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: 811-08061

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: December 31

Date of reporting period: June 30, 2013

Item 1. Reports to Stockholders.

Semi-Annual Report

June 30, 2013

SMALL CAP FUND

SMALL-MID CAP FUND

LARGE CAP FUND

SELECT FUND

LONG-SHORT FUND

RESEARCH OPPORTUNITIES FUND

FINANCIAL LONG-SHORT FUND

STRATEGIC INCOME FUND

Not FDIC Insured | May Lose Value | No Bank Guarantee

Table of Contents

Letter to Shareholders	1
Mission Statement, Pledge, and Fundamental Principles	4
Financial Statements
Schedules of Investments	9
Statements of Assets & Liabilities	28
Statements of Operations	30
Statements of Changes in Net Assets	32
Financial Highlights	40
Notes to Financial Statements	56
Other Items	68
Schedule of Shareholder Expenses	71
Notice of Privacy Policy	73

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. An investor should consider the Fund’s investment objectives, risks, and charges and expenses carefully before investing or sending any money. This and other important information about the Fund(s) can be found in the Fund’s(s) prospectus or summary prospectus which can be obtained at www.diamond-hill.com or by calling 888-226-5595. Please read the prospectus or summary prospectus carefully before investing. Performance data presented represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted herein.

2013 Semi-Annual Report

Letter to Shareholders

Dear fellow shareholder:

We are pleased to provide this 2013 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 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. In implementing our investment process, we are rigorous in applying our shared intrinsic value-based investment philosophy across all strategies, adhering to a long-term investment temperament, investing only when the current market price is below (above for short positions) our estimate of intrinsic value, maintaining a focus on absolute returns, and remaining independent of benchmark weights. We believe this discipline will add the most value for investors in our strategies over time.

2013 Year-to-Date Market Review

U.S. equity markets rose during the first six months of 2013 with the Russell 1000 and Russell 2000 Indexes increasing 13.91% and 15.86%, respectively. Most of the year-to-date gains were achieved in the first quarter as investors continued to push riskier assets higher in a quest to earn returns above the rate of inflation. The first quarter rally was fueled in large part by the continued efforts of the Federal Reserve, along with other global central banks, to keep interest rates low. The Fed doubled its pace of bond purchases from 2012, driving bond prices up and yields (interest rates) down and absorbing an estimated 90% of net debt issuance. In addition, the Fed continued to indicate that it would not slow its bond purchases until the economy was on more solid footing and pledged to hold short-term rates steady until 2015.

The market rally came to a halt swiftly in mid-May when the Federal Reserve unexpectedly hinted that it could begin winding down its unprecedented bond buying program known as Quantitative Easing (QE). Investors had come to expect a continuous stream of money flowing into the financial markets and were unprepared for the speed and scope of market losses at the first sign of an end to the Fed’s monetary support. The bond markets also sold off dramatically with the yield on the 10-year Treasury note rising to 2.49% on the last trading day of the quarter, up from the quarter’s low of 1.63%. Despite its intention to begin with “tapering” the bond buying program, the Fed continued to say that it did not expect to raise short-term interest rates in the near future.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  1

Economic and Sector Results

Real economic growth around the world remained generally sluggish during the first half of 2013. Overall, the U.S. economy also continued on a rather subdued pace as key areas of improvement were mitigated by a modest fiscal drag and a U.S. consumer that remained unable or unwilling to add meaningful debt to their balance sheet. We do not expect rapid economic growth over the remainder of the year. The key area of global weakness continued to be Europe as the recessionary environment in its peripheral countries drags on. Asian economies appeared mixed as Japanese growth picked up while China struggles with an unusual slowdown.

Year-to-date, the health care, consumer discretionary, financial, and consumer staples sectors were the best performing sectors despite a clear reversal in market leaders during the second quarter with some of the more traditionally cyclical sectors outperforming traditionally defensive sectors. Typically, a strong market rally is led by stocks that tend to be more volatile than the market, or higher beta stocks, rather than more defensive or lower beta stocks, such as health care and consumer staples. However, in our experience, investors are often more interested in the relative safety of low beta stocks during low growth, low interest rate environments. In this environment, we believe companies that can provide steady earnings and cash flow growth can also command a premium price.

Market Outlook

Our long-term views have not changed. As we noted last quarter, consumer debt-service burdens have improved significantly in the past couple of years and are now at relatively low levels. However, total household debt, when compared to asset levels and disposable income, remains above long-term averages. Consequently, the healthy debt service picture remains closely linked to very low interest/mortgage rates which may present a meaningful risk if we experience further sharp increases in those rates. We continue to believe that the U.S. economy will be challenged for many years by financial deleveraging and the ultimate withdrawal of fiscal and monetary stimulus. From current levels, we continue to expect positive but modestly below average equity market returns over the next five years.

We continue to believe the Fed is likely to maintain a very accommodative overall monetary stance for the foreseeable future, especially relative to historical standards. The Fed’s monetary policy and its impact on interest rates and the economy is an important factor in estimating the long-term intrinsic value of companies; however, it is just one of many factors that we consider. In estimating intrinsic value, we consider all relevant factors that might impact the discounted value of a company’s future cash flows. We will invest when we believe that we can make informed estimates and judgments about those cash flows and when our estimate of intrinsic value is sufficiently different from the current market price. We believe security selection through the independent valuation of businesses and the discipline to only purchase (short)

Page  2 Diamond Hill Funds Semi-Annual Report June 30, 2013

securities selling at a discount (premium) to our estimate of intrinsic value are the keys to a successful long-term track record.

Chris Bingaman, CFA	Chris Welch, CFA
Portfolio Manager,	Portfolio Manager,
Co-Chief Investment Officer	Co-Chief Investment Officer

The views expressed are those of the portfolio managers as of June 30, 2013, 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.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  3

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 our 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

Page  4 Diamond Hill Funds Semi-Annual Report June 30, 2013

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.

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 one of the largest shareholders in the Diamond Hill Funds. In addition, all Diamond Hill employees are subject to a Code of Ethics, which prohibits the purchase of any individual security that is eligible for purchase in one of Diamond Hill’s portfolios. The Code of Ethics also prohibits the purchase of third-party mutual funds that primarily invest in U.S. equity securities. Investment in the Diamond Hill mutual funds is encouraged, and third-party mutual funds can only be purchased in strategies not managed by Diamond Hill.

Our fundamental equity 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 higher or lower than intrinsic value.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  5

Over short periods of time, 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 or longer, the stock market price tends to converge with intrinsic value.

Intrinsic Value Estimate

We believe that we can determine a reasonable approximation of intrinsic value in some cases.

Intrinsic 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.

A five-year discounted cash flow analysis is the primary methodology used to determine whether there is a discrepancy between the current market price and our estimate of intrinsic value.

In order to forecast the amount and timing of cash flows, we concentrate on the fundamental economic drivers of the business and the management. This might encompass the level of industry competition, regulatory factors, the threat of technological obsolescence, and a variety of other factors.

The Diamond Hill investment process continually compares market price to our estimate of intrinsic value, which is updated over time as new information is available.

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 at a premium for short positions).

We concentrate our investments in businesses whose per share intrinsic value is likely to increase. We seek to invest in businesses that possess a competitive advantage and significant growth prospects as well as outstanding managers and employees.

Risk & Return

We intend to achieve our return from both the closing of the gap between our purchase price and intrinsic value and the increase in per share intrinsic value. For short positions, an increasing intrinsic value may shorten the holding period.

Page  6 Diamond Hill Funds Semi-Annual Report June 30, 2013

We define risk as the permanent loss of capital rather than price volatility. We manage risk by investing in companies selling at a discount (premium for short positions) 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 of intrinsic value.

Our fundamental fixed income principles Business Analysis

We leverage the industry analysis conducted by our research team to identify attractive corporate bonds and other senior corporate securities. Our business analysis focuses on the fundamental economic drivers of the business.

We evaluate the quality of a firm’s management and their treatment of bondholders and stockholders. Managements that focus on growth without regard to return on invested capital or long-term cost of capital are more likely to destroy value for bondholders and stockholders. In contrast, managements that understand the competitive dynamics of their business and prudent capital allocation often produce value for both bondholders and stockholders.

We seek to invest in corporate bonds of companies with improving competitive positions and return on invested capital.

Valuation

We focus on the intrinsic value of the business in relation to the amount of debt in the capital structure. We also evaluate the sources and uses of cash for the business including capital expenditures, working capital, interest charges and the maturity schedule of loans and bonds.

The liquidity and expected volatility of a corporate bond are also important factors in valuation. Because of our long-term time horizon, we will invest in less liquid or more volatile securities; however, we require a higher yield as compensation.

Suitable Investments

Our core competency is the evaluation of credit risk. As a result, we typically favor lower duration, shorter maturity corporate bonds. We focus almost entirely on the secondary market for corporate bonds rather than the primary (new issue) market.

We primarily invest in investment grade and below-investment grade (high yield) corporate bonds, including a significant allocation to defensive high yield corporate bonds (due to low duration and higher credit quality).

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  7

Risk & Return

Our objectives are to generate an attractive cash distribution in excess of the current rate of inflation and an attractive total return while minimizing the risk of a permanent loss of capital over a five-year time horizon.

We expect to achieve our return objective by investing in corporate bonds when we believe the market price discounts a greater risk of default or a greater loss upon default than is warranted. An additional source of return exists when the market price provides attractive compensation for short-term illiquidity or volatility, both of which are of less concern to a long-term investor.

Our definition of risk is a permanent loss of capital. We seek to avoid a permanent loss of capital and to earn a sufficient return on capital to grow our purchasing power.

We focus on credit risk, interest rate risk, liquidity risk, call risk, reinvestment risk and other risks when evaluating corporate bonds.

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

— WARREN BUFFETT

Page  8 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Small Cap Fund

Schedule of Investments

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 84.7%
Consumer Discretionary — 14.0%
Aaron’s, Inc.^		696,435	$	19,507,144
Callaway Golf Co.^		731,916		4,816,007
Carter’s, Inc.^		96,830		7,172,198
Global Sources Ltd.*^#		1,183,192		7,939,218
Hanesbrands, Inc.^		46,615		2,396,943
Hillenbrand, Inc.		574,910		13,631,116
Liquidity Services, Inc.*^		276,600		9,589,722
Live Nation Entertainment, Inc.*		1,052,695		16,316,773
Steiner Leisure Ltd.*		597,952		31,607,743
Tenneco, Inc.*^		580,760		26,296,813
				139,273,677
Consumer Staples — 6.6%
B&G Foods, Inc.^		342,175		11,651,058
Core-Mark Holding Co., Inc.		24,755		1,571,943
Diamond Foods, Inc.*^		127,553		2,646,725
Energizer Holdings, Inc.^		306,600		30,816,366
Flowers Foods, Inc.^		381,954		8,422,086
Harris Teeter Supermarkets, Inc.^		221,220		10,366,369
				65,474,547
Energy — 9.2%
Berry Petroleum Co., Class A^		97,540		4,127,893
Carrizo Oil & Gas, Inc.*^		235,411		6,669,194
Cimarex Energy Co.^		241,295		15,681,762
Contango Oil & Gas Co.		111,737		3,771,124
Crimson Exploration, Inc.*		460,039		1,297,310
Denbury Resources, Inc.*		638,515		11,059,080
Forest Oil Corp.*^		222,020		908,062
Rosetta Resources, Inc.*^		582,230		24,756,419
Southwestern Energy Co.*^		177,485		6,483,527
Whiting Petroleum Corp.*		375,300		17,297,576
				92,051,947
Financials — 26.7%
Alleghany Corp.*^		36,757		14,089,326
American Equity Investment Life Holding Co.^		766,500		12,034,050
Assurant, Inc.		434,830		22,137,195
Assured Guaranty Ltd.		1,058,807		23,357,282
City National Corp.^		46,875		2,970,469

	Shares		Fair Value
Financials — 26.7% continued
Endurance Specialty Holdings Ltd.^		196,005	$	10,084,457
Enstar Group Ltd.*^		81,372		10,820,849
First Niagara Financial Group, Inc.^		648,415		6,529,539
First of Long Island Corp., The		159,419		5,291,117
Fortress Investment Group LLC, Class A		1,315,925		8,632,468
Greenlight Capital Re Ltd., Class A*		580,240		14,233,287
HCC Insurance Holdings, Inc.^		642,020		27,677,483
iStar Financial, Inc. REIT*^		2,307,850		26,055,627
Mid-America Apartment Communities, Inc. REIT^		127,569		8,645,351
National Penn Bancshares, Inc.^		659,430		6,699,809
Nationstar Mortgage Holdings, Inc.*		131,370		4,918,493
Navigators Group, Inc.*		164,445		9,379,943
Popular, Inc.*		696,828		21,134,792
Reinsurance Group of America		180,455		12,471,245
Selective Insurance Group, Inc.^		209,465		4,821,884
Sterling Bancorp		614,622		7,141,908
Winthrop Realty Trust REIT		642,905		7,734,147
				266,860,721
Health Care — 5.8%
Alere, Inc.*^		558,260		13,677,370
Greatbatch, Inc.*^		374,260		12,271,985
LifePoint Hospitals, Inc.*		75,750		3,699,630
Orthofix International NV*^		357,755		9,623,610
Warner Chilcott plc		922,095		18,331,249
				57,603,844
Industrials — 16.3%
AAR Corp.^		788,152		17,323,581
Alaska Air Group, Inc.*		142,460		7,407,920
Avis Budget Group, Inc.*		860,690		24,744,837
Brink’s Co., The^		445,435		11,363,047
Corrections Corp. of America		417,178		14,129,819
Hub Group, Inc., Class A*		352,910		12,852,982

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  9

Diamond Hill Small Cap Fund

Schedule of Investments (Continued)

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 84.7% continued
Industrials — 16.3% continued
Hyster-Yale Materials Handling, Inc.		111,100	$	6,975,969
Kaydon Corp.^		90,730		2,499,612
Kennametal, Inc.^		389,230		15,113,800
Pacer International, Inc.*^		294,812		1,860,264
Saia, Inc.*		394,410		11,820,468
Toro Co., The^		188,380		8,554,336
TriMas Corp.*^		371,725		13,857,908
Trinity Industries, Inc.^		375,845		14,447,482
				162,952,025
Information Technology — 3.3%
Broadridge Financial Solutions, Inc.^		534,710		14,212,592
CSG Systems International, Inc.*^		528,637		11,471,423
Stamps.com, Inc.*		190,955		7,521,717
				33,205,732
Utilities — 2.8%
Cleco Corp.^		308,315		14,315,065
UGI Corp.^		349,690		13,676,376
				27,991,441
Total Common Stocks			$	845,413,934
Registered Investment Companies — 33.1%
Federated Prime Obligations Fund, 0.01%†S		171,205,985		171,205,985
JPMorgan Prime Money Market Fund, 0.06%S		158,567,428		158,567,428
Total Registered Investment Companies			$	329,773,413
Total Investment Securities — 117.8%
(Cost $962,695,457)**			$	1,175,187,347
Net Other Assets (Liabilities) — (17.8)%				(177,732,400	)
Net Assets — 100.0%			$	997,454,947

^ All or a portion of the security is on loan. The total fair value of the securities on loan, as of June 30, 2013, was $165,591,202.

* Non-income producing security.

^#  This security has been deemed illiquid:

	Acquisition Dates		Current Cost		Fair Value		Value as a % of Net Assets
Global Sources Ltd.		December-09 through May-13	$	8,159,491	$	7,939,218		0.8%

^†  This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2013.

^S  Rate represents the daily yield on June 30, 2013.

** Represents cost for financial reporting purposes.

REIT – Real Estate Investment Trust

See accompanying Notes to Financial Statements

Page  10 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Small-Mid Cap Fund

Schedule of Investments

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 91.0%
Consumer Discretionary — 10.5%
Aaron’s, Inc.		139,110	$	3,896,471
Callaway Golf Co.		207,445		1,364,988
Hillenbrand, Inc.		101,055		2,396,014
Leggett & Platt, Inc.^		1,625		50,521
Staples, Inc.^		268,870		4,264,279
Steiner Leisure Ltd.*		82,155		4,342,713
Tenneco, Inc.*		75,750		3,429,960
Whirlpool Corp.^		12,970		1,483,249
				21,228,195
Consumer Staples — 12.7%
B&G Foods, Inc.^		97,600		3,323,280
ConAgra Foods, Inc.		203,350		7,103,017
Energizer Holdings, Inc.^		54,430		5,470,759
Flowers Foods, Inc.		66,948		1,476,203
Harris Teeter Supermarkets, Inc.^		93,670		4,389,376
Molson Coors Brewing Co., Class B		84,035		4,021,915
				25,784,550
Energy — 9.1%
Cimarex Energy Co.		60,005		3,899,725
Contango Oil & Gas Co.		32,064		1,082,160
Denbury Resources, Inc.*		142,368		2,465,814
Energen Corp.		49,298		2,576,313
Noble Energy, Inc.^		108,775		6,530,852
Southwestern Energy Co.*^		21,765		795,075
Whiting Petroleum Corp.*		24,335		1,121,600
				18,471,539
Financials — 24.1%
Alleghany Corp.*^		8,344		3,198,339
American Equity Investment Life Holding Co.^		136,370		2,141,009
Assurant, Inc.		1,790		91,129
Assured Guaranty Ltd.		115,945		2,557,747
Endurance Specialty Holdings Ltd.^		43,610		2,243,735
First Niagara Financial Group, Inc.		293,150		2,952,021
First Republic Bank		63,855		2,457,140
Greenlight Capital Re Ltd., Class A*		101,590		2,492,003
Hartford Financial Services Group, Inc., The		94,790		2,930,907

	Shares		Fair Value
Financials — 24.1% continued
HCC Insurance Holdings, Inc.		82,070	$	3,538,037
iStar Financial, Inc. REIT*^		290,685		3,281,834
KeyCorp		282,435		3,118,082
National Penn Bancshares, Inc.		169,885		1,726,032
Nationstar Mortgage Holdings, Inc.*		31,600		1,183,104
Popular, Inc.*		106,377		3,226,414
Reinsurance Group of America		64,870		4,483,165
SunTrust Banks, Inc.^		25,010		789,566
Willis Group Holdings plc		79,260		3,232,222
XL Group plc		105,270		3,191,786
				48,834,272
Health Care — 13.5%
Boston Scientific Corp.*		583,980		5,413,494
CareFusion Corp.*		22,280		821,018
Forest Laboratories, Inc.*		204,485		8,383,885
Greatbatch, Inc.*^		66,320		2,174,632
Life Technologies Corp.*		30,855		2,283,579
Orthofix International NV*^		112,442		3,024,690
Quest Diagnostics, Inc.^		88,950		5,393,039
				27,494,337
Industrials — 13.5%
Brink’s Co., The		77,770		1,983,913
Corrections Corp. of America^		80,906		2,740,286
Dover Corp.^		93,553		7,265,326
Hub Group, Inc., Class A*		119,450		4,350,369
Kennametal, Inc.^		70,640		2,742,951
Parker Hannifin Corp.^		12,320		1,175,328
Southwest Airlines Co.		557,574		7,187,129
				27,445,302
Information Technology — 5.8%
Broadridge Financial Solutions, Inc.^		187,445		4,982,287
CSG Systems International, Inc.*^		88,895		1,929,022
Juniper Networks, Inc.*		180,045		3,476,669
Linear Technology Corp.		35,515		1,308,373
				11,696,351

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  11

Diamond Hill Small-Mid Cap Fund

Schedule of Investments (Continued)

June 30, 2013 (Unaudited)

Diamond Hill Large Cap Fund

Schedule of Investments

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 91.0% continued
Utilities — 1.8%
Cleco Corp.		21,540	$	1,000,102
UGI Corp.		68,535		2,680,404
				3,680,506
Total Common Stocks			$	184,635,052
Registered Investment Companies — 29.8%
Federated Prime Obligations Fund, 0.01%†S		40,095,126		40,095,126
JPMorgan Prime Money Market Fund, 0.06%S		20,516,080		20,516,080
Total Registered Investment Companies			$	60,611,206
Total Investment Securities — 120.8%
(Cost $212,013,679)**			$	245,246,258
Net Other Assets (Liabilities) — (20.8)%				(42,191,118	)
Net Assets — 100.0%			$	203,055,140

^ All or a portion of the security is on loan. The total fair value of the securities on loan, as of June 30, 2013, was $38,660,712.

* Non-income producing security.

^†  This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2013.

^S  Rate represents the daily yield on June 30, 2013.

** Represents cost for financial reporting purposes.

REIT – Real Estate Investment Trust

See accompanying Notes to Financial Statements

	Shares		Fair Value
Common Stocks — 99.3%
Consumer Discretionary — 11.6%
Comcast Corp., Class A		650,270	$	27,233,308
McDonald’s Corp.		395,349		39,139,551
NIKE, Inc., Class B		496,890		31,641,955
TJX Cos., Inc., The		834,340		41,767,060
VF Corp.^		235,960		45,554,438
Walt Disney Co., The		703,965		44,455,389
Whirlpool Corp.^		89,080		10,187,189
				239,978,890
Consumer Staples — 14.7%
ConAgra Foods, Inc.		1,301,508		45,461,675
General Mills, Inc.		854,833		41,485,045
Kimberly-Clark Corp.		508,140		49,360,720
PepsiCo, Inc.		615,560		50,346,652
Philip Morris International		308,210		26,697,150
Procter & Gamble Co., The		699,182		53,830,022
Sysco Corp.^		1,071,494		36,602,235
				303,783,499
Energy — 10.2%
Apache Corp.^		507,873		42,574,994
Cimarex Energy Co.		129,270		8,401,257
Devon Energy Corp.		636,118		33,001,802
EOG Resources, Inc.		396,488		52,209,540
Occidental Petroleum Corp.		831,002		74,150,308
				210,337,901
Financials — 25.5%
American International Group, Inc.*		1,398,585		62,516,750
Charles Schwab Corp., The		1,818,445		38,605,587
Citigroup, Inc.		1,376,950		66,052,292
Hartford Financial Services Group, Inc., The		972,175		30,059,651
JPMorgan Chase & Co.		1,264,328		66,743,875
Morgan Stanley		2,483,735		60,677,646
PNC Financial Services Group, Inc.		656,845		47,897,137
Progressive Corp.^		1,522,530		38,702,713
Prudential Financial, Inc.		946,943		69,155,247
Wells Fargo & Co.		1,043,825		43,078,658
				523,489,556

Page  12 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Large Cap Fund

Schedule of Investments (Continued)

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 99.3% continued
Health Care — 13.9%
Abbott Laboratories		775,177	$	27,038,174
Baxter International, Inc.		436,667		30,247,923
Boston Scientific Corp.*		4,493,430		41,654,096
Express Scripts Holding Co.*		421,160		25,981,360
Medtronic, Inc.		1,412,997		72,726,956
Pfizer, Inc.		2,085,317		58,409,729
Quest Diagnostics, Inc.^		512,815		31,091,974
				287,150,212
Industrials — 12.3%
3M Co.		364,492		39,857,200
Dover Corp.^		584,138		45,364,157
Illinois Tool Works, Inc.		551,579		38,152,719
Parker Hannifin Corp.^		450,899		43,015,765
Southwest Airlines Co.^		1,504,900		19,398,161
United Technologies Corp.		734,952		68,306,439
				254,094,441
Information Technology — 10.1%
Apple Computer, Inc.		75,136		29,759,867
Cisco Systems, Inc.		1,830,838		44,507,673
International Business Machines Corp.		184,920		35,340,061
Juniper Networks, Inc.*		1,074,240		20,743,574
Linear Technology Corp.^		514,180		18,942,391
Microsoft Corp.		1,682,095		58,082,740
				207,376,306
Materials — 1.0%
Air Products & Chemicals, Inc.^		216,690		19,842,303
Total Common Stocks			$	2,046,053,108

	Shares		Fair Value
Registered Investment Companies — 7.9%
Federated Prime Obligations Fund, 0.01%†S		142,762,205	$	142,762,205
JPMorgan Prime Money Market Fund, 0.06%S		19,898,293		19,898,293
Total Registered Investment Companies			$	162,660,498
Total Investment Securities — 107.2%
(Cost $1,738,604,718)**			$	2,208,713,606
Net Other Assets (Liabilities)��— (7.2)%				(147,477,370	)
Net Assets — 100.0%			$	2,061,236,236

^ All or a portion of the security is on loan. The total fair value of the securities on loan, as of June 30, 2013, was $138,535,333.

* Non-income producing security.

^†  This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2013.

^S  Rate represents the daily yield on June 30, 2013.

** Represents cost for financial reporting purposes.

See accompanying Notes to Financial Statements

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  13

Diamond Hill Select Fund

Schedule of Investments

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 93.0%
Consumer Discretionary — 6.4%
Aaron’s, Inc.		41,015	$	1,148,830
TJX Cos., Inc., The		21,540		1,078,292
VF Corp.		7,480		1,444,089
				3,671,211
Consumer Staples — 7.8%
ConAgra Foods, Inc.		67,023		2,341,114
General Mills, Inc.		21,410		1,039,027
PepsiCo, Inc.		12,870		1,052,637
				4,432,778
Energy — 8.9%
Apache Corp.		24,440		2,048,805
Cimarex Energy Co.		23,175		1,506,143
Devon Energy Corp.		4,005		207,779
Occidental Petroleum Corp.		14,850		1,325,066
				5,087,793
Financials — 23.8%
American International Group, Inc.*		31,990		1,429,953
Citigroup, Inc.		22,360		1,072,609
Endurance Specialty Holdings Ltd.		17,285		889,313
Fortress Investment Group LLC, Class A		163,950		1,075,512
iStar Financial, Inc. REIT*^		110,130		1,243,368
JPMorgan Chase & Co.		18,520		977,671
Morgan Stanley		71,655		1,750,532
Popular, Inc.*		59,140		1,793,716
Prudential Financial, Inc.		29,340		2,142,701
Willis Group Holdings plc		28,190		1,149,588
				13,524,963
Health Care — 20.2%
Baxter International, Inc.		31,965		2,214,215
Boston Scientific Corp.*		240,040		2,225,171
Forest Laboratories, Inc.*^		42,820		1,755,620
Medtronic, Inc.		27,821		1,431,947
Pfizer, Inc.		46,205		1,294,202
UnitedHealth Group, Inc.		17,652		1,155,853
Warner Chilcott plc		70,685		1,405,218
				11,482,226
Industrials — 14.0%
3M Co.		9,845		1,076,551
Dover Corp.		14,750		1,145,485

	Shares		Fair Value
Industrials — 14.0% continued
Hub Group, Inc., Class A*		31,810	$	1,158,520
Parker Hannifin Corp.		8,665		826,641
Southwest Airlines Co.^		120,980		1,559,432
United Technologies Corp.		24,130		2,242,642
				8,009,271
Information Technology — 11.9%
Apple Computer, Inc.		2,879		1,140,314
Cisco Systems, Inc.		51,015		1,240,175
International Business Machines Corp.		9,160		1,750,568
Juniper Networks, Inc.*^		47,030		908,149
Microsoft Corp.		51,115		1,765,001
				6,804,207
Total Common Stocks			$	53,012,449
Registered Investment Companies — 14.7%
Federated Prime Obligations Fund, 0.01%†S		3,980,775		3,980,775
JPMorgan Prime Money Market Fund, 0.06%S		4,388,632		4,388,632
Total Registered Investment Companies			$	8,369,407
Total Investment Securities — 107.7%
(Cost $49,576,806)**			$	61,381,856
Net Other Assets (Liabilities) — (7.7)%				(4,362,366	)
Net Assets — 100.0%			$	57,019,490

* Non-income producing security.

^ All or a portion of the security is on loan. The total fair value of the securities on loan, as of June 30, 2013, was $3,819,638.

^†  This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2013.

^S  Rate represents the daily yield on June 30, 2013.

** Represents cost for financial reporting purposes.

REIT – Real Estate Investment Trust

See accompanying Notes to Financial Statements

Page  14 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Long-Short Fund

Schedule of Investments

June 30, 2013 (Unaudited)

		Shares		Fair Value
Common Stocks — 79.7%
Consumer Discretionary — 9.1%
Comcast Corp., Class A			920,455	$	38,548,655
McDonald’s Corp.			349,364		34,587,036
NIKE, Inc., Class B			377,590		24,044,931
TJX Cos., Inc., The			856,785		42,890,657
VF Corp.^			271,080		52,334,705
Walt Disney Co., The¨			954,451		60,273,582
					252,679,566
Consumer Staples — 10.4%
ConAgra Foods, Inc.			1,349,480		47,137,336
General Mills, Inc.¨			920,962		44,694,286
Kimberly-Clark Corp.^			610,210		59,275,799
PepsiCo, Inc.			638,130		52,192,653
Procter & Gamble Co., The			676,995		52,121,845
Sysco Corp.^			1,015,697		34,696,210
					290,118,129
Energy — 7.9%
Apache Corp.^			404,551		33,913,510
Cimarex Energy Co.			408,627		26,556,669
Devon Energy Corp.			459,405		23,833,931
EOG Resources, Inc.			497,761		65,545,168
Occidental Petroleum Corp.			786,123		70,145,756
					219,995,034
Financials — 23.7%
American International Group, Inc.*			1,836,455		82,089,538
Assured Guaranty Ltd.¨			554,845		12,239,881
Charles Schwab Corp., The			1,314,570		27,908,321
Citigroup, Inc.			1,758,979		84,378,223
Hartford Financial Services Group, Inc., The			1,245,199		38,501,553
JPMorgan Chase & Co.			1,387,175		73,228,968
Morgan Stanley¨			2,763,210		67,505,220
PNC Financial Services Group, Inc.			625,085		45,581,198
Popular, Inc.*			1,541,122		46,742,231
Progressive Corp.			1,065,600		27,087,552
Prudential Financial, Inc.¨			1,098,478		80,221,848
Wells Fargo & Co.¨	��		1,057,335		43,636,215
Willis Group Holdings plc^			871,110		35,523,866
					664,644,614

	Shares		Fair Value
Health Care — 10.3%
Abbott Laboratories¨		929,265	$	32,412,763
Baxter International, Inc.		505,971		35,048,611
Boston Scientific Corp.*		5,976,296		55,400,264
Medtronic, Inc.^		1,345,487		69,252,216
Pfizer, Inc.		2,279,820		63,857,759
Quest Diagnostics, Inc.^		494,675		29,992,145
				285,963,758
Industrials — 9.4%
3M Co.¨		369,240		40,376,394
Dover Corp.^		599,675		46,570,761
Illinois Tool Works, Inc.¨		551,360		38,137,571
Parker Hannifin Corp.^		467,780		44,626,212
Southwest Airlines Co.^		1,959,615		25,259,437
United Technologies Corp.		701,480		65,195,551
				260,165,926
Information Technology — 8.0%
Apple Computer, Inc.		96,553		38,242,712
Cisco Systems, Inc.		2,308,925		56,129,967
International Business Machines Corp.		247,235		47,249,081
Juniper Networks, Inc.*^		1,703,515		32,894,874
Microsoft Corp.¨		1,323,849		45,712,505
				220,229,139
Materials — 0.9%
Air Products & Chemicals, Inc.^¨		287,201		26,298,996
Total Common Stocks			$	2,220,095,162

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  15

Diamond Hill Long-Short Fund

Schedule of Investments (Continued)

June 30, 2013 (Unaudited)

Diamond Hill Long-Short Fund

Schedule of Investments Sold Short

June 30, 2013 (Unaudited)

	Shares		Fair Value
Registered Investment Companies — 25.3%
Federated Prime Obligations Fund, 0.01%†S		186,876,182	$	186,876,182
JPMorgan Prime Money Market Fund, 0.06%S		519,166,193		519,166,193
Total Registered Investment Companies			$	706,042,375
Total Investment Securities — 105.0%
Cost ($2,318,529,889)**			$	2,926,137,538
Segregated Cash With Brokers — 23.1%				645,743,640
Securities Sold Short — (22.0)%
(Proceeds $468,240,146)				(611,332,764	)
Net Other Assets (Liabilities) — (6.1)%				(171,516,277	)
Net Assets — 100.0%			$	2,789,032,137

^ All or a portion of the security is on loan. The total fair value of the securities on loan, as of June 30, 2013, was $181,817,214.

^¨  Security position is either entirely or partially held in a segregated account as collateral for securities sold short and aggregates to a total market value of $275,113,814.

* Non-income producing security.

^†  This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2013.

^S  Rate represents the daily yield on June 30, 2013.

** Represents cost for financial reporting purposes.

See accompanying Notes to Financial Statements

	Shares		Fair Value
Common Stocks — 22.0%
Consumer Discretionary — 10.5%
Brunswick Corp.		1,349,670	$	43,121,957
Gap, Inc., The		1,378,585		57,528,352
Gildan Activewear, Inc.		203,800		8,255,938
Grand Canyon Education, Inc.*		365,820		11,790,378
J.C. Penney Co., Inc.*		925,545		15,808,309
John Wiley & Sons, Inc., Class A		131,320		5,264,619
Life Time Fitness, Inc.*		1,100,684		55,155,275
Macy’s, Inc.		747,360		35,873,280
Red Robin Gourmet Burgers, Inc.*		487,525		26,901,630
Saks, Inc.*		445,660		6,078,802
Sonic Corp.*		321,855		4,686,209
Sotheby’s Holdings, Inc.		133,615		5,065,345
Tractor Supply Co.		148,744		17,493,782
				293,023,876
Consumer Staples — 2.3%
Campbell Soup Co.		856,300		38,353,677
Colgate-Palmolive Co.		446,600		25,585,714
				63,939,391
Financials — 1.6%
Cincinnati Financial Corp.		442,855		20,327,045
First American Financial Corp.		306,303		6,750,918
Moody’s Corp.		84,580		5,153,459
Principal Financial Group, Inc.		360,910		13,516,080
				45,747,502
Industrials — 3.1%
Boeing Co., The		599,885		61,452,219
Healthcare Services Group		312,090		7,652,447
Kansas City Southern Industries, Inc.		122,090		12,936,656
Navistar International Corp.*		73,280		2,034,253
				84,075,575
Information Technology — 2.0%
Advent Software, Inc.*		440,895		15,457,779
Akamai Technologies, Inc.*		889,525		37,849,289
				53,307,068

Page  16 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Long-Short Fund

Schedule of Investments Sold Short (Continued)

June 30, 2013 (Unaudited)

Diamond Hill Research Opportunities Fund

Schedule of Investments

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 22.0% continued
Telecommunication Services — 0.6%
AT&T, Inc.		503,165	$	17,812,040
Total Common Stocks			$	557,905,452
Exchange Traded Fund — 1.9%
iShares Russell 2000 Index Fund		549,890		53,427,312
Total Securities Sold Short — 22.0%
(Proceeds $468,240,146)			$	611,332,764

* Non-dividend expense producing security.

Percentages disclosed are based on total net assets of the Fund at June 30, 2013.

See accompanying Notes to Financial Statements

	Shares		Fair Value
Common Stocks — 73.0%
Consumer Discretionary — 11.2%
Aaron’s, Inc.		14,579	$	408,358
Autozone, Inc.*		837		354,629
Comcast Corp., Class A		5,135		215,054
Dollar General Corp.*		7,545		380,494
Hillenbrand, Inc.		9,772		231,694
Jarden Corp.*		15,300		669,375
Liquidity Services, Inc.*^		12,886		446,758
McDonald’s Corp.¨		5,300		524,700
NIKE, Inc., Class B		4,020		255,994
Staples, Inc.^		37,055		587,691
Steiner Leisure Ltd.*		9,197		486,153
TJX Cos., Inc., The		8,646		432,819
Vail Resorts, Inc.		6,900		424,488
VF Corp.^		2,658		513,153
Whirlpool Corp.^		4,600		526,056
				6,457,416
Consumer Staples — 6.1%
B&G Foods, Inc.^		16,165		550,418
Core-Mark Holding Co., Inc.		7,000		444,500
Diamond Foods, Inc.*		27,200		564,400
Energizer Holdings, Inc.^		8,000		804,080
Harris Teeter Supermarkets, Inc.		6,000		281,160
Molson Coors Brewing Co., Class B		10,000		478,600
Tesco plc^		24,295		370,499
				3,493,657
Energy — 2.4%
Apache Corp.		3,338		279,825
Cimarex Energy Co.		12,225		794,503
Occidental Petroleum Corp.		3,175		283,305
				1,357,633
Financials — 19.4%
American International Group, Inc.*		34,490		1,541,703
Assured Guaranty Ltd.		13,370		294,942
Endurance Specialty Holdings Ltd.		12,410		638,495
First Niagara Financial Group, Inc.¨		58,500		589,095
Fortress Investment Group LLC, Class A		141,900		930,864
iStar Financial, Inc. REIT*		109,430		1,235,464
JPMorgan Chase & Co.		2,255		119,041

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  17

Diamond Hill Research Opportunities Fund

Schedule of Investments (Continued)

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 73.2% continued
Financials — 19.4% continued
Nationstar Mortgage Holdings, Inc.*		7,100	$	265,824
Popular, Inc.*		47,600		1,443,709
Prudential Financial, Inc.		28,440		2,076,973
Willis Group Holdings plc		32,580		1,328,612
Winthrop Realty Trust REIT		56,290		677,169
				11,141,891
Health Care — 10.7%
Alere, Inc.*^		12,000		294,000
Boston Scientific Corp.*		100,055		927,510
Express Scripts Holding Co.*		9,850		607,647
Forest Laboratories, Inc.*		16,555		678,755
GlaxoSmithKline plc		9,561		477,763
Hi Tech Pharmacal Co.		4,250		141,100
Life Technologies Corp.*		5,400		399,654
Natus Medical, Inc.*		48,600		663,390
Orthofix International NV*^		7,506		201,911
Teva Pharmaceutical Industries Ltd., SP ADR		10,225		400,820
UnitedHealth Group, Inc.		3,890		254,717
Universal American Financial Corp.		33,920		301,549
Valeant Pharmaceuticals International, Inc.*		3,250		279,760
Warner Chilcott plc		25,975		516,383
				6,144,959
Industrials — 8.9%
AAR Corp.		29,800		655,004
Corrections Corp. of America		10,400		352,248
Hub Group, Inc., Class A*		24,000		874,080
Illinois Tool Works, Inc.		4,300		297,431
Kennametal, Inc.^		18,300		710,589
Pacer International, Inc.*		15,250		96,228
Parker Hannifin Corp.		4,600		438,840
Southwest Airlines Co.^		100,000		1,289,000
United Technologies Corp.		4,200		390,348
				5,103,768
Information Technology — 14.3%
Apple Computer, Inc.¨		1,216		481,633
Baidu, Inc.*^		2,340		221,200
Cisco Systems, Inc.¨		64,127		1,558,928
International Business Machines Corp.¨		8,574		1,638,577

	Shares		Fair Value
Information Technology — 14.3% continued
Juniper Networks, Inc.*^¨		79,711	$	1,539,219
Linear Technology Corp.		12,979		478,146
Microsoft Corp.¨		55,352		1,911,306
Rovi Corp.*		9,035		206,359
Stamps.com, Inc.*		4,325		170,362
				8,205,730
Total Common Stocks			$	41,905,054
Registered Investment Companies — 28.6%
Federated Prime Obligations Fund, 0.01%†¨		5,605,205		5,605,205
JPMorgan Prime Money Market Fund, 0.06%¨		10,843,298		10,843,298
Total Registered Investment Companies			$	16,448,503
Total Investment Securities — 101.6%
Cost ($51,992,166)**			$	58,353,557
Segregated Cash With Brokers — 10.8%				6,221,154
Securities Sold Short — (10.2)%
(Proceeds $5,250,935)				(5,845,658	)
Net Other Assets (Liabilities) — (2.2)%				(1,268,880	)
Net Assets — 100.0%			$	57,460,173

* Non-income producing security.

^ All or a portion of the security is on loan. The total fair value of the securities on loan, as of June 30, 2013, was $5,431,919.

^¨  Security position is either entirely or partially held in a segregated account as collateral for securities sold short and aggregates to a total market value of $4,329,353.

^†  This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2013.

^S  Rate represents the daily yield on June 30, 2013.

** Represents cost for financial reporting purposes.

REIT – Real Estate Investment Trust

ADR – American Depositary Receipt

See accompanying Notes to Financial Statements

Page  18 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Research Opportunities Fund

Schedule of Investments Sold Short

June 30, 2013 (Unaudited)

Diamond Hill Financial Long-Short Fund

Schedule of Investments

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 10.2%
Consumer Discretionary — 3.6%
Brunswick Corp.		900	$	28,755
Gap, Inc., The		10,510		438,582
Gildan Activewear, Inc.		1,704		69,029
Grand Canyon Education, Inc.*		10,284		331,453
J.C. Penney Co., Inc.*		3,140		53,631
John Wiley & Sons, Inc., Class A		2,255		90,403
Life Time Fitness, Inc.*		7,753		388,503
Macy’s, Inc.		4,651		223,248
Red Robin Gourmet Burgers, Inc.*		1,100		60,698
Saks, Inc.*		11,135		151,881
Sonic Corp.*		10,600		154,336
Sotheby’s Holdings, Inc.		2,525		95,723
				2,086,242
Financials — 3.7%
BancorpSouth, Inc.		15,175		268,598
Cincinnati Financial Corp.		14,505		665,780
First American Financial Corp.		19,055		419,972
Principal Financial Group, Inc.		20,080		751,996
				2,106,346
Health Care — 0.2%
Covance, Inc.*		1,700		129,438
Industrials — 1.1%
Boeing Co., The		2,500		256,100
Healthcare Services Group		4,500		110,340
Kansas City Southern Industries, Inc.		1,400		148,344
Navistar International Corp.*		3,200		88,832
				603,616
Information Technology — 1.6%
Advent Software, Inc.*		6,624		232,237
Akamai Technologies, Inc.*		16,164		687,779
				920,016
Total Securities Sold Short — 10.2%
(Proceeds $5,250,935)			$	5,845,658

* Non-dividend expense producing security.

Percentages disclosed are based on total net assets of the Fund at June 30, 2013.

See accompanying Notes to Financial Statements

	Shares		Fair Value
Preferred Stock — 0.7%
REITs & Real Estate Management — 0.7%
iStar Financial, Inc. Series F, 1.30%		6,322	$	152,171
Total Preferred Stock			$	152,171
Common Stocks — 81.0%
Banking Services — 26.4%
Bank of Marin BanCorp		6,695		267,800
BB&T Corp.		5,640		191,083
City National Corp.^		2,420		153,355
First Niagara Financial Group, Inc.		26,535		267,207
First of Long Island Corp., The		11,230		372,724
First Republic Bank		8,195		315,344
Huntington Bancshares, Inc.¨		12,121		95,513
KeyCorp		28,150		310,776
National Penn Bancshares, Inc.^		15,565		158,140
PNC Financial Services Group, Inc.¨		9,849		718,190
Popular, Inc.*		32,355		981,328
Sterling Bancorp		24,910		289,454
SunTrust Banks, Inc.		9,747		307,713
Tower Financial Corp.		7,810		113,323
U.S. Bancorp		3,508		126,814
Wells Fargo & Co.¨		19,111		788,712
				5,457,476
Capital Markets — 4.6%
Charles Schwab Corp., The		9,545		202,640
Fortress Investment Group LLC, Class A		115,700		758,992
				961,632
Consumer Financial Services — 1.5%
Capital One Financial Corp.		4,875		306,199
Financial Services — 14.9%
Bank of New York Mellon Corp., The¨		2,299		64,487
Citigroup, Inc.		21,360		1,024,640
JPMorgan Chase & Co.		17,305		913,531
Morgan Stanley¨		33,675		822,680
Nationstar Mortgage Holdings, Inc.*		6,610		247,477
				3,072,815

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  19

Diamond Hill Financial Long-Short Fund

Schedule of Investments (Continued)

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 81.0% continued
Insurance — 25.0%
ACE Ltd.		3,430	$	306,916
American Equity Investment Life Holding Co.^		19,900		312,430
American International Group, Inc.*		21,965		981,836
Assured Guaranty Ltd.		3,540		78,092
Endurance Specialty Holdings Ltd.		6,460		332,367
Enstar Group Ltd.*		1,765		234,710
Greenlight Capital Re Ltd., Class A*		12,310		301,964
HCC Insurance Holdings, Inc.		3,860		166,405
Navigators Group, Inc.*		4,185		238,712
Progressive Corp.		8,425		214,164
Prudential Financial, Inc.		13,950		1,018,768
Reinsurance Group of America		6,235		430,901
Willis Group Holdings plc		10,285		419,422
XL Group plc		4,365		132,347
				5,169,034
Other — 1.0%
Vantiv, Inc., Class A*^		7,295		201,342
REITs & Real Estate Management — 7.6%
iStar Financial, Inc. REIT*		90,110		1,017,342
Winthrop Realty Trust REIT		46,015		553,560
				1,570,902
Total Common Stocks			$	16,739,400

	Shares		Fair Value
Registered Investment Companies — 22.7%
Federated Prime Obligations Fund, 0.01%†S		687,831	$	687,831
JPMorgan Prime Money Market Fund, 0.06%S		4,018,149		4,018,149
Total Registered Investment Companies			$	4,705,980
Total Investment Securities — 104.4%
(Cost $17,834,205)**			$	21,597,551
Segregated Cash With Brokers — 9.3%				1,931,337
Securities Sold Short — (8.7)%
(Proceeds $1,477,497)				(1,768,504	)
Net Other Assets (Liabilities) — (5.0)%				(1,043,550	)
Net Assets — 100.0%			$	20,716,834

^ All or a portion of the security is on loan. The total fair value of the securities on loan, as of June 30, 2013, was $655,753.

^¨  Security position is either entirely or partially held in a segregated account as collateral for securities sold short and aggregates to a total market value of $1,072,927.

* Non-income producing security.

^†  This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2013.

^S  Rate represents the daily yield on June 30, 2013.

** Represents cost for financial reporting purposes.

REIT – Real Estate Investment Trust

See accompanying Notes to Financial Statements

Page  20 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Financial Long-Short

Schedule of Investments Sold Short

June 30, 2013 (Unaudited)

Diamond Hill Strategic Income Fund

Schedule of Investments

June 30, 2013 (Unaudited)

	Shares		Fair Value
Common Stocks — 8.7%
Banking Services — 2.9%
Bank of The Ozarks, Inc.		7,230	$	313,276
Home Bancshares, Inc.		10,880		282,554
				595,830
Commercial Banks — 1.1%
BancorpSouth, Inc.		12,915		228,596
Financial Services — 2.1%
Moody’s Corp.		1,915		116,681
Principal Financial Group, Inc.		8,115		303,907
				420,588
Insurance — 2.6%
Cincinnati Financial Corp.		7,470		342,873
First American Financial Corp.		8,195		180,617
				523,490
Total Securities Sold Short — 8.7%
(Proceeds $1,477,497)			$	1,768,504

Percentages disclosed are based on total net assets of the Fund at June 30, 2013.

See accompanying Notes to Financial Statements

	Shares/ Par Value		Fair Value
Collateralized Debt Obligations — 0.4%
Alesco Preferred Funding Ltd., Class PPNE, 3/23/35#*	$	336,608	$	87,754
Alesco Preferred Funding VI, Class PNN, 3/23/35#*		621,631		170,016
Fort Sheridan ABS CDO Ltd., Class PPN2, 11/5/41#*		611,948		191,209
Taberna Preferred Funding Ltd., Class PPN2, 7/5/35#*		1,175,564		321,117
Total Collateralized Debt Obligations			$	770,096
Preferred Stock — -%
Alesco Preferred Funding III#*		900		–
Total Preferred Stock			$	–
Corporate Bonds — 95.7%
Consumer Discretionary — 18.8%
Avis Budget Car Rental, 8.25%, 1/15/19^		3,332,000		3,623,550
Expedia, Inc., 7.46%, 8/15/18^		3,175,000		3,661,962
Goodyear Tire & Rubber Co., The, 8.25%, 8/15/20^		2,900,000		3,175,500
Goodyear Tire & Rubber Co., The, 8.75%, 8/15/20		3,355,000		3,908,575
J Crew Group, 8.13%, 3/1/19^		2,975,000		3,123,750
Penn National Gaming, Inc., 8.75%, 8/15/19		3,000,000		3,285,000
QVC, Inc., 7.50%, 10/1/19††		3,840,000		4,174,472
Tenneco, Inc., 7.75%, 8/15/18		4,315,000		4,617,050
Vail Resorts, Inc., 6.50%, 5/1/19		3,543,000		3,711,293
				33,281,152
Consumer Staples — 2.3%
TreeHouse Foods, Inc., 7.75%, 3/1/18		3,865,000		4,092,069

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  21

Diamond Hill Strategic Income Fund

Schedule of Investments (Continued)

June 30, 2013 (Unaudited)

	Shares/ Par Value		Fair Value
Corporate Bonds — 95.7% continued
Energy — 4.2%
Carrizo Oil & Gas, Inc., 8.63%, 10/15/18	$	4,150,000	$	4,440,500
Halcon Resources Corp., 9.75%, 7/15/20		3,000,000		2,992,500
				7,433,000
Financials — 21.5%
CNA Financial Corp., 6.50%, 8/15/16^		2,165,000		2,452,298
Discover Financial Services, 6.45%, 6/12/17		2,700,000		3,066,282
First Horizon National Corp., 5.38%, 12/15/15		3,000,000		3,241,002
First Tennessee Bank NA, 5.05%, 1/15/15^		1,150,000		1,200,948
iStar Financial, Inc., Series B, 9.00%, 6/1/17^		2,000,000		2,230,000
iStar Financial, Inc., Series B, 5.70%, 3/1/14		5,275,000		5,354,125
MGIC Investment Corp., 5.38%, 11/1/15		2,105,000		2,115,525
Radian Group, Inc., 9.00%, 6/15/17		4,760,000		5,164,600
Regions Financial Corp., 5.75%, 6/15/15		4,000,000		4,315,000
Symetra Financial Corp., 6.13%, 4/1/16††		4,750,000		5,177,376
Synovus Financial Corp., 5.13%, 6/15/17^		3,725,000		3,659,813
				37,976,969
Health Care — 13.5%
DaVita, Inc., 6.63%, 11/1/20		2,150,000		2,279,000
DaVita, Inc., 6.38%, 11/1/18		4,850,000		5,062,187
HealthSouth Corp., 7.25%, 10/1/18		3,821,000		4,078,918

	Shares/ Par Value		Fair Value
Health Care — 13.5% continued
Hospira, Inc., 6.05%, 3/30/17	$	2,025,000	$	2,166,264
Mylan, Inc., 7.63%, 7/15/17^††		4,600,000		5,092,853
Valeant Pharmaceuticals International, Inc., 7.00%, 10/1/-20††		2,695,000		2,748,900
Warner Chilcott Co. LLC, 7.75%, 9/15/18^		2,335,000		2,521,800
				23,949,922
Industrials — 21.9%
B/E Aerospace, Inc., 6.88%, 10/1/20		5,685,000		6,139,799
Continental Airlines, Inc., 6.75%, 9/15/15††		6,525,000		6,704,438
Triumph Group, Inc., 8.00%, 11/15/17		4,705,000		4,952,013
United Continental Holdings, Inc., 6.38%, 6/1/18^		5,190,000		5,099,175
UR Merger Sub Corp., 9.25%, 12/15/19^		5,715,000		6,300,788
US Airways Group, Inc., 6.13%, 6/1/18^		6,210,000		5,868,450
Wabtec Corp., 6.88%, 7/31/13		3,650,000		3,663,688
				38,728,351
Information Technology — 3.8%
KLA-Tencor Corp., 6.90%, 5/1/18		4,478,000		5,211,075
ManTech International Corp., 7.25%, 4/15/18		1,500,000		1,560,000
				6,771,075
Materials — 3.2%
Owens-Brockway Packaging, Inc., 7.38%, 5/15/16		5,021,000		5,598,415

Page  22 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Strategic Income Fund

Schedule of Investments (Continued)

June 30, 2013 (Unaudited)

	Shares/ Par Value		Fair Value
Corporate Bonds — 95.7% continued
Telecommunication Services — 4.1%
Level 3 Financing, Inc., 8.13%, 7/1/19	$	2,825,000	$	2,966,250
Level 3 Financing, Inc., 10.00%, 2/1/18		3,950,000		4,256,125
				7,222,375
Utilities — 2.4%
Source Gas LLC, 5.90%, 4/1/17††		4,000,000		4,252,892
Total Corporate Bonds			$	169,306,220
Registered Investment Companies — 11.4%
Federated Prime Obligations Fund, 0.01%†S		12,222,838		12,222,838
JPMorgan Prime Money Market Fund, 0.06%S		7,903,964		7,903,964
Total Registered Investment Companies			$	20,126,802
Total Investment Securities 107.5%
(Cost $187,715,159)**			$	190,203,118
Net Other Assets (Liabilities) — (7.5)%				(13,274,269	)
Net Assets — 100.0%			$	176,928,849

* Non-income producing security.

** Represents cost for financial reporting purposes.

^ All or a portion of the security is on loan. The total fair value of the securities on loan, as of June 30, 2013, was $11,686,996.

^†  This security, which was purchased using cash collateral received from securities on loan, represents collateral for securities loaned as of June 30, 2013.

^†† 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:

	Acquisition Date		Current Cost		Fair Value		Value as a % of Net Assets
Continental Airlines, Inc.		December-11	$	6,383,875	$	6,704,438		3.8%
Mylan, Inc.		September-10		4,960,500		5,092,853		2.9%
QVC, Inc.		November-12		4,252,800		4,174,472		2.4%
Source Gas LLC		March-10		3,840,001		4,252,892		2.4%
Symetra Financial Corp.		February-11		4,973,773		5,177,376		2.9%
Valeant Pharmaceuticals International, Inc.		June-12, July-13		2,805,831		2,748,900		1.5%
			$	27,216,780	$	28,150,931		15.9%

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

	Acquisition Date	Current Cost		Fair Value		Value as a % of Net Assets
Alesco Preferred Funding III	March-13	$	–	$	–		0.0%
Alesco Preferred Funding Ltd., Series 6A, Class PPNE	March-05		336,608		87,754		0.0%
Alesco Preferred Funding VI, Class PNN	Dec-04		621,631		170,016		0.1%
Fort Sheridan ABS CDO Ltd., Series 2005-1A, Class PPN2	March-05		509,448		191,209		0.1%
Taberna Preferred Funding Ltd., Series 2005-1A, Class PPN2	March-05		1,035,359		321,117		0.2%
		$	2,503,046	$	770,096		0.4%

^S  Rate represents the daily yield on June 30, 2013.

See accompanying Notes to Financial Statements

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  23

Diamond Hill Funds

Tabular Presentation of Schedules of Investments

June 30, 2013 (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
Sector Allocation	% of Net Assets
Consumer Discretionary		14.0%
Consumer Staples		6.6%
Energy		9.2%
Financials		26.7%
Health Care		5.8%
Industrials		16.3%
Information Technology		3.3%
Utilities		2.8%
Cash and Cash Equivalents		33.1%
Other
Net Other Assets (Liabilities)		-17.8%
Total		100%
Diamond Hill Small-Mid Cap Fund
Sector Allocation	% of Net Assets
Consumer Discretionary		10.5%
Consumer Staples		12.7%
Energy		9.1%
Financials		24.1%
Health Care		13.5%
Industrials		13.5%
Information Technology		5.8%
Utilities		1.8%
Cash and Cash Equivalents		29.8%
Other
Net Other Assets (Liabilities)		-20.8%
Total		100.0%

Diamond Hill Large Cap Fund
Sector Allocation	% of Net Assets
Consumer Discretionary		11.6%
Consumer Staples		14.7%
Energy		10.2%
Financials		25.5%
Health Care		13.9%
Industrials		12.3%
Information Technology		10.1%
Materials		1.0%
Cash and Cash Equivalents		7.9%
Other
Net Other Assets (Liabilities)		-7.2%
Total		100.0%
Diamond Hill Select Fund
Sector Allocation	% of Net Assets
Consumer Discretionary		6.4%
Consumer Staples		7.8%
Energy		8.9%
Financials		23.8%
Health Care		20.2%
Industrials		14.0%
Information Technology		11.9%
Cash and Cash Equivalents		14.7%
Other
Net Other Assets (Liabilities)		-7.7%
Total		100.0%

Page  24 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Tabular Presentation of Schedules of Investments (Continued)

June 30, 2013 (Unaudited)

Diamond Hill Long-Short Fund
Sector Allocation	% of Long Portfolio		% of Net Assets
Long Portfolio
Consumer Discretionary		8.6%		9.1%
Consumer Staples		9.9%		10.4%
Energy		7.5%		7.9%
Financials		22.8%		23.7%
Health Care		9.8%		10.3%
Industrials		8.9%		9.4%
Information Technology		7.5%		8.0%
Materials		0.9%		0.9%
Cash and Cash Equivalents		24.1%		25.3%
Total		100.0%
Sector Allocation	% of Short Portfolio		% of Net Assets
Short Portfolio
Consumer Discretionary		47.9%		-10.5%
Consumer Staples		10.5%		-2.3%
Financials		7.5%		-1.6%
Industrials		13.8%		-3.1%
Information Technology		8.7%		-2.0%
Telecommunication Services		2.9%		-0.6%
Exchange Traded Fund		8.7%		-1.9%
Total		100.0%
Other
Segregated Cash With Brokers				23.1%
Net Other Assets (Liabilities)				-6.1%
				100.0%

Diamond Hill Research Opportunities Fund
Sector Allocation	% of Long Portfolio		% of Net Assets
Long Portfolio
Consumer Discretionary		11.1%		11.2%
Consumer Staples		6.0%		6.1%
Energy		2.3%		2.4%
Financials		19.1%		19.4%
Health Care		10.5%		10.7%
Industrials		8.7%		8.9%
Information Technology		14.1%		14.3%
Cash and Cash Equivalents		28.2%		28.6%
Total		100.0%
Sector Allocation	% of Short Portfolio		% of Net Assets
Short Portfolio
Consumer Discretionary		35.8%		-3.6%
Financials		36.0%		-3.7%
Health Care		2.2%		-0.2%
Industrials		10.3%		-1.1%
Information Technology		15.7%		-1.6%
		100.0%
Other
Segregated Cash With Brokers				10.8%
Net Other Assets (Liabilities)				-2.2%
				100.0%

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  25

Diamond Hill Funds

Tabular Presentation of Schedules of Investments (Continued)

June 30, 2013 (Unaudited)

Diamond Hill Financial Long-Short Fund
Sector Allocation	% of Long Portfolio		% of Net Assets
Long Portfolio
Common Stocks
Banking Services		25.3%		26.4%
Capital Markets		4.5%		4.6%
Consumer Financial Services		1.4%		1.5%
Financial Services		14.2%		14.9%
Insurance		23.9%		25.0%
Other		0.9%		1.0%
REITs & Real Estate Management		7.3%		7.6%
Preferred Stocks
REITs & Real Estate Management		0.7%		0.7%
Cash and Cash Equivalents		21.8%		22.7%
		100.0%
Sector Allocation	% of Short Portfolio		% of Net Assets
Short Portfolio
Common Stocks
Banking Services		33.7%		-2.9%
Commercial Banks		12.9%		-1.1%
Financial Services		23.8%		-2.1%
Insurance		29.6%		-2.6%
Total		100.0%
Other
Segregated Cash With Brokers				9.3%
Net Other Assets (Liabilities)				-5.0%
				100.0%

Diamond Hill Strategic Income Fund
Sector Allocation	% of Net Assets
Collateralized Debt Obligations		0.4%
Preferred Stocks		0.0%
Corporate Bonds		95.7%
Cash and Cash Equivalents		11.4%
Other
Net Other Assets (Liabilities)		-7.5%
Total		100.0%

Page  26 Diamond Hill Funds Semi-Annual Report June 30, 2013

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Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  27

Diamond Hill Funds

Statements of Assets & Liabilities

June 30, 2013 (Unaudited)

	Small Cap Fund			Small-Mid Cap Fund
Assets
Total investment securities, at cost	$	962,695,457		$	212,013,679
Investment securities, at fair value - including $165,591,202, $38,660,712, $138,535,333, $3,819,638, $181,817,214, $5,431,919, $655,753 and $11,686,996 of securities loaned	$	1,175,187,347		$	245,246,258
Deposits with brokers for securities sold short		-			-
Receivable for fund shares issued		1,428,645			700,714
Receivable for dividends and interest		645,106			218,378
Receivable for investments sold		2,736,208			272,951
Total Assets		1,179,997,306			246,438,301
Liabilities
Securities sold short, at fair value (proceeds $-, $-, $-, $-, $468,240,146, $5,250,935, $1,477,497 and $-)		-			-
Payable for securities purchased		9,611,428			3,064,053
Payable for expenses and fees on securities sold short		-			-
Payable for fund shares redeemed		740,330			51,443
Payable for return of collateral received		171,205,985			40,095,126
Payable to Investment Adviser		646,968			121,393
Payable to Administrator		193,331			32,002
Accrued distribution and service fees		130,534			16,725
Payable to accountant and custodian		13,783			2,419
Total Liabilities		182,542,359			43,383,161
Net Assets	$	997,454,947		$	203,055,140
Components of Net Assets
Paid-in capital	$	717,972,297		$	160,509,181
Accumulated net investment income (loss)		2,549,587			648,561
Accumulated net realized gains (losses) from investment transactions		64,441,173			8,664,819
Net unrealized appreciation (depreciation) on investments		212,491,890			33,232,579
Net Assets	$	997,454,947		$	203,055,140
Net Assets
Class A Shares	$	486,602,942		$	33,219,328
Class C Shares	$	37,749,069		$	13,026,547
Class I Shares	$	401,272,683		$	87,734,056
Class Y Shares	$	71,830,253		$	69,075,209
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)
Class A Shares		16,174,375			2,089,664
Class C Shares		1,369,898			861,300
Class I Shares		13,181,510			5,479,854
Class Y Shares		2,359,057			4,311,746
Net Asset Value, offering (except Class A Shares) and redemption price per share:
Class A Shares	$	30.09	(B)	$	15.90
Class C Shares(A)	$	27.56		$	15.13	(B)
Class I Shares	$	30.44		$	16.01
Class Y Shares	$	30.45		$	16.02
Maximum Offering Price
Maximum sales charge - Class A Shares		5.00%			5.00%
(100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent) per share - Class A Shares	$	31.67		$	16.74

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

^(B)  Difference in net asset value recalculation and net asset value stated is caused by rounding differences.

See accompanying Notes to Financial Statements.

Page  28 Diamond Hill Funds Semi-Annual Report June 30, 2013

Large Cap Fund			Select Fund		Long-Short Fund			Research Opportunities Fund			Financial Long-Short Fund			Strategic Income Fund
$	1,738,604,718		$	49,576,806	$	2,318,529,889		$	51,992,166		$	17,834,205		$	187,715,159
$	2,208,713,606		$	61,381,856	$	2,926,137,538		$	58,353,557		$	21,597,551		$	190,203,118
	-			-		645,743,640			6,221,154			1,931,337			-
	2,985,653			175,809		18,514,048			4,746,886			232,142			48,757
	2,154,089			33,293		2,209,980			39,487			12,931			2,911,300
	5,588,611			1,145,248		6,206,801			172,812			34,571			-
	2,219,441,959			62,736,206		3,598,812,007			69,533,896			23,808,532			193,163,175
	-			-		611,332,764			5,845,658			1,768,504			-
	2,741,768			1,667,988		3,687,500			562,397			585,618			3,714,263
	-			-		426,383			7,585			3,143			-
	11,161,109			19,841		4,572,035			-			24,190			155,333
	142,762,205			3,980,775		186,876,182			5,605,205			687,831			12,222,838
	939,587			32,174		2,047,754			42,410			15,288			72,833
	391,168			10,680		558,018			8,859			3,822			35,866
	185,452			4,665		224,016			968			3,217			31,016
	24,434			593		55,218			641			85			2,177
	158,205,723			5,716,716		809,779,870			12,073,723			3,091,698			16,234,326
$	2,061,236,236		$	57,019,490	$	2,789,032,137		$	57,460,173		$	20,716,834		$	176,928,849
$	1,509,111,587		$	37,955,331	$	2,693,998,504		$	49,091,979		$	29,432,867		$	189,872,601
	14,011,084			698,873		11,101,474			52,615			(14,547	)		221,029
	68,004,677			6,560,236		(380,582,872	)		2,548,911			(12,173,825	)		(15,652,740	)
	470,108,888			11,805,050		464,515,031			5,766,668			3,472,339			2,487,959
$	2,061,236,236		$	57,019,490	$	2,789,032,137		$	57,460,173		$	20,716,834		$	176,928,849
$	749,507,842		$	8,270,793	$	668,579,598		$	5,233,453		$	12,421,547		$	41,856,547
$	40,393,370		$	3,928,786	$	111,087,693		$	283,888		$	1,434,480		$	26,053,632
$	988,345,203		$	38,277,871	$	1,922,133,365		$	37,831,824		$	6,860,807		$	104,493,461
$	282,989,821		$	6,542,040	$	87,231,481		$	14,111,008		$	-		$	4,525,209
	38,306,561			642,822		32,785,564			240,652			760,594			3,808,504
	2,144,686			312,399		5,863,253			13,184			93,276			2,374,255
	50,252,447			2,977,555		93,113,437			1,735,956			421,285			9,526,142
	14,383,544			508,298		4,222,259			646,818			-			412,751
$	19.57		$	12.87	$	20.39		$	21.75		$	16.33		$	10.99
$	18.84	(B)	$	12.58	$	18.95		$	21.54	(B)	$	15.38		$	10.97
$	19.67		$	12.86	$	20.64		$	21.79		$	16.29		$	10.97
$	19.68	(B)	$	12.87	$	20.66		$	21.82		$	-		$	10.96
	5.00%			5.00%		5.00%			5.00%			5.00%			3.50%
$	20.60		$	13.55	$	21.46		$	22.89		$	17.19		$	11.39

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  29

Diamond Hill Funds

Statements of Operations

For the period ended June 30, 2013 (Unaudited)

	Small Cap Fund		Small-Mid Cap Fund		Large Cap Fund		Select Fund
Investment Income
Dividends	$	7,744,139	$	1,466,361	$	19,262,415	$	519,633
Interest		-		-		151		8
Securities lending income		298,619		6,392		23,906		1,702
Total Investment Income		8,042,758		1,472,753		19,286,472		521,343
Expenses
Investment advisory fees		3,610,001		590,109		5,288,290		203,267
Administration fees		1,074,305		157,653		2,201,421		67,918
Distribution fees - Class A		555,911		30,499		858,152		9,792
Distribution and service fees - Class C		173,168		55,455		186,205		17,791
Accounting and custody fees		79,786		11,554		118,974		5,185
Total Expenses		5,493,171		845,270		8,653,042		303,953
Net Investment Income (Loss)		2,549,587		627,483		10,633,430		217,390
Realized and Unrealized Gains (Losses) on Investments
Net realized gains (losses) on security sales		64,688,643		9,164,274		69,185,046		7,505,694
Net change in unrealized appreciation (depreciation) on investments		96,145,536		17,506,742		236,945,844		4,616,946
Net Realized and Unrealized Gains (Losses) on Investments		160,834,179		26,671,016		306,130,890		12,122,640
Change in Net Assets from Operations	$	163,383,766	$	27,298,499	$	316,764,320	$	12,340,030

See accompanying Notes to Financial Statements.

Page  30 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Statements of Operations

For the period ended June 30, 2013 (Unaudited)

	Long-Short Fund			Research Opportunities Fund			Financial Long-Short Fund			Strategic Income Fund
Investment Income
Dividends	$	20,762,630		$	284,379		$	117,604		$	2,979
Interest		-			-			6			5,375,814
Securities lending income		33,457			29,279			161			13,607
Total Investment Income		20,796,087			313,658			117,771			5,392,400
Expenses
Investment advisory fees		11,546,524			190,416			77,946			438,875
Administration fees		3,142,017			37,704			19,487			217,220
Distribution fees - Class A		746,748			2,326			11,515			53,010
Distribution and service fees - Class C		541,504			927			4,778			137,988
Accounting and custody fees		181,874			4,147			1,988			14,607
Expenses and fees on securities sold short		3,163,495			27,221			16,604			-
Total Expenses		19,322,162			262,741			132,318			861,700
Net Investment Income (Loss)		1,473,925			50,917			(14,547	)		4,530,700
Realized and Unrealized Gains (Losses) on Investments
Net realized gains (losses) on security sales		106,923,664			2,565,535			1,410,051			1,269,126
Net realized gains (losses) on closed short positions		(1,780,528	)		(12,878	)		(107,039	)		-
Net change in unrealized appreciation (depreciation) on investments		184,100,075			3,196,061			1,798,384			(4,498,590	)
Net Realized and Unrealized Gains (Losses) on Investments		289,243,211			5,748,718			3,101,396			(3,229,464	)
Change in Net Assets from Operations	$	290,717,136		$	5,799,635		$	3,086,849		$	1,301,236

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  31

Diamond Hill Funds

Statements of Changes in Net Assets

	Small Cap Fund					Small-Mid Cap Fund
	For the six months ended June 30, 2013 (Unaudited)		For the year ended December 31, 2012			For the six months ended June 30, 2013 (Unaudited)		For the year ended December 31, 2012
From Operations
Net investment income (loss)	$	2,549,587	$	3,167,850		$	627,483	$	272,871
Net realized gains (losses) on security sales		64,688,643		30,129,454			9,164,274		3,714,329
Net change in unrealized appreciation (depreciation) on investments		96,145,536		64,030,020			17,506,742		9,479,780
Change in Net Assets from Operations		163,383,766		97,327,324			27,298,499		13,466,980
Distributions to Shareholders
From net investment income:
Class A		-		(1,330,780	)		-		(4,470	)
Class I		-		(1,718,094	)		-		(154,313	)
Class Y		-		(488,929	)		-		(140,210	)
From net realized gains on investments
Class A		-		(14,700,458	)		-		(541,059	)
Class C		-		(1,199,637	)		-		(269,679	)
Class I		-		(10,631,813	)		-		(1,487,194	)
Class Y		-		(2,291,039	)		-		(861,022	)
Change in Net Assets from Distributions to Shareholders		-		(32,360,750	)		-		(3,457,947	)
Change in Net Assets from Capital Transactions		51,870,752		(59,891,817	)		62,526,201		34,164,984
Total Change in Net Assets		215,254,518		5,074,757			89,824,700		44,174,017
Net Assets:
Beginning of period		782,200,429		777,125,672			113,230,440		69,056,423
End of period	$	997,454,947	$	782,200,429		$	203,055,140	$	113,230,440
Accumulated Net Investment Income (Loss)	$	2,549,587	$	-		$	648,561	$	21,078

See accompanying Notes to Financial Statements.

Page  32 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Statements of Changes in Net Assets

	Small Cap Fund						Small-Mid Cap Fund
	For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012			For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012
Capital Transactions:
Class A
Proceeds from shares sold	$	78,450,982		$	92,315,984		$	13,180,844		$	7,582,329
Reinvested distributions		-			14,016,747			-			490,305
Payments for shares redeemed		(62,630,044	)		(182,981,707	)		(3,850,131	)		(8,080,590	)
Change in Net Assets from Class A Share Transactions		15,820,938			(76,648,976	)		9,330,713			(7,956	)
Class C
Proceeds from shares sold		4,196,787			3,339,208			2,387,373			1,395,884
Reinvested distributions		-			1,062,556			-			210,408
Payments for shares redeemed		(2,455,249	)		(8,481,300	)		(489,764	)		(1,456,120	)
Change in Net Assets from Class C Share Transactions		1,741,538			(4,079,536	)		1,897,609			150,172
Class I
Proceeds from shares sold		76,819,107			98,789,866			26,028,452			16,592,523
Reinvested distributions		-			10,401,478			-			1,535,572
Payments for shares redeemed		(37,552,960	)		(151,778,830	)		(4,214,380	)		(13,138,069	)
Change in Net Assets from Class I Share Transactions		39,266,147			(42,587,486	)		21,814,072			4,990,026
Class Y
Proceeds from shares sold		6,363,189			62,199,978			33,574,291			29,721,385
Reinvested distributions		-			2,770,079			-			691,728
Payments for shares redeemed		(11,321,060	)		(1,545,876	)		(4,090,484	)		(1,380,371	)
Change in Net Assets from Class Y Share Transactions		(4,957,871	)		63,424,181			29,483,807			29,032,742
Change in net assets from capital transactions:	$	51,870,752		$	(59,891,817	)	$	62,526,201		$	34,164,984
Share Transactions:
Class A
Issued		2,736,533			3,749,172			852,932			603,958
Reinvested		-			571,180			-			37,949
Redeemed		(2,209,535	)		(7,395,743	)		(256,721	)		(639,668	)
Change in shares outstanding		526,998			(3,075,391	)		596,211			2,239
Class C
Issued		159,854			146,151			164,433			115,941
Reinvested		-			47,099			-			17,051
Redeemed		(94,319	)		(372,953	)		(34,522	)		(120,692	)
Change in shares outstanding		65,535			(179,703	)		129,911			12,300
Class I
Issued		2,643,029			3,955,958			1,705,742			1,305,500
Reinvested		-			419,414			-			118,121
Redeemed		(1,299,613	)		(6,035,146	)		(278,124	)		(1,063,447	)
Change in shares outstanding		1,343,416			(1,659,774	)		1,427,618			360,174
Class Y
Issued		224,159			2,467,003			2,232,476			2,396,490
Reinvested		-			111,742			-			53,210
Redeemed		(382,558	)		(61,289	)		(263,980	)		(106,450	)
Change in shares outstanding		(158,399	)		2,517,456			1,968,496			2,343,250
Change in shares		1,777,550			(2,397,412	)		4,122,236			2,717,963

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  33

Diamond Hill Funds

Statements of Changes in Net Assets

	Large Cap Fund					Select Fund
	For the six months ended June 30, 2013 (Unaudited)		For the year ended December 31, 2012			For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012
From Operations
Net investment income (loss)	$	10,633,430	$	23,131,400		$	217,390		$	697,744
Net realized gains (losses) on security sales		69,185,046		66,945,646			7,505,694			1,927,404
Net change in unrealized appreciation (depreciation) on investments		236,945,844		82,462,094			4,616,946			2,765,760
Change in Net Assets from Operations		316,764,320		172,539,140			12,340,030			5,390,908
Distributions to Shareholders
From net investment income:
Class A		-		(7,686,137	)		-			(55,677	)
Class C		-		(192,790	)		-			-
Class I		-		(11,551,812	)		-			(437,925	)
Class Y		-		(3,698,722	)		-			(68,257	)
From net realized gains on investments
Class A		-		(1,701,263	)		-			(177,974	)
Class C		-		(95,354	)		-			(78,031	)
Class I		-		(2,194,710	)		-			(975,189	)
Class Y		-		(613,387	)		-			(134,657	)
Change in Net Assets from Distributions to Shareholders		-		(27,734,175	)		-			(1,927,710	)
Change in Net Assets from Capital Transactions		78,655,860		213,266,718			(14,019,763	)		9,147,226
Total Change in Net Assets		395,420,180		358,071,683			(1,679,733	)		12,610,424
Net Assets:
Beginning of period		1,665,816,056		1,307,744,373			58,699,223			46,088,799
End of period	$	2,061,236,236	$	1,665,816,056		$	57,019,490		$	58,699,223
Accumulated Net Investment Income (Loss)	$	14,011,084	$	3,377,654		$	698,873		$	481,483

See accompanying Notes to Financial Statements.

Page  34 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Statements of Changes in Net Assets

	Large Cap Fund						Select Fund
	For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012			For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012
Capital Transactions:
Class A
Proceeds from shares sold	$	107,735,612		$	188,087,012		$	2,255,837		$	1,855,487
Reinvested distributions		-			8,970,570			-			218,009
Payments for shares redeemed		(88,468,158	)		(231,818,748	)		(3,400,122	)		(2,963,396	)
Change in Net Assets from Class A Share Transactions		19,267,454			(34,761,166	)		(1,144,285	)		(889,900	)
Class C
Proceeds from shares sold		4,302,265			5,166,453			367,242			271,336
Reinvested distributions		-			250,246			-			57,219
Payments for shares redeemed		(3,193,797	)		(5,710,528	)		(427,214	)		(947,282	)
Change in Net Assets from Class C Share Transactions		1,108,468			(293,829	)		(59,972	)		(618,727	)
Class I
Proceeds from shares sold		173,588,677			377,650,394			9,955,960			15,474,051
Reinvested distributions		-			12,535,349			-			1,066,468
Payments for shares redeemed		(129,502,580	)		(361,443,859	)		(22,209,703	)		(11,571,208	)
Change in Net Assets from Class I Share Transactions		44,086,097			28,741,884			(12,253,743	)		4,969,311
Class Y
Proceeds from shares sold		61,936,841			228,256,655			728,249			5,841,735
Proceeds from shares sold - in-kind		-			2,786,568			-			-
Reinvested distributions		-			3,654,990			-			161,753
Payments for shares redeemed		(47,743,000	)		(15,118,384	)		(1,290,012	)		(316,946	)
Change in Net Assets from Class Y Share Transactions		14,193,841			219,579,829			(561,763	)		5,686,542
Change in net assets from capital transactions:	$	78,655,860		$	213,266,718		$	(14,019,763	)	$	9,147,226
Share Transactions:
Class A
Issued		5,751,717			11,732,062			182,762			175,939
Reinvested		-			549,670			-			21,145
Redeemed		(4,771,181	)		(14,616,139	)		(284,306	)		(285,690	)
Change in shares outstanding		980,536			(2,334,407	)		(101,544	)		(88,606	)
Class C
Issued		240,318			333,847			30,494			26,956
Reinvested		-			15,870			-			5,654
Redeemed		(179,606	)		(372,346	)		(37,163	)		(95,151	)
Change in shares outstanding		60,712			(22,629	)		(6,669	)		(62,541	)
Class I
Issued		9,419,178			23,480,044			886,988			1,476,125
Reinvested		-			764,817			-			103,641
Redeemed		(6,802,350	)		(22,200,954	)		(1,923,593	)		(1,119,053	)
Change in shares outstanding		2,616,828			2,043,907			(1,036,605	)		460,713
Class Y
Issued		3,317,331			14,014,442			63,760			568,795
Issued - in-kind		-			173,402			-			-
Reinvested		-			223,137			-			15,719
Redeemed		(2,432,355	)		(912,413	)		(110,317	)		(29,659	)
Change in shares outstanding		884,976			13,498,568			(46,557	)		554,855
Change in shares		4,543,052			13,185,439			(1,191,375	)		864,421

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  35

Diamond Hill Funds

Statements of Changes in Net Assets

	Long-Short Fund						Research Opportunities Fund
	For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012			For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012(A)
From Operations
Net investment income (loss)	$	1,473,925		$	9,627,599		$	50,917		$	78,824
Net realized gains (losses) on security sales		106,923,664			123,328,557			2,565,535			210,422
Net realized gains (losses) on closed short positions		(1,780,528	)		3,356,592			(12,878	)		112,547
Net change in unrealized appreciation (depreciation) on investments		184,100,075			30,978,764			3,196,061			2,570,607
Change in Net Assets from Operations		290,717,136			167,291,512			5,799,635			2,972,400
Distributions to Shareholders
From net investment income:
Class A		-			(481,377	)		-			(920	)
Class I		-			(5,398,618	)		-			(39,149	)
Class Y		-			(429,039	)		-			(42,459	)
From net realized gains on investments
Class A		-			-			-			(11,368	)
Class C		-			-			-			(1,528	)
Class I		-			-			-			(162,885	)
Class Y		-			-			-			(118,699	)
Change in Net Assets from Distributions to Shareholders		-			(6,309,034	)		-			(377,008	)
Change in Net Assets from Capital Transactions		223,167,465			268,323,808			22,842,990			26,222,156
Total Change in Net Assets		513,884,601			429,306,286			28,642,625			28,817,548
Net Assets:
Beginning of period		2,275,147,536			1,845,841,250			28,817,548			-
End of period	$	2,789,032,137		$	2,275,147,536		$	57,460,173		$	28,817,548
Accumulated Net Investment Income (Loss)	$	11,101,474		$	9,627,549		$	52,615		$	1,698

^(A)  Inception date of the Fund is December 30, 2011. Fund commenced public offering and investment operations on January 3, 2012.

See accompanying Notes to Financial Statements.

Page  36 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Statements of Changes in Net Assets

	Long-Short Fund						Research Opportunities Fund
	For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012			For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012(A)
Capital Transactions:
Class A
Proceeds from shares sold	$	143,726,504		$	178,400,411		$	3,928,742		$	1,512,012
Reinvested distributions		-			351,948			-			12,118
Payments for shares redeemed		(76,373,908	)		(200,387,209	)		(33,048	)		(435,488	)
Change in Net Assets from Class A Share Transactions		67,352,596			(21,634,850	)		3,895,694			1,088,642
Class C
Proceeds from shares sold		6,513,461			6,096,610			106,650			143,504
Reinvested distributions		-			-			-			597
Payments for shares redeemed		(10,924,786	)		(31,085,293	)		-			(41	)
Change in Net Assets from Class C Share Transactions		(4,411,325	)		(24,988,683	)		106,650			144,060
Class I
Proceeds from shares sold		389,104,553			577,978,176			18,795,542			21,079,703
Reinvested distributions		-			1,762,762			-			192,853
Payments for shares redeemed		(222,294,275	)		(346,261,846	)		(272,840	)		(7,182,594	)
Change in Net Assets from Class I Share Transactions		166,810,278			233,479,092			18,522,702			14,089,962
Class Y
Proceeds from shares sold		10,541,022			100,293,210			462,625			10,911,862
Reinvested distributions		-			427,791			-			12,279
Payments for shares redeemed		(17,125,106	)		(19,252,752	)		(144,681	)		(24,649	)
Change in Net Assets from Class Y Share Transactions		(6,584,084	)		81,468,249			317,944			10,899,492
Change in net assets from capital transactions:	$	223,167,465		$	268,323,808		$	22,842,990		$	26,222,156
Share Transactions:
Class A
Issued		7,243,298			10,106,080			181,171			83,966
Reinvested		-			19,552			-			669
Redeemed		(3,862,631	)		(11,347,924	)		(1,573	)		(23,581	)
Change in shares outstanding		3,380,667			(1,222,292	)		179,598			61,054
Class C
Issued		351,676			370,191			5,067			8,086
Reinvested		-			-			-			33
Redeemed		(596,769	)		(1,886,870	)		-			(2	)
Change in shares outstanding		(245,093	)		(1,516,679	)		5,067			8,117
Class I
Issued		19,450,490			32,347,052			878,473			1,273,886
Reinvested		-			96,855			-			10,638
Redeemed		(11,052,526	)		(19,377,015	)		(12,988	)		(414,053	)
Change in shares outstanding		8,397,964			13,066,892			865,485			870,471
Class Y
Issued		513,923			5,584,570			23,352			630,924
Reinvested		-			23,505			-			677
Redeemed		(836,463	)		(1,063,276	)		(6,807	)		(1,328	)
Change in shares outstanding		(322,540	)		4,544,799			16,545			630,273
Change in shares		11,210,998			14,872,720			1,066,695			1,569,915

^(A)  Inception date of the Fund is December 30, 2011. Fund commenced public offering and investment operations on January 3, 2012.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  37

Diamond Hill Funds

Statements of Changes in Net Assets

	Financial Long-Short Fund						Strategic Income Fund
	For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012			For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012
From Operations
Net investment income (loss)	$	(14,547	)	$	56,444		$	4,530,700		$	9,464,992
Net realized gains (losses) on security sales		1,410,051			711,754			1,269,126			564,733
Net realized gains (losses) on closed short positions		(107,039	)		15,430			-			-
Net change in unrealized appreciation (depreciation) on investments		1,798,384			1,725,138			(4,498,590	)		5,116,229
Change in Net Assets from Operations		3,086,849			2,508,766			1,301,236			15,145,954
Distributions to Shareholders
From net investment income:
Class A		-			(39,291	)		(1,055,133	)		(2,456,527	)
Class C		-			-			(589,347	)		(1,292,950	)
Class I		-			(32,438	)		(2,692,302	)		(5,662,671	)
Class Y		-			-			(84,609	)		(106,908	)
Change in Net Assets from Distributions to Shareholders		-			(71,729	)		(4,421,391	)		(9,519,056	)
Change in Net Assets from Capital Transactions		5,017,316			1,146,030			1,621,083			26,770,493
Total Change in Net Assets		8,104,165			3,583,067			(1,499,072	)		32,397,391
Net Assets:
Beginning of period		12,612,669			9,029,602			178,427,921			146,030,530
End of period	$	20,716,834		$	12,612,669		$	176,928,849		$	178,427,921
Accumulated Net Investment Income (Loss)	$	(14,547	)	$	-		$	221,029		$	111,720

See accompanying Notes to Financial Statements.

Page  38 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Statements of Changes in Net Assets

	Financial Long-Short Fund						Strategic Income Fund
	For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012			For the six months ended June 30, 2013 (Unaudited)			For the year ended December 31, 2012
Capital Transactions:
Class A
Proceeds from shares sold	$	3,824,378		$	1,666,721		$	5,291,478		$	15,180,687
Reinvested distributions		-			30,991			795,483			1,774,383
Payments for shares redeemed		(1,119,543	)		(2,199,237	)		(7,856,762	)		(12,955,470	)
Change in Net Assets from Class A Share Transactions		2,704,835			(501,525	)		(1,769,801	)		3,999,600
Class C
Proceeds from shares sold		526,100			99,295			2,320,938			7,160,477
Reinvested distributions		-			-			314,149			671,544
Payments for shares redeemed		(100,330	)		(269,282	)		(3,902,800	)		(4,635,232	)
Change in Net Assets from Class C Share Transactions		425,770			(169,987	)		(1,267,713	)		3,196,789
Class I
Proceeds from shares sold		5,150,122			2,419,317			10,054,201			28,601,026
Reinvested distributions		-			15,030			2,064,045			4,232,173
Payments for shares redeemed		(3,263,411	)		(616,805	)		(9,564,053	)		(15,733,634	)
Change in Net Assets from Class I Share Transactions		1,886,711			1,817,542			2,554,193			17,099,565
Class Y
Proceeds from shares sold		-			-			2,202,786			2,472,263
Reinvested distributions		-			-			78,874			94,167
Payments for shares redeemed		-			-			(177,256	)		(91,891	)
Change in Net Assets from Class Y Share Transactions		-			-			2,104,404			2,474,539
Change in net assets from capital transactions:	$	5,017,316		$	1,146,030		$	1,621,083		$	26,770,493
Share Transactions:
Class A
Issued		240,300			139,712			471,516			1,368,497
Reinvested		-			2,372			71,218			159,937
Redeemed		(73,706	)		(180,852	)		(701,538	)		(1,164,264	)
Change in shares outstanding		166,594			(38,768	)		(158,804	)		364,170
Class C
Issued		34,855			8,707			207,204			646,098
Reinvested		-			-			28,165			60,596
Redeemed		(7,123	)		(23,044	)		(350,029	)		(417,210	)
Change in shares outstanding		27,732			(14,337	)		(114,660	)		289,484
Class I
Issued		325,773			196,951			901,828			2,586,603
Reinvested		-			1,154			185,182			382,142
Redeemed		(202,653	)		(51,190	)		(854,529	)		(1,418,356	)
Change in shares outstanding		123,120			146,915			232,481			1,550,389
Class Y
Issued		-			-			195,973			225,420
Reinvested		-			-			7,093			8,501
Redeemed		-			-			(15,829	)		(8,407	)
Change in shares outstanding		-			-			187,237			225,514
Change in shares		317,446			93,810			146,254			2,429,557

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  39

Small Cap Fund

Financial Highlights

Selected data for a share outstanding throughout the periods indicated

Small Cap Fund	Net asset value, beginning of period		Net investment income (loss)			Net realized and unrealized gains (losses) on investments			Total from investment operations
Class A
For the six months ended June 30, 2013 (Unaudited)		$24.95		0.07	(C)		5.07			5.14
For the year ended December 31, 2012		$23.04		0.07	(C)		2.88			2.95
For the year ended December 31, 2011		$25.80		(0.08	)		(1.80	)		(1.88	)
For the year ended December 31, 2010		$21.31		(0.05	)		4.95			4.90
For the year ended December 31, 2009		$16.53		(0.01	)		4.79			4.78
For the year ended December 31, 2008		$22.53		0.13			(5.98	)		(5.85	)
Class C
For the six months ended June 30, 2013 (Unaudited)		$22.94		(0.04	)(C)		4.66			4.62
For the year ended December 31, 2012		$21.34		(0.10	)(C)		2.65			2.55
For the year ended December 31, 2011		$24.14		(0.25	)		(1.67	)		(1.92	)
For the year ended December 31, 2010		$20.12		(0.16	)		4.59			4.43
For the year ended December 31, 2009		$15.72		(0.13	)		4.53			4.40
For the year ended December 31, 2008		$21.44		(0.01	)		(5.68	)		(5.69	)
Class I
For the six months ended June 30, 2013 (Unaudited)		$25.21		0.10	(C)		5.13			5.23
For the year ended December 31, 2012		$23.27		0.14	(C)		2.90			3.04
For the year ended December 31, 2011		$26.01		(0.01	)		(1.82	)		(1.83	)
For the year ended December 31, 2010		$21.41		-	(F)		5.01			5.01
For the year ended December 31, 2009		$16.55		0.04			4.83			4.87
For the year ended December 31, 2008		$22.57		0.17			(5.97	)		(5.80	)
Class Y(G)
For the six months ended June 30, 2013 (Unaudited)		$25.20		0.12	(C)		5.13			5.25
For the year ended December 31, 2012		$23.27		0.20	(C)		2.88			3.08

^(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)  Net investment income (loss) per share has been calculated using the average daily shares outstanding during the period.

See accompanying Notes to Financial Statements.

Page  40 Diamond Hill Funds Semi-Annual Report June 30, 2013

Dividends from net investment income			Distributions from net realized gains			Total distributions			Net asset value at end of period		Total return(A)			Net assets at end of period (000’s)		Ratio of total expenses to average net assets			Ratio of net investment income (loss) to average net assets			Portfolio turnover rate(B)
	-			-			-			$30.09		20.60	%(D)		$486,603		1.32	%(E)		0.47	%(E)		29	%(D)
	(0.09	)		(0.95	)		(1.04	)		$24.95		12.88	%		$390,371		1.31	%		0.30	%		13	%
	-			(0.88	)		(0.88	)		$23.04		(7.17	)%		$431,313		1.33	%		(0.32	)%		28	%
	-			(0.41	)		(0.41	)		$25.80		22.99	%		$501,237		1.37	%		(0.24	)%		35	%
	-			-			-			$21.31		28.92	%		$438,722		1.38	%		(0.09	)%		47	%
	(0.12	)		(0.03	)		(0.15	)		$16.53		(25.99	)%		$308,832		1.35	%		0.75	%		47	%
	-			-			-			$27.56		20.14	%(D)		$37,749		2.07	%(E)		(0.28	)%(E)		29	%(D)
	-			(0.95	)		(0.95	)		$22.94		12.04	%		$29,917		2.06	%		(0.45	)%		13	%
	-			(0.88	)		(0.88	)		$21.34		(7.83	)%		$31,664		2.08	%		(1.07	)%		28	%
	-			(0.41	)		(0.41	)		$24.14		22.01	%		$35,093		2.12	%		(0.96	)%		35	%
	-			-			-			$20.12		27.99	%		$23,172		2.13	%		(0.83	)%		47	%
	-			(0.03	)		(0.03	)		$15.72		(26.55	)%		$16,790		2.11	%		(0.03	)%		47	%
	-			-			-			$30.44		20.75	%(D)		$401,273		1.07	%(E)		0.71	%(E)		29	%(D)
	(0.15	)		(0.95	)		(1.10	)		$25.21		13.17	%		$298,473		1.06	%		0.56	%		13	%
	(0.03	)		(0.88	)		(0.91	)		$23.27		(6.91	)%		$314,149		1.04	%		(0.03	)%		28	%
	-			(0.41	)		(0.41	)		$26.01		23.39	%		$312,295		1.00	%		0.20	%		35	%
	(0.01	)		-			(0.01	)		$21.41		29.43	%		$106,561		0.99	%		0.30	%		47	%
	(0.19	)		(0.03	)		(0.22	)		$16.55		(25.69	)%		$38,967		0.98	%		1.17	%		47	%
	-			-			-			$30.45		20.83	%(D)		$71,830		0.92	%(E)		0.86	%(E)		29	%(D)
	(0.20	)		(0.95	)		(1.15	)		$25.20		13.34	%		$63,439		0.91	%		0.82	%		13	%

^(D)  Not annualized.

^(E)  Annualized.

^(F)  Amount is less than $0.005.

^(G)  Inception date of Class Y is December 30, 2011. Class Y commenced public offering and investment operations on January 3, 2012.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  41

Small-Mid Cap Fund

Financial Highlights

Selected data for a share outstanding throughout the periods indicated

Small-Mid Cap Fund	Net asset value, beginning of period		Net investment income (loss)			Net realized and unrealized gains (losses) on investments			Total from investment operations
Class A
For the six months ended June 30, 2013 (Unaudited)		$13.13		0.04	(C)		2.73			2.77
For the year ended December 31, 2012		$11.71		0.02	(C)		1.78			1.80
For the year ended December 31, 2011		$12.56		-	(F)		(0.53	)		(0.53	)
For the year ended December 31, 2010		$10.22		(0.04	)		2.38			2.34
For the year ended December 31, 2009		$7.26		0.03			2.93			2.96
For the year ended December 31, 2008		$10.50		0.10			(3.25	)		(3.15	)
Class C
For the six months ended June 30, 2013 (Unaudited)		$12.54		(0.01	)(C)		2.60			2.59
For the year ended December 31, 2012		$11.28		(0.07	)(C)		1.71			1.64
For the year ended December 31, 2011		$12.21		(0.06	)		(0.55	)		(0.61	)
For the year ended December 31, 2010		$10.00		(0.05	)		2.26			2.21
For the year ended December 31, 2009		$7.15		(0.04	)		2.89			2.85
For the year ended December 31, 2008		$10.40		0.04			(3.22	)		(3.18	)
Class I
For the six months ended June 30, 2013 (Unaudited)		$13.21		0.06	(C)		2.74			2.80
For the year ended December 31, 2012		$11.78		0.05	(C)		1.80			1.85
For the year ended December 31, 2011		$12.61		0.04			(0.54	)		(0.50	)
For the year ended December 31, 2010		$10.23		0.02			2.37			2.39
For the year ended December 31, 2009		$7.25		0.04			2.96			3.00
For the year ended December 31, 2008		$10.50		0.13			(3.26	)		(3.13	)
Class Y(H)
For the six months ended June 30, 2013 (Unaudited)		$13.20		0.08	(C)		2.74			2.82
For the year ended December 31, 2012		$11.78		0.09	(C)		1.77			1.86

^(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)  Net investment income (loss) per share has been calculated using the average daily shares outstanding during the period.

^(D)  Not annualized.

See accompanying Notes to Financial Statements.

Page  42 Diamond Hill Funds Semi-Annual Report June 30, 2013

Dividends from net investment income			Distributions from net realized gains			Total distributions			Net asset value at end of period		Total return(A)			Net assets at end of period (000’s)		Ratio of total expenses to average net assets			Ratio of net investment income (loss) to average net assets			Portfolio turnover rate(B)
	-			-			-			$15.90		21.10	%(D)		$33,219		1.26	%(E)		0.57	%(E)		23	%(D)
	-	(F)		(0.38	)		(0.38	)		$13.13		15.43	%		$19,607		1.26	%		0.15	%		26	%
	-			(0.32	)		(0.32	)		$11.71		(4.19	)%		$17,461		1.28	%		-	%(G)		48	%
	-			-	(F)		-	(F)		$12.56		23.03	%		$17,216		1.32	%		(0.17	)%		35	%
	-			-			-			$10.22		40.77	%		$8,616		1.33	%		0.17	%		74	%
	(0.09	)		-			(0.09	)		$7.26		(30.01	)%		$7,557		1.32	%		1.11	%		91	%
	-			-			-			$15.13		20.65	%(D)		$13,027		2.01	%(E)		(0.16	)%(E)		23	%(D)
	-			(0.38	)		(0.38	)		$12.54		14.57	%		$9,169		2.01	%		(0.59	)%		26	%
	-			(0.32	)		(0.32	)		$11.28		(4.89	)%		$8,110		2.02	%		(0.74	)%		48	%
	-			-	(F)		-	(F)		$12.21		22.14	%		$7,417		2.07	%		(0.90	)%		35	%
	-			-			-			$10.00		39.86	%		$4,361		2.08	%		(0.59	)%		74	%
	(0.07	)		-			(0.07	)		$7.15		(30.54	)%		$2,920		2.05	%		0.48	%		91	%
	-			-			-			$16.01		21.20	%(D)		$87,734		1.01	%(E)		0.82	%(E)		23	%(D)
	(0.04	)		(0.38	)		(0.42	)		$13.21		15.74	%		$53,514		1.01	%		0.42	%		26	%
	(0.01	)		(0.32	)		(0.33	)		$11.78		(3.86	)%		$43,485		0.99	%		0.29	%		48	%
	(0.01	)		-	(F)		(0.01	)		$12.61		23.43	%		$44,711		0.95	%		0.22	%		35	%
	(0.02	)		-			(0.02	)		$10.23		41.36	%		$26,110		0.94	%		0.54	%		74	%
	(0.12	)		-			(0.12	)		$7.25		(29.77	)%		$14,815		0.93	%		1.49	%		91	%
	-			-			-			$16.02		21.36	%(D)		$69,075		0.86	%(E)		1.06	%(E)		23	%(D)
	(0.06	)		(0.38	)		(0.44	)		$13.20		15.84	%		$30,940		0.86	%		0.68	%		26	%

^(E)  Annualized.

^(F)  Amount is less than $0.005.

^(G)  Amount is less than 0.005%.

^(H)  Inception date of Class Y is December 30, 2011. Class Y commenced public offering and investment operations on January 3, 2012.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  43

Large Cap Fund

Financial Highlights

Selected data for a share outstanding throughout the periods indicated

Large Cap Fund	Net asset value, beginning of period		Net investment income (loss)			Net realized and unrealized gains (losses) on investments			Total from investment operations
Class A
For the six months ended June 30, 2013 (Unaudited)		$16.54		0.09	(C)		2.94			3.03
For the year ended December 31, 2012		$14.96		0.22	(C)		1.62			1.84
For the year ended December 31, 2011		$14.78		0.18	(C)		0.17			0.35
For the year ended December 31, 2010		$13.62		0.10			1.17			1.27
For the year ended December 31, 2009		$10.47		0.10			3.06			3.16
For the year ended December 31, 2008		$16.25		0.15			(5.69	)		(5.54	)
Class C
For the six months ended June 30, 2013 (Unaudited)		$15.98		0.02	(C)		2.84			2.86
For the year ended December 31, 2012		$14.46		0.10	(C)		1.56			1.66
For the year ended December 31, 2011		$14.29		0.06			0.16			0.22
For the year ended December 31, 2010		$13.18		0.02			1.09			1.11
For the year ended December 31, 2009		$10.19		0.02			2.97			2.99
For the year ended December 31, 2008		$15.84		0.06			(5.55	)		(5.49	)
Class I
For the six months ended June 30, 2013 (Unaudited)		$16.61		0.11	(C)		2.95			3.06
For the year ended December 31, 2012		$15.01		0.26	(C)		1.63			1.89
For the year ended December 31, 2011		$14.82		0.22			0.17			0.39
For the year ended December 31, 2010		$13.65		0.13			1.20			1.33
For the year ended December 31, 2009		$10.49		0.11			3.11			3.22
For the year ended December 31, 2008		$16.29		0.23			(5.74	)		(5.51	)
Class Y(G)
For the six months ended June 30, 2013 (Unaudited)		$16.60		0.12	(C)		2.96			3.08
For the year ended December 31, 2012		$15.01		0.30	(C)		1.62			1.92

^(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)  Net investment income (loss) per share has been calculated using the average daily shares outstanding during the period.

See accompanying Notes to Financial Statements.

Page  44 Diamond Hill Funds Semi-Annual Report June 30, 2013

Dividends from net investment income			Distributions from net realized gains			Total distributions			Net asset value at end of period		Total return(A)			Net assets at end of period (000’s)		Ratio of total expenses to average net assets			Ratio of net investment income (loss) to average net assets			Portfolio turnover rate(B)
	-			-			-			$19.57		18.32	%(D)		$749,508		1.06	%(E)		0.94	%(E)		14	%(D)
	(0.21)			(0.05	)		(0.26	)		$16.54		12.29	%		$617,407		1.06	%		1.37	%		28	%
	(0.17)			-			(0.17	)		$14.96		2.35	%		$593,124		1.12	%		1.19	%		16	%
	(0.11)			-			(0.11	)		$14.78		9.29	%		$459,659		1.18	%		0.90	%		16	%
	(0.01)			-			(0.01	)		$13.62		30.21	%		$344,456		1.18	%		0.91	%		31	%
	(0.14)			(0.10	)		(0.24	)		$10.47		(34.06	)%		$254,688		1.16	%		1.23	%		28	%
	-			-			-			$18.84		17.90	%(D)		$40,393		1.81	%(E)		0.19	%(E)		14	%(D)
	(0.09)			(0.05	)		(0.14	)		$15.98		11.49	%		$33,305		1.81	%		0.62	%		28	%
	(0.05)			-			(0.05	)		$14.46		1.55	%		$30,465		1.87	%		0.45	%		16	%
	-	(F)		-			-	(F)		$14.29		8.45	%		$29,274		1.93	%		0.15	%		16	%
	-			-			-			$13.18		29.34	%		$25,454		1.93	%		0.17	%		31	%
	(0.06)			(0.10	)		(0.16	)		$10.19		(34.64	)%		$20,656		1.91	%		0.48	%		28	%
	-			-			-			$19.67		18.42	%(D)		$988,345		0.81	%(E)		1.19	%(E)		14	%(D)
	(0.24	)		(0.05	)		(0.29	)		$16.61		12.62	%		$791,031		0.81	%		1.62	%		28	%
	(0.20	)		-			(0.20	)		$15.01		2.60	%		$684,156		0.83	%		1.49	%		16	%
	(0.16	)		-			(0.16	)		$14.82		9.72	%		$623,147		0.81	%		1.29	%		16	%
	(0.06	)		-			(0.06	)		$13.65		30.71	%		$347,998		0.79	%		1.28	%		31	%
	(0.19	)		(0.10	)		(0.29	)		$10.49		(33.82	)%		$141,416		0.78	%		1.67	%		28	%
	-			-			-			$19.68		18.55	%(D)		$282,990		0.66	%(E)		1.34	%(E)		14	%(D)
	(0.28	)		(0.05	)		(0.33	)		$16.60		12.79	%		$224,073		0.66	%		1.87	%		28	%

^(D)  Not annualized.

^(E)  Annualized.

^(F)  Amount is less than $0.005.

^(G)  Inception date of Class Y is December 30, 2011. Class Y commenced public offering and investment operations on January 3, 2012.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  45

Select Fund

Financial Highlights

Selected data for a share outstanding throughout the periods indicated

Select Fund	Net asset value, beginning of period		Net investment income (loss)			Net realized and unrealized gains (losses) on investments			Total from investment operations
Class A
For the six months ended June 30, 2013 (Unaudited)		$10.45		0.04	(C)		2.38			2.42
For the year ended December 31, 2012		$9.69		0.12	(C)		0.97			1.09
For the year ended December 31, 2011		$9.99		0.08			(0.33	)		(0.25	)
For the year ended December 31, 2010		$9.02		0.07			0.91			0.98
For the year ended December 31, 2009		$6.82		0.04			2.16			2.20
For the year ended December 31, 2008		$10.61		0.09			(3.55	)		(3.46	)
Class C
For the six months ended June 30, 2013 (Unaudited)		$10.25		(0.01	)(C)		2.34			2.33
For the year ended December 31, 2012		$9.51		0.04	(C)		0.95			0.99
For the year ended December 31, 2011		$9.83		0.02			(0.34	)		(0.32	)
For the year ended December 31, 2010		$8.94		(0.01	)		0.90			0.89
For the year ended December 31, 2009		$6.78		0.01			2.15			2.16
For the year ended December 31, 2008		$10.56		0.02			(3.55	)		(3.53	)
Class I
For the six months ended June 30, 2013 (Unaudited)		$10.43		0.05	(C)		2.38			2.43
For the year ended December 31, 2012		$9.68		0.15	(C)		0.96			1.11
For the year ended December 31, 2011		$9.98		0.11			(0.33	)		(0.22	)
For the year ended December 31, 2010		$9.02		0.07			0.94			1.01
For the year ended December 31, 2009		$6.75		0.05			2.22			2.27
For the year ended December 31, 2008		$10.59		0.11			(3.58	)		(3.47	)
Class Y(F)
For the six months ended June 30, 2013 (Unaudited)		$10.43		0.06	(C)		2.38			2.44
For the year ended December 31, 2012		$9.68		0.17	(C)		0.96			1.13

^(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)  Net investment income (loss) per share has been calculated using the average daily shares outstanding during the period.

See accompanying Notes to Financial Statements.

Page  46 Diamond Hill Funds Semi-Annual Report June 30, 2013

Dividends from net investment income			Distributions from net realized gains			Total distributions			Net asset value at end of period		Total return(A)			Net assets at end of period (000’s)		Ratio of total expenses to average net assets			Ratio of net investment income (loss) to average net assets			Ratio of gross expenses to average net assets			Portfolio turnover rate(B)
	-			-			-			$12.87		23.16	%(D)		$8,271		1.22	%(E)		0.59	%(E)		1.22	%(E)		40	%(D)
	(0.08	)		(0.25	)		(0.33	)		$10.45		11.27	%		$7,778		1.21	%		1.15	%		1.21	%		38	%
	(0.05	)		-			(0.05	)		$9.69		(2.53	)%		$8,071		1.23	%		0.92	%		1.23	%		26	%
	(0.01	)		-			(0.01	)		$9.99		10.83	%		$7,437		1.28	%		0.67	%		1.28	%		18	%
	-			-			-			$9.02		32.26	%		$6,910		1.28	%		0.60	%		1.28	%		57	%
	(0.08	)		(0.25	)		(0.33	)		$6.82		(32.68	)%		$4,030		1.28	%		1.10	%		1.28	%		85	%
	-			-			-			$12.58		22.73	%(D)		$3,929		1.97	%(E)		(0.18	)%(E)		1.97	%(E)		40	%(D)
	-			(0.25	)		(0.25	)		$10.25		10.44	%		$3,271		1.96	%		0.41	%		1.96	%		38	%
	-			-			-			$9.51		(3.26	)%		$3,630		1.98	%		0.15	%		1.98	%		26	%
	-			-			-			$9.83		9.96	%		$4,254		2.03	%		(0.08	)%		2.03	%		18	%
	-			-			-			$8.94		31.86	%		$3,472		2.03	%		0.07	%		2.03	%		57	%
	-			(0.25	)		(0.25	)		$6.78		(33.48	)%		$3,366		2.01	%		0.28	%		2.02	%		85	%
	-			-			-			$12.86		23.30	%(D)		$38,278		0.97	%(E)		0.82	%(E)		0.97	%(E)		40	%(D)
	(0.11	)		(0.25	)		(0.36	)		$10.43		11.54	%		$41,862		0.96	%		1.44	%		0.96	%		38	%
	(0.08	)		-			(0.08	)		$9.68		(2.25	)%		$34,388		0.95	%		1.21	%		0.95	%		26	%
	(0.05	)		-			(0.05	)		$9.98		11.19	%		$31,619		0.91	%		1.05	%		0.91	%		18	%
	-			-			-			$9.02		33.63	%		$23,122		0.89	%		1.29	%		0.89	%		57	%
	(0.12	)		(0.25	)		(0.37	)		$6.75		(32.85	)%		$7,489		0.87	%		1.58	%		0.87	%		85	%
	-			-			-			$12.87		23.39	%(D)		$6,542		0.82	%(E)		0.99	%(E)		0.82	%(E)		40	%(D)
	(0.13	)		(0.25	)		(0.38	)		$10.43		11.69	%		$5,788		0.81	%		1.62	%		0.81	%		38	%

^(D)  Not annualized.

^(E)  Annualized.

^(F)  Inception date of Class Y is December 30, 2011. Class Y commenced public offering and investment operations on January 3, 2012.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  47

Long-Short Fund

Financial Highlights

Selected data for a share outstanding throughout the periods indicated

Long-Short Fund	Net asset value, beginning of period		Net investment income (loss)			Net realized and unrealized gains (losses)  on investments			Total from investment operations
Class A
For the six months ended June 30, 2013 (Unaudited)		$18.15		-	(C)(D)		2.24			2.24
For the year ended December 31, 2012		$16.75		0.06	(D)		1.36			1.42
For the year ended December 31, 2011		$16.26		0.03	(D)		0.46			0.49
For the year ended December 31, 2010		$16.31		-	(C)		(0.05	)		(0.05	)
For the year ended December 31, 2009		$13.83		-	(C)		2.48			2.48
For the year ended December 31, 2008		$18.40		0.16			(4.52	)		(4.36	)
Class C
For the six months ended June 30, 2013 (Unaudited)		$16.93		(0.07	)(D)		2.09			2.02
For the year ended December 31, 2012		$15.72		(0.07	)(D)		1.28			1.21
For the year ended December 31, 2011		$15.37		(0.08	)(D)		0.43			0.35
For the year ended December 31, 2010		$15.54		(0.19	)		0.02			(0.17	)
For the year ended December 31, 2009		$13.28		(0.12	)		2.38			2.26
For the year ended December 31, 2008		$17.65		0.04			(4.32	)		(4.28	)
Class I
For the six months ended June 30, 2013 (Unaudited)		$18.35		0.02	(D)		2.27			2.29
For the year ended December 31, 2012		$16.93		0.10	(D)		1.38			1.48
For the year ended December 31, 2011		$16.42		0.09	(D)		0.45			0.54
For the year ended December 31, 2010		$16.42		0.04			(0.03	)		0.01
For the year ended December 31, 2009		$13.87		0.05			2.50			2.55
For the year ended December 31, 2008		$18.46		0.19			(4.51	)		(4.32	)
Class Y(H)
For the six months ended June 30, 2013 (Unaudited)		$18.35		0.04	(D)		2.27			2.31
For the year ended December 31, 2012		$16.93		0.14	(D)		1.37			1.51

^(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)  Net investment income (loss) per share has been calculated using the average daily shares outstanding during the period.

See accompanying Notes to Financial Statements.

Page  48 Diamond Hill Funds Semi-Annual Report June 30, 2013

Dividends from net investment income			Distributions from net realized gains			Total distributions			Net asset value at end of period		Total return(A)			Net assets at end of period (000’s)		Ratio of total expenses to average net assets			Ratio of net investment income (loss) to average net assets			Ratio of total expenses to average net assets, excluding expenses and fees on securities sold short			Portfolio turnover rate(B)
	-			-			-			$20.39		12.34	%(E)		$668,580		1.66	%(F)		(0.04	)%(F)		1.41	%(F)		15	%(E)
	(0.02	)		-			(0.02	)		$18.15		8.46	%		$533,722		1.75	%		0.32	%		1.41	%		39	%
	-			-			-			$16.75		3.01	%		$512,870		1.67	%		0.21	%		1.43	%		50	%
	-			-			-			$16.26		(0.31	)%		$698,670		1.81	%		0.01	%		1.48	%		43	%
	-			-			-			$16.31		17.93	%		$965,382		1.85	%		-	%(G)		1.48	%		44	%
	(0.15	)		(0.06	)		(0.21	)		$13.83		(23.65	)%		$1,110,982		1.62	%		0.95	%		1.45	%		59	%
	-			-			-			$18.95		11.93	%(E)		$111,088		2.41	%(F)		(0.78	)%(F)		2.16	%(F)		15	%(E)
	-			-			-			$16.93		7.70	%		$103,393		2.50	%		(0.43	)%		2.16	%		39	%
	-			-			-			$15.72		2.28	%		$119,850		2.43	%		(0.54	)%		2.19	%		50	%
	-			-			-			$15.37		(1.09	)%		$179,214		2.56	%		(0.73	)%		2.23	%		43	%
	-			-			-			$15.54		17.02	%		$256,445		2.60	%		(0.76	)%		2.23	%		44	%
	(0.03	)		(0.06	)		(0.09	)		$13.28		(24.26	)%		$278,069		2.37	%		0.22	%		2.20	%		59	%
	-			-			-			$20.64		12.48	%(E)		$1,922,133		1.41	%(F)		0.21	%(F)		1.16	%(F)		15	%(E)
	(0.06	)		-			(0.06	)		$18.35		8.77	%		$1,554,623		1.50	%		0.58	%		1.16	%		39	%
	(0.03	)		-			(0.03	)		$16.93		3.29	%		$1,213,122		1.39	%		0.52	%		1.15	%		50	%
	(0.01	)		-			(0.01	)		$16.42		0.03	%		$1,045,686		1.46	%		0.42	%		1.11	%		43	%
	-	(C)		-			-	(C)		$16.42		18.39	%		$733,909		1.47	%		0.37	%		1.10	%		44	%
	(0.21	)		(0.06	)		(0.27	)		$13.87		(23.36	)%		$657,662		1.24	%		1.33	%		1.08	%		59	%
	-			-			-			$20.66		12.59	%(E)		$87,231		1.26	%(F)		0.37	%(F)		1.01	%(F)		15	%(E)
	(0.09	)		-			(0.09	)		$18.35		8.95	%		$83,409		1.35	%		0.79	%		1.01	%		39	%

^(E)  Not annualized.

^(F)  Annualized.

^(G)  Amount is less than 0.005%.

^(H)  Inception date of Class Y is December 30, 2011. Class Y commenced public offering and investment operations on January 3, 2012.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  49

Research Opportunities Fund

Financial Highlights

Selected data for a share outstanding throughout the periods indicated

Research Opportunities Fund(C)	Net asset value, beginning of period		Net investment income (loss)			Net realized and unrealized gains (losses) on investments		Total from investment operations
Class A
For the six months ended June 30, 2013 (Unaudited)		$18.34		(0.01	)(D)		3.42		3.41
For the year ended December 31, 2012		$16.60		0.02	(D)		1.93		1.95
Class C
For the six months ended June 30, 2013 (Unaudited)		$18.22		(0.07	)(D)		3.39		3.32
For the year ended December 31, 2012		$16.60		(0.09	)(D)		1.90		1.81
Class I
For the six months ended June 30, 2013 (Unaudited)		$18.36		0.02	(D)		3.41		3.43
For the year ended December 31, 2012		$16.60		0.05	(D)		1.95		2.00
Class Y
For the six months ended June 30, 2013 (Unaudited)		$18.36		0.04	(D)		3.42		3.46
For the year ended December 31, 2012		$16.60		0.08	(D)		1.94		2.02

^(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)  Inception date of the Fund is December 30, 2011. Fund commenced public offering and investment operations on January 3, 2012.

See accompanying Notes to Financial Statements.

Page  50 Diamond Hill Funds Semi-Annual Report June 30, 2013

Dividends from net investment income			Distributions from net realized gains			Total distributions			Net asset value at end of period		Total return(A)			Net assets at end of period (000’s)		Ratio of total expenses to average net assets			Ratio of net investment income (loss) to average net assets			Ratio of total expenses to average net assets, excluding expenses and fees on securities sold short			Portfolio turnover rate(B)
	-			-			-			$21.75		18.59	%(E)		$5,233		1.66	%(F)		(0.07	)%(F)		1.51	%(F)		39	%(E)
	(0.02	)		(0.19	)		(0.21	)		$18.34		11.73	%		$1,120		1.63	%		0.10	%		1.53	%		35	%
	-			-			-			$21.54		18.22	%(E)		$284		2.41	%(F)		(0.74	)%(F)		2.26	%(F)		39	%(E)
	-			(0.19	)		(0.19	)		$18.22		10.91	%		$148		2.38	%		(0.51	)%		2.28	%		35	%
	-			-			-			$21.79		18.68	%(E)		$37,832		1.41	%(F)		0.24	%(F)		1.27	%(F)		39	%(E)
	(0.05	)		(0.19	)		(0.24	)		$18.36		12.03	%		$15,978		1.38	%		0.30	%		1.28	%		35	%
	-			-			-			$21.82		18.85	%(E)		$14,111		1.26	%(F)		0.38	%(F)		1.12	%(F)		39	%(E)
	(0.07	)		(0.19	)		(0.26	)		$18.36		12.17	%		$11,572		1.23	%		0.45	%		1.13	%		35	%

^(D)  Net investment income (loss) per share has been calculated using the average daily shares outstanding during the period.

^(E)  Not annualized.

^(F)  Annualized.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  51

Financial Long-Short Fund

Financial Highlights

Selected data for a share outstanding throughout the periods indicated

Financial Long-Short Fund	Net asset value, beginning of period		Net investment income (loss)			Net realized and unrealized gains (losses)  on investments			Total from investment operations
Class A
For the six months ended June 30, 2013 (Unaudited)		$13.24		(0.01	)(C)		3.10			3.09
For the year ended December 31, 2012		$10.51		0.06	(C)		2.74			2.80
For the year ended December 31, 2011		$12.18		0.02			(1.65	)		(1.63	)
For the year ended December 31, 2010		$10.43		0.02			1.73			1.75
For the year ended December 31, 2009		$8.48		0.16	(C)		1.94			2.10
For the year ended December 31, 2008		$16.20		0.45			(7.74	)		(7.29	)
Class C
For the six months ended June 30, 2013 (Unaudited)		$12.51		(0.06	)(C)		2.93			2.87
For the year ended December 31, 2012		$9.96		(0.02	)(C)		2.57			2.55
For the year ended December 31, 2011		$11.58		(0.07	)(C)		(1.55	)		(1.62	)
For the year ended December 31, 2010		$9.99		(0.10	)		1.69			1.59
For the year ended December 31, 2009		$8.12		0.09	(C)		1.84			1.93
For the year ended December 31, 2008		$15.60		0.21			(7.31	)		(7.10	)
Class I
For the six months ended June 30, 2013 (Unaudited)		$13.18		(0.01	)(C)		3.12			3.11
For the year ended December 31, 2012		$10.47		0.10	(C)		2.72			2.82
For the year ended December 31, 2011		$12.14		0.07			(1.67	)		(1.60	)
For the year ended December 31, 2010		$10.37		0.08			1.71			1.79
For the year ended December 31, 2009		$8.43		0.21	(C)		1.92			2.13
For the year ended December 31, 2008		$16.18		0.63			(7.89	)		(7.26	)

^(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)  Net investment income (loss) per share has been calculated using the average daily shares outstanding during the period.

See accompanying Notes to Financial Statements.

Page  52 Diamond Hill Funds Semi-Annual Report June 30, 2013

Dividends from net investment income			Distributions from net realized gains			Total distributions			Net asset value at end of period		Total return(A)			Net assets at end of period (000's)		Ratio of total expenses to average net assets			Ratio of net investment income (loss) to average net assets			Ratio of total expenses to average net assets, excluding expenses and fees on securities sold short			Portfolio turnover rate(B)
	-			-			-			$16.33		23.34	%(D)		$12,422		1.73	%(E)		(0.18	)%(E)		1.52	%(E)		46	%(D)
	(0.07	)		-			(0.07	)		$13.24		26.62	%		$7,862		1.76	%		0.49	%		1.56	%		58	%
	(0.04	)		-			(0.04	)		$10.51		(13.39	)%		$6,650		1.66	%		0.14	%		1.54	%		52	%
	-			-			-			$12.18		16.78	%		$8,543		1.71	%		0.09	%		1.56	%		60	%
	(0.15	)		-			(0.15	)		$10.43		24.73	%		$8,053		1.77	%		1.92	%		1.58	%		85	%
	(0.42	)		(0.01	)		(0.43	)		$8.48		(44.98	)%		$7,596		1.85	%		2.37	%		1.56	%		74	%
	-			-			-			$15.38		22.94	%(D)		$1,434		2.48	%(E)		(0.90	)%(E)		2.27	%(E)		46	%(D)
	-			-			-			$12.51		25.60	%		$820		2.51	%		(0.20	)%		2.31	%		58	%
	-			-			-			$9.96		(13.99	)%		$795		2.41	%		(0.60	)%		2.29	%		52	%
	-			-			-			$11.58		15.92	%		$1,381		2.46	%		(0.66	)%		2.31	%		60	%
	(0.06	)		-			(0.06	)		$9.99		23.81	%		$1,295		2.52	%		1.17	%		2.35	%		85	%
	(0.37	)		(0.01	)		(0.38	)		$8.12		(45.49	)%		$1,866		2.58	%		1.76	%		2.30	%		74	%
	-			-			-			$16.29		23.60	%(D)		$6,861		1.48	%(E)		(0.07	)%(E)		1.27	%(E)		46	%(D)
	(0.11	)		-			(0.11	)		$13.18		26.94	%		$3,931		1.51	%		0.85	%		1.31	%		58	%
	(0.07	)		-			(0.07	)		$10.47		(13.21	)%		$1,584		1.37	%		0.47	%		1.25	%		52	%
	(0.02	)		-			(0.02	)		$12.14		17.29	%		$1,873		1.34	%		0.45	%		1.19	%		60	%
	(0.19	)		-			(0.19	)		$10.37		25.31	%		$671		1.38	%		2.45	%		1.19	%		85	%
	(0.48	)		(0.01	)		(0.49	)		$8.43		(44.79	)%		$709		1.47	%		2.80	%		1.18	%		74	%

^(D)  Not annualized.

^(E)  Annualized.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  53

Strategic Income Fund

Financial Highlights

Selected data for a share outstanding throughout the periods indicated

Strategic Income Fund	Net asset value, beginning of period		Net investment income (loss)			Net realized and unrealized gains (losses) on investments			Total from investment operations
Class A
For the six months ended June 30, 2013 (Unaudited)		$11.18		0.29	(C)		(0.20	)		0.09
For the year ended December 31, 2012		$10.79		0.62	(C)		0.39			1.01
For the year ended December 31, 2011		$10.86		0.65			(0.09	)		0.56
For the year ended December 31, 2010		$10.15		0.64			0.69			1.33
For the year ended December 31, 2009		$8.28		0.69			1.86			2.55
For the year ended December 31, 2008		$10.41		0.71			(2.19	)		(1.48	)
Class C
For the six months ended June 30, 2013 (Unaudited)		$11.17		0.24	(C)		(0.20	)		0.04
For the year ended December 31, 2012		$10.78		0.53	(C)		0.40			0.93
For the year ended December 31, 2011		$10.85		0.56			(0.08	)		0.48
For the year ended December 31, 2010		$10.15		0.54			0.70			1.24
For the year ended December 31, 2009		$8.27		0.58			1.91			2.49
For the year ended December 31, 2008		$10.41		0.65			(2.21	)		1.56
Class I
For the six months ended June 30, 2013 (Unaudited)		$11.16		0.30	(C)		(0.20	)		0.10
For the year ended December 31, 2012		$10.77		0.64	(C)		0.40			1.04
For the year ended December 31, 2011		$10.84		0.67			(0.08	)		0.59
For the year ended December 31, 2010		$10.13		0.64			0.72			1.36
For the year ended December 31, 2009		$8.26		0.73			1.85			2.58
For the year ended December 31, 2008		$10.40		0.70			(2.15	)		(1.45	)
Class Y(F)
For the six months ended June 30, 2013 (Unaudited)		$11.15		0.30	(C)		(0.19	)		0.11
For the year ended December 31, 2012		$10.77		0.66			0.38			1.04

^(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)  Net investment income (loss) per share has been calculated using the average daily shares outstanding during the period.

See accompanying Notes to Financial Statements.

Page  54 Diamond Hill Funds Semi-Annual Report June 30, 2013

Dividends from net investment income	Return of capital			Total distributions			Net asset value at end of period			Total return(A)			Net assets at end of period (000’s)		Ratio of total expenses to average net assets			Ratio of net investment income (loss) to average net assets			Ratio of gross expenses to average net assets			Portfolio turnover rate(B)
(0.28)		-			(0.28	)		$10.99			0.78	%(D)		$41,857		1.02	%(E)		5.13	%(E)		1.02	%(E)		26	%(D)
(0.62)		-			(0.62	)		$11.18			9.55	%		$44,374		1.02	%		5.57	%		1.02	%		33	%
(0.63)		-			(0.63	)		$10.79			5.21	%		$38,895		1.02	%		5.80	%		1.02	%		36	%
(0.62)		-			(0.62	)		$10.86			13.33	%		$42,360		1.06	%		5.81	%		1.06	%		68	%
(0.68)		-			(0.68	)		$10.15			32.13	%		$41,048		1.08	%		7.64	%		1.08	%		83	%
(0.64)		(0.01	)		(0.65	)		$8.28			(14.79	)%		$31,268		1.06	%		6.60	%		1.06	%		95	%
(0.24)		-			(0.24	)		$10.97			0.33	%(D)		$26,054		1.77	%(E)		4.38	%(E)		1.77	%(E)		26	%(D)
(0.54)		-			(0.54	)		$11.17			8.76	%		$27,801		1.77	%		4.81	%		1.77	%		33	%
(0.55)		-			(0.55	)		$10.78			4.48	%		$23,717		1.77	%		5.06	%		1.77	%		36	%
(0.54)		-			(0.54	)		$10.85			12.39	%		$24,264		1.81	%		5.06	%		1.81	%		68	%
(0.61)		-			(0.61	)		$10.15			31.34	%		$22,120		1.83	%		6.88	%		1.83	%		83	%
(0.57)		(0.01	)		(0.58	)		$8.27			(15.51	)%		$14,730		1.80	%		5.87	%		1.81	%		95	%
(0.29)		-			(0.29	)		$10.97			0.89	%(D)		$104,493		0.77	%(E)		5.38	%(E)		0.77	%(E)		26	%(D)
(0.65)		-			(0.65	)		$11.16	��		9.83	%		$103,738		0.77	%		5.81	%		0.77	%		33	%
(0.66)		-			(0.66	)		$10.77			5.53	%		$83,418		0.73	%		6.10	%		0.73	%		36	%
(0.65)		-			(0.65	)		$10.84			13.77	%		$76,893		0.69	%		6.18	%		0.69	%		68	%
(0.71)		-			(0.71	)		$10.13			32.69	%		$64,407		0.69	%		8.05	%		0.69	%		83	%
(0.68)		(0.01	)		(0.69	)		$8.26			(14.55	)%		$50,185		0.67	%		7.05	%		0.68	%		95	%
(0.30)		-			(0.30	)		$10.96			0.95	%(D)		$4,525		0.62	%(E)		5.50	%(E)		0.62	%(E)		26	%(D)
(0.66)		-			(0.66	)		$11.15			9.90	%		$2,515		0.62	%		5.95	%		0.62	%		33	%

^(D)  Not annualized.

^(E)  Annualized.

^(F)  Inception date of Class Y is December 30, 2011. Class Y commenced public offering and investment operations on January 3, 2012.

See accompanying Notes to Financial Statements.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  55

Diamond Hill Funds

Notes to Financial Statements

June 30, 2013 (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 Research Opportunities Fund (“Research Opportunities 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.

With the exception of the Financial Long-Short Fund, the Funds offer four classes of shares: Class A, Class C, Class I and Class Y. The Financial Long-Short Fund offers 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 Funds record their 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 by the Funds 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.)

Page  56 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (Unaudited)

• Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments)

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. Investments in other investment companies are valued at their reported net asset value. In each of these types of situations, valuations are typically categorized as Level 1 in the fair value hierarchy.

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. In each of these situations, valuations are typically categorized as Level 2 in the fair value hierarchy.

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. Depending on the source and relative significance of the valuation inputs in these instances, the valuations for these securities may be classified as Level 2 or Level 3 in the fair value hierarchy.

Approximately 0.4% 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 fair 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.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The Trust determines transfers between fair value hierarchy levels at the reporting period end. There were no transfers between Levels 1, 2 or 3 as of June 30, 2013 based on input levels assigned at December 31, 2012.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  57

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (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, 2013:

	Level 1 – Quoted Prices		Level 2 – Other Significant Observable Inputs		Level 3 – Significant Unobservable Inputs
Investments in Securities: (Assets)
Small Cap Fund
Common Stocks*	$	845,413,934	$	-	$	-
Registered Investment Companies		329,773,413		-		-
Total		1,175,187,347		-		-
Small-Mid Cap Fund
Common Stocks*		184,635,052		-		-
Registered Investment Companies		60,611,206		-		-
Total		245,246,258		-		-
Large Cap Fund
Common Stocks*		2,046,053,108		-		-
Registered Investment Companies		162,660,498		-		-
Total		2,208,713,606		-		-
Select Fund
Common Stocks*		53,012,449		-		-
Registered Investment Companies		8,369,407		-		-
Total		61,381,856		-		-
Long-Short Fund
Common Stocks*		2,220,095,162		-		-
Registered Investment Companies		706,042,375		-		-
Total		2,926,137,538		-		-

Page  58 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (Unaudited)

	Level 1 – Quoted Prices			Level 2 – Other Significant Observable Inputs		Level 3 – Significant Unobservable Inputs
Research Opportunities Fund
Common Stocks*	$	41,905,054		$	-	$	-
Registered Investment Companies		16,448,503			-		-
Total		58,353,557			-		-
Financial Long-Short Fund
Preferred Stock*		152,171			-		-
Common Stocks*		16,739,400			-		-
Registered Investment Companies		4,705,980			-		-
Total		21,597,551			-		-
Strategic Income Fund
Collateralized Debt Obligations		-			770,096		-
Preferred Stock*^		-			-		-
Corporate Bonds		-			169,306,220		-
Registered Investment Companies		20,126,802			-		-
Total		20,126,802			170,076,316		-
Investments in Securities Sold Short: (Liabilities)
Long-Short Fund
Common Stocks*		(557,905,452	)		-		-
Exchange Traded Fund		(53,427,312	)		-		-
Total		(611,332,764	)		-		-
Research Opportunities Fund
Common Stocks*		(5,845,658	)		-		-
Financial Long-Short Fund
Common Stocks*		(1,768,504	)		-		-

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

^ Security has zero value and is considered Level 3.

Short sales — The Long-Short Fund, Research Opportunities Fund, Financial Long-Short Fund and Strategic Income Fund are permitted to make short sales of securities. Short sales are effective when it is believed that the price of a particular security will decline, and involves the sale of a security which the Fund does not own in hope of purchasing the same security at a later date at a lower price. To make delivery to the buyer, a Fund must borrow the security, and the Fund is obligated to return the security to the

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  59

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (Unaudited)

lender, which is accomplished by a later purchase of the security by the Fund. 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 and “Segregated Cash With Brokers” on the Schedules of Investments.

A Fund will incur a loss as a result of a short sale if the price of the security increases between the date of the short sale and the date on which the Fund purchases the security to replace the borrowed security. The use of short sales may cause a Fund to have higher expenses (especially dividend expenses) than those of other equity mutual funds. Short sales are speculative transactions and involve special risks, including greater reliance on the ability of Diamond Hill Capital Management, Inc. to accurately anticipate the future value of a security.

Securities lending — Under the terms of the securities lending agreement with Citibank, N.A. (“Citibank”), Citibank 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 each Fund’s Schedule 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, the Funds pay Citibank 15% of the net securities lending income plus any costs and other charges incurred by each Fund with Citibank to be paid as credits.

As of June 30, 2013, the value of securities loaned and the collateral held were as follows:

	Fair Value of Securities Loaned		Fair Value of Collateral Received
Small Cap Fund	$	165,591,202	$	171,205,985
Small-Mid Cap Fund		38,660,712		40,095,126
Large Cap Fund		138,535,333		142,762,205
Select Fund		3,819,638		3,980,775
Long-Short Fund		181,817,214		186,876,182
Research Opportunities Fund		5,431,919		5,605,205
Financial Long-Short Fund		655,753		687,831
Strategic Income Fund		11,686,996		12,222,838

Page  60 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (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, 2009 through 2012) 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, Research Opportunities 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 paydown gains and losses on mortgage-backed securities, expiring capital loss carry-forwards and deferrals of certain losses. Permanent book and tax basis differences are reclassified among the components of net assets. Certain Funds may utilize earnings and profits distributed to shareholders on redemption of shares as part of the dividends paid deduction for income tax purposes.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  61

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (Unaudited)

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, 2013, the purchases and sales (including maturities) of investment securities (excluding short-term securities and U.S. government obligations) were as follows:

	Purchases		Sales
Small Cap Fund	$	227,648,127	$	247,476,049
Small-Mid Cap Fund		85,146,888		32,688,322
Large Cap Fund		349,805,334		266,018,031
Select Fund		22,947,004		40,262,790
Long-Short Fund		320,361,871		571,250,734
Research Opportunities Fund		19,734,171		11,966,565
Financial Long-Short Fund		7,893,409		6,142,593
Strategic Income Fund		49,270,183		44,239,326

The Funds pay commissions on the purchase and sale of investment securities. The commissions are treated as transaction costs and, therefore, are included as part of the cost of purchases or net proceeds on the sale of investment securities and are not included in the presentation of Fund expenses on the Statements of Operations. No portion of the commissions paid during the year was used to purchase so-called “soft

Page  62 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (Unaudited)

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, 2013:

	Total Commissions		Total Commissions Used to Pay for Soft Dollars Services		Commissions as a % of Average Net Assets
Small Cap Fund	$	350,660	$	-		0.04	%
Small-Mid Cap Fund		83,206		-		0.05	%
Large Cap Fund		353,342		-		0.02	%
Select Fund		49,291		-		0.08	%
Long-Short Fund		638,940		-		0.02	%
Research Opportunities Fund		17,923		-		0.05	%
Financial Long-Short Fund		9,399		-		0.06	%

Investment Advisory Fees and Other Transactions with Affiliates

The Small Cap Fund, Small-Mid Cap Fund, Large Cap Fund, Select Fund, Long-Short Fund, Research Opportunities Fund, Financial Long-Short Fund and Strategic Income Fund each receive investment management and advisory services from Diamond Hill Capital Management, Inc. (“DHCM”) under a management agreement that provides for fees to be paid at an annual rate of 0.80%, 0.75%, 0.55%, 0.70%, 0.90%, 1.00%, 1.00% and 0.50% of the Fund’s average daily net assets, respectively. The advisory agreement is 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 0.25% for Class A Shares, Class C Shares and Class I Shares and 0.10% for Class Y shares of each class’ average daily net assets. These administrative fees are used to pay most of the Funds’ operating expenses except advisory, distribution, fund accounting, 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 and Class Y 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.

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  63

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (Unaudited)

For the six months ended June 30, 2013, the Distributor retained the following amounts in sales commissions from the sales of Class A shares of the Funds as follows:

Small Cap Fund	$	10,760
Small-Mid Cap Fund		2,946
Large Cap Fund		8,519
Select Fund		58
Long-Short Fund		14,600
Financial Long-Short Fund		1,429
Strategic Income Fund		765

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, 2013 as follows:

Small Cap Fund	$	257
Small-Mid Cap Fund		158
Large Cap Fund		220
Select Fund		32
Long-Short Fund		378
Strategic Income Fund		1,535

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 DHCM as part of the administration services agreement. Collectively, the Independent Trustees were paid $127,000 in fees during the six months ended June 30, 2013.

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.

Page  64 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (Unaudited)

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 2012 was as follows:

	Small Cap Fund		Small-Mid Cap Fund		Large Cap Fund		Select Fund
Distributions paid from:
Ordinary income	$	7,263,992	$	976,848	$	23,129,461	$	689,102
Long-term capital gains		25,096,758		2,481,099		4,604,714		1,238,608
Total distributions	$	32,360,750	$	3,457,947	$	27,734,175	$	1,927,710

	Long-Short Fund		Research Opportunities Fund		Financial Long-Short Fund		Strategic Income Fund
Distributions paid from:
Ordinary income	$	6,309,034	$	79,646	$	71,729	$	9,519,056
Long-term capital gains		—		297,362		—		—
Total distributions	$	6,309,034	$	377,008	$	71,729	$	9,519,056

The following information is computed on a tax basis for each item as of December 31, 2012:

	Small Cap Fund			Small-Mid Cap Fund			Large Cap Fund			Select Fund
Tax cost of portfolio investments	$	774,929,542		$	114,469,108		$	1,687,090,336		$	60,858,375
Gross unrealized appreciation		145,913,883			15,577,910			238,452,944			7,011,015
Gross unrealized depreciation		(29,704,350	)		(362,595	)		(6,470,270	)		(768,369	)
Net unrealized appreciation		116,209,533			15,215,315			231,982,674			6,242,646
Undistributed ordinary income		—			21,078			3,377,654			481,483
Undistributed capital gains		—			11,067			—			—
Qualified Late Year Capital Losses deferred		(110,649	)		—			—			—
Accumulated earnings	$	116,098,884		$	15,247,460		$	235,360,328		$	6,724,129

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  65

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (Unaudited)

	Long-Short Fund			Research Opportunities Fund			Financial Long-Short Fund			Strategic Income Fund
Tax cost of portfolio investments	$	1,665,507,211		$	25,211,068		$	9,360,333		$	174,359,914
Gross unrealized appreciation		352,840,458			3,175,319			1,647,175			9,324,833
Gross unrealized depreciation		(75,457,018	)		(606,761	)		(239,014	)		(2,369,030	)
Net unrealized appreciation (depreciation)		277,383,440			2,568,558			1,408,161			6,955,803
Undistributed ordinary income		9,627,549			1			—			141,701
Capital loss carryforwards		(482,694,492	)		—			(13,181,605	)		(16,439,277	)
Qualified Late Year Capital Losses deferred		—			—			(29,438	)		(481,824	)
Accumulated earnings (deficit)	$	(195,683,503	)	$	2,568,559		$	(11,802,882	)	$	(9,823,597	)

The difference between book basis and tax basis net unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.

As of the latest tax year ended December 31, 2012, the following Funds have capital loss carry forwards (“CLCFs”) as summarized in the tables below. CLCFs subject to expiration are applied as short-term capital loss regardless of whether the originating capital loss was short-term or long-term. CLCFs that are not subject to expiration must be utilized before those that are subject to expire. As of June 30, all CLCFs were subject to expiration.

CLCFs subject to expiration:

	Amount		Expires December 31,
Long-Short Fund	$	413,517,395		2017
		69,177,097		2018
	$	482,694,492
Financial Long-Short Fund	$	6,641,477		2016
		6,540,128		2017
	$	13,181,605
Strategic Income Fund	$	11,167,423		2016
		5,271,854		2017
	$	16,439,277

As of the latest tax year ended December 31, 2012, Large Cap Fund, Select Fund, Long-Short Fund, Financial Long-Short Fund and Strategic Income Fund utilized $61,958,289, $488,344, $105,488,091, $653,866 and $970,808, respectively, of CLCFs.

Page  66 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Notes to Financial Statements (Continued)

June 30, 2013 (Unaudited)

The Funds also elected to defer until their subsequent tax year capital losses incurred after October 31, 2012. The CLCFs and “Qualified Late Year Capital Losses” 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 CLCFs will be determined at the end of the current tax year.

As of June 30, 2013, the Funds’ federal tax cost of investment securities and net unrealized appreciation (depreciation) were as follows:

Fund	Federal Tax Cost		Gross Unrealized Appreciation		Gross Unrealized Depreciation			Net Unrealized Appreciation (Depreciation)
Small Cap Fund	$	962,597,599	$	227,765,368	$	(15,175,620	)	$	212,589,748
Small-Mid Cap Fund		212,292,510		34,025,178		(1,071,430	)		32,953,748
Large Cap Fund		1,739,785,087		478,962,884		(10,034,365	)		468,928,519
Select Fund		50,323,442		12,077,634		(1,019,220	)		11,058,414
Long-Short Fund		2,321,113,946		613,910,848		(8,887,256	)		605,023,592
Research Opportunities Fund		51,990,936		6,604,561		(241,940	)		6,362,621
Financial Long-Short Fund		18,005,416		3,772,485		(180,350	)		3,592,135
Strategic Income Fund		187,745,140		5,689,397		(3,231,419	)		2,457,978

In-kind Transactions

During the year ended December 31, 2012, the Large Cap Fund received securities in lieu of cash for shareholder subscriptions. The value of the subscription was as follows:

Date	Subscription		Securities		Cash		Class Y Shares Issued
April 9, 2012	$	2,786,568	$	2,716,322	$	70,248		173,402

Subsequent Events

The Funds evaluated events from June 30, 2013 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, 2013 Page  67

Diamond Hill Funds

Other Items

June 30, 2013

(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”), considered a broad range of information specifically requested and relating to its consideration of the continuance of the investment advisory agreement at regularly scheduled meetings on April 17, 2013 and May 23, 2013, and by a unanimous vote, approved the Management Agreement 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 Agreement (“investment advisory agreement”):

a) Nature, Extent and Quality of Services. The Trustees considered the nature, extent and quality of the services provided by the Adviser under the investment advisory agreement, including the services provided thereunder, the fee rates, fees paid and expenses assumed. They also considered the Adviser’s investment philosophy and overall reputation, integrity and commitment to providing high quality service to the Funds. The Trustees noted the qualifications of the investment staff and that the Adviser continued to invest significant resources in its investment team, by growing its research team to 21 associates over the last seven years to help enhance the delivery of portfolio management services to the Funds. In addition, the Trustees reviewed information related to the compensation structure for portfolio managers and other key investment personnel.

Page  68 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Other Items

June 30, 2013

(Unaudited) Continued

In evaluating the performance of each Fund, the Trustees reviewed each Fund’s absolute performance, performance relative to its passive benchmark, and performance relative to its peer group as of March 31, 2013, noting that for the five year trailing period, three of the seven funds outperformed their benchmarks, four Funds ranked in the 1^st or 2^nd quartile of their respective peer groups and three ranked in the 3^rd quartile of their respective peer groups. The Research Opportunities Fund, which does not yet have five-year performance information, underperformed its benchmark by only 0.71% for the trailing three year performance period and ranked in the 2^nd quartile of its peer group. The Trustees also reviewed and considered trailing five year investment results as of each previous calendar year end, noting that in general each fund has achieved adequate returns over the various five year periods. In addition, the Trustees discussed the methodology for selecting funds to be included in each Fund’s respective peer group and the appropriateness of the benchmarks against which fund performance is measured.

b) Reasonableness of Investment Advisory Fees. The Trustees noted that the contractual fee rates applicable to the funds under the investment advisory agreement as of March 31, 2013 were below the average and median rates of funds within each Fund’s respective peer group.

c) Reasonableness of Total Expenses. The Trustees noted that the total expenses of each class of shares of each of the Funds generally were at or below the average and median total expenses of funds within each Fund’s respective peer group. The total expenses of Class I shares of the Small-Mid Cap Fund and Class C shares of the Select Fund were below the average of the peer group, but above the median, while Class I shares of the Select Fund were slightly above both the average and median for the peer group.

d) Reasonableness of Investment Advisory Fees as Compared to Fees Charged to Other Clients. The Trustees reviewed the fees paid by each of the Adviser’s other clients, as well as a summary of the differences in services provided. 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) Profitability. The Trustees noted the reasonableness of each Fund’s profitability to the Adviser, including the Adviser’s methodology for calculating its profitability. The Trustees noted that the Adviser also is the administrator to the Funds (under the Administration Agreement) and the Trustees reviewed a separate profitability analysis relating to the administrative services provided to the funds. The Trustees concluded that the Adviser’s pre-tax profit margin under the investment advisory

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  69

Diamond Hill Funds

Other Items

June 30, 2013

(Unaudited) Continued

agreement and the Administration Agreement represented a fair and entrepreneurial profit for managing the Funds.

f) Economies of Scale. The Trustees reviewed the potential 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. They noted that while many advisory firms reduce fees as assets under management increase with predetermined break points, the Adviser has adopted a different strategy. The Trustees considered that rather than instituting breakpoints, the Adviser has targeted its advisory fees to correspond to its mission to add value, meaning that rather than charging a lower fee on assets above a certain level, the Adviser prefers to close a strategy to new investors so that it can efficiently manage the fund’s assets and attempt to fulfill its responsibility to add value to existing investors accounts. The Trustees also noted the Adviser has a history of voluntarily reducing its fees under the Administration Agreement when asset growth allows for the sharing of the economies of scale.

g) Ancillary Benefits. The Trustees considered ancillary benefits received by the Adviser as a result of its relationship with the Funds, including the ability to negotiate favorable commissions rates and have access to research that benefits all of the Adviser’s clients and the ability to serve as sub-adviser to other mutual funds. The Trustees noted 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 noted that affiliates of the Adviser also have the ability to leverage these administrative services to other non-affiliated funds. 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.

In their deliberations, there was a comprehensive consideration of each of the factors above in connection with each Fund, and the Trustees, all of whom qualify as independent trustees under the Investment Company Act of 1940 Act, concluded the compensation to be received by the Adviser from each Fund was fair and reasonable and the continuance of the agreements was in the best interest of each Fund and its shareholders.

Page  70 Diamond Hill Funds Semi-Annual Report June 30, 2013

Diamond Hill Funds

Schedule of Shareholder Expenses

Hypothetical Example of a $1,000 Investments 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, 2013 and held for the entire period from January 1, 2013 through June 30, 2013.

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 the 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.

	Account value at the beginning of the period ($)				Account value at the end of the period ($)				Expenses paid during the period ($)*				Funds annualized expense ratio (%)
	Actual		Hypothetical		Actual		Hypothetical		Actual		Hypothetical		Actual
Small Cap Fund
Class A		1,000.00		1,000.00		1,206.00		1,018.25		7.22		6.61		1.32
Class C		1,000.00		1,000.00		1,201.40		1,014.53		11.30		10.34		2.07
Class I		1,000.00		1,000.00		1,207.50		1,019.49		5.86		5.36		1.07
Class Y		1,000.00		1,000.00		1,208.30		1,020.23		5.04		4.61		0.92
Small-Mid Cap Fund
Class A		1,000.00		1,000.00		1,211.00		1,018.55		6.91		6.31		1.26
Class C		1,000.00		1,000.00		1,206.50		1,014.83		11.00		10.04		2.01
Class I		1,000.00		1,000.00		1,212.00		1,019.79		5.54		5.06		1.01
Class Y		1,000.00		1,000.00		1,213.60		1,020.53		4.72		4.31		0.86

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  71

Diamond Hill Funds

Schedule of Shareholder Expenses

Hypothetical Example of a $1,000 Investments at Beginning of Period

(Unaudited) Continued

	Account value at the beginning of the period ($)				Account value at the end of the period ($)				Expenses paid during the period ($)*				Funds annualized expense ratio (%)
	Actual		Hypothetical		Actual		Hypothetical		Actual		Hypothetical		Actual
Large Cap Fund
Class A		1,000.00		1,000.00		1,183.20		1,019.54		5.74		5.31		1.06
Class C		1,000.00		1,000.00		1,179.00		1,015.82		9.78		9.05		1.81
Class I		1,000.00		1,000.00		1,184.20		1,020.78		4.39		4.06		0.81
Class Y		1,000.00		1,000.00		1,185.50		1,021.52		3.58		3.31		0.66
Select Fund
Class A		1,000.00		1,000.00		1,231.60		1,018.74		6.75		6.11		1.22
Class C		1,000.00		1,000.00		1,227.30		1,015.03		10.88		9.84		1.97
Class I		1,000.00		1,000.00		1,233.00		1,019.98		5.37		4.86		0.97
Class Y		1,000.00		1,000.00		1,233.90		1,020.73		4.54		4.11		0.82
Long-Short Fund
Class A		1,000.00		1,000.00		1,123.40		1,016.56		8.74		8.30		1.66
Class C		1,000.00		1,000.00		1,119.30		1,012.84		12.66		12.03		2.41
Class I		1,000.00		1,000.00		1,124.80		1,017.80		7.43		7.05		1.41
Class Y		1,000.00		1,000.00		1,125.90		1,018.55		6.64		6.31		1.26
Research Opportunities Fund
Class A		1,000.00		1,000.00		1,185.90		1,016.56		9.00		8.30		1.66
Class C		1,000.00		1,000.00		1,182.20		1,012.84		13.04		12.03		2.41
Class I		1,000.00		1,000.00		1,186.80		1,017.80		7.65		7.05		1.41
Class Y		1,000.00		1,000.00		1,188.50		1,018.55		6.84		6.31		1.26
Financial Long-Short Fund
Class A		1,000.00		1,000.00		1,233.40		1,016.22		9.58		8.65		1.73
Class C		1,000.00		1,000.00		1,229.40		1,012.50		13.71		12.37		2.48
Class I		1,000.00		1,000.00		1,236.00		1,017.46		8.21		7.40		1.48
Strategic Income Fund
Class A		1,000.00		1,000.00		1,007.80		1,019.74		5.08		5.11		1.02
Class C		1,000.00		1,000.00		1,003.30		1,016.02		8.79		8.85		1.77
Class I		1,000.00		1,000.00		1,008.90		1,020.98		3.84		3.86		0.77
Class Y		1,000.00		1,000.00		1,009.50		1,021.72		3.09		3.11		0.62

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

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

Page  72 Diamond Hill Funds Semi-Annual Report June 30, 2013

NOTICE OF PRIVACY POLICY FOR DIAMOND HILL FUNDS

We value you as a shareholder and take your personal privacy seriously. In order to enhance our ability to provide you with the best service possible, Diamond Hill Funds (referred to as “we” or “us” or the “Funds”) collect, use and share certain information about you. This policy explains what information we collect and with whom we share it. The practices described in this policy are applicable to all customers, including prospective, current and former customers. The policy also explains how we protect the security and confidentiality of certain customer information.

SAFEGUARDING PRIVACY

Diamond Hill Funds maintain physical, electronic and procedural safeguards that comply with federal standards to ensure the safety of non-public personal customer information. In addition, we require service providers to the Funds to maintain policies and procedures designed to assure only appropriate access to, and use of, information about customers and to maintain physical, electronic and procedural safeguards that comply with federal standards to guard non-public personal customer information.

INFORMATION WE COLLECT AND SOURCES OF INFORMATION

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

• Information we receive from you on applications or other forms, such as your name, address, date of birth, social security number and investment information;

• Information about your transactions and experiences with us, such as your account balance, transaction history and investment selections; and

• Information you supply in written, telephonic or electronic communications with the Funds or service providers to the Funds.

INFORMATION WE SHARE

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

QUESTIONS?

Questions regarding this policy may be directed to: 888-226-5595

Diamond Hill Funds Semi-Annual Report June 30, 2013 Page  73

325 John H. McConnell Blvd., Suite 200

Columbus, Ohio 43215

614.255.3333

www.diamond-hill.com

Investment Adviser

Diamond Hill Capital Management, Inc.

Distributor

BHIL Distributors, Inc.

For additional information, call:

Diamond Hill Funds

TOLLFREE 888.226.5595

Item 2. Code of Ethics.

Not applicable.

Item 3. Audit Committee Financial Expert.

Not applicable.

Item 4. Principal Accountant Fees and Services.

Not applicable.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Schedule of Investments.

(a) Not applicable.

(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 Company and Affiliated Purchasers.

Not applicable.

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

Not applicable.

Item 11. Controls and Procedures.

(a)The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b)There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)(1)	Not applicable.
(a)(2)	Certifications required by Item 12(a) of Form N-CSR are filed herewith.
(a)(3)	Not applicable.
(b)	Certification required by Item 12(b) of Form N-CSR is 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 August 30, 2013

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 August 30, 2013

By (Signature and Title)	/s/ Trent M. Statczar
	Trent M. Statczar, Treasurer

Date August 30, 2013