%
Health Care		12	%
Industrials		11	%
Information Technology		8	%
Utilities		2	%
Cash and Cash Equivalents		9	%
Total		100	%

Diamond Hill Large Cap Fund

	% of
Sector Allocation	Net Assets
Consumer Discretionary		3	%
Consumer Staples		15	%
Energy		19	%
Financials		18	%
Health Care		21	%
Industrials		14	%
Information Technology		6	%
Materials		3	%
Cash and Cash Equivalents		1	%
Total		100	%

Diamond Hill Select Fund

	% of
Sector Allocation	Net Assets
Consumer Discretionary		4	%
Consumer Staples		16	%
Energy		17	%
Financials		21	%
Health Care		19	%
Industrials		16	%
Information Technology		3	%
Materials		3	%
Cash and Cash Equivalents		1	%
Total		100	%

Diamond Hill Long-Short Fund

	% of Long			% of Net
Sector Allocation	Portfolio			Assets
Long Portfolio
Consumer Discretionary		3	%		3	%
Consumer Staples		8	%		11	%
Energy		15	%		19	%
Financials		11	%		14	%
Health Care		14	%		18	%
Industrials		10	%		13	%
Information Technology		4	%		5	%
Materials		2	%		3	%
Cash and Cash Equivalents		33	%		19	%
Total		100	%

	% of Short			% of Net
Sector Allocation	Portfolio			Assets
Short Portfolio
Consumer Discretionary		55	%		-14	%
Consumer Staples		10	%		-3	%
Health Care		6	%		-1	%
Industrials		9	%		-2	%
Information Technology		12	%		-3	%
Exchange Traded Fund		8	%		-2	%
Total		100	%
Other
Segregated Cash with Brokers					20	%
					100	%

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 19

Diamond Hill Funds
Tabular Presentation of Schedules of Investments (Continued)
June 30, 2011 (Unaudited)

Diamond Hill Financial Long-Short Fund

	% of Long			% of Net
Sector Allocation	Portfolio			Assets
Long Portfolio
Common Stocks
Banking Services		29	%		31	%
Consumer Financial Services		3	%		4	%
Financial Services		14	%		15	%
Insurance		28	%		31	%
IT Services		1	%		1	%
REITs and Real Estate Management		5	%		5	%
Corporate Bonds
Banking Services		1	%		1	%
Preferred Stocks
Banking Services		1	%		1	%
REITs and Real Estate
Management		1	%		1	%
Cash and Cash Equivalents		17	%		14	%
Total		100	%

	% of Short			% of Net
Sector Allocation	Portfolio			Assets
Short Portfolio
Common Stocks
Banking Services		88	%		-5	%
Financial Services		12	%		-1	%
		100	%
Other
Segregated Cash with Brokers					2	%
					100	%

Diamond Hill Strategic Income Fund

	% of
Sector Allocation	Net Assets
Corporate Bonds		89	%
Preferred Stocks		1	%
Collateralized Debt Obligations		1	%
Cash and Cash Equivalents		9	%
Total		100	%

Page 20 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Statements of Assets & Liabilities
June 30, 2011 (Unaudited)

				Small-Mid
	Small Cap			Cap			Large Cap			Select
	Fund			Fund			Fund			Fund
Assets
Investment securities, at cost	$	831,478,110		$	80,450,084		$	1,052,535,857		$	39,705,183
Investment securities, at fair value — including $102,135,175; $9,865,009; $29,400,955; and $1,137,583 of securities loaned for the Small Cap Fund, the Small-Mid Cap Fund, the Large Cap Fund and the Select Fund, respectively.	$	879,526,734		$	83,412,664		$	1,207,655,481		$	45,885,785
Repurchase agreements, at value		97,488,055			9,313,701			29,577,025			1,168,359
Total securities at value		977,014,789			92,726,365			1,237,232,506			47,054,144
Receivable for securities sold		—			335,197			—			—
Receivable for fund shares issued		1,608,382			52,713			860,787			3,367
Receivable for dividends		470,861			39,172			1,621,660			63,842
Total Assets		979,094,032			93,153,447			1,239,714,953			47,121,353
Liabilities
Return of collateral for securities on loan		97,488,055			9,313,701			29,577,025			1,168,359
Payable for securities purchased		3,235,601			—			—			—
Payable for fund shares redeemed		—			149,549			7,168,146			2,633
Payable to Investment Adviser		564,981			51,685			586,238			26,360
Payable to Administrator		221,343			20,373			301,665			11,934
Accrued distribution and service fees		131,443			11,673			123,271			4,749
Total Liabilities		101,641,423			9,546,981			37,756,345			1,214,035
Net Assets	$	877,452,609		$	83,606,466		$	1,201,958,608		$	45,907,318
Components of Net Assets
Paid-in capital	$	693,944,723		$	67,014,002		$	1,059,578,870		$	39,153,607
Accumulated net investment income (loss)		(1,163,195	)		(14,676	)		10,367,562			517,255
Accumulated net realized gains (losses) from investment transactions		39,134,402			4,330,859			(52,684,473	)		(1,112,505	)
Net unrealized appreciation (depreciation) on investments		145,536,679			12,276,281			184,696,649			7,348,961
Net Assets	$	877,452,609		$	83,606,466		$	1,201,958,608		$	45,907,318
Pricing of Class A Shares
Net assets attributable to Class A shares	$	505,509,970		$	21,282,446		$	483,263,584		$	8,023,286
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		18,868,059			1,603,075			30,887,005			763,451
Net asset value and redemption price per share	$	26.79		$	13.28		$	15.65		$	10.51
Maximum offering price per share	$	28.20		$	13.98		$	16.47		$	11.06
Pricing of Class C Shares
Net assets attributable to Class C shares	$	37,732,184		$	9,279,225		$	32,318,445		$	3,923,306
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		1,510,253			722,159			2,144,628			380,665
Net asset value, offering price and redemption price per share(A)	$	24.98		$	12.85		$	15.07		$	10.31
Pricing of Class I Shares
Net assets attributable to Class I shares	$	334,210,455		$	53,044,795		$	686,376,579		$	33,960,726
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		12,351,754			3,974,759			43,705,014			3,230,515
Net asset value, offering price and redemption price per share	$	27.06		$	13.35		$	15.70		$	10.51

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

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 21

Diamond Hill Funds
Statements of Assets & Liabilities
June 30, 2011 (Unaudited)

				Financial			Strategic
	Long-Short			Long-Short			Income
	Fund			Fund			Fund
Assets
Investment securities, at cost	$	1,686,222,514		$	11,058,688		$	147,804,934
Investment securities, at market value — including $90,090,561, $521,429 and $1,613,031 of securities loaned for the Long-Short Fund, the Financial Long-Short Fund and the Strategic Income Fund, respectively	$	1,961,234,096		$	11,927,240		$	151,158,534
Repurchase agreements, at value		91,107,894			534,874			1,644,183
Total investment securities, at value		2,052,341,990			12,462,114			152,802,717
Cash		68,317			—			—
Deposits with brokers for securities sold short		476,911,860			556,666			—
Receivable for securities sold		—			248,328			—
Receivable for fund shares issued		3,716,901			22,301			102,456
Receivable for dividends and interest		1,774,626			15,881			2,406,343
Total Assets		2,534,813,694			13,305,290			155,311,516
Liabilities
Return of collateral for securities on loan		91,107,894			534,874			1,644,183
Securities sold short, at value (proceeds $362,122,706 for the Long-Short Fund and $679,566 for the Financial Long-Short Fund)		480,599,188			688,922			—
Payable for securities purchased		—			—			—
Payable for dividends on securities sold short		302,361			2,989			—
Payable for fund shares redeemed		4,578,032			6,904			56,413
Payable to Investment Adviser		1,425,616			9,691			62,905
Payable to Administrator		452,165			2,475			34,175
Accrued distribution and service fees		247,148			2,591			29,625
Total Liabilities		578,712,404			1,248,446			1,827,301
Net Assets	$	1,956,101,290		$	12,056,844		$	153,484,215
Components of Net Assets
Paid-in capital	$	2,294,824,424		$	24,726,660		$	166,067,989
Accumulated net investment income (loss)		4,092,435			5,470			96,528
Accumulated net realized gains (losses) from investment transactions		(590,458,562	)		(14,069,356	)		(17,678,085	)
Net unrealized appreciation (depreciation) on investments		247,642,993			1,394,070			4,997,783
Net Assets	$	1,956,101,290		$	12,056,844		$	153,484,215
Pricing of Class A Shares
Net assets attributable to Class A shares	$	620,347,735		$	7,930,807		$	47,262,778
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		36,872,352			657,848			4,298,447
Net asset value and redemption price per share	$	16.82		$	12.06		$	11.00
Maximum offering price per share	$	17.71		$	12.69		$	11.40
Pricing of Class C Shares
Net assets attributable to Class C shares	$	144,643,375		$	1,206,338		$	24,232,289
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		9,124,983			105,639			2,205,757
Net asset value, offering price and redemption price per share(A)	$	15.85		$	11.42		$	10.99
Pricing of Class I Shares
Net assets attributable to Class I shares	$	1,191,110,180		$	2,919,699		$	81,989,148
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		69,988,141			242,779			7,471,205
Net asset value, offering price and redemption price per share	$	17.02		$	12.03		$	10.97

(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, 2011

Diamond Hill Funds
Statements of Operations
For the Six Months Ended June 30, 2011 (Unaudited)

	Small Cap			Small-Mid Cap			Large Cap		Select
	Fund			Fund			Fund		Fund
Investment Income
Dividends	$	3,935,155		$	447,241		$	12,880,633	$	452,358
Interest income		50,899			—			—		1,246
Total Investment Income		3,986,054			447,241			12,880,633		453,604
Expenses
Investment advisory fees		3,501,972			300,608			3,541,958		154,829
Administration fees		1,113,428			97,052			1,448,411		52,477
Distribution fees — Class A		630,027			25,439			603,084		9,950
Distribution and service fees — Class C		181,642			42,379			152,498		20,672
Accounting and custody fees		59,450			5,132			106,289		4,020
Net Expenses		5,486,519			470,610			5,852,240		241,948
Net Investment Income (Loss)		(1,500,465	)		(23,369	)		7,028,393		211,656
Realized and Unrealized Gains (Losses) on Investments
Net realized gains (losses) from security sales		37,222,235			4,544,317			23,442,942		1,175,438
Net change in unrealized appreciation (depreciation) on investments		(1,824,546	)		(316,102	)		36,368,946		793,386
Net Realized and Unrealized Gains on Investments		35,397,689			4,228,215			59,811,888		1,968,824
Net Change in Net Assets from Operations	$	33,897,224		$	4,204,846		$	66,840,281	$	2,180,480

				Financial			Strategic
	Long-Short			Long-Short			Income
	Fund			Fund			Fund
Investment Income
Dividends	$	17,061,272		$	92,567		$	55,660
Interest		147,087			3,918			4,978,828
Securities lending income		—			—			17,527
Total Investment Income		17,208,359			96,485			5,052,015
Expenses
Investment advisory fees		8,615,075			61,495			371,445
Administration fees		2,348,503			16,180			183,230
Distribution fees — Class A		815,558			10,395			55,881
Distribution and service fees — Class C		801,677			6,565			120,935
Accounting and custody fees		178,502			1,077			—
Dividend expense on securities sold short		2,554,802			9,782			—
Net Expenses		15,314,117			105,494			731,491
Net Investment Income (Loss)		1,894,242			(9,009	)		4,320,524
Realized and Unrealized Gains (Losses) on Investments
Net realized gains (losses) from security sales		79,371,755			400,987			1,101,481
Net realized gains (losses) on closed short positions		(62,300,360	)		52,106			—
Net change in unrealized appreciation (depreciation) on investments		48,255,251			(599,748	)		683,408
Net Realized and Unrealized Gains (Losses) on Investments		65,326,646			(146,655	)		1,784,889
Net Change in Net Assets from Operations	$	67,220,888		$	(155,664	)	$	6,105,413

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2011 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, 2011			December 31,			June 30, 2011			December 31,			June 30, 2011			December 31,			June 30, 2011			December 31,
	(Unaudited)			2010			(Unaudited)			2010			(Unaudited)			2010			(Unaudited)			2010
From Operations
Net investment income (loss)	$	(1,500,465	)	$	(880,390	)	$	(23,369	)	$	8,692		$	7,028,393		$	9,679,313		$	211,656		$	305,602
Net realized gains (losses) from security sales		37,222,235			52,577,163			4,544,317			3,294,096			23,442,942			10,149,784			1,175,438			853,152
Net change in unrealized appreciation (depreciation) on investments		(1,824,546	)		96,105,153			(316,102	)		8,000,766			36,368,946			72,974,502			793,386			2,910,338
Change in Net Assets from Operations		33,897,224			147,801,926			4,204,846			11,303,554			66,840,281			92,803,599			2,180,480			4,069,092
Distributions to Shareholders
From net investment income:
Class A		—						—			—			—			(3,174,891	)		—			(5,324	)
Class C		—						—			—			—			(7,277	)		—			—
Class I		—						—			(47,033	)		—			(6,529,972	)		—			(155,500	)
From net realized gains on investments:
Class A		—			(7,686,104	)		—			(4,694	)		—			—			—			—
Class C		—			(574,550	)		—			(2,217	)		—			—			—			—
Class I		—			(4,688,890	)		—			(13,348	)		—			—			—			—
Decrease in Net Assets from Distributions to Shareholders		—			(12,949,544	)		—			(67,292	)		—			(9,712,140	)		—			(160,824	)
From Capital Transactions
Class A
Proceeds from shares sold		76,953,587			165,849,296			5,782,279			12,157,686			93,870,353			219,386,955			1,458,190			2,049,801
Reinvested distributions		—			7,134,182			—			4,133			—			3,000,868			—			4,779
Payments for shares redeemed		(91,895,703	)		(195,854,251	)		(2,802,831	)		(5,901,187	)		(97,854,467	)		(140,028,087	)		(1,283,194	)		(2,211,552	)
Net Increase (Decrease) in Net Assets from Class A Share Transactions		(14,942,116	)		(22,870,773	)		2,979,448			6,260,632			(3,984,114	)		82,359,736			174,996			(156,972	)
Class C
Proceeds from shares sold		3,505,621			10,432,535			1,745,477			3,003,957			5,447,538			8,599,012			141,426			1,462,563
Reinvested distributions		—			513,137			—			1,579			—			6,204			—			—
Payments for shares redeemed		(2,117,049	)		(4,383,475	)		(303,967	)		(1,073,799	)		(3,978,388	)		(7,084,631	)		(673,113	)		(1,013,783	)
Net Increase (Decrease) in Net Assets from Class C Share Transactions		1,388,572			6,562,197			1,441,510			1,931,737			1,469,150			1,520,585			(531,687	)		448,780
Class I
Proceeds from shares sold		75,306,902			267,239,689			12,269,495			14,273,930			112,262,661			322,102,816			7,179,930			8,271,464
Reinvested distributions		—			3,784,526			(5	)		48,470			—			5,074,239			—			143,710
Payments for shares redeemed		(66,822,036	)		(109,398,154	)		(6,633,541	)		(3,493,338	)		(86,709,693	)		(99,975,636	)		(6,406,528	)		(2,809,148	)
Net Increase (Decrease) in Net Assets from Class I Share Transactions		8,484,866			161,626,061			5,635,949			10,829,062			25,552,968			227,201,419			773,402			5,606,026
Total Increase (Decrease) in Net Assets		28,828,546			280,169,867			14,261,753			30,257,693			89,878,285			394,173,199			2,597,191			9,806,102
Net Assets
Beginning of period		848,624,064			568,454,197			69,344,713			39,087,020			1,112,080,323			717,907,124			43,310,127			33,504,025
End of period	$	877,452,610		$	848,624,064		$	83,606,466		$	69,344,713		$	1,201,958,608		$	1,112,080,323		$	45,907,318		$	43,310,127
Accumulated Net Investment Income (Loss)	$	(1,163,195	)	$	337,270		$	(14,676	)	$	8,693		$	10,367,562		$	3,339,169		$	517,255		$	305,599

See accompanying Notes to Financial Statements.

Page 24 Diamond Hill Funds Semi-Annual Report June 30, 2011

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, 2011			December 31,			June 30, 2011			December 31,			June 30, 2011			December 31,
	(Unaudited)			2010			(Unaudited)			2010			(Unaudited)			2010
From Operations
Net investment income (loss)	$	1,894,242		$	2,198,195		$	(9,009	)	$	6,049		$	4,320,524		$	8,348,213
Net realized gains (losses) from security sales		79,371,755			50,130,474			400,987			1,027,389			1,101,481			5,110,915
Net realized gains (losses) on closed short positions		(62,300,360	)		(132,584,179	)		52,106			92,336			—			—
Net change in unrealized appreciation (depreciation) on investments		48,255,251			68,454,353			(599,748	)		606,059			683,408			3,918,466
Net Change in Net Assets from Operations		67,220,888			(11,801,157	)		(155,664	)		1,731,833			6,105,413			17,377,594
Distributions to Shareholders
From net investment income:
Class A		—			—			—			—			(1,282,937	)		(2,537,128	)
Class C		—			—			—			—			(604,800	)		(1,215,833	)
Class I		—			(334,787	)		—			(3,500	)		(2,401,905	)		(4,529,534	)
Decrease in Net Assets from Distributions to Shareholders		—			(334,787	)		—			(3,500	)		(4,289,642	)		(8,282,495	)
From Capital Transactions
Class A
Proceeds from shares sold		105,890,171			319,968,417			1,322,361			5,852,273			10,816,204			24,626,078
Reinvested distributions		—			—			—			—			898,360			1,852,244
Payments for shares redeemed		(207,738,011	)		(569,340,467	)		(1,843,706	)		(6,742,636	)		(7,339,720	)		(27,978,007	)
Net Increase (Decrease) in Net Assets from Class A Share Transactions		(101,847,840	)		(249,372,050	)		(521,345	)		(890,363	)		4,374,844			(1,499,685	)
Class C
Proceeds from shares sold		4,885,820			25,789,006			121,083			455,017			2,002,703			6,405,155
Reinvested distributions		—			—			—			—			319,662			648,128
Payments for shares redeemed		(44,895,608	)		(97,574,427	)		(280,834	)		(558,844	)		(2,659,740	)		(6,492,327	)
Net Increase (Decrease) in Net Assets from Class C Share Transactions		(40,009,788	)		(71,785,421	)		(159,751	)		(103,827	)		(337,375	)		560,956
Class I
Proceeds from shares sold		290,454,265			725,972,530			1,549,552			2,442,106			7,878,626			18,456,655
Reinvested distributions		(190	)		146,563			—			2,305			1,738,368			3,484,096
Payments for shares redeemed		(183,286,168	)		(424,991,830	)		(452,595	)		(1,400,675	)		(5,502,501	)		(14,155,841	)
Net Increase (Decrease) in Net Assets from Class I Share Transactions		107,167,907			301,127,263			1,096,957			1,043,736			4,114,493			7,784,910
Total Increase (Decrease) in Net Assets		32,531,167			(32,166,152	)		260,197			1,777,879			9,967,733			15,941,280
Net Assets
Beginning of period		1,923,570,123			1,955,736,275			11,796,647			10,018,768			143,516,482			127,575,202
End of period	$	1,956,101,290		$	1,923,570,123		$	12,056,844		$	11,796,647		$	153,484,215		$	143,516,482
Accumulated Net Investment Income (Loss)	$	4,092,435		$	2,198,193		$	5,470		$	14,479		$	96,528		$	65,646

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2011 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, 2011			December 31,			June 30, 2011			December 31,			June 30, 2011			December 31,			June 30, 2011			December 31,
	(Unaudited)			2010			(Unaudited)			2010			(Unaudited)			2010			(Unaudited)			2010
Shares
Class A Shares:
Issued		2,941,700			7,155,291			447,512			1,077,346			6,097,893			15,937,265			142,472			222,167
Reinvested		—			278,244			—			331			—			203,173			—			478
Redeemed		(3,504,264	)		(8,587,264	)		(214,606	)		(550,505	)		(6,307,989	)		(10,326,539	)		(123,282	)		(244,323	)
Change in shares outstanding		(562,564	)		(1,153,729	)		232,906			527,172			(210,096	)		5,813,899			19,190			(21,678	)
Class C Shares:
Issued		143,345			481,177			138,346			273,718			364,834			652,105			13,992			155,983
Reinvested		—			21,372			—			130						434			—			—
Redeemed		(86,507	)		(200,794	)		(23,818	)		(102,293	)		(268,847	)		(535,306	)		(65,990	)		(111,650	)
Change in shares outstanding		56,838			301,755			114,528			171,555			95,987			117,233			(51,998	)		44,333
Class I Shares:
Issued		2,853,057			11,575,522			934,893			1,301,149			7,236,744			23,434,165			683,165			896,622
Reinvested		—			146,346			—			3,835						342,623			—			14,400
Redeemed		(2,506,337	)		(4,694,221	)		(505,179	)		(311,832	)		(5,590,845	)		(7,205,259	)		(621,661	)		(306,496	)
Change in shares outstanding		346,720			7,027,647			429,714			993,152			1,645,899			16,571,529			61,504			604,526

							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, 2011			December 31,			June 30, 2011			December 31,			June 30, 2011			December 31,
	(Unaudited)			2010			(Unaudited)			2010			(Unaudited)			2010
Shares
Class A Shares:
Issued		6,322,892			20,215,595			106,016			524,460			980,322			2,319,678
Reinvested		—			—			—			—			81,489			173,782
Redeemed		(12,424,880	)		(36,439,875	)		(149,279	)		(595,480	)		(665,633	)		(2,634,548	)
Change in shares outstanding		(6,101,988	)		(16,224,280	)		(43,263	)		(71,020	)		396,178			(141,088	)
Class C Shares:
Issued		309,200			1,699,414			10,138			41,998			181,644			604,466
Reinvested		—			—			—			—			29,005			60,738
Redeemed		(2,840,461	)		(6,546,127	)		(23,679	)		(52,413	)		(241,385	)		(608,807	)
Change in shares outstanding		(2,531,261	)		(4,846,713	)		(13,541	)		(10,415	)		(30,736	)		56,397
Class I Shares:
Issued		17,163,777			45,807,193			125,090			215,283			716,015			1,738,613
Reinvested		(12	)		8,942			—			190			157,971			327,091
Redeemed		(10,854,197	)		(26,843,681	)		(36,678	)		(125,867	)		(499,184	)		(1,324,791	)
Change in shares outstanding		6,309,568			18,972,454			88,412			89,606			374,802			740,913

See accompanying Notes to Financial Statements.

Page 26 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Financial Highlights
For a share outstanding throughout each year.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2011			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2010			2009			2008			2007			2006
Diamond Hill Small Cap Fund — Class A
Net asset value at beginning of period	$	25.80		$	21.31		$	16.53		$	22.53		$	25.03		$	23.95
Income (loss) from investment operations:
Net investment income (loss)		(0.06	)		(0.05	)		(0.01	)		0.13			0.08			0.09
Net realized and unrealized gains (losses) on investments		1.05			4.95			4.79			(5.98	)		(1.00	)		1.60
Total from investment operations		0.99			4.90			4.78			(5.85	)		(0.92	)		1.69
Less distributions:
Dividends from net investment income		—			—			—			(0.12	)		(0.08	)		(0.09	)
Distributions from net realized gains		—			(0.41	)		—			(0.03	)		(1.50	)		(0.52	)
Total distributions		—			(0.41	)		—			(0.15	)		(1.58	)		(0.61	)
Net asset value at end of period	$	26.79		$	25.80		$	21.31		$	16.53		$	22.53		$	25.03
Total return(A)		3.84	%		22.99	%		28.92	%		(25.99	%)		(3.79	%)		7.03	%
Net assets at end of period (000s)	$	505,510		$	501,237		$	438,722		$	308,832		$	315,378		$	431,524
Ratio of net expenses to average net assets		1.34	% (D)		1.37	%		1.38	%		1.35	%		1.39	%		1.42	%
Ratio of net investment income (loss) to average net assets		(0.43	%)(D)		(0.24	%)		(0.09	%)		0.75	%		0.29	%		0.38	%
Ratio of gross expenses to average net assets		1.34	% (D)		1.37	%		1.38	%		1.35	%		1.39	%		1.42	%
Portfolio turnover rate(B)		17	%		35	%		47	%		47	%		21	%		30	%
Diamond Hill Small Cap Fund — Class C
Net asset value at beginning of period	$	24.14		$	20.12		$	15.72		$	21.44		$	24.00		$	23.08
Income (loss) from investment operations:
Net investment income (loss)		(0.14	)		(0.16	)		(0.13	)		(0.01	)		(0.15	)		(0.10	)
Net realized and unrealized gains (losses) on investments		0.98			4.59			4.53			(5.68	)		(0.91	)		1.54
Total from investment operations		0.84			4.43			4.40			(5.69	)		(1.06	)		1.44
Less distributions:
Distributions from net realized gains		—			(0.41	)		—			(0.03	)		(1.50	)		(0.52	)
Total distributions		—			(0.41	)		—			(0.03	)		(1.50	)		(0.52	)
Net asset value at end of period	$	24.98		$	24.14		$	20.12		$	15.72		$	21.44		$	24.00
Total return(A)		3.48	%		22.01	%		27.99	%		(26.55	%)		(4.51	%)		6.23	%
Net assets at end of period (000s)	$	37,732		$	35,093		$	23,172		$	16,790		$	25,158		$	35,035
Ratio of net expenses to average net assets		2.09	% (D)		2.12	%		2.13	%		2.11	%		2.14	%		2.17	%
Ratio of net investment income (loss) to average net assets		(1.17	%)(D)		(0.96	%)		(0.83	%)		(0.03	%)		(0.46	%)		(0.37	%)
Ratio of gross expenses to average net assets		2.09	% (D)		2.12	%		2.13	%		2.11	%		2.14	%		2.17	%
Portfolio turnover rate(B)		17	%		35	%		47	%		47	%		21	%		30	%
Diamond Hill Small Cap Fund — Class I
Net asset value at beginning of period	$	26.01		$	21.41		$	16.55		$	22.57		$	25.08		$	23.99
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)		0.00	(C)		0.04			0.17			0.22			0.21
Net realized and unrealized gains (losses) on investments		1.06			5.01			4.83			(5.97	)		(1.05	)		1.59
Total from investment operations		1.05			5.01			4.87			(5.80	)		(0.83	)		1.80
Less distributions:
Dividends from net investment income		—			—			(0.01	)		(0.19	)		(0.18	)		(0.19	)
Distributions from net realized gains		—			(0.41	)		—			(0.03	)		(1.50	)		(0.52	)
Total distributions		—			(0.41	)		(0.01	)		(0.22	)		(1.68	)		(0.71	)
Net asset value at end of period	$	27.06		$	26.01		$	21.41		$	16.55		$	22.57		$	25.08
Total return		4.04	%		23.39	%		29.43	%		(25.69	%)		(3.41	%)		7.49	%
Net assets at end of period (000s)	$	334,211		$	312,295		$	106,561		$	38,967		$	32,057		$	51,381
Ratio of net expenses to average net assets		1.04	% (D)		1.00	%		0.99	%		0.98	%		0.98	%		0.99	%
Ratio of net investment income (loss) to average net assets		(0.13	%)(D)		0.20	%		0.30	%		1.17	%		0.69	%		0.82	%
Ratio of gross expenses to average net assets		1.04	% (D)		1.00	%		0.99	%		0.98	%		0.98	%		0.99	%
Portfolio turnover rate(B)		17	%		35	%		47	%		47	%		21	%		30	%

(A)	Total returns shown exclude the effect of applicable sales charges.
(B)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(C)	Amount is less than $0.005.
(D)	Annualized.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 27

Diamond Hill Funds
Financial Highlights
For a share outstanding throughout each year.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2011			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2010			2009			2008			2007			2006
Diamond Hill Small-Mid Cap Fund — Class A
Net asset value at beginning of period	$	12.56		$	10.22		$	7.26		$	10.50		$	10.91		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)		(0.04	)		0.03			0.10			0.06			0.04
Net realized and unrealized gains (losses) on investments		0.73			2.38			2.93			(3.25	)		(0.15	)		0.94
Total from investment operations		0.72			2.34			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		—			(0.00	)(A)		—			—			(0.28	)		(0.06	)
Total distributions		—			(0.00	)(A)		—			(0.09	)		(0.32	)		(0.07	)
Net asset value at end of period	$	13.28		$	12.56		$	10.22		$	7.26		$	10.50		$	10.91
Total return(B)		5.65	%		23.03	%		40.77	%		(30.01	%)		(0.91	%)		9.81	%
Net assets at end of period (000s)	$	21,282		$	17,216		$	8,616		$	7,557		$	10,549		$	9,608
Ratio of net expenses to average net assets		1.28	% (D)		1.32	%		1.33	%		1.32	%		1.33	%		1.21	%
Ratio of net investment income (loss) to average net assets		(0.17	%)(D)		(0.17	%)		0.17	%		1.11	%		0.54	%		0.49	%
Ratio of gross expenses to average net assets		1.28	% (D)		1.32	%		1.33	%		1.32	%		1.34	%		1.34	%
Portfolio turnover rate(C)		23	%		35	%		74	%		91	%		39	%		33	%
Diamond Hill Small-Mid Cap Fund — Class C
Net asset value at beginning of period	$	12.21		$	10.00		$	7.15		$	10.40		$	10.85		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		(0.17	)		(0.05	)		(0.04	)		0.04			(0.02	)		(0.02	)
Net realized and unrealized gains (losses) on investments		0.81			2.26			2.89			(3.22	)		(0.15	)		0.93
Total from investment operations		0.64			2.21			2.85			(3.18	)		(0.17	)		0.91
Less distributions:
Dividends from net investment income		—			—			—			(0.07	)		—			—
Distributions from net realized gains		—			(0.00	)(A)		—			—			(0.28	)		(0.06	)
Total distributions		—			(0.00	)(A)		—			(0.07	)		(0.28	)		(0.06	)
Net asset value at end of period	$	12.85		$	12.21		$	10.00		$	7.15		$	10.40		$	10.85
Total return(B)		5.24	%		22.14	%		39.86	%		(30.54	%)		(1.65	%)		9.08	%
Net assets at end of period (000s)	$	9,279		$	7,417		$	4,361		$	2,920		$	2,388		$	2,368
Ratio of net expenses to average net assets		2.03	% (D)		2.07	%		2.08	%		2.05	%		2.08	%		2.00	%
Ratio of net investment income (loss) to average net assets		(0.92	%)(D)		(0.90	%)		(0.59	%)		0.48	%		(0.21	%)		(0.27	%)
Ratio of gross expenses to average net assets		2.03	% (D)		2.07	%		2.08	%		2.05	%		2.09	%		2.11	%
Portfolio turnover rate(C)		23	%		35	%		74	%		91	%		39	%		33	%
Diamond Hill Small-Mid Cap Fund — Class I
Net asset value at beginning of period	$	12.61		$	10.23		$	7.25		$	10.50		$	10.91		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.02			0.04			0.13			0.09			0.04
Net realized and unrealized gains (losses) on investments		0.73			2.37			2.96			(3.26	)		(0.13	)		0.98
Total from investment operations		0.74			2.39			3.00			(3.13	)		(0.04	)		1.02
Less distributions:
Dividends from net investment income		—			(0.01	)		(0.02	)		(0.12	)		(0.09	)		(0.05	)
Distributions from net realized gains		—			(0.00	)(A)		—			—			(0.28	)		(0.06	)
Total distributions		—			(0.01	)		(0.02	)		(0.12	)		(0.37	)		(0.11	)
Net asset value at end of period	$	13.35		$	12.61		$	10.23		$	7.25		$	10.50		$	10.91
Total return		5.87	%		23.43	%		41.36	%		(29.77	%)		(0.44	%)		10.18	%
Net assets at end of period (000s)	$	53,045		$	44,711		$	26,110		$	14,815		$	18,478		$	11,986
Ratio of net expenses to average net assets		0.99	% (D)		0.95	%		0.94	%		0.93	%		0.93	%		0.90	%
Ratio of net investment income (loss) to average net assets		0.13	% (D)		0.22	%		0.54	%		1.49	%		0.97	%		1.01	%
Ratio of gross expenses to average net assets		0.99	% (D)		0.95	%		0.94	%		0.93	%		0.94	%		0.98	%
Portfolio turnover rate(C)		23	%		35	%		74	%		91	%		39	%		33	%

(A)	Amount is less than $0.005.
(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)	Annualized.

See accompanying Notes to Financial Statements.

Page 28 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Financial Highlights
For a share outstanding throughout each year.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2011			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2010			2009			2008			2007			2006
Diamond Hill Large Cap Fund — Class A
Net asset value at beginning of period	$	14.78		$	13.62		$	10.47		$	16.25		$	16.36		$	14.44
Income (loss) from investment operations:
Net investment income (loss)		0.08			0.10			0.10			0.15			0.21			0.15
Net realized and unrealized gains (losses) on investments		0.79			1.17			3.06			(5.69	)		0.69			2.03
Total from investment operations		0.87			1.27			3.16			(5.54	)		0.90			2.18
Less distributions:
Dividends from net investment income		—			(0.11	)		(0.01	)		(0.14	)		(0.19	)		(0.14	)
Distributions from net realized gains		—			—			—			(0.10	)		(0.82	)		(0.12	)
Total distributions		—			(0.11	)		(0.01	)		(0.24	)		(1.01	)		(0.26	)
Net asset value at end of period	$	15.65		$	14.78		$	13.62		$	10.47		$	16.25		$	16.36
Total return(A)		5.89	%		9.29	%		30.21	%		(34.06	%)		5.42	%		15.06	%
Net assets at end of period (000s)	$	483,264		$	459,659		$	344,456		$	254,688		$	309,617		$	338,286
Ratio of net expenses to average net assets		1.14	%(D)		1.18	%		1.18	%		1.16	%		1.18	%		1.21	%
Ratio of net investment income (loss) to average net assets		1.04	%(D)		0.90	%		0.91	%		1.23	%		1.15	%		1.32	%
Ratio of gross expenses to average net assets		1.14	%(D)		1.18	%		1.18	%		1.16	%		1.19	%		1.21	%
Portfolio turnover rate(B)		9	%		16	%		31	%		28	%		44	%		32	%
Diamond Hill Large Cap Fund — Class C
Net asset value at beginning of period	$	14.29		$	13.18		$	10.19		$	15.84		$	15.99		$	14.15
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.02			0.02			0.06			0.06			0.06
Net realized and unrealized gains (losses) on investments		0.76			1.09			2.97			(5.55	)		0.70			1.95
Total from investment operations		0.78			1.11			2.99			(5.49	)		0.76			2.01
Less distributions:
Dividends from net investment income		—			(0.00	)(C)		—			(0.06	)		(0.09	)		(0.05	)
Distributions from net realized gains		—			—			—			(0.10	)		(0.82	)		(0.12	)
Total distributions		—			(0.00	)(C)		—			(0.16	)		(0.91	)		(0.17	)
Net asset value at end of period	$	15.07		$	14.29		$	13.18		$	10.19		$	15.84		$	15.99
Total return(A)		5.46	%		8.45	%		29.34	%		(34.64	%)		4.68	%		14.18	%
Net assets at end of period (000s)	$	32,318		$	29,274		$	25,454		$	20,656		$	27,084		$	22,438
Ratio of net expenses to average net assets		1.89	%(D)		1.93	%		1.93	%		1.91	%		1.93	%		1.96	%
Ratio of net investment income (loss) to average net assets		0.29	%(D)		0.15	%		0.17	%		0.48	%		0.43	%		0.57	%
Ratio of gross expenses to average net assets		1.89	%(D)		1.93	%		1.93	%		1.91	%		1.93	%		1.96	%
Portfolio turnover rate(B)		9	%		16	%		31	%		28	%		44	%		32	%
Diamond Hill Large Cap Fund — Class I
Net asset value at beginning of period	$	14.82		$	13.65		$	10.49		$	16.29		$	16.40		$	14.47
Income (loss) from investment operations:
Net investment income (loss)		0.10			0.13			0.11			0.23			0.25			0.13
Net realized and unrealized gains (losses) on investments		0.78			1.20			3.11			(5.74	)		0.73			2.12
Total from investment operations		0.88			1.33			3.22			(5.51	)		0.98			2.25
Less distributions:
Dividends from net investment income		—			(0.16	)		(0.06	)		(0.19	)		(0.27	)		(0.20	)
Distributions from net realized gains		—			—			—			(0.10	)		(0.82	)		(0.12	)
Total distributions		—			(0.16	)		(0.06	)		(0.29	)		(1.09	)		(0.32	)
Net asset value at end of period	$	15.70		$	14.82		$	13.65		$	10.49		$	16.29		$	16.40
Total return		6.01	%		9.72	%		30.71	%		(33.82	%)		5.88	%		15.49	%
Net assets at end of period (000s)	$	686,377		$	623,147		$	347,998		$	141,416		$	84,129		$	59,182
Ratio of net expenses to average net assets		0.84	%(D)		0.81	%		0.79	%		0.78	%		0.78	%		0.78	%
Ratio of net investment income (loss) to average net assets		1.34	%(D)		1.29	%		1.28	%		1.67	%		1.60	%		1.82	%
Ratio of gross expenses to average net assets		0.84	%(D)		0.81	%		0.79	%		0.78	%		0.78	%		0.78	%
Portfolio turnover rate(B)		9	%		16	%		31	%		28	%		44	%		32	%

(A)	Total returns shown exclude the effect of applicable sales charges.
(B)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(C)	Amount is less than $0.005.
(D)	Annualized.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 29

Diamond Hill Funds
Financial Highlights
For a share outstanding throughout each year.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2011			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2010			2009			2008			2007			2006
Diamond Hill Select Fund — Class A
Net asset value at beginning of period	$	9.99		$	9.02		$	6.82		$	10.61		$	11.17		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.07			0.04			0.09			0.12			0.10
Net realized and unrealized gains (losses) on investments		0.48			0.91			2.16			(3.55	)		0.53			1.27
Total from investment operations		0.52			0.98			2.20			(3.46	)		0.65			1.37
Less Distributions:
Dividends from net investment income		—			(0.01	)		—			(0.08	)		(0.09	)		(0.08	)
Distributions from net realized gains		—			—			—			(0.25	)		(1.12	)		(0.12	)
Total distributions		—			(0.01	)		—			(0.33	)		(1.21	)		(0.20	)
Net asset value at end of period	$	10.51		$	9.99		$	9.02		$	6.82		$	10.61		$	11.17
Total return(A)		5.21	%		10.83	%		32.26	%		(32.68	%)		5.63	%		13.66	%
Net assets at end of period (000s)	$	8,023		$	7,437		$	6,910		$	4,030		$	6,841		$	10,036
Ratio of net expenses to average net assets		1.24	%(C)		1.28	%		1.28	%		1.28	%		1.29	%		1.31	%
Ratio of net investment income (loss) to average net assets		0.80	%(C)		0.67	%		0.60	%		1.10	%		0.90	%		1.04	%
Ratio of gross expenses to average net assets		1.24	%(C)		1.28	%		1.28	%		1.28	%		1.29	%		1.32	%
Portfolio turnover rate(B)		18	%		18	%		57	%		85	%		55	%		80	%
Diamond Hill Select Fund — Class C
Net asset value at beginning of period	$	9.83		$	8.94		$	6.78		$	10.56		$	11.16		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.00			(0.01	)		0.01			0.02			0.02			0.02
Net realized and unrealized gains (losses) on investments		0.48			0.90			2.15			(3.55	)		0.54			1.30
Total from investment operations		0.48			0.89			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	$	10.31		$	9.83		$	8.94		$	6.78		$	10.56		$	11.16
Total return(A)		4.88	%		9.96	%		31.86	%		(33.48	%)		4.78	%		13.11	%
Net assets at end of period (000s)	$	3,923		$	4,254		$	3,472		$	3,366		$	6,912		$	5,661
Ratio of net expenses to average net assets		1.99	%(C)		2.03	%		2.03	%		2.01	%		2.03	%		2.05	%
Ratio of net investment income (loss) to average net assets		0.05	%(C)		(0.08	%)		0.07	%		0.28	%		0.23	%		0.32	%
Ratio of gross expenses to average net assets		1.99	%(C)		2.03	%		2.03	%		2.02	%		2.04	%		2.06	%
Portfolio turnover rate(B)		18	%		18	%		57	%		85	%		55	%		80	%
Diamond Hill Select Fund — Class I
Net asset value at beginning of period	$	9.98		$	9.02		$	6.75		$	10.59		$	11.16		$	10.00
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.07			0.05			0.11			0.13			0.09
Net realized and unrealized gains (losses) on investments		0.48			0.94			2.22			(3.58	)		0.57			1.32
Total from investment operations		0.53			1.01			2.27			(3.47	)		0.70			1.41
Less distributions:
Dividends from net investment income		—			(0.05	)		—			(0.12	)		(0.15	)		(0.13	)
Distributions from net realized gains		—			—			—			(0.25	)		(1.12	)		(0.12	)
Total distributions		—			(0.05	)		—			(0.37	)		(1.27	)		(0.25	)
Net asset value at end of period	$	10.51		$	9.98		$	9.02		$	6.75		$	10.59		$	11.16
Total return		5.31	%		11.19	%		33.63	%		(32.85	%)		6.10	%		14.04	%
Net assets at end of period (000s)	$	33,961		$	31,619		$	23,122		$	7,489		$	4,667		$	3,220
Ratio of net expenses to average net assets		0.94	%(C)		0.91	%		0.89	%		0.87	%		0.88	%		0.84	%
Ratio of net investment (loss) income to average net assets		1.11	%(C)		1.05	%		1.29	%		1.58	%		1.37	%		1.47	%
Ratio of gross expenses to average net assets		0.94	%(C)		0.91	%		0.89	%		0.87	%		0.89	%		0.86	%
Portfolio turnover rate(B)		18	%		18	%		57	%		85	%		55	%		80	%

(A)	Total returns shown exclude the effect of applicable sales charges.
(B)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(C)	Annualized.

See accompanying Notes to Financial Statements.

Page 30 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Financial Highlights
For a share outstanding throughout each year.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2011			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2010			2009			2008			2007			2006
Diamond Hill Select Fund — Class A
Net asset value at beginning of period	$	16.26		$	16.31		$	13.83		$	18.40		$	18.57		$	16.46
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.00	(A)		0.00	(A)		0.16			0.44			0.26
Net realized and unrealized gains (losses) on investments		0.55			(0.05	)		2.48			(4.52	)		0.16			2.52
Total from investment operations		0.56			(0.05	)		2.48			(4.36	)		0.60			2.78
Less distributions:
Dividends from net investment income		—			—			—			(0.15	)		(0.42	)		(0.25	)
Distributions from net realized gains		—			—			—			(0.06	)		(0.35	)		(0.42	)
Total distributions		—			—			—			(0.21	)		(0.77	)		(0.67	)
Net asset value at end of period	$	16.82		$	16.26		$	16.31		$	13.83		$	18.40		$	18.57
Total return(B)		3.44	%		(0.31	%)		17.93	%		(23.65	%)		3.14	%		16.89	%
Net assets at end of period (000s)	$	620,348		$	698,670		$	965,382		$	1,110,982		$	965,259		$	773,161
Ratio of net expenses to average net assets		1.71	%(E)		1.81	%		1.85	%		1.62	%		1.69	%		1.77	%
Ratio of net investment income (loss) to average net assets		0.09	%(E)		0.01	%		0.00	%(D)		0.95	%		2.46	%		2.15	%
Ratio of gross expenses to average net assets		1.71	%(E)		1.81	%		1.85	%		1.62	%		1.69	%		1.77	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		1.44	%(E)		1.48	%		1.48	%		1.45	%		1.48	%		1.51	%
Portfolio turnover rate(C)		31	%		43	%		44	%		59	%		59	%		83	%
Diamond Hill Long-Short Fund — Class C
Net asset value at beginning of period	$	15.37		$	15.54		$	13.28		$	17.65		$	17.88		$	15.92
Income (loss) from investment operations:
Net investment income (loss)		(0.10	)		(0.19	)		(0.12	)		0.04			0.27			0.16
Net realized and unrealized gains (losses) on investments		0.58			0.02			2.38			(4.32	)		0.16			2.38
Total from investment operations		0.48			(0.17	)		2.26			(4.28	)		0.43			2.54
Less distributions:
Dividends from net investment income		—			—			—			(0.03	)		(0.31	)		(0.16	)
Distributions from net realized gains		—			—			—			(0.06	)		(0.35	)		(0.42	)
Total distributions		—			—			—			(0.09	)		(0.66	)		(0.58	)
Net asset value at end of period	$	15.85		$	15.37		$	15.54		$	13.28		$	17.65		$	17.88
Total return(B)		3.12	%		(1.09	%)		17.02	%		(24.26	%)		2.41	%		15.98	%
Net assets at end of period (000s)	$	144,643		$	179,214		$	256,445		$	278,069		$	303,392		$	188,550
Ratio of net expenses to average net assets		2.46	%(E)		2.56	%		2.60	%		2.37	%		2.44	%		2.52	%
Ratio of net investment income (loss) to average net assets		(0.67	%)(E)		(0.73	%)		(0.76	%)		0.22	%		1.72	%		1.40	%
Ratio of gross expenses to average net assets		2.46	%(E)		2.56	%		2.60	%		2.37	%		2.44	%		2.52	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		2.19	%(E)		2.24	%		2.23	%		2.20	%		2.23	%		2.26	%
Portfolio turnover rate(C)		31	%		43	%		44	%		59	%		59	%		83	%
Diamond Hill Long-Short Fund — Class I
Net asset value at beginning of period	$	16.42		$	16.42		$	13.87		$	18.46		$	18.63		$	16.49
Income (loss) from investment operations:
Net investment income (loss)		0.03			0.04			0.05			0.19			0.48			0.28
Net realized and unrealized gains (losses) on investments		0.57			(0.03	)		2.50			(4.51	)		0.19			2.59
Total from investment operations		0.60			0.01			2.55			(4.32	)		0.67			2.87
Less distributions:
Dividends from net investment income		—			(0.01	)		(0.00	)(A)		(0.21	)		(0.49	)		(0.31	)
Distributions from net realized gains		—			—			—			(0.06	)		(0.35	)		(0.42	)
Total distributions		—			(0.01	)		(0.00	)(A)		(0.27	)		(0.84	)		(0.73	)
Net asset value at end of period	$	17.02		$	16.42		$	16.42		$	13.87		$	18.46		$	18.63
Total return		3.65	%		0.03	%		18.39	%		(23.36	%)		3.59	%		17.37	%
Net assets at end of period (000s)	$	1,191,110		$	1,045,686		$	733,909		$	657,662		$	500,425		$	290,734
Ratio of net expenses to average net assets		1.41	%(E)		1.46	%		1.47	%		1.24	%		1.29	%		1.34	%
Ratio of net investment income (loss) to average net assets		0.39	%(E)		0.42	%		0.37	%		1.33	%		2.87	%		2.60	%
Ratio of gross expenses to average net assets		1.41	%(E)		1.46	%		1.47	%		1.24	%		1.29	%		1.34	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		1.14	%(E)		1.11	%		1.10	%		1.08	%		1.08	%		1.08	%
Portfolio turnover rate(C)		31	%		43	%		44	%		59	%		59	%		83	%

(A)	Amount is less than $0.005.
(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)	Amount is less than 0.005%.
(E)	Annualized.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 31

Diamond Hill Funds
Financial Highlights
For a share outstanding throughout each year.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2011			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2010			2009			2008			2007			2006
Diamond Hill Select Fund — Class A
Net asset value at beginning of period	$	12.18		$	10.43		$	8.48		$	16.20		$	20.90		$	18.48
Income (loss) from investment operations:
Net investment income (loss)		0.00			0.02			0.16	(D)		0.45			0.49			0.23
Net realized and unrealized gains (losses) on investments		(0.12	)		1.73			1.94			(7.74	)		(4.04	)		2.79
Total from investment operations		(0.12	)		1.75			2.10			(7.29	)		(3.55	)		3.02
Less distributions:
Dividends from net investment income		—			—			(0.15	)		(0.42	)		(0.47	)		(0.24	)
Distributions from net realized gains		—			—			—			(0.01	)		(0.68	)		(0.36	)
Total distributions		—			—			(0.15	)		(0.43	)		(1.15	)		(0.60	)
Net asset value at end of period	$	12.06		$	12.18		$	10.43		$	8.48		$	16.20		$	20.90
Total return(B)		(0.99	%)		16.78	%		24.73	%		(44.98	%)		(17.05	%)		16.35	%
Net assets at end of period (000s)	$	7,931		$	8,543		$	8,053		$	7,596		$	27,597		$	38,978
Ratio of net expenses to average net assets		1.70	% (E)		1.71	%		1.77	%		1.85	%		1.81	%		1.70	%
Ratio of net investment income (loss) to average net assets		(0.14	%)(E)		0.09	%		1.92	%		2.37	%		2.17	%		1.80	%
Ratio of gross expenses to average net assets		1.70	% (E)		1.71	%		1.77	%		1.85	%		1.82	%		1.70	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		1.54	% (E)		1.56	%		1.58	%		1.56	%		1.59	%		1.62	%
Portfolio turnover rate(C)		25	%		60	%		85	%		74	%		55	%		45	%
Diamond Hill Financial Long-Short Fund — Class C
Net asset value at beginning of period	$	11.58		$	9.99		$	8.12		$	15.60		$	20.10		$	17.84
Income (loss) from investment operations:
Net investment income (loss)		(0.10	)		(0.10	)		0.09	(D)		0.21			0.34			0.13
Net realized and unrealized gains (losses) on investments		(0.06	)		1.69			1.84			(7.31	)		(3.88	)		2.63
Total from investment operations		(0.16	)		1.59			1.93			(7.10	)		(3.54	)		2.76
Less distributions:
Dividends from net investment income		—			—			(0.06	)		(0.37	)		(0.28	)		(0.14	)
Distributions from net realized gains		—			—			—			(0.01	)		(0.68	)		(0.36	)
Total distributions		—			—			(0.06	)		(0.38	)		(0.96	)		(0.50	)
Net asset value at end of period	$	11.42		$	11.58		$	9.99		$	8.12		$	15.60		$	20.10
Total return(B)		(1.38	%)		15.92	%		23.81	%		(45.49	%)		(17.68	%)		15.47	%
Net assets at end of period (000s)	$	1,206		$	1,381		$	1,295		$	1,866		$	3,287		$	4,620
Ratio of net expenses to average net assets		2.45	% (E)		2.46	%		2.52	%		2.58	%		2.56	%		2.45	%
Ratio of net investment income (loss) to average net assets		(0.90	%)(E)		(0.66	%)		1.17	%		1.76	%		1.42	%		1.03	%
Ratio of gross expenses to average net assets		2.45	% (E)		2.46	%		2.52	%		2.58	%		2.57	%		2.45	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		2.29	% (E)		2.31	%		2.35	%		2.30	%		2.34	%		2.37	%
Portfolio turnover rate(C)		25	%		60	%		85	%		74	%		55	%		45	%
Diamond Hill Financial Long-Short Fund — Class I(A)
Net asset value at beginning of period	$	12.14		$	10.37		$	8.43		$	16.18			20.90
Income (loss) from investment operations:
Net investment income (loss)		0.02			0.08			0.21	(D)		0.63			0.37
Net realized and unrealized gains (losses) on investments		(0.13	)		1.71			1.92			(7.89	)		(3.83	)
Total from investment operations		(0.11	)		1.79			2.13			(7.26	)		(3.46	)
Less distributions:
Dividends from net investment income		—			(0.02	)		(0.19	)		(0.48	)		(0.58	)
Distributions from net realized gains		—			—			—			(0.01	)		(0.68	)
Total distributions		—			(0.02	)		(0.19	)		(0.49	)		(1.26	)
Net asset value at end of period	$	12.03		$	12.14		$	10.37		$	8.43		$	16.18
Total return		(0.91	%)		17.29	%		25.31	%		(44.79	%)		(16.61	%)
Net assets at end of period (000s)	$	2,920		$	1,873		$	671		$	709		$	2,464
Ratio of net expenses to average net assets		1.41	% (E)		1.34	%		1.38	%		1.47	%		1.41	%
Ratio of net investment income (loss) to average net assets		0.20	% (E)		0.45	%		2.45	%		2.80	%		2.96	%
Ratio of gross expenses to average net assets		1.41	% (E)		1.34	%		1.38	%		1.47	%		1.42	%
Ratio of net expenses to average net assets, excluding dividends on securities sold short		1.24	% (E)		1.19	%		1.19	%		1.18	%		1.18	%
Portfolio turnover rate(C)		25	%		60	%		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)	Annualized.

See accompanying Notes to Financial Statements.

Page 32 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Financial Highlights
For a share outstanding throughout each year.

	For the Six
	Months Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	June 30, 2011			December 31,			December 31,			December 31,			December 31,			December 31,
	(Unaudited)			2010			2009			2008			2007			2006
Diamond Hill Select Fund — Class A
Net asset value at beginning of period	$	10.86		$	10.15		$	8.28		$	10.41		$	11.71		$	11.25
Income (loss) from investment operations:
Net investment income (loss)		0.31			0.64			0.69			0.71			0.68			0.70
Net realized and unrealized gains (losses) on investments		0.14			0.69			1.86			(2.19	)		(1.20	)		0.42
Total from investment operations		0.45			1.33			2.55			(1.48	)		(0.52	)		1.12
Less distributions:
Dividends from net investment income		(0.31	)		(0.62	)		(0.68	)		(0.64	)		(0.67	)		(0.66	)
Distributions from net realized gains		—			—			—			—			(0.11	)		—
Return of Capital		—			—			—			(0.01	)		—			—
Total distributions		(0.31	)		(0.62	)		(0.68	)		(0.65	)		(0.78	)		(0.66	)
Net asset value at end of period	$	11.00		$	10.86		$	10.15		$	8.28		$	10.41		$	11.71
Total return(A)		4.19	%		13.33	%		32.13	%		(14.79	%)		(4.78	%)		10.26	%
Net assets at end of period (000s)	$	47,263		$	42,360		$	41,048		$	31,268		$	54,435		$	49,372
Ratio of net expenses to average net assets		1.02	%(C)		1.06	%		1.08	%		1.06	%		1.08	%		1.12	%
Ratio of net investment income (loss) to average net assets		5.77	%(C)		5.81	%		7.64	%		6.60	%		6.15	%		6.38	%
Ratio of gross expenses to average net assets		1.02	%(C)		1.06	%		1.08	%		1.06	%		1.09	%		1.12	%
Portfolio turnover rate(B)		21	%		68	%		83	%		95	%		142	%		43	%
Diamond Hill Strategic Income Fund — Class C
Net asset value at beginning of period	$	10.85		$	10.15		$	8.27		$	10.41		$	11.70		$	11.24
Income (loss) from investment operations:
Net investment income (loss)		0.28			0.54			0.58			0.65			0.62			0.62
Net realized and unrealized gains (losses) on investments		0.13			0.70			1.91			(2.21	)		(1.22	)		0.41
Total from investment operations		0.41			1.24			2.49			(1.56	)		(0.60	)		1.03
Less distributions:
Dividends from net investment income		(0.27	)		(0.54	)		(0.61	)		(0.57	)		(0.58	)		(0.57	)
Distributions from net realized gains		—			—			—			—			(0.11	)		—
Return of Capital		—			—			—			(0.01	)		—			—
Total distributions		(0.27	)		(0.54	)		(0.61	)		(0.58	)		(0.69	)		(0.57	)
Net asset value at end of period	$	10.99		$	10.85		$	10.15		$	8.27		$	10.41		$	11.70
Total return(A)		3.84	%		12.39	%		31.34	%		(15.51	%)		(5.43	%)		9.43	%
Net assets at end of period (000s)	$	24,232		$	24,264		$	22,120		$	14,730		$	24,638		$	26,908
Ratio of net expenses to average net assets		1.77	%(C)		1.81	%		1.83	%		1.80	%		1.83	%		1.87	%
Ratio of net investment income (loss) to average net assets		5.03	%(C)		5.06	%		6.88	%		5.87	%		5.35	%		5.63	%
Ratio of gross expenses to average net assets		1.77	%(C)		1.81	%		1.83	%		1.81	%		1.84	%		1.87	%
Portfolio turnover rate(B)		21	%		68	%		83	%		95	%		142	%		43	%
Diamond Hill Strategic Income Fund — Class I
Net asset value at beginning of period	$	10.84		$	10.13		$	8.26		$	10.40		$	11.69		$	11.23
Income (loss) from investment operations:
Net investment income (loss)		0.33			0.64			0.73			0.70			0.71			0.73
Net realized and unrealized gains (losses) on investments		0.13			0.72			1.85			(2.15	)		(1.17	)		0.44
Total from investment operations		0.46			1.36			2.58			(1.45	)		(0.46	)		1.17
Less distributions:
Dividends from net investment income		(0.33	)		(0.65	)		(0.71	)		(0.68	)		(0.72	)		(0.71	)
Distributions from net realized gains		—			—			—			—			(0.11	)		—
Return of Capital		—			—			—			(0.01	)		—			—
Total distributions		(0.33	)		(0.65	)		(0.71	)		(0.69	)		(0.83	)		(0.71	)
Net asset value at end of period	$	10.97		$	10.84		$	10.13		$	8.26		$	10.40		$	11.69
Total return		4.26	%		13.77	%		32.69	%		(14.55	%)		(4.31	%)		10.74	%
Net assets at end of period (000s)	$	81,989		$	76,893		$	64,407		$	50,185		$	70,205		$	54,302
Ratio of net expenses to average net assets		0.72	%(C)		0.69	%		0.69	%		0.67	%		0.68	%		0.68	%
Ratio of net investment income (loss) to average net assets		6.07	%(C)		6.18	%		8.05	%		7.05	%		6.62	%		6.89	%
Ratio of gross expenses to average net assets		0.72	%(C)		0.69	%		0.69	%		0.68	%		0.68	%		0.68	%
Portfolio turnover rate(B)		21	%		68	%		83	%		95	%		142	%		43	%

(A)	Total returns shown exclude the effect of applicable sales charges.
(B)	Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between classes of shares issued.
(C)	Annualized.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 33

Diamond Hill Funds

Notes to Financial Statements
June 30, 2011 (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 Strategic Income Fund’s portfolio manager in the absence of readily ascertainable market values. These values may differ from the values that would have been used had a ready market for these securities existed, and the differences could be material.

The 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)

Page 34 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Notes to Financial Statements
June 30, 2011 (Unaudited)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, short-term debt securities of sufficient credit quality maturing in less than 61 days 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, 2011:

			Level 2 —
	Level 1 —		Other Significant
	Quoted Prices		Observable Inputs
Investments in Securities: (Assets)
Small Cap Fund
Common Stocks*	$	748,067,932	$	—
Registered Investment Companies		131,458,802		—
Repurchase Agreements		—		97,488,055
Total		879,526,734		97,488,055
Small-Mid Cap Fund
Common Stocks*		75,830,173		—
Registered Investment Companies		7,582,491		—
Repurchase Agreements		—		9,313,701
Total		83,412,664		9,313,701
Large Cap Fund
Common Stocks*		1,187,010,954		—
Registered Investment Companies		20,644,527		—
Repurchase Agreements		—		29,577,025
Total		1,207,655,481		29,577,025
Select Fund
Common Stocks*		45,280,712		—
Registered Investment Companies		605,073		—
Repurchase Agreements		—		1,168,359
Total		45,885,785		1,168,359
Long-Short Fund
Common Stocks*		1,686,524,182		—
Registered Investment Companies		274,709,914		—
Repurchase Agreements		—		91,107,894
Total		1,961,234,096		91,107,894
Financial Long-Short Fund
Common Stocks*		10,421,241		—
Preferred Stocks*		231,910		—
Corporate Bonds*		—		99,628
Registered Investment Companies		1,174,461		—
Repurchase Agreements		—		534,874
Total		11,827,612		634,502
Strategic Income Fund
Preferred Stocks*		1,542,835		105,035
Corporate Bonds*		—		136,332,759
Collateralized Debt Obligations		—		699,075
Registered Investment Companies		12,478,830		—
Repurchase Agreements		—		1,644,183
Total		14,021,665		138,781,052

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 35

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2011 (Unaudited)

				Level 2 —
	Level 1 —			Other Significant
	Quoted Prices			Observable Outputs
Investment in Securities Sold Short: (Liabilities)
Long-Short Fund
Common Stocks*	$	(440,943,370	)		—
Exchange Traded Funds		(39,655,818	)		—
Total		(480,599,188	)		—
Financial Long-Short Fund
Common Stocks*		(688,921	)		—

* 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, 2011 and the Funds held no Level 3 securities at June 30, 2011.

New accounting pronouncement — In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update’s adoption on the Fund’s financial statement disclosures.

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.

On June 30, 2011, the collateral value was less than 100% of the value of the securities on loan for the Small Cap Fund and the Small-Mid Cap Fund due to the timing of a corporation action for a security on loan at month end and the related end of day valuation and collateral analysis. Consistent with the Funds’ securities lending procedures, additional collateral was received the next business day to fully collateralize this security in the Funds.

As of June 30, 2011, 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	$	102,135,175	$	97,488,055
Small-Mid Cap Fund		9,865,009		9,313,701
Large Cap Fund		29,400,955		29,577,025
Select Fund		1,137,583		1,168,359
Long-Short Fund		90,090,561		91,107,894
Financial Long-Short Fund		521,429		534,874
Strategic Income Fund		1,613,031		1,644,183

Page 36 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2011 (Unaudited)

Security transactions — Throughout the reporting period, investment transactions are recorded no later than the first business day following trade date. For financial reporting purposes, investments are reported on trade date on the last business day of the reporting period. 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 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, 2007 through 2010) 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. These differences are primarily due to differing treatments for pay down 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, 2011 the purchases and sales (including maturities) of investment securities (excluding short-term securities and U.S. government obligations) were as follows:

	Purchase		Sales
Small Cap Fund	$	137,264,022	$	123,367,913
Small-Mid Cap Fund		28,647,689		16,109,043
Large Cap Fund		159,605,002		99,959,835
Select Fund		9,589,195		7,682,271
Long-Short Fund		525,413,709		695,081,431
Financial Long-Short Fund		2,841,914		2,771,354
Strategic Income Fund		30,896,642		28,954,666

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

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 37

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2011 (Unaudited)

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, 2011:

			Total Commissions
			Used to Pay for		Commissions as a %
	Total Commissions		Soft Dollars Services		of Average Net Assets
Small Cap Fund	$	211,255	$	—		0.02	%
Small-Mid Cap Fund		38,036		—		0.05	%
Large Cap Fund		134,636		—		0.01	%
Select Fund		11,576		—		0.03	%
Long-Short Fund		570,377		—		0.03	%
Financial Long-Short Fund		3,716		—		0.03	%
Strategic Income Fund		—		—		0.00	%

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 0.26% for Class A and Class C Shares and 0.24% for Class I shares of each class’ average daily net assets. Prior to March 1, 2011, the fees paid by Class A, Class C, and Class I shares were paid at an annual rate of 0.30%, 0.30% and 0.19% 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, and 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, 2011, the Distributor received the following amounts in sales commissions from the sales of Class A shares of the Funds as follows:

Small Cap Fund	$	8,041
Small-Mid Cap Fund		1,568
Large Cap Fund		5,458
Select Fund		1,624
Long-Short Fund		8,591
Financial Long-Short Fund		2,418
Strategic Income Fund		2,587

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, 2011 as follows:

Small Cap Fund	$	702
Small-Mid Cap Fund		51
Large Cap Fund		1,794
Select Fund		35
Long-Short Fund		4,674
Financial Long-Short Fund		420
Strategic Income Fund		457

Page 38 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2011 (Unaudited)

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.

Trustee Fees

The Independent Trustees are compensated for their services to the Funds by Diamond Hill Capital Management as part of the administration services agreement. The Independent Trustees were paid $76,000 in fees during the six months ended June 30, 2011.

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 may differ from the character of distributions shown on the Statements of Changes in Net Assets, as items such as short-term capital gains are treated as ordinary income for tax purposes.

The tax character of distributions paid during the latest tax years ending 2010 and 2009 was as follows:

	Small Cap Fund				Small-Mid Cap Fund				Large Cap Fund				Select Fund
	2010		2009		2010		2009		2010		2009		2010		2009
Distributions paid from:
Ordinary income	$	—	$	54,353	$	47,033	$	47,498	$	9,712,140	$	1,909,846	$	160,824	$	—
Long-term capital gains		12,949,544		—		20,259		—		—		—		—		—
Total distributions	$	12,949,544	$	54,353	$	67,292	$	47,498	$	9,712,140	$	909,846	$	160,824	$	—

	Long-Short Fund				Financial Long-Short Fund				Strategic Income Fund
	2010		2009		2010		2009		2010		2009
Distributions paid from:
Ordinary income	$	334,787	$	19,506	$	3,500	$	149,149	$	8,282,495	$	7,974,351
Long-term capital gains		—		—		—		—		—		—
Total distributions	$	334,787	$	19,506	$	3,500	$	149,149	$	8,282,495	$	7,974,351

The following components of accumulated earnings (deficit) computed on a tax basis as of the latest tax year ended December 31, 2010:

	Small			Small-Mid			Large			Select
	Cap Fund			Cap Fund			Cap Fund			Fund
Tax cost of portfolio investments	$	799,223,282		$	65,297,711		$	968,915,343		$	38,183,144
Gross unrealized appreciation		166,520,300			12,657,947			166,120,228			6,341,358
Gross unrealized depreciation		(20,846,458	)		(812,727	)		(18,764,181	)		(679,514	)
Net unrealized appreciation		145,673,842			11,845,220			147,356,047			5,661,844
Undistributed ordinary income		—			8,693			3,339,169			305,599
Undistributed capital gains		3,936,820			533,705			—			—
Capital loss carryforwards		—			—			(75,155,759	)		(1,394,212	)
Post-October losses		—			—			—			—
Other temporary differences		—			—			—			—
Accumulated earnings	$	149,610,662		$	12,387,618		$	75,539,457		$	4,573,231

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 39

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2011 (Unaudited)

				Financial			Strategic
	Long-Short			Long-Short			Income
	Fund			Fund			Fund
Tax cost of portfolio investments	$	1,576,377,207		$	11,107,374		$	146,700,386
Gross unrealized appreciation		380,851,386			2,053,560			8,094,470
Gross unrealized depreciation		(187,232,865	)		(236,134	)		(3,794,594	)
Net unrealized appreciation		193,618,521			1,817,426			4,299,876
Undistributed ordinary income		2,198,193			2,549			80,145
Capital loss carryforwards		(588,182,583	)		(14,334,127	)		(17,410,085	)
Post-October losses		(13,578,153	)		—			(1,369,481	)
Accumulated deficit	$	(405,944,022	)	$	(12,514,152	)	$	(14,399,545	)

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 REIT and contributed securities.

As of the latest tax year ended December 31, 2010, the Funds had net capital loss carryforwards expiring as follows:

			Expires
	Amount		December 31,
Large Cap Fund	$	33,876,572		2016
		41,279,187		2017
	$	75,155,759
Select Fund	$	1,397,212		2017
		1,397,212
Long-Short Fund	$	101,454,175		2016
		417,551,311		2017
		69,177,097		2018
	$	588,182,583
Financial Long-Short Fund	$	7,793,999		2016
		6,540,128		2017
	$	14,334,127
Strategic Income Fund	$	12,138,231		2016
		5,271,854		2017
	$	17,410,085

The Funds also elected to defer until their subsequent tax year capital losses incurred after October 31, 2010.The 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.

The Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted on December 22, 2010. The Act makes changes to several tax rules impacting the Fund. In general, the provisions of the Act will be effective for the Fund’s fiscal year ending December 31, 2011. Although the Act provides several benefits, including the unlimited carryover of future capital losses, there may be a greater likelihood that all or a portion of the fund’s pre-enactment capital loss carryovers may expire without being utilized due to the fact that post-enactment capital losses get utilized before pre-enactment capital loss carryovers. Relevant information regarding the impact of the Act on the Fund, if any, will be contained within the “Federal Tax Information” section of the notes to financial statements beginning in 2011 reporting periods.

Page 40 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Notes to Financial Statements (Continued)
June 30, 2011 (Unaudited)

As of June 30, 2011, 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)
Small Cap Fund	$	832,030,637	$	165,165,086	$	(20,180,834	)	$	144,984,252
Small-Mid Cap Fund		81,016,789		12,803,726		(1,094,150	)		11,709,576
Large Cap Fund		1,053,507,513		193,327,824		(9,602,831	)		183,724,993
Select Fund		40,620,409		6,802,848		(369,113	)		6,433,735
Long-Short Fund		1,688,351,344		385,824,995		(21,834,349	)		363,990,646
Financial Long-Short Fund		11,234,314		1,564,872		(337,072	)		1,227,800
Strategic Income Fund		147,804,934		8,520,236		(3,522,453	)		4,997,783

Subsequent Events

The Funds evaluated events from June 30, 2011 through the date that these financial statements were issued. There were no subsequent events to report that would have a material impact on the Funds’ financial statements.

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 41

Diamond Hill Funds

Other Items
June 30, 2011 (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 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 16, 2011, 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 trailing five year performance history of each fund as of March 31, 2011, noting that six of the seven funds beat their benchmark and that two Funds ranked in the 1st quartile of their respective peer group, one ranked in the 2nd quartile and four in the 3rd quartile. The Trustees also noted that the Adviser continued to invest significant resources in its investment team, by growing its research team to 18 associates over the last six 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 March 31, 2011 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 below the mean and median total expenses of comparable funds within each Fund’s respective peer group.
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.
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.

Page 42 Diamond Hill Funds Semi-Annual Report June 30, 2011

Diamond Hill Funds
Other Items (Continued)
June 30, 2011 (Unaudited)

g) The ancillary benefits received by the Adviser as a result of its relationship with the Funds. The Trustees 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.

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 43

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, 2011 and held for the entire period from January 1, 2011 through June 30, 2011.

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.

													Funds
	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		1,038.40		1,018.15		6.77		6.71		1.34
Class C		1,000.00		1,000.00		1,034.80		1,014.43		10.54		10.44		2.09
Class I		1,000.00		1,000.00		1,040.40		1,019.64		5.26		5.21		1.04
Small-Mid Cap Fund
Class A		1,000.00		1,000.00		1,056.50		1,018.45		6.53		6.41		1.28
Class C		1,000.00		1,000.00		1,052.40		1,014.73		10.33		10.14		2.03
Class I		1,000.00		1,000.00		1,058.70		1,019.89		5.05		4.96		0.99
Large Cap Fund
Class A		1,000.00		1,000.00		1,058.90		1,019.14		5.82		5.71		1.14
Class C		1,000.00		1,000.00		1,054.60		1,015.42		9.63		9.44		1.89
Class I		1,000.00		1,000.00		1,060.10		1,020.63		4.29		4.21		0.84
Select Fund
Class A		1,000.00		1,000.00		1,052.10		1,018.65		6.31		6.21		1.24
Class C		1,000.00		1,000.00		1,048.80		1,014.93		10.11		9.94		1.99
Class I		1,000.00		1,000.00		1,053.10		1,020.13		4.79		4.71		0.94
Long-Short Fund
Class A		1,000.00		1,000.00		1,034.40		1,016.31		8.63		8.55		1.71
Class C		1,000.00		1,000.00		1,031.20		1,012.60		12.39		12.28		2.46
Class I		1,000.00		1,000.00		1,036.50		1,017.80		7.12		7.05		1.41

Page 44 Diamond Hill Funds Semi-Annual Report June 30, 2011

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		990.10		1,016.36		8.39		8.30		1.70
Class C		1,000.00		1,000.00		986.20		1,012.65		12.07		12.23		2.45
Class I		1,000.00		1,000.00		990.90		1,017.80		6.96		7.05		1.41
Strategic Income Fund
Class A		1,000.00		1,000.00		1,041.90		1,019.74		5.16		5.11		1.02
Class C		1,000.00		1,000.00		1,038.40		1,016.02		8.95		8.85		1.77
Class I		1,000.00		1,000.00		1,042.60		1,021.22		3.65		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 [number of days in most recent fiscal half-year/ 365] (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.

Diamond Hill Funds Semi-Annual Report June 30, 2011 Page 45

Item 2. Code of Ethics.

Not required for Semi-Annual report filings.

Item 3. Audit Committee Financial Expert.

Not required for Semi-Annual report filings.

Item 4. Principal Accountant Fees and Services.

Not required for Semi-Annual report filings.

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 required for Semi-Annual report filings.
(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 7, 2011

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

By (Signature and Title)

/s/ James F. Laird, Jr.

James F. Laird, Jr.

President

Date: September 7, 2011

By (Signature and Title)

/s/ Trent M. Statczar

Trent M. Statczar

Treasurer

Date: September 7, 2011