AQR Funds NCSR Certified 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: 811-22235

AQR Funds

(Exact name of registrant as specified in charter)

Two Greenwich Plaza, 3^rd Floor

Greenwich, CT 06830

(Address of principal executive offices) (Zip code)

Bradley D. Asness, Esq.

Principal and Chief Legal Officer

Two Greenwich Plaza

3rd Floor

Greenwich, CT 06830

(Name and Address of Agent for Service)

Registrant’s telephone number, including area code: 203-742-3600

Date of fiscal year end: December 31

Date of reporting period: January 1, 2010 to December 31, 2010

Item 1. Reports to Shareholders.

The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1.)

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AQR FUNDS

Annual Report

December 31, 2010

Table of Contents


Shareholder Letters

AQR Global Equity Fund			2

AQR International Equity Fund			7

AQR Diversified Arbitrage Fund			12

AQR Managed Futures Strategy Fund			16

AQR Risk Parity Fund			19

AQR Momentum Fund			22

AQR Small Cap Momentum Fund			24

AQR International Momentum Fund			26

Schedule of Investments

AQR Global Equity Fund			31

AQR International Equity Fund			41

AQR Diversified Arbitrage Fund			48

AQR Managed Futures Strategy Fund			65

AQR Risk Parity Fund			70

AQR Momentum Fund			76

AQR Small Cap Momentum Fund			81

AQR International Momentum Fund			89

Financial Statements and Notes			95

Report of Independent Registered Public Accounting Firm			133

Other Federal Tax Information (unaudited)			134

Fund Expense Examples (unaudited)			135

Trustees and Officers (unaudited)			137

Board Approval of Investment Advisory Agreements (unaudited)			139

Shareholder Letter (Unaudited)


AQR GLOBAL EQUITY FUND

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Cliff Asness

Managing & Founding Principal

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Ronen Israel

Principal

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Oktay Kurbanov

Principal

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John Liew

Founding Principal

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Lars Nielsen

Principal

Dear Shareholder:

Global equity markets had uneven performance in 2010. During the first half of the year, the MSCI World Index (the “Benchmark”) posted a negative return of -9.84%, followed by a rally of +23.96% in the second half of the year. For the year, the Benchmark finished up +11.76%. The year consisted of two major macro-economic themes: continuation of European debt concerns and quantitative easing policies in the US. These themes had opposite effects on the market, leading to its bumpy performance during the year. During this turbulent period, the AQR Global Equity Fund Class N shares (the “Fund”) fared well, outperforming the Benchmark by +2.07%, with a positive return of +13.83% for the year.

The Fund is actively managed, and it seeks to outperform its benchmark in three ways: by selecting stocks within each country and by using futures and forwards contracts to over and under-weight the portfolio’s exposures to each country and to each currency. In the first half of the year, the stock and currency selection strategies contributed to positive performance while the country selection strategy detracted, with the net result of modest underperformance. In the second half of the year all three strategies were positive contributors. Each of these decisions is made independently. Details on each of the strategies are provided below.

Our stock selection strategies performed well in 2010 led by strong performance in the continental European portfolio. Performance in the US and the UK was also positive, while stock selection in Japan detracted slightly for the year. 2010 was a good year for stock selection in Europe as we observed positive performance across nearly all investment themes, especially momentum. Positive performance in momentum also helped offset negative performance in valuation in the US and UK. The Japan strategy struggled early in the year hurt by poor performance of momentum factors, but contributed positively in Q4 with strong performance of the valuation signals.

Approaching the end of 2010, the portfolio was positioned overweight the industrial sector driven by attractive momentum and underweight the information technology sector due to its high valuation level.

Our stock selection strategy remains broadly diversified across over seven hundred names, with any individual position representing a small active weight against the Benchmark. The portfolio as a whole is overweight cheaper stocks with better momentum and earnings quality.

The country selection strategy detracted from performance in 2010, stemming from underperformance of the value-driven positions. Fears of European defaults made this a difficult year for value. We were overweight in the European region vs. underweight in the Asia/Pacific region. The biggest detractors for the year were our value-driven overweights in Italy and Spain, as these countries sold off during the Greek sovereign debt crisis. An underweight in Canada also detracted from performance. Supported by the rally in commodities, the Canadian equity market showed better than average performance. Momentum themes worked well in 2010, helping to offset losses from


AQR Funds	Annual Report	December 2010	2
AQR Funds	Annual Report	December 2010	2

Shareholder Letter (Unaudited)


AQR GLOBAL EQUITY FUND

value signals. Positive contributors supported by momentum were our overweight in Germany in the second half of the year, an overweight in the Netherlands and an underweight of Australia.

Our country views continue to favor European markets versus markets in the Asia/Pacific and North American regions. This reflects the value-oriented allocation in the country selection model as European markets are generally fair to cheaply valued versus other regions based on our measures. As European markets showed dispersion of returns and fundamental signals, the model adjusted accordingly. We reduced our position in Spain to a relatively small underweight. On the other hand, the model moved from a flat to an overweight position in Germany and increased its overweight in France. Price momentum drove these changes as Spain was among the worst performers in 2010, trailed only by Greece and Ireland. Germany outpaced other markets by more than 10%, while France’s performance was in line with an average global market. Strong relative momentum combined with improving macro indicators propelled these two countries to our top overweight positions by the end of the year. Additionally, the Netherlands remained one of our top three countries displaying an opportune combination of positive valuation and momentum signals. We increased our underweight in Switzerland over the past year as Swiss banks did not cheapen as much as other financials in Europe, making Switzerland more expensive on a relative basis.

The portfolio maintained underweight positions in the Asia/Pacific region. Australia’s underweight is driven by all major factor themes. This underweight benefited the model throughout the year as Australia’s equity market has showed weak relative performance. The model has maintained its value-driven underweight of Hong Kong, while Japan’s underweight has been reduced due to improvement in its price momentum signals.

In the North American region, the model has maintained a moderate underweight of Canada due to poor valuation indicators.

The currency selection strategy was a positive contributor in 2010. Notably, in a year fraught with sovereign credit concerns, carry and interest rate related themes worked well and were the top contributors to outperformance. This is partially explained by additional measures of the quantitative easing policy in the US originally announced in Q3. The accommodating policy of the Federal Reserve (“Fed”) encouraged risk taking, which provided support for carry related themes. As the model favored the high yielding Australian Dollar, the currency strategy benefited from this increase in risk appetite. The currency strategy also benefited from our significant underweight in the Euro, the worst performing currency in 2010. On a thematic level, momentum added to the outperformance, as the Australian Dollar and the Euro continued their appreciation / depreciation trends respectively. Value signals detracted from the performance for these currencies.

In the European region, we continue to dislike the Euro, which has remained our top underweight position throughout the period. The Euro position combines negative views stemming from carry, price and fundamental momentum. While the deterioration in the Euro’s price momentum was offset by improved valuations, its fundamentals worsened when Eurozone earnings were revised downwards. Interest rate predictors provided additional negative signals, as the continuing sovereign debt crisis made it less likely that Eurozone interest rates would increase in the near term. In Q1, the model moved from flat to an overweight position in the Swedish Krona, driven by a combination of fundamental momentum and value. As the year progressed, the Krona became strong on all factor themes, moving to the largest overweight position in the currency model. The Norwegian Krone overweight has remained relatively stable throughout the year, driven by a combination of fundamental momentum and interest rate related indicators. However, the weak price momentum of the Krone continues to moderate our positive view.

In the Asia/Pacific region, we remain overweight the Australian Dollar and underweight the Japanese Yen. The Aussie/Yen yield differential, as well as fundamental and valuation signals, motivates this positioning.


AQR Funds	Annual Report	December 2010	3
AQR Funds	Annual Report	December 2010	3

Shareholder Letter (Unaudited)

AQR GLOBAL EQUITY FUND

Over the second half of the year, we have assumed a meaningful underweight in the New Zealand Dollar as weak macro-economic conditions in New Zealand reduced the likelihood of future interest rate increases, making the New Zealand Dollar less attractive relative to other currencies.

In the North American region, we significantly reduced our underweight of the Canadian Dollar to a quarter of its size earlier in the year driven by significant improvement from interest rate predictors.


AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2010 AQR GLOBAL EQUITY FUND PERFORMANCE SINCE COMMENCEMENT OF OPERATIONS AS A MUTUAL FUND
	Since Inception (12/31/09)
Fund - Class N: AQGNX		13.83%
Fund - Class I: AQGIX		14.12%
Fund - Class Y: AQGYX		14.54%
MSCI World Total Return (net of dividends) Index		11.76%

Past performance does not guarantee future results. Investment results and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Class N and Class I shares of the Fund are subject to a 2% redemption fee for redemptions within 60 days of purchase. Class Y shares are subject to a 0.10% redemption fee. If reflected, the redemption fee would reduce the performance quoted. Current performance may be lower or higher than the performance data quoted. As of the latest prospectus, the gross expense ratio for the Fund’s Class N/I/Y shares are 1.34%, 1.04% and 0.89%, respectively. Call 1-866-290-2688 or visit www.aqrfunds.com for current month-end performance.

AQR GLOBAL EQUITY FUND VS. MSCI WORLD TOTAL RETURN

VALUE OF $10,000 INVESTED ON 12/31/09

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The chart above represents historical performance of a hypothetical investment of $10,000 in the Fund over the past ten years (or since inception if shorter). Performance calculations are as of the end of December each year. Past performance does not guarantee future results. Returns shown are total returns, which assume the reinvestment of dividends and capital gains. The table and graph presented above do not reflect the deduction of taxes a shareholder would pay on fund distributions or the redemption of fund shares.


AQR Funds	Annual Report	December 2010	4
AQR Funds	Annual Report	December 2010	4

Shareholder Letter (Unaudited)

AQR GLOBAL EQUITY FUND


AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/2010 AQR GLOBAL EQUITY FUND PERFORMANCE SINCE INCEPTION OF PREDECESSOR LIMITED PARTNERSHIP
			Annualized Total Return
	YTD		1 Year		3 Year		Since Inception (06/30/2006)
Fund - Class N: AQGNX		13.83%		13.83%		-4.86%		0.25%
Fund - Class I: AQGIX		14.12%		14.12%		-4.55%		0.58%
Fund - Class Y: AQGYX		14.54%		14.54%		-4.21%		0.94%
MSCI WORLD (net of dividends) Index		11.76%		11.76%		-4.85%		1.37%

AQR GLOBAL EQUITY FUND VS. MSCI WORLD TOTAL RETURN INDEX

VALUE OF $10,000 INVESTED ON 6/30/2006


AQR Funds	Annual Report	December 2010	5
AQR Funds	Annual Report	December 2010	5

Shareholder Letter (Unaudited)


AQR GLOBAL EQUITY FUND

A privately offered fund managed by the Adviser was reorganized into Class Y shares of the Fund on December 31, 2009, the date the Fund commenced operations. This privately offered fund was organized in March 2006 and commenced operations in June 2006 and had an investment objective, investment policies and restrictions that were, in all material respects, the same as those of the Fund. However, the privately offered fund was not registered as an investment company under the 1940 Act. In addition, this privately offered fund was not subject to certain investment limitations, diversification requirements, liquidity requirements, and other restrictions imposed by the 1940 Act and the Internal Revenue Code which, if applicable, might have adversely affected its performance. The Fund’s performance for periods prior to the commencement of operations on or about December 31, 2009 is that of the privately offered fund. The total annual fund operating expenses of the privately offered fund were lower than the Fund’s estimated total annual fund operating expense for Class N, Class I and Class Y shares during the periods presented. The Fund has restated the performance of the privately offered fund to reflect the Fund’s expenses of the Class N, I and Y shares.


AQR Funds	Annual Report	December 2010	6
AQR Funds	Annual Report	December 2010	6

Shareholder Letter (Unaudited)


AQR INTERNATIONAL EQUITY FUND

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Cliff Asness

Managing & Founding Principal

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Ronen Israel

Principal

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Oktay Kurbanov

Principal

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John Liew

Founding Principal

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Lars Nielsen

Principal

Dear Shareholder:

International equity markets had uneven performance in 2010. During the first half of the year, the MSCI EAFE Index (the “Index”) posted a negative return of -13.23%, followed by a rally of +24.18% in the second half of the year. For the year, the index finished up 7.75%. The year was highlighted by two major macro-economic themes: European sovereign debt concerns and quantitative easing in the US. These themes had opposite effects on the market, leading to its bumpy performance during the year. During this period, the AQR International Equity Fund Class N shares (the “Fund”) faired well, outperforming its benchmark index by 2.65%, with a positive return of 10.40% for the year.

The Fund is actively managed, and it seeks to outperform its benchmark in three ways: by selecting stocks within each country and by using futures and forwards contracts to over-and under-weight the portfolio’s exposures to countries and currencies. In the first half of the year, the stock and currency selection strategies contributed to the performance while the country selection strategy detracted, with the net result of modest underperformance. In the second half of the year all three strategies were positive contributors. Details on each of the strategies are provided below.

Our stock selection strategies performed well in 2010 on a benchmark relative basis. The main contributor to the positive performance was the continental European portfolio. Performance in the UK portfolio was also positive, while the Japan strategy was down slightly for the year. This was a good year in Europe as we observed positive performance across nearly all investment themes, especially momentum. In the UK, positive performance in momentum (both within and across industries) offset negative performance in value. The Japan strategy struggled early in the year hurt by poor performance of momentum factors, but contributed positively in Q4 with strong performance of valuation signals.

Approaching the end of 2010, the portfolio was positioned to overweight industrials from attractive momentum, while underweight financials from unfavorable momentum.

Our stock selection strategy remains broadly diversified across over four hundred names, with any individual position representing a small active weight against the benchmark. The portfolio as a whole is overweight cheaper stocks with better momentum and earnings quality.

The country selection strategy was a negative contributor to the performance, stemming from underperformance of value-driven positions. Fears of European defaults made this a difficult year for value, which was overweight the European region vs. underweight the Asia/Pacific region. The biggest detractors for the year were our overweights in Italy and Spain, as these countries sold off during the Greek sovereign debt crisis and amid growing concerns about contagion. An underweight in Sweden was also a detractor as the country significantly outperformed as its macro-economic conditions improved. Momentum themes worked well in 2010, helping offset losses


AQR Funds	Annual Report	December 2010	7
AQR Funds	Annual Report	December 2010	7

Shareholder Letter (Unaudited)


AQR INTERNATIONAL EQUITY FUND

from value signals. Positive contributors supported by momentum were our overweight in Germany in the second half of the year, an overweight in the Netherlands, and an underweight of Australia.

Our country selection portfolio entered 2010 with an increased weighting towards European markets versus markets in the Asia/Pacific region. This reflects the value-oriented bias in the country selection model as European markets generally were priced fair to cheaply valued relative to markets in the Asia/Pacific region. We maintained this view throughout the year but the positioning within Europe changed materially as the sovereign debt crisis impacted markets differently. Dispersion in performance is reflected in the momentum components of our process. Going into the year we were substantially overweight Spain and Italy based on valuation. Both these positions were reduced over the year on the back of the relative poor performance of these markets. On the other hand, the relative outperformance and better macro economic indicators of Germany and France led us to initiate overweight positions in those countries. The Netherlands remained one of our top positions over the year based on cheap valuation combined with positive momentum signals. Offsetting the overweight positions in Europe is an underweight of Switzerland, which looks unattractive on multiple indicators, as well as a value-driven underweight of Sweden.

The portfolio was underweight equity markets in the Asia-Pacific region throughout the year. Australia’s underweight is driven by all major investment themes in our process. This underweight benefited the model throughout the year as Australia’s equity market has showed weak relative performance. The model has maintained its value-driven underweight of Hong Kong, while Japan’s underweight has been reduced due to improvement in its price momentum signals.

The currency selection strategy was a positive contributor in 2010. Remarkably, in a year fraught with sovereign credit concerns, carry and interest rate related themes performed well and were the top contributors to outperformance. This is partially explained by the additional measures of the quantitative easing policy in the US, which was originally announced in Q3. The accommodating policy of the Fed encouraged risk taking, which provided support for higher yielding currencies. As the model favored the high yielding Australian Dollar, the currency strategy benefited from this increase in risk appetite. The currency strategy also benefited from its significant underweight in the Euro, the worst performing currency in 2010. On a thematic level, momentum added to the outperformance, as the Australian Dollar and the Euro continued their appreciation / depreciation trends respectively. Value detracted from the performance. The Swiss franc was a value-driven underweight that did not perform well, as the franc showed strong performance during the year helped by its safe haven status.

In the European region, our currency views continue to dislike the euro which has remained our top underweight position throughout the period. The strong negative view on the Euro is due to a combination of relatively poor carry, price momentum and fundamental momentum. An additional important consideration is that the continuing sovereign debt crisis makes it less likely that Eurozone interest rates would increase in the near term. The year witnessed meaningful changes in the positioning of the Swiss Franc and the Swedish Krona. The flight to quality caused by the volatile European debt situation led to strong appreciation of the Franc and in the second half of the year, the currency model assumed a significant underweight in the Swiss franc based on valuation. In the first quarter of the year, the model moved from flat to an overweight position in the Swedish Krona, driven by a combination of fundamental momentum and value. As the year progressed, the Krona improved on all factor themes, moving to the largest overweight position in the currency model. The Norwegian Krone overweight has remained relatively stable throughout the year, driven by a combination of fundamental momentum and interest rate related indicators. However, the weak price momentum of the Krone is moderating the positive view.

In the Asia/Pacific region, the model continues to maintain its overweight of the Australian Dollar versus an underweight of the Japanese Yen. The Aussie/Yen yield differential, as well as fundamental and valuation signals, motivates this positioning.


AQR Funds	Annual Report	December 2010	8
AQR Funds	Annual Report	December 2010	8

Shareholder Letter (Unaudited)


AQR INTERNATIONAL EQUITY FUND

Our optimistic view is driven primarily by the opportunity for the country and currency selection strategies, while the opportunity in the stock selection strategy is about average. In country selection we see relatively extended spreads in valuation between cheap and expensive countries. For currency selection we see an unusually strong level of agreement between the valuation and carry indicators in the model – essentially indicating that we can get exposure to relatively high yielding currencies at unusually reasonable valuations. As always, we seek to maintain a highly diversified portfolio both in terms of individual positions but also in terms of the risk allocation to the three strategies.


AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2010 AQR INTERNATIONAL EQUITY FUND PERFORMANCE SINCE COMMENCEMENT OF OPERATIONS AS A MUTUAL FUND
	1 Year		Since 9/29/2009		Since Inception (8/28/2009)
Fund - Class N: AQINX		10.40%		9.96%		na
Fund - Class I: AQIIX		10.40%		10.10%		na
Fund - Class Y: AQIYX		10.84%		10.52%		12.82%
MSCI EAFE Index		7.75%		8.38%		10.03%

Past performance does not guarantee future results. Investment results and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Class N and Class I shares of the Fund are subject to a 2% redemption fee for redemptions within 60 days of purchase. Class Y shares are subject to a 0.10% redemption fee. If reflected, the redemption fee would reduce the performance quoted. Current performance may be lower or higher than the performance data quoted. As of the latest prospectus, the gross expense ratio for the Fund’s Class N/I/Y shares are 1.43%, 1.13% and 0.98%, respectively. Call 1-866-290-2688 or visit www.aqrfunds.com for current month-end performance.

*	Class Y shares commenced operations on 8/28/2009


AQR Funds	Annual Report	December 2010	9
AQR Funds	Annual Report	December 2010	9

Shareholder Letter (Unaudited)

AQR INTERNATIONAL EQUITY FUND

AQR INTERNATIONAL EQUITY FUND VS. MSCI EAFE INDEX

VALUE OF $10,000 INVESTED ON 9/29/09

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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2010 AQR INTERNATIONAL EQUITY FUND PERFORMANCE SINCE INCEPTION OF PREDECESSOR LIMITED PARTNERSHIP
	1 Year		3 Year		5 Year		Since Inception (8/1/2004)
Fund - Class N: AQINX		10.40%		-6.56%		1.79%		6.50%
Fund - Class I: AQIIX		10.40%		-6.32%		2.09%		6.82%
Fund - Class Y: AQIYX		10.84%		-6.00%		2.44%		7.19%
MSCI EAFE Index		7.75%		-7.02%		2.46%		6.78%

Past performance does not guarantee future results. Investment results and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Class N and Class I shares of the Fund are subject to a 2% redemption fee for redemptions within 60 days of purchase. Class Y shares are subject to a 0.10% redemption fee. If reflected, the redemption fee would reduce the performance quoted. Current performance may be lower or higher than the performance data quoted. As of the latest prospectus, the gross expense ratio for the Fund’s Class N/I/Y shares are 1.43%, 1.13% and 0.98%, respectively. Call 1-866-290-2688 or visit www.aqrfunds.com for current month-end performance.


AQR Funds	Annual Report	December 2010	10
AQR Funds	Annual Report	December 2010	10

Shareholder Letter (Unaudited)

AQR INTERNATIONAL EQUITY FUND

AQR INTERNATIONAL EQUITY FUND VS. MSCI EAFE INDEX

VALUE OF $10,000 INVESTED ON 8/1/2004

LOGO

A privately offered fund managed by the Adviser was reorganized into the Class Y shares of the Fund on August 28, 2009, the date the Fund commenced operations. The Class N and Class I shares of the Fund commenced operations on September 30, 2009. This privately offered fund was organized in June 2004 and commenced operations in August 2004 and had an investment objective, investment policies and restrictions that were, in all material respects, the same as those of the Fund. However, the privately offered fund was not registered as an investment company under the 1940 Act. In addition, this privately offered fund was not subject to certain investment limitations, diversification requirements, liquidity requirements, and other restrictions imposed by the 1940 Act and the Internal Revenue Code which, if applicable, might have adversely affected its performance. The performance of Class N and Class I shares for the period from August 28, 2009 to September 30, 2009 is based on the performance of the Class Y shares of the Fund, and, for all share classes, for periods prior to August 28, 2009 is based on that of the privately offered fund. The total annual fund operating expenses of the privately offered fund were lower than the Fund’s estimated total annual fund operating expenses for Class N, I and Y shares during the periods presented. Also, the Fund’s total annual fund operating expenses for Class Y shares were lower than the Fund’s estimated total annual fund operating expenses for Class N and Class I shares during the periods presented. The Fund has restated the performance of the privately offered fund and of the Class Y shares to reflect the Fund’s expenses of Class N, I and Y shares.


AQR Funds	Annual Report	December 2010	11
AQR Funds	Annual Report	December 2010	11

Shareholder Letter (Unaudited)


AQR DIVERSIFIED ARBITRAGE FUND

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Ronen Israel

Principal

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Mark Mitchell, Ph.D.

Founding Principal, CNH Partners

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Lars Nielsen

Principal

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Todd Pulvino, Ph.D.

Founding Principal, CNH Partners

Dear Shareholder:

The Diversified Arbitrage Fund returned 4.43% for the Fund’s Class N Shares during the 2010 calendar year. During the corresponding period, the Merrill Lynch 3-Month Treasury-Bill Index (the Fund’s benchmark) returned 0.13% and the S&P 500 returned 15.06%. Based on monthly return data, the Fund’s equity market beta (relative to the S&P 500) since inception (January 15, 2009) through December 31, 2010 is 0.06 and its annualized volatility is 3.3%.

Arbitrage markets were largely stable throughout the year, aside from disruptions in May when economic uncertainty increased commensurate with an increase in European sovereign risk and a worsening outlook for the global economy. Indeed, May was the only month during 2010 in which the Fund had a negative return (-1.37%) as arbitrage spreads temporarily widened.

The Fund invests in multiple arbitrage and alternative-investment strategies, and tactically allocates to various strategies based on relative attractiveness. As displayed in the Table below, strategy weights have varied throughout the past 12 months, though considerably less so than in 2009. The Fund reduced its exposure to convertible arbitrage during the year, bringing the weight in convertible arbitrage close to what we expect to be the long-term average. The Table indicates a substantial drop-off in the allocation to merger arbitrage at year-end, but this decline is largely an artifact of the consummation of mergers prior to year-end. This seasonal effect is not uncommon and is driven by firms’ desires to avoid the administrative burden (e.g. tax filings) of carrying two entities into a new fiscal year. The Fund’s allocation to merger arbitrage is expected to rebound in early 2011 as new mergers are announced. The weight in credit-related trades increased from 1% at the end of 2009 to 15% at the end of the 2010 due to numerous opportunities in short-term corporate credit. Both dual-class arbitrage and closed-end-fund arbitrage saw reductions in strategy weights, a result of declining spreads and discounts. The Table also indicates the addition of PIPEs (Private Investments in Public Entities) in the second half of 2010. PIPEs have many structures, but typically are comprised of an equity-linked security (convertible debenture, convertible preferred, or common stock) and long-lived warrants (up to five years). These deals are usually priced such that the unit (for example, common stock plus warrant) is priced at a discount to the market price of the common stock. A common trade is to purchase the unit, and over time sell the common stock. We generally continue to hold the warrant as it tends to have a substantially higher value than what can be obtained by selling in the open market.


AQR Funds	Annual Report	December 2010	12
AQR Funds	Annual Report	December 2010	12

Shareholder Letter (Unaudited)

AQR DIVERSIFIED ARBITRAGE FUND

Table of Arbitrage Strategy Weights


Long Positions By Strategy as % of Investment in Securities
	12/31/09		6/30/10		12/31/10
Convertible Arbitrage		44%		35%		38%
Merger Arbitrage		34%		34%		23%
Credit		1%		13%		15%
Dual-Class Arbitrage		12%		8%		8%
Price Pressure		4%		5%		6%
SPACs (Special Purpose Acquisition Company)		1%		1%		3%
PIPEs		0%		0%		3%
Closed-End Fund Arbitrage		5%		2%		0%
Other Arbitrage and Alternative Investment Strategies		2%		2%		4%

Notwithstanding the reduction in the allocation to the convertible arbitrage strategy, it continues to have the largest strategy weight. As discussed in detail in the 2009 year-end letter, the convertible bond market unraveled during the 2008 financial crisis causing convertible bonds to trade at significant discounts to fundamental values. As financial markets stabilized in 2009, convertible cheapness began to revert to historical levels. By the end of 2010, convertible cheapness was close to its long-term historical average. Because of the convergence of convertible bonds toward fundamental value in 2010, the convertible arbitrage strategy contributed significantly to the Fund’s positive return for the year, accounting for 34% of the total return. In the meantime, we have positioned the convertible portfolio defensively with 95% of the convertible portfolio invested in equity-sensitive convertibles, where the equity short provides a direct hedge to the long convertible bond position. Although we are still exposed to convertible bonds cheapening relative to fundamental values, these losses are generally temporary, and would be at least partially offset by an increase in realized volatility (realized volatility that is higher than expected results in increased profits) that tends to accompany cheapening episodes.¹

Merger arbitrage, a well-known arbitrage strategy like convertible arbitrage, involves the purchase of shares of firms that are targets in announced mergers or reorganizations. For a merger where the consideration is the acquirer’s stock, the Fund seeks to hedge market exposure by shorting the stock of the acquiring company in an amount based on the exchange ratio specified in the merger agreement. Conditions for investing in merger arbitrage are especially attractive when deal spreads (the percentage difference between the consideration offered by the acquiring firm and the stock price of the target firm) are wide and when merger activity is robust. As deal flow began to increase during the latter part of 2009, the Fund increased its allocation to merger arbitrage to 34%. The Fund maintained a higher allocation to merger arbitrage in 2010 than in 2009, although as previously discussed, the allocation fell at year-end as a result of numerous deal closings. Merger arbitrage generated 28% of the Fund’s return during 2010 as the strategy benefited from a combination of deal spread tightening, reasonably strong deal flow, a low frequency of deal failures, and frequent increased offers. We anticipate robust deal flow in 2011 in light of increased business confidence and thus expect to maintain substantial exposure to the merger arbitrage strategy.

It is important to note that the Fund’s investment in a convertible bond is based on the cheapness of the bond relative to its fundamental value rather than on a view about the underlying stock price. Specifically, we hedge our long position and attempt to capture the cheapness of the convertible by shorting the stock of the underlying issuer, and by hedging systematic credit and interest rate risk.


AQR Funds	Annual Report	December 2010	13
AQR Funds	Annual Report	December 2010	13

Shareholder Letter (Unaudited)

AQR DIVERSIFIED ARBITRAGE FUND

As mentioned above, the Fund increased its exposure to specific short-term (average duration of 12-15 months) corporate debentures during the first half of the year, particularly in May amid heightened economic uncertainty and European sovereign risk. Historically, as we have documented using our proprietary credit database, short-dated corporate debentures, particularly in the high-yield arena, produce excess returns after accounting for systematic credit and interest rate risk. We postulate that the reason for the excess returns is that fixed-income investors often choose to exchange short-term debentures for longer-term debentures in order to generate higher-expected returns associated with bearing greater systematic credit risk. We focus on short-dated debentures issued by companies that have stable near-term cash flow and sufficient assets to retire the debenture at maturity. We view this trade as similar to a long-dated cash merger trade, but one in which the downside is contractually protected by the underlying indenture. This is not to say that the trade is absent risk. However, the systematic component of risk can be minimized due to the short-dated nature of the security. Our analysis using our proprietary database shows that the modest systematic credit and interest rate risk may be hedged at the portfolio level using credit default swaps and Treasury futures. The Fund took advantage of attractive risk-adjusted yields by selectively purchasing several short-dated corporate debentures and contemporaneously hedging credit risk and interest rate risk at the portfolio level. This strategy contributed 14% to the Fund’s return for the year.

The three strategies described above accounted for roughly 76% of the capital allocated to the Fund (based on 2010 year-end allocations), and likewise 76% of the Fund’s return in 2010. Allocations to the other strategies (dual-class arbitrage, price pressure, PIPEs, SPACs, closed-end-fund arbitrage, etc.) were relatively small on an individual basis as they offered fewer investment opportunities. These strategies contributed positively to the Fund’s return, with only one exception as dual-class arbitrage realized a reasonably small loss to the Fund.

Overall, the Fund had a successful second year. It realized a return in line with our long-term expectations, investing opportunities were good, though not great, and given our multi-strategy approach, we were able to reposition the portfolio as opportunities arose. Looking forward to 2011, we anticipate there will be several opportunities to successfully deploy capital. In particular, merger deal flow is strengthening, in light of the increased business confidence, and we are seeing good opportunities to invest in target firms with attractive deal spreads. Likewise, with the economy growing, we anticipate a pick-up in new capital issues which will lead to an increase in opportunities involving price pressure, PIPEs and SPACs. Importantly, irrespective of where the Fund deploys capital in 2011, we will continue to attempt to hedge out systematic equity, credit and interest rate risk, with the intention of out-performing the Treasury Bill benchmark return.


AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2010 AQR DIVERSIFIED ARBITRAGE FUND
	1 Year		Since Inception (1/15/2009)
Fund - Class N: ADANX		4.43%		6.78%
Fund - Class I: ADAIX		4.71%		7.11%
Merrill Lynch 3-Month T-Bill Index		0.13%		0.17%


AQR Funds	Annual Report	December 2010	14
AQR Funds	Annual Report	December 2010	14

Shareholder Letter (Unaudited)

AQR DIVERSIFIED ARBITRAGE FUND

Current performance may be lower or higher than the performance data quoted. As of the latest Prospectus, the gross expense ratios for the Class N/I shares are expected to be 2.69% and 2.46%, respectively. Call 1-866-290-2688 or visit www.aqrfunds.com for current month-end performance.

AQR DIVERSIFIED ARBITRAGE FUND VS. MERRILL LYNCH 3-MONTH T-BILL INDEX

VALUE OF $10,000 INVESTED ON 1/15/09

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AQR Funds	Annual Report	December 2010	15
AQR Funds	Annual Report	December 2010	15

Shareholder Letter (Unaudited)


AQR MANAGED FUTURES STRATEGY FUND

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Cliff Asness

Managing & Founding Principal

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John Liew

Founding Principal

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Brian Hurst

Principal

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Lasse Pedersen

Principal

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Yao Hua Ooi

Vice President

Dear Shareholder:

On January 6, 2011, the Managed Futures Strategy Fund celebrated its one year anniversary. From its inception date of January 6, 2010 through December 31, 2010, the Fund’s Class N shares returned +5.12% and realized an annualized volatility of 8.6%. During this same period, the Merrill Lynch 3-Month Treasury-Bill Index (the Fund’s benchmark) returned 0.13%. The S&P 500 returned 12.89% over this same period. The Fund’s assets grew to $928 MM by the end of December, reflecting strong investor demand for an actively run managed futures fund in the mutual fund space.

The Fund invests both long and short across a portfolio of futures contracts and futures-related instruments, utilizing more than 100 contracts across four major asset classes: commodities, currencies, fixed income, and equity markets. The Fund pursues a trend-following strategy, and as such, it tends to perform well when there are persistent trends in markets and suffers when there is a lack of trends or when trends reverse sharply. In 2010, the Fund realized gains in currency and fixed income markets, benefiting from a number of persistent trends, such as the weakening of the Euro and declines in government bond yields globally. Those gains were partially offset by losses in equity and commodity markets, where a number of positive trends that formed throughout the latter half of 2009 reversed during the first half of 2010.

By design, the Fund tactically changes the amount of risk it takes in pursing trends across the four major asset classes depending on the relative attractiveness of the trend-following opportunities within each asset class. The Fund will invest more in an asset class when there are perceived strong trends across many assets within that particular asset class. The Fund began the year having its largest risk allocation in equities and currencies, and ended the year with its largest risk allocation in equities and commodities.

In addition, the Fund also tactically changes the level of risk it targets depending on the strength and correlation of trends across the four asset classes. The Adviser started 2010 targeting close to 13% annualized volatility (the maximum ex-ante risk the Fund will target), as there were strong and correlated trends in equity and commodity markets following the strong performance of those markets in 2009, but reduced its overall risk target gradually over the first half of 2010 as those trends weakened. As trends picked up again in the second half of 2010 the risk target was increased, ending the year back at its maximum target. Below is a summary of the asset class risk exposures throughout 2010:


Asset Class Exposure (% of Risk Allocation)
	1/31/2010		3/31/2010		6/30/2010		9/30/2010		12/31/2010
Fixed Income		19.8%		12.5%		33.9%		21.2%		7.3%
Commodities		15.1%		17.1%		27.5%		19.0%		32.0%
Currencies		22.6%		22.6%		22.0%		26.8%		28.7%
Equities		42.5%		47.8%		16.6%		33.0%		32.0%


AQR Funds	Annual Report	December 2010	16
AQR Funds	Annual Report	December 2010	16

Shareholder Letter (Unaudited)


AQR MANAGED FUTURES STRATEGY FUND

Within each of the asset classes, the fund pursues short-term trend strategies, long-term trend strategies and over-extended trend strategies. Overall, short-term trend strategies performed well in 2010, particularly in fixed income and currency markets, where short-term trends continued in the first part of the year. Long-term trend strategies performed even better than short-term trend strategies, contributing positively in every asset class. The over-extended trend strategies detracted from performance over this period, especially in commodities, where the Fund’s long exposures were reduced on long-term overextended trend indicators. This detracted from performance in the second half of the year, as commodities experienced an extended rally.

The Fund gained 4.9% in the fixed income markets in 2010. The majority of the gains were driven by the Fund’s long positions in European and US government bonds and short-term interest rate futures for most of the year, based on both positive short-term trends and long-term trends. Yields on government bonds of most maturities declined over this period as investors turned to safe-haven assets following fears of a European sovereign debt crisis, benefiting the Fund. While this trend reversed toward the end of the year as growth expectations rose, losses were mitigated by overextended trend signals and short term trend signals which quickly reduced positions, leaving the Fund with reduced fixed income exposure at the end of the year.

The Fund lost 0.7% in equities in 2010. The majority of the losses occurred in the second quarter, as strong short and long term trends in both developed and emerging equity markets reversed sharply following fears of a European sovereign debt crisis, as well as a slowdown in global economic growth. However, the longer term trend reasserted itself in the second half of the year as increased growth expectations and the second round of quantitative easing (“QE2”) drove equities higher, offsetting most of the losses from the first half of the year.

The Fund lost 0.6% in commodities over the course of the year. While the Fund benefited from being long copper and agricultural commodities in the 4th quarter when many commodities rose on increased growth prospects, the gains were not sufficient to overcome losses suffered in energies, base metals and agricultural commodities during the 2nd quarter. During the 2nd quarter, positive short and long term trends reversed in the majority of commodity markets following fears of slower global economic growth in both developed and emerging markets.

In currencies, the Fund gained 1.5% in 2010. Much of the gains came as a result of the Fund’s short position in the Euro in the first part of the year, which profited as the Euro fell on Euro-zone worries. The fund also gained from being long the Australian Dollar, which profited as commodity linked currencies strengthened in the 4^th quarter.

The Fund’s performance in 2010 highlighted the potential benefits of the Fund’s approach in diversifying across various trend indicators and asset classes. While fixed income and currencies contributed in the first half of the year, commodities and equities contributed in the second half. While overextended trend signals suffered moderate losses, trend signals performed well. We continue to pursue a risk-balanced approach in investing across the major asset classes, and trust that doing so will benefit the Fund in the long-run.


AQR Funds	Annual Report	December 2010	17
AQR Funds	Annual Report	December 2010	17

Shareholder Letter (Unaudited)

AQR MANAGED FUTURES STRATEGY FUND


SINCE INCEPTION TOTAL RETURNS AS OF 12/31/2010 AQR MANAGED FUTURES STRATEGY FUND
	Since Inception (1/6/2010)
Fund - Class N: AQMNX		5.12%
Fund - Class I: AQMIX		5.41%
Merrill Lynch 3-Month T-Bill Index		0.13%

Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund generally charges 1% of redemption proceeds on shares held for 60 days or less. If reflected, the redemption fee would reduce the performance quoted. Current performance may be lower or higher than the performance data quoted. As of the latest Prospectus, the gross expense ratios for the Class N/I shares are expected to be 1.50% and 1.25%, respectively. Call 1-866-290-2688 or visit www.aqrfunds.com for current month-end performance.

AQR MANAGED FUTURES STRATEGY FUND VS. MERRILL LYNCH 3-MONTH T-BILL INDEX

VALUE OF $10,000 INVESTED ON 1/6/10

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AQR Funds	Annual Report	December 2010	18
AQR Funds	Annual Report	December 2010	18

Shareholder Letter (Unaudited)


AQR RISK PARITY FUND

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John Liew

Founding Principal

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Brian Hurst

Principal

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Michael Mendelson

Principal

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Yao Hua Ooi

Vice President

Dear Shareholder:

On December 31, 2010, the AQR Risk Parity Fund completed its first quarter. From its inception date of September 30, 2010 through December 31, 2010, the Fund’s Class N shares returned +3.78% and realized an annualized volatility of 11.75%. During this same period, a 60/40 reference portfolio consisting of 60% S&P 500 Index/40% Barclays US Aggregate Index returned 5.67%. The Fund’s assets grew to $24 MM by the end of December.

The Fund invests across a wide variety of global markets, including: developed and emerging market equities, fixed income and currencies, global credit (corporate, government, and mortgage), and commodities. The Fund’s strategic allocation across these markets is determined by a risk parity approach to allocating investments – which spreads capital across the various asset classes to roughly equally balance the risk allocated to them. The balancing of risk allocation across different asset classes can create a portfolio that can potentially perform more consistently across a wider array of economic environments than portfolios which may have risk more concentrated into a specific asset class.

Starting from this strategic risk parity allocation, we then use AQR’s proprietary macroeconomic views to determine actual capital allocations across a broad array of global markets. The actual allocations represent over- and under-weights of the strategy vs. the strategic risk parity allocation. This strategy centers around building a truly diversified and risk targeted portfolio whose allocations reflect AQR’s forecasts of changes in market environments, all in an attempt to deliver higher returns at a risk level similar to that of traditional portfolios.

The Fund will remain long all of the markets in which we invest while maintaining a moderate (under 0.5 on average) beta to the stock market. Our risk parity framework centers around a core risk allocation balanced across the various types of asset classes (equity, fixed income, credit, commodities). From this core starting point, we rely on the proprietary models we use in our hedge funds, which include signals based on carry, momentum, valuation, and other important economic variables, to determine views across the various markets and apply controlled allocations away from risk parity in an attempt to take advantage of opportunities in the various markets.

The targeted annualized volatility for the fund is 10%, on average, which varies modestly over time based on our perceptions of tactical opportunities within the different asset classes we trade. Over the fourth quarter, our signals indicated an attractive environment for equities, credit and commodities, and as a result the strategy was targeting a higher level of volatility (took a more aggressive stance) than normal.

The Fund experienced gains in three out of its four major asset class buckets. Equities contributed +2.1%, the inflation-sensitive assets contributed 2.7%, the credit assets contributed 2.8%, while the nominal interest exposures lost 3.8% over the quarter.


AQR Funds	Annual Report	December 2010	19
AQR Funds	Annual Report	December 2010	19

Shareholder Letter (Unaudited)

AQR RISK PARITY FUND

In the equity bucket, the fund was tactically overweight equities in the fourth quarter on both short-term and long-term market trend signals and profited from a strong rally across both developed and emerging equity markets.

In the inflation bucket, the Fund was tactically overweight commodities in the fourth quarter based on strong macroeconomic growth indicators as well as positive market momentum, and profited from a strong rally across all commodity sectors on hopes of stronger economic growth. The Fund’s inflation-linked bond positions ended the quarter relatively flat, as losses in European linkers and Treasury Inflation-Protected Securities (“TIPS”) were offset by gains in UK linkers.

In the credit bucket, the Fund was tactically overweight high yield credit because of a strong fundamental environment for credit spreads and positive credit market momentum. In addition, the fund was overweight emerging currencies, which appreciated versus developed currencies over the quarter.

In the nominal interest rate bucket, the Fund entered the quarter being overweight bonds on strong momentum coming into the quarter, but reduced its overweight position over the quarter as yields rose and the positive momentum in the market deteriorated following the Fed’s QE2 announcement. In addition, our risk forecasts for bonds increased substantially over the quarter. Part of our risk parity approach to investing involves targeting risk levels. So, when our forecast for risk of a market increases, we generally will lower capital allocation to that market. The combination of a weaker view on fixed income and an increase in forecasted fixed income market risk led us to cut our holdings in bonds by 25% over the quarter.

This has been a good first quarter for the Fund, and we hope to continue to add value to your portfolios going forward.


AQR Funds	Annual Report	December 2010	20
AQR Funds	Annual Report	December 2010	20

Shareholder Letter (Unaudited)

AQR RISK PARITY FUND


SINCE INCEPTION TOTAL RETURNS AS OF 12/31/2010 AQR RISK PARITY FUND
	Since Inception (9/30/2010)
Fund - Class N: AQRNX		3.78%
Fund - Class I: AQRIX		3.88%
Merrill Lynch 3-Month T-Bill Index		0.05%

Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund generally charges 1% of redemption proceeds on shares held for 60 days or less. If reflected, the redemption fee would reduce the performance quoted. Current performance may be lower or higher than the performance data quoted. As of the latest Prospectus, the gross expense ratios for the Class N/I shares are expected to be 1.20% and 0.95%, respectively. Call 1-866-290-2688 or visit www.aqrfunds.com for current month-end performance.

AQR RISK PARITY FUND VS. MERRILL LYNCH 3-MONTH T-BILL INDEX

VALUE OF $10,000 INVESTED ON 9/30/2010

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AQR Funds	Annual Report	December 2010	21
AQR Funds	Annual Report	December 2010	21

Shareholder Letter (Unaudited)

AQR MOMENTUM FUND

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Cliff Asness

Managing & Founding Principal

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Jacques Friedman

Principal

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Ronen Israel

Principal

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Lars Nielsen

Principal

Dear Shareholder:

Despite a rocky first half of 2010, the equity markets rallied in the second half, as investors put aside European debt troubles and governments around the world continued to bolster the economy. The AQR Momentum Fund finished its first full year beating the equity markets, gaining 18.60%, while the Russell 1000 Index returned 16.10%. The Fund outperformed the Russell 1000 Growth Index, which returned 16.72%.

Most of the outperformance to the Russell 1000 Index was driven by the implied sector over/underweights that result from individual stock positions in the Fund; in other words, the Fund profited by being overweight the sectors that had previously done well and underweight those that had suffered. The Fund was overweight Consumer Discretionary throughout the year, and in the third quarter the overweight swelled to 13%, with 24% of the Fund in Consumer Discretionary names versus 11% in the Russell 1000 Index. Particularly adding to performance were internet retailers that the Fund held such as Amazon.com and Priceline.com, which both saw tremendous gains in the third quarter. In the fourth quarter, the Fund benefitted from underweights in the Healthcare sector and especially in pharmaceutical companies such as Johnson & Johnson and Abbott Labs.

Relative over/underweights within sectors played a smaller role in outperformance. Good stock selection within certain sectors such as Consumer Discretionary and Information Technology were offset by less successful exposures within Financials, particularly in the first quarter, when the Fund failed to capture the upswing of certain beaten-down financials. The Fund’s biggest single contributor to outperformance was Apple, which we were overweight throughout the year. The stock rose 53% in 2010.

The AQR Momentum Fund invests in stocks of large and mid-cap U.S. companies with positive momentum. A stock is considered to have positive momentum if it has performed well in the prior twelve months (excluding the most recent month) relative to other stocks in the Fund’s investment universe, which is comprised of the 1000 largest U.S. companies by market capitalization. The Fund is not actively managed to outperform a growth, value or core benchmark. Rather, it seeks to provide systematic exposure to stocks that share the common characteristic of positive momentum.

Note that the Fund sometimes uses derivatives, such as S&P500 E-Mini futures, to gain market exposure and equitize daily flows. The Fund’s derivatives positions in 2010 detracted about -0.90% over the year, because a larger portion of the Fund was in these positions in mid-May and late June, when markets were falling.

In summary, the AQR Momentum Fund finished its first full year delivering a strong +18.60% return.


AQR Funds	Annual Report	December 2010	22
AQR Funds	Annual Report	December 2010	22

Shareholder Letter (Unaudited)

AQR MOMENTUM FUND


AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2010 AQR MOMENTUM FUND
	1 Year		Since Inception (7/9/2009)
Fund—Class L: AMOMX		18.60%		30.90%
Russell 1000^® Index		16.10%		30.88%

Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund generally charges 1% of redemption proceeds on shares held for 60 days or less. If reflected, the redemption fee would reduce the performance quoted. Current performance may be lower or higher than the performance data quoted. As of the latest Prospectus, the gross expense ratios for the Class L shares is expected to be 0.49%. Call 1-866-290-2688 or visit www.aqrfunds.com for current month-end performance.

AQR MOMENTUM FUND VS. RUSSELL 1000^® INDEX

VALUE OF $10,000 INVESTED ON 7/9/09

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AQR Funds	Annual Report	December 2010	23
AQR Funds	Annual Report	December 2010	23

Shareholder Letter (Unaudited)

AQR SMALL CAP MOMENTUM FUND

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Cliff Asness

Managing & Founding Principal

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Jacques Friedman

Principal

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Ronen Israel

Principal

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Lars Nielsen

Principal

Dear Shareholder:

For US small cap stocks, while the first half of 2010 was as rocky as their large and mid-cap peers, the market rally in the second half of the year was even more pronounced. The Russell 2000 Index gained 26.85% for the year, and the AQR Small Cap Momentum Fund (the “Fund”) finished its first full year beating the market, gaining 27.69%. The Fund underperformed the Russell 2000 Growth Index, which returned 29.09%.

Outperformance relative to the Russell 2000 Index was driven both by implied sector over/underweights as well as relative over/underweights within sectors. The Fund’s overweight of Consumer Discretionary stocks during the first quarter and overweight of Energy stocks during the fourth quarter were especially profitable. In the fourth quarter, oil and gas exploration companies like Rosetta Resource and Clayton Williams were both up more than 60%, and the Fund benefitted from being overweight these names.

Relative over/underweights within sectors were also a positive contributor to outperformance. Stock selection within the Industrials sector was noteworthy, as the Fund was overweight big winners like Polypore International and underweight losing stocks like American Semiconductor.

The AQR Small Cap Momentum Fund invests in stocks of small-cap U.S. companies with positive momentum. A stock is considered to have positive momentum if it has performed well in the prior twelve months (excluding the most recent month) relative to other stocks in the investment universe, which is comprised of U.S. companies smaller than the 1000th largest and larger than the 3000th smallest company by market capitalization. The Fund is not actively managed to outperform a growth, value or core benchmark. Rather, it seeks to provide systematic exposure to stocks that share the common characteristic of positive momentum.

Note that the Fund sometimes uses derivatives, such as Russell 2000 E-Mini futures, to gain market exposure and equitize daily flows. The Fund’s derivatives positions in 2010 contributed about +0.88% to performance over the year, because it had larger positions on when the markets were rising in early December.

In summary, the AQR Small Cap Momentum Fund finished its first full year delivering a strong +27.69% return.


AQR Funds	Annual Report	December 2010	24
AQR Funds	Annual Report	December 2010	24

Shareholder Letter (Unaudited)

AQR SMALL CAP MOMENTUM FUND


AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2010 AQR SMALL CAP MOMENTUM FUND
	1 Year		Since Inception (7/9/2009)
Fund—Class L: ASMOX		27.69%		34.37%
Russell 2000^® Index		26.85%		41.22%

Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund generally charges 1% of redemption proceeds on shares held for 60 days or less. If reflected, the redemption fee would reduce the performance quoted. Current performance may be lower or higher than the performance data quoted. As of the latest Prospectus, the gross expense ratios for the Class L shares is expected to be 0.65%. Call 1-866-290-2688 or visit www.aqrfunds.com for current month-end performance.

AQR SMALL CAP MOMENTUM FUND VS. RUSSELL 2000^® INDEX

VALUE OF $10,000 INVESTED ON 7/9/09

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AQR Funds	Annual Report	December 2010	25
AQR Funds	Annual Report	December 2010	25

Shareholder Letter (Unaudited)

AQR INTERNATIONAL MOMENTUM FUND

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Cliff Asness

Managing & Founding Principal

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Jacques Friedman

Principal

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Ronen Israel

Principal

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Lars Nielsen

Principal

Dear Shareholder:

While global markets were up overall in 2010, performance was less stellar than the US market, having fared worse in the first half of the year. European countries most affected by the debt crisis suffered more than others. The AQR International Momentum Fund (the “Fund”) finished its first full year beating the global equity markets, returning 14.11% while the MSCI World ex-USA Index gained a modest 8.95%. The Fund outperformed the MSCI World ex-USA Growth Index, which returned 13.06%.

The Fund outperformed the broader MSCI World ex-USA Index, driven in large part by stock selection in the Energy Sector, meaning that within this sector, stocks with good momentum tended to outperform their peers. The largest contributors to outperformance were Royal Dutch Shell, in which the Fund had roughly a 2% overweight during the second half of the year, and BP, in which the Fund had about a -1.3% underweight throughout the year. BP finished down almost -23% on the year in the wake of its oil spill, while Royal Dutch was up 24%, mostly after surprisingly good earnings announcements in the fourth quarter.

To a lesser extent, the Fund also benefitted from good sector and country selection. A sector overweight in Materials contributed positively as the fund was heavily invested in global mining companies such as Rio Tinto and Xstrata, both having outperformed the rest of the market in 2010. The Fund was actually quite well-positioned for the European debt problems during the year, maintaining an overweight in safer countries such as Sweden while underweighting Spain and Greece. Its country over/underweights within Europe contributed positively to outperformance versus the MSCI World ex-USA Index in 2010.

The AQR International Momentum Fund invests in stocks of large and mid-cap non-U.S. companies with positive momentum. A stock is considered to have positive momentum if it has performed well in the prior twelve months (excluding the most recent month) relative to other stocks in the investment universe, which is comprised of approximately the top 85% of stocks by market capitalization of each of the 20 major developed markets outside the U.S. The Fund is not actively managed to outperform a growth, value or core benchmark. Rather, it seeks to provide systematic exposure to stocks that share the common characteristic of positive momentum.

Note that the Fund sometimes uses derivatives to implement its strategy. In particular, the Fund will sometimes trade swaps in UK securities to minimize certain trading costs. Its derivatives positions in 2010 contributed about +2.00% to performance over the year, consistent with UK equity markets in general being up for the year.

In summary, the AQR International Momentum Fund finished its first full year delivering a strong +14.11% return.


AQR Funds	Annual Report	December 2010	26
AQR Funds	Annual Report	December 2010	26

Shareholder Letter (Unaudited)

AQR INTERNATIONAL MOMENTUM FUND


AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2010 AQR INTERNATIONAL MOMENTUM FUND
	1 Year		Since Inception (7/9/2009)
Fund—Class L: AIMOX		14.11%		25.81%
MSCI World ex-USA Index		8.95%		24.52%

Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund generally charges 2% of redemption proceeds on shares held for 60 days or less. If reflected, the redemption fee would reduce the performance quoted. Current performance may be lower or higher than the performance data quoted. As of the latest prospectus, the gross expense ratios for the Class L shares is expected to be 0.65%. Call 1-866-290-2688 or visit www.aqrfunds.com for current month-end performance.

AQR INTERNATIONAL MOMENTUM FUND VS. MSCI WORLD EX-USA INDEX

VALUE OF $10,000 INVESTED ON 7/9/09

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The recent growth rate in the stock market has helped to produce short-term returns for some asset classes that are not typical and may not continue in the future. Because of ongoing market volatility, fund performance may be subject to substantial short-term changes.


AQR Funds	Annual Report	December 2010	27
AQR Funds	Annual Report	December 2010	27

Shareholder Letter (Unaudited)

PRINCIPAL RISKS:

AQR Global Equity Fund and AQR International Equity Fund: The AQR Global Equity Fund and the AQR International Equity Fund use derivatives to manage their country and currency exposures. The use of derivatives exposes the Fund to additional risks including increased volatility, lack of liquidity, and possible losses greater than the Fund’s initial investment as well as increased transaction costs. Foreign investing involves special risks such as currency fluctuations and political uncertainty. The Funds are not suitable for all investors.

AQR Diversified Arbitrage Fund: As the AQR Diversified Arbitrage Fund (the “Fund”) employs arbitrage and alternative strategies, the Fund has the risk that the anticipated opportunities do not play out as planned, resulting in potentially reduced returns or losses to the Fund as it unwinds its trades. This Fund enters into a short sale by selling a security it has borrowed. If the market price of a security increases after the Fund borrows the security, the Fund will suffer a potentially unlimited loss when it replaces the borrowed security at the higher price. Short sales also involve transaction and other costs that will reduce potential Fund gains and increase potential Fund losses. The Fund uses derivatives to hedge certain economic exposures. The use of derivatives exposes the Fund to additional risks including increased volatility, lack of liquidity, and possible losses greater than the Fund’s initial investment as well as increased transaction costs. This Fund is not suitable for all investors.

AQR Managed Futures Strategy Fund: The use of derivatives, forward and futures contracts, and commodities exposes the Fund to additional risks including increased volatility, lack of liquidity, and possible losses greater than the Fund’s initial investment as well as increased transaction costs. Concentration generally will lead to greater price volatility. The Fund enters into a short sale by selling a security it has borrowed. If the market price of a security increases after the Fund borrows the security, the Fund will suffer a potentially unlimited loss when it replaces the borrowed security at the higher price. Short sales also involve transaction and other costs that will reduce potential Fund gains and increase potential Fund losses. This Fund is not suitable for all investors.

AQR Risk Parity Fund: Foreign investing involves special risks such as currency fluctuations and political uncertainty. The use of derivatives, forward and futures contracts, and commodities exposes the Fund to additional risks including increased volatility, lack of liquidity, and possible losses greater than the Fund’s initial investment as well as increased transaction costs. This Fund enters into a short sale by selling a security it has borrowed. If the market price of a security increases after the Fund borrows the security, the Fund will suffer a potentially unlimited loss when it replaces the borrowed security at the higher price. Short sales also involve transaction and other costs that will reduce potential Fund gains and increase potential Fund losses. When investing in bonds, yield and share price will vary with changes in interest rates and market conditions. Investors should note that if interest rates rise significantly from current levels, bond total returns will decline and may even turn negative in the short term. There is also a chance that some of the Fund’s holdings may have their credit rating downgraded or may default. Actual or realized volatility can and will differ from the forecasted or target volatility. This Fund is not suitable for all investors.

AQR Momentum Fund: Securities with positive momentum generally will be more volatile than a broad crosssection of securities. In addition, there may be periods when the momentum style is out of favor, and during which the investment performance of a Fund, which uses a momentum strategy, generally will suffer. This Fund is not suitable for all investors.

AQR Small Cap Momentum Fund: Securities with positive momentum generally will be more volatile than a broad crosssection of securities. In addition, there may be periods when the momentum style is out of favor, and during which the investment performance of a Fund, which uses a momentum strategy, generally will suffer. Derivatives are generally more sensitive to changes in economic or market conditions than other types of investments, which could result in losses that significantly exceed the Fund’s original investment. The use of derivatives exposes the Fund to additional risks including increased volatility, lack of liquidity, and possible losses greater than the Fund’s initial investment as well as increased transaction costs. Funds that emphasize investments in smaller companies generally will experience greater price volatility. This Fund is not suitable for all investors.


AQR Funds	Annual Report	December 2010	28
AQR Funds	Annual Report	December 2010	28

Shareholder Letter (Unaudited)

AQR International Momentum Fund: Securities with positive momentum generally will be more volatile than a broad crosssection of securities. In addition, there may be periods when the momentum style is out of favor, and during which the investment performance of a Fund, which uses a momentum strategy, generally will suffer. Derivatives are generally more sensitive to changes in economic or market conditions than other types of investments, which could result in losses that significantly exceed the Fund’s original investment. The use of derivatives exposes the Fund to additional risks including increased volatility, lack of liquidity, and possible losses greater than the Fund’s initial investment as well as increased transaction costs. Foreign investing involves special risks such as currency fluctuations and political uncertainty. This Fund is not suitable for all investors.

An investment in any of the AQR Funds (the “Funds”) involves risk, including loss of principal. Diversification does not eliminate this risk. The value of the Funds’ portfolio holdings may fluctuate in response to events specific to the companies in which the Fund invests, as well as economic, political or social events in the United States or abroad. Please refer to the prospectus for complete information regarding all risks associated with the Funds.

An investor considering the Funds should be able to tolerate potentially wide price fluctuations. The funds are subject to high portfolio turnover risk as a result of frequent trading, and thus will incur a higher level of brokerage fees and commissions and cause a higher level of tax liability to shareholders in the funds. The Funds may attempt to increase their income or total return through the use of securities lending, and they may be subject to the possibility of additional loss as a result of this investment technique.

Cliff Asness, David Kabiller, Brian Hurst, Yao Hua Ooi and Marco Hanig are registered representatives of ALPS Distributors, Inc.

DEFINITIONS:

Arbitrage: The simultaneous purchase and sale of an asset or two related assets in order to profit from a difference in price.

Bearish: A belief that a particular security, sector or the overall market will fall.

Beta is a measure of the volatility of a security or portfolio in comparison to an index or the market as a whole, where a security with a beta of 1.0 has equivalent volatility to the index or market it is compared to.

Carry: The return obtained from holding an asset (if positive), or the cost of holding it (if negative).

Cheapness: A measure of the discount a security price relative to its fundamental value.

Closed-end fund arbitrage is the practice of buying (selling) closed-end funds that trade at abnormally wide discounts (or premiums) to their underlying net asset values. Positions are unwound when the discount or premium converges to expected levels.

Convertible Bonds: Fixed-income securities that are convertible into common stock.

Correlation: A measurement to identify the relationship and impact on return of two or more assets.

Credit: This strategy purchases attractively priced securities on a hedged basis, typically around event-induced capital flows.

Dual-Class Arbitrage: An investment strategy that takes advantage of inefficiencies in the prices at which different classes of a publicly traded company’s stock are trading.

Futures and Forwards contracts: A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset) at a pre-determined future date and price.

Momentum: An investment style wherein an asset is deemed to have positive momentum if it has performed well in the past relative to other assets in the same universe.


AQR Funds	Annual Report	December 2010	29
AQR Funds	Annual Report	December 2010	29

Shareholder Letter (Unaudited)

Price to Book: A valuation ratio of a company’s current share price compared to its book value.

Price Pressure: This strategy captures a risk premium by providing liquidity around different types of securities issues and restructuring events. The Fund may employ additional arbitrage and alternative strategies as they arise.

Quantitative Easing: The term quantitative easing describes an extreme form of monetary policy use to stimulate an economy when the interbank interest rate, (which in the US is called the federal funds rate) is either at, or close to zero.

Richness: A measure of the premium a security price relative to its fundamental value.

Sovereign Risk: The probability that the government of a country will refuse to comply with the terms of a loan agreement during economically difficult or politically volatile times.

Special Purpose Acquisition Companies (SPACs): SPACs, often called “blank check” companies, are publicly traded companies whose primary asset is a trust invested in short-term high-grade securities. The Fund seeks to capture a liquidity premium when these securities, which are typically thinly traded, are selling at a discount.

Spread: The percentage difference between two related securities.

S&P 500 Index: An Index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors.

The Merrill Lynch 3 Month Treasury Bill Index is designed to measure the performance of high-quality short-term cash-equivalent investments. Indexes are unmanaged and one cannot invest directly in an index.

The Morgan Stanley Capital International EAFE Index is a free float-adjusted market capitalization index that is designed to measure the performance of equities in developed markets, excluding the United States and Canada.

The Morgan Stanley Capital International World Index is a free float-adjusted market capitalization index that is designed to measure the performance of equities in developed markets, including the United States and Canada.

The MSCI World ex-USA Index is a free float-adjusted market capitalization index that is designed to measure the performance of equities in developed markets, excluding the United States.

The Russell 1000^® Index measures the performance of the large and mid-cap segment of the U.S. equity universe. It is a subset of the Russell 3000^® Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 90% of the U.S. market. Indexes are unmanaged and one cannot invest directly in an index.

The Russell 2000^® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000^® Index is a subset of the Russell 3000^® Index representing approximately 8% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. Indexes are unmanaged and one cannot invest directly in an index.

Tracking Error: A measure of how closely a portfolio follows the index to which it is benchmarked. It measures the standard deviation of the difference between the portfolio and index returns.

Valuation: A process of determining the current worth of an asset or company.

Volatility is a statistical measurement of up and down asset price fluctuations over time. If an asset has rapid dramatic price swings, its “volatility” will likely be relatively high. If prices are consistent and rarely change, “volatility” of that asset will likely be relatively low. “Volatility” can be measured as the standard deviation of an asset with a specific time horizon. It is often used to quantify the risk of such asset over a time period, typically expressed in annualized terms.


AQR Funds	Annual Report	December 2010	30
AQR Funds	Annual Report	December 2010	30


Schedule of Investments			December 31, 2010


AQR GLOBAL EQUITY FUND


COMMON STOCKS - 89.4%	SHARES		VALUE (Note 3)
Australia - 3.6%
Alumina Ltd.		37,995	$	96,799
Ansell Ltd.		20,994		273,281
ASX Ltd. (a)		2,722		105,155
Australia & New Zealand Banking Group Ltd.		53,416		1,278,654
AXA Asia Pacific Holdings Ltd.		16,242		105,118
Bank of Queensland Ltd.		3,416		36,457
Beach Energy Ltd.		43,365		38,453
BHP Billiton Ltd.		52,374		2,440,807
Brambles Ltd.		6,647		48,524
Caltex Australia Ltd. (a)		15,033		221,397
CFS Retail Property Trust REIT		36,456		65,746
Challenger Ltd.		61,272		295,626
Commonwealth Bank of Australia		24,222		1,261,357
Computershare Ltd.		7,001		77,335
CSL Ltd.		9,106		338,779
Dexus Property Group REIT		74,910		61,029
DUET Group		51,943		89,716
Fairfax Media Ltd. (a)		116,736		167,760
Flight Centre Ltd.		2,293		58,313
Fortescue Metals Group Ltd. †		19,404		130,358
Foster’s Group Ltd.		96,615		562,887
Goodman Group REIT		93,620		62,355
GPT Group REIT		29,672		89,542
GPT Group - In Specie (3)†(b)		96,388		—
Incitec Pivot Ltd.		63,407		257,617
Lend Lease Group		8,523		75,420
Mirvac Group REIT		51,825		65,167
National Australia Bank Ltd.		48,458		1,178,253
Newcrest Mining Ltd.		12,358		513,720
OneSteel Ltd.		66,192		175,739
Origin Energy Ltd. (a)		15,399		263,137
OZ Minerals Ltd.		52,223		92,437
Paladin Energy Ltd. †(a)		10,415		52,609
Rio Tinto Ltd. (a)		10,632		933,061
Sigma Pharmaceuticals Ltd. †		11,450		4,689
Stockland REIT		33,079		122,115
Suncorp Group Ltd.		41,179		363,433
TABCORP Holdings Ltd.		71,837		523,501
Tatts Group Ltd.		128,292		339,509
Telecom Corp of New Zealand Ltd. (a)		66,719		112,082
Telstra Corp. Ltd.		69,795		199,558
Transurban Group		19,970		105,070
Wesfarmers Ltd.		23,287		765,311
West Australian Newspapers Holdings Ltd.		3,103		20,484
Westfield Group REIT		32,674		320,756
Westfield Retail Trust REIT †		32,674		86,076
Westpac Banking Corp.		34,732		790,775

				15,265,967

Belgium - 0.1%
KBC Groep NV †		17,206		588,558

Bermuda - 0.1%
Everest Re Group Ltd. (1)		5,635		477,961

Canada - 4.9% (1)
AGF Management Ltd., Class B		15,018		294,571


	SHARES		VALUE (Note 3)
Canada - 4.9% (continued) (1)
ARC Energy Trust		2,100	$	53,702
Atco Ltd., Class I		3,349		199,359
Bank of Montreal (a)		12,580		727,719
Bank of Nova Scotia		15,799		907,888
Barrick Gold Corp.		26,005		1,390,213
BCE, Inc.		27,609		981,937
Bombardier, Inc., Class B		108,591		547,518
Brookfield Asset Management, Inc., Class A		8,102		270,705
Canadian Imperial Bank of Commerce (a)(c)		5,300		417,802
Canadian National Railway Co.		8,400		560,902
Canadian Natural Resources Ltd.		29,104		1,299,011
Canadian Oil Sands Trust		4,234		112,705
Canadian Pacific Railway Ltd.		6,800		442,224
Celestica, Inc. †		33,711		327,390
Cenovus Energy, Inc.		6,100		204,305
Encana Corp.		27,691		810,679
Enerplus Resources Fund		2,951		91,086
Fairfax Financial Holdings Ltd.		600		246,962
Finning International, Inc.		13,300		362,600
Gildan Activewear, Inc. †		11,100		316,696
Goldcorp, Inc.		3,688		170,287
Great-West Lifeco, Inc.		3,145		83,559
HudBay Minerals, Inc.		10,700		193,508
Imperial Oil Ltd.		7,000		285,875
Inmet Mining Corp.		5,780		449,417
Ivanhoe Mines Ltd. †		4,885		113,073
Laurentian Bank of Canada		4,237		204,932
Magna International, Inc.		19,634		1,025,714
Manulife Financial Corp.		40,900		705,918
National Bank of Canada		2,914		200,943
Nexen, Inc.		15,100		346,480
Niko Resources Ltd.		700		72,688
Pacific Rubiales Energy Corp.		4,000		135,863
Penn West Energy Trust		7,308		175,336
Petrobank Energy & Resources Ltd. †(c)		1,600		40,658
Petrominerales Ltd.		982		32,785
Potash Corp of Saskatchewan, Inc.		6,000		932,622
Power Corp. of Canada		4,746		132,161
Research In Motion Ltd. †		12,640		738,696
Royal Bank of Canada (a)		12,824		675,239
Russel Metals, Inc.		18,100		417,139
Silver Wheaton Corp. †		5,300		207,914
Suncor Energy, Inc.		10,582		407,668
Talisman Energy, Inc.		23,766		529,064
Teck Resources Ltd., Class B (a)		16,493		1,025,615
TELUS Corp. (a)		2,307		100,415
Toronto-Dominion Bank/The		10,112		755,614
Valeant Pharmaceuticals International, Inc.		2,874		81,796
Yellow Media, Inc.		8,100		50,541

				20,857,494

Cayman Islands - 0.0% (d)
Sands China Ltd. †		31,600		69,459


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	31
AQR Funds	Annual Report	December 2010	31


Schedule of Investments			December 31, 2010


AQR GLOBAL EQUITY FUND


	SHARES		VALUE (Note 3)
China - 0.0% (d)
Foxconn International Holdings Ltd. †(a)		32,101	$	22,405
Yangzijiang Shipbuilding Holdings Ltd.		24,404		36,407

				58,812

Denmark - 0.8%
AP Moller - Maersk A/S, Class B		56		509,122
Carlsberg A/S, Class B		4,235		426,866
Coloplast A/S, Class B		2,448		334,055
Novo Nordisk A/S, Class B		17,631		1,994,684

				3,264,727

Finland - 0.7%
Kesko OYJ B Shares		7,485		351,149
Kone OYJ, Class B		2,727		152,058
Nokia OYJ		2,990		31,095
Stora Enso OYJ R Shares		117,053		1,209,331
UPM-Kymmene OYJ		44,257		787,660
Wartsila OYJ		8,435		645,303

				3,176,596

France - 3.6%
Arkema SA		4,651		336,713
BNP Paribas		24,591		1,572,260
Bouygues SA		14,577		631,590
Christian Dior SA		5,026		721,709
CNP Assurances		1,429		25,893
Compagnie de Saint-Gobain		16,031		828,924
Klepierre REIT		1,740		63,091
Legrand SA		20,362		833,824
L’Oreal SA		8,463		944,707
LVMH Moet Hennessy Louis Vuitton SA		3,924		648,836
Metropole Television SA		17,674		429,833
Natixis †		167,812		788,064
PPR		985		157,439
Rhodia SA		17,559		583,673
Safran SA		6,184		220,073
Sanofi-Aventis SA		6,600		424,791
Schneider Electric SA		2,936		441,939
Societe BIC SA		9,971		860,562
Societe Generale		3,237		174,856
Thales SA		5,276		185,528
Total SA		52,926		2,830,029
Unibail-Rodamco SE REIT		1,690		335,929
Valeo SA †		9,881		563,007
Vivendi SA		35,582		965,256

				15,568,526

Germany - 3.4%
Adidas AG		10,735		701,042
Allianz SE		8,256		984,790
Aurubis AG		4,144		243,968
BASF SE		11,828		947,612
Bayer AG		15,620		1,162,411
Daimler AG †		12,534		851,438
Deutsche Bank AG		17,142		899,974
Deutsche Boerse AG		2,471		171,394
Deutsche Lufthansa AG †		15,663		342,049
Deutsche Post AG		34,448		586,709
Deutsche Telekom AG		63,382		820,275


	SHARES		VALUE (Note 3)
Germany - 3.4% (continued)
E.ON AG		10,147	$	311,093
Hannover Rueckversicherung AG		11,946		643,354
Infineon Technologies AG †		69,455		649,950
K+S AG		3,818		288,900
MAN SE		6,101		729,515
Muenchener Rueckversicherungs AG		6,256		951,217
RWE AG		8,361		560,620
Siemens AG		17,907		2,226,923
Suedzucker AG		21,344		572,259

				14,645,493

Hong Kong - 1.2%
AIA Group Ltd. †		125,600		353,034
ASM Pacific Technology Ltd.		2,982		37,657
Cheung Kong Holdings Ltd.		24,201		372,932
Cheung Kong Infrastructure Holdings Ltd.		5,749		26,318
Chinese Estates Holdings Ltd.		46,000		75,924
CLP Holdings Ltd.		30,511		247,714
Esprit Holdings Ltd.		35,944		170,963
Hang Lung Group Ltd.		11,791		77,460
Hang Lung Properties Ltd.		44,000		205,635
Hang Seng Bank Ltd.		11,657		191,508
Hong Kong Exchanges and Clearing Ltd.		16,169		366,554
Hongkong Electric Holdings Ltd.		28,500		179,634
Hopewell Holdings Ltd.		31,195		97,882
Hutchison Whampoa Ltd.		42,489		437,049
Hysan Development Co. Ltd.		34,823		163,839
Li & Fung Ltd.		8,734		50,669
Lifestyle International Holdings Ltd.		9,000		22,144
Link REIT/The REIT		34,329		106,578
Mongolia Energy Corp. Ltd. †		48,885		14,580
New World Development Ltd.		40,173		75,364
NWS Holdings Ltd.		19,500		29,592
Orient Overseas International Ltd.		22,500		218,081
PCCW Ltd.		20,406		9,025
Sun Hung Kai Properties Ltd.		21,022		348,751
Swire Pacific Ltd., Class A		12,818		210,577
Television Broadcasts Ltd.		31,442		169,743
Wharf Holdings Ltd.		41,604		319,835
Wheelock & Co. Ltd.		59,844		241,960
Yue Yuen Industrial Holdings Ltd.		45,623		164,098

				4,985,100

Ireland - 0.6%
Accenture PLC, Class A (1)		15,874		769,730
Covidien PLC (1)		16,200		739,692
Experian PLC		36,238		453,250
Seagate Technology PLC (1)†		35,300		530,559

				2,493,231

Italy - 1.2%
Banco Popolare SC (a)		28,700		130,783
Enel SpA		94,899		477,409
ENI SpA		109,223		2,403,275
Fiat SpA		22,378		464,618
Mediaset SpA		72,330		439,763
Pirelli & C SpA		64,444		523,545


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	32
AQR Funds	Annual Report	December 2010	32


Schedule of Investments			December 31, 2010


AQR GLOBAL EQUITY FUND


	SHARES		VALUE (Note 3)
Italy - 1.2% (continued)
Telecom Italia SpA		489,169	$	637,164
UniCredit SpA		8,846		18,411

				5,094,968

Japan - 9.0%
Aeon Co. Ltd.		51,100		638,309
Aisin Seiki Co. Ltd.		16,700		589,066
Ajinomoto Co., Inc.		9,000		93,591
Asahi Glass Co. Ltd.		55,236		643,059
Asahi Kasei Corp.		41,000		266,970
Bridgestone Corp.		12,000		231,230
Brother Industries Ltd.		3,300		48,755
Canon, Inc.		12,745		655,337
Central Japan Railway Co.		42		351,464
Chubu Electric Power Co., Inc.		9,354		229,865
Cosmo Oil Co. Ltd.		13,000		42,499
Credit Saison Co. Ltd.		14,675		239,742
Daicel Chemical Industries Ltd.		64,000		466,212
Daido Steel Co. Ltd.		79,000		463,021
Daiichi Sankyo Co. Ltd.		13,600		297,349
Daito Trust Construction Co. Ltd.		2,486		170,077
Daiwa House Industry Co. Ltd.		151		1,852
Denso Corp.		15,100		519,665
DIC Corp.		31,000		69,168
East Japan Railway Co.		8,512		552,916
Elpida Memory, Inc. †		15,900		184,091
FANUC Corp.		2,600		397,843
Fuji Electric Holdings Co. Ltd.		35,000		108,577
Fuji Heavy Industries Ltd.		57,000		440,033
FUJIFILM Holdings Corp.		15,544		560,461
Fujitsu Ltd.		71,283		494,391
Fukuoka Financial Group, Inc.		10,096		43,747
Hino Motors Ltd.		51,000		275,230
Hitachi High-Technologies Corp.		2,658		61,998
Hitachi Ltd.		101,000		536,788
Honda Motor Co. Ltd.		26,897		1,062,705
Hoya Corp.		9,806		237,350
Idemitsu Kosan Co. Ltd.		800		84,862
IHI Corp.		193,000		428,941
Isuzu Motors Ltd.		107,000		484,009
ITOCHU Corp.		73,888		745,257
Itochu Techno-Solutions Corp.		6,100		228,446
Japan Petroleum Exploration Co.		1,600		60,739
Japan Real Estate Investment Corp. REIT		7		72,593
JFE Holdings, Inc.		2,700		93,713
JTEKT Corp.		12,100		142,125
JX Holdings, Inc.		35,614		241,254
Kaneka Corp.		21,354		147,692
Kansai Electric Power Co., Inc./The		13,500		333,243
KDDI Corp.		77		444,504
Keisei Electric Railway Co. Ltd.		1,461		9,735
Kinden Corp.		44,284		408,507
Kobe Steel Ltd.		208,000		526,112
Komatsu Ltd.		13,300		400,708
Konica Minolta Holdings, Inc.		34,500		356,944
Kuraray Co. Ltd.		39,700		567,308
Kyocera Corp.		2,100		213,578
Makita Corp.		10,246		417,366


	SHARES		VALUE (Note 3)
Japan - 9.0% (continued)
Marubeni Corp.		11,000	$	77,089
Maruichi Steel Tube Ltd.		13,800		292,926
Miraca Holdings, Inc.		6,128		246,251
Mitsubishi Chemical Holdings Corp.		37,000		250,192
Mitsubishi Corp.		2,936		79,213
Mitsubishi Electric Corp.		62,000		648,534
Mitsubishi Estate Co. Ltd.		18,764		347,145
Mitsubishi UFJ Financial Group, Inc.		139,449		752,714
Mitsubishi UFJ Lease & Finance Co. Ltd.		4,658		184,047
Mitsui & Co. Ltd.		34,889		574,662
Mitsui Engineering & Shipbuilding Co. Ltd.		17,000		44,871
Mitsui Fudosan Co. Ltd.		17,598		350,102
Mitsui OSK Lines Ltd.		69,000		468,043
Mitsumi Electric Co. Ltd.		10,040		183,673
Mizuho Financial Group, Inc.		167,128		313,840
Mizuho Securities Co. Ltd.		12,000		34,254
Nippon Building Fund, Inc. REIT		8		82,072
Nippon Electric Glass Co. Ltd.		28,000		402,331
Nippon Kayaku Co. Ltd.		20,546		216,831
Nippon Meat Packers, Inc.		30,097		392,577
Nippon Shokubai Co. Ltd.		13,000		134,188
Nippon Telegraph & Telephone Corp.		7,948		362,314
Nissan Motor Co. Ltd.		10,100		95,645
Nisshin Seifun Group, Inc.		6,500		82,369
Nisshin Steel Co. Ltd.		38,000		84,430
Nisshinbo Holdings, Inc.		9,000		98,341
Nitto Denko Corp.		10,294		483,303
Nomura Holdings, Inc.		15,100		95,911
NTN Corp.		19,000		100,376
NTT Data Corp.		93		321,056
NTT DoCoMo, Inc.		542		944,940
OJI Paper Co. Ltd.		68,682		331,808
Omron Corp.		7,931		209,230
ORIX Corp.		1,599		156,826
Osaka Gas Co. Ltd.		129,446		502,315
Pacific Metals Co. Ltd.		13,000		110,117
Rengo Co. Ltd.		884		5,990
Resona Holdings, Inc. (a)		11,200		66,830
Sapporo Hokuyo Holdings, Inc.		7,191		33,637
SBI Holdings, Inc.		261		39,401
Secom Co. Ltd.		2,900		137,171
Sega Sammy Holdings, Inc.		26,900		510,711
Seino Holdings Corp.		31,100		213,324
Sekisui Chemical Co. Ltd.		38,000		272,149
Sekisui House Ltd.		9,000		90,784
Seven & I Holdings Co. Ltd.		19,530		520,123
Shimizu Corp.		10,000		42,643
Showa Shell Sekiyu KK (a)		25,400		232,314
Softbank Corp.		4,900		169,131
Sojitz Corp.		134,216		293,786
Sony Corp.		22,872		818,866
Sumitomo Corp.		53,700		756,742
Sumitomo Heavy Industries Ltd.		59,000		377,779
Sumitomo Mitsui Financial Group, Inc.		21,249		753,155
Sumitomo Realty & Development Co. Ltd.		5,624		133,933
Sumitomo Trust & Banking Co. Ltd./The		22,000		137,967


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	33
AQR Funds	Annual Report	December 2010	33


Schedule of Investments			December 31, 2010


AQR GLOBAL EQUITY FUND


	SHARES		VALUE (Note 3)
Japan - 9.0% (continued)
Taisei Corp.		82,000	$	191,401
Takeda Pharmaceutical Co. Ltd.		19,769		972,186
TDK Corp.		75		5,198
Teijin Ltd.		26,000		110,811
Tokai Rika Co. Ltd.		3,165		59,701
Tokio Marine Holdings, Inc.		17,400		517,451
Tokyo Electric Power Co., Inc./The		3,670		89,578
Tokyo Gas Co. Ltd.		65,000		288,139
Tosoh Corp.		60,000		194,505
Toyota Auto Body Co. Ltd.		10,365		193,198
Toyota Motor Corp.		32,678		1,287,830
USS Co. Ltd.		5,795		473,395
West Japan Railway Co.		44		164,402
Yamada Denki Co. Ltd.		3,370		229,505
Yamaha Corp.		11,300		139,654
Yamaha Motor Co. Ltd. †		18,300		297,279
Yamatake Corp.		3,700		87,430
Yamato Holdings Co. Ltd.		13,500		191,707

				38,535,339

Jersey, Channel Islands - 0.3%
Wolseley PLC †		36,527		1,174,226


Netherlands - 2.1%
Corio NV REIT		1,027		66,201
ING Groep NV CVA †		61,101		598,424
Koninklijke Ahold NV		68,517		908,676
Koninklijke DSM NV		23,173		1,326,112
Koninklijke Philips Electronics NV		28,583		879,716
Royal Dutch Shell PLC A Shares		56,073		1,880,065
Royal Dutch Shell PLC B Shares		72,935		2,425,371
Unilever NV CVA		24,960		781,746

				8,866,311

New Zealand - 0.0% (d)
Telecom Corp of New Zealand Ltd.		25,878		43,614

Singapore - 0.7%
Ascendas Real Estate Investment Trust REIT		22,478		36,337
CapitaMall Trust REIT		34,494		52,557
ComfortDelGro Corp. Ltd.		47,000		56,861
DBS Group Holdings Ltd.		20,054		224,236
Fraser and Neave Ltd.		66,000		330,069
Genting Singapore PLC †		108,000		185,088
Golden Agri-Resources Ltd.		244,000		152,619
Jardine Cycle & Carriage Ltd.		7,291		208,265
Neptune Orient Lines Ltd. †		112,891		192,239
Oversea-Chinese Banking Corp. Ltd.		70,422		543,149
SembCorp Industries Ltd.		11,777		47,228
SembCorp Marine Ltd.		55,000		230,500
Singapore Exchange Ltd. (a)		10,967		72,054
Singapore Technologies Engineering Ltd.		25,103		67,011
Singapore Telecommunications Ltd.		118,635		282,424
StarHub Ltd.		7,476		15,380


	SHARES		VALUE (Note 3)
Singapore - 0.7% (continued)
United Overseas Bank Ltd.		17,201	$	244,537
UOL Group Ltd.		10,340		38,381

				2,978,935

Spain - 1.5%
Banco Bilbao Vizcaya Argentaria SA		46,481		475,559
Banco Santander SA		176,313		1,886,129
Endesa SA (a)		30,206		785,756
Inditex SA		22,756		1,710,048
Repsol YPF SA		28,033		788,104
Telefonica SA		40,244		922,376

				6,567,972

Sweden - 1.4%
Boliden AB		26,673		543,659
Investor AB B Shares		9,034		193,392
NCC AB, Class B		5,150		113,498
Sandvik AB		9,240		180,366
Scania AB B Shares		46,605		1,073,251
Swedbank AB †		13,021		182,153
Tele2 AB B Shares		102,781		2,133,346
Telefonaktiebolaget LM Ericsson B Shares		24,522		284,299
Volvo AB B Shares †		63,582		1,120,514

				5,824,478

Switzerland - 4.7%
ABB Ltd. †		78,183		1,751,094
ACE Ltd. (1)		16,496		1,026,876
Clariant AG †		15,951		324,211
Compagnie Financiere Richemont SA, Class A		21,055		1,241,967
Nestle SA		80,594		4,736,182
Noble Corp. (1)†		3,835		137,178
Novartis AG		59,248		3,498,521
Roche Holding AG		13,947		2,050,891
Sulzer AG		2,560		391,772
Transocean Ltd. (1)†		3,814		265,111
Tyco Electronics Ltd. (1)		37,660		1,333,164
Tyco International Ltd. (1)		18,600		770,784
UBS AG †		52,129		858,551
Xstrata PLC		68,804		1,637,250

				20,023,552

United Kingdom - 7.4%
Anglo American PLC		8,784		461,447
Associated British Foods PLC		28,204		522,877
AstraZeneca PLC		36,194		1,656,460
Aviva PLC		134,560		830,600
Barclays PLC		147,562		612,422
BBA Aviation PLC		4,405		15,284
BHP Billiton PLC		33,310		1,345,756
BP PLC		349,186		2,584,657
British American Tobacco PLC		36,951		1,427,337
British Land Co. PLC REIT		13,261		109,311
British Sky Broadcasting Group PLC		17,771		205,121


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	34
AQR Funds	Annual Report	December 2010	34


Schedule of Investments			December 31, 2010


AQR GLOBAL EQUITY FUND


	SHARES		VALUE (Note 3)
United Kingdom - 7.4% (continued)
BT Group PLC		362,993	$	1,035,312
Burberry Group PLC		34,987		617,481
Capital Shopping Centres Group PLC REIT		6,502		42,588
Centrica PLC		379,991		1,977,130
Ensco PLC ADR (1)		17,171		916,588
GlaxoSmithKline PLC		84,074		1,637,292
Hammerson PLC REIT		10,329		67,596
HSBC Holdings PLC		192,206		1,972,633
IMI PLC		26,393		391,227
Intermediate Capital Group PLC		18,423		96,381
International Personal Finance PLC		28,464		171,649
Investec PLC		54,548		451,272
ITV PLC †		398,307		438,577
J Sainsbury PLC		38,290		225,895
Kingfisher PLC		118,250		489,206
Land Securities Group PLC REIT		4,504		47,710
Legal & General Group PLC		241,482		367,273
Lloyds Banking Group PLC †		1,203,116		1,247,202
Marks & Spencer Group PLC		10,273		59,488
Mondi PLC		104,822		846,719
Old Mutual PLC		101,402		196,092
Petrofac Ltd.		15,081		376,294
Rio Tinto PLC		23,550		1,685,739
Royal Bank of Scotland Group PLC †		960,732		592,484
Segro PLC REIT		13,080		58,815
Standard Chartered PLC		3,372		91,412
Tate & Lyle PLC		30,201		245,758
Tesco PLC		278,188		1,852,431
Vodafone Group PLC		1,314,008		3,463,968
WH Smith PLC		18,586		142,313

				31,575,797

United States - 42.1% (1)
3M Co.		2,100		181,230
Abbott Laboratories		17,584		842,449
Aflac, Inc.		7,600		428,868
Altria Group, Inc.		66,296		1,632,208
American Express Co.		8,889		381,516
American Financial Group, Inc./OH		33,825		1,092,209
Ameriprise Financial, Inc.		9,300		535,215
AmerisourceBergen Corp.		12,000		409,440
Amgen, Inc. †		38,249		2,099,870
Annaly Capital Management, Inc. REIT		8,318		149,059
Apache Corp.		3,280		391,074
Apollo Group, Inc., Class A †		8,000		315,920
Apple, Inc. †		10,128		3,266,888
Archer-Daniels-Midland Co.		1,433		43,105
Ashland, Inc.		14,000		712,040
Assurant, Inc.		23,400		901,368
AT&T, Inc.		129,597		3,807,560
AutoZone, Inc. †		1,000		272,590
AvalonBay Communities, Inc. REIT		1,311		147,553
Bank of America Corp.		187,038		2,495,087
Becton Dickinson and Co.		7,186		607,361
Bed Bath & Beyond, Inc. †		4,300		211,345
Berkshire Hathaway, Inc., Class B †		13,150		1,053,446


	SHARES		VALUE (Note 3)
United States - 42.1% (continued) (1)
Boeing Co./The		7,065	$	461,062
Boston Properties, Inc. REIT		1,463		125,964
Bristol-Myers Squibb Co.		40,432		1,070,639
Broadridge Financial Solutions, Inc.		17,593		385,814
Brookfield Properties Corp.		2,845		50,277
Cablevision Systems Corp., Class A		23,800		805,392
Cardinal Health, Inc.		29,100		1,114,821
Career Education Corp. †		22,359		463,502
Carnival Corp.		5,700		262,827
CF Industries Holdings, Inc.		959		129,609
Chemed Corp.		9,980		633,830
Chevron Corp.		47,800		4,361,750
Chubb Corp.		6,649		396,546
Cimarex Energy Co.		10,800		956,124
Cisco Systems, Inc. †		54,289		1,098,266
Citigroup, Inc. †		463,491		2,192,312
Coach, Inc.		1,800		99,558
Coca-Cola Co./The		32,880		2,162,518
Colgate-Palmolive Co.		15,528		1,247,985
Comcast Corp., Class A		68,480		1,504,506
Comerica, Inc.		7,200		304,128
Computer Sciences Corp.		13,831		686,018
ConAgra Foods, Inc.		25,874		584,235
ConocoPhillips		44,375		3,021,937
Crown Holdings, Inc. †		16,651		555,810
CSX Corp.		20,498		1,324,376
Deere & Co.		3,900		323,895
Delta Air Lines, Inc. †		28,900		364,140
Devon Energy Corp.		10,690		839,272
DIRECTV, Class A †		13,869		553,789
DISH Network Corp., Class A †		8,674		170,531
DR Horton, Inc.		17,000		202,810
Dr Pepper Snapple Group, Inc.		26,432		929,349
DTE Energy Co.		17,400		788,568
Edison International		31,556		1,218,062
Eli Lilly & Co.		13,000		455,520
Emerson Electric Co.		8,741		499,723
Energen Corp.		2,800		135,128
Equity Residential REIT		4,548		236,269
Estee Lauder Cos., Inc./The, Class A		300		24,210
Esterline Technologies Corp. †		2,500		171,475
Exelon Corp.		9,800		408,072
Exxon Mobil Corp.		93,989		6,872,476
FedEx Corp.		8,800		818,488
Ford Motor Co. †		47,100		790,809
Forest Laboratories, Inc. †		15,186		485,648
Franklin Resources, Inc.		3,200		355,872
Freeport-McMoRan Copper & Gold, Inc.		6,500		780,585
Gap, Inc./The		40,219		890,449
General Dynamics Corp.		6,838		485,224
General Electric Co.		198,402		3,628,773
General Mills, Inc.		17,588		625,957
GenOn Energy, Inc. †		6,772		25,801
Goldman Sachs Group, Inc./The		10,405		1,749,705
Goodyear Tire & Rubber Co./The †		16,800		199,080
Google, Inc., Class A †		3,202		1,901,892
Hasbro, Inc.		10,650		502,467


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	35
AQR Funds	Annual Report	December 2010	35


Schedule of Investments			December 31, 2010


AQR GLOBAL EQUITY FUND


	SHARES		VALUE (Note 3)
United States - 42.1% (continued) (1)
HCP, Inc. REIT		2,572	$	94,624
Health Care REIT, Inc. REIT		2,485		118,385
Health Net, Inc. †		20,100		548,529
Hewlett-Packard Co.		29,652		1,248,349
HJ Heinz Co.		4,541		224,598
Home Depot, Inc.		30,206		1,059,022
Honeywell International, Inc.		14,402		765,610
Host Hotels & Resorts, Inc. REIT		9,300		166,191
Hudson City Bancorp, Inc.		18,917		241,003
Humana, Inc. †		17,000		930,580
Intel Corp.		96,067		2,020,289
International Business Machines Corp.		25,423		3,731,079
International Paper Co.		34,900		950,676
ITT Corp.		1,082		56,383
ITT Educational Services, Inc. †		2,700		171,963
Johnson & Johnson		68,896		4,261,218
Joy Global, Inc.		3,952		342,836
JPMorgan Chase & Co.		83,773		3,553,651
KBR, Inc.		9,100		277,277
KeyCorp		64,300		569,055
Kimberly-Clark Corp.		25,563		1,611,492
Kimco Realty Corp. REIT		6,500		117,260
King Pharmaceuticals, Inc. †		21,800		306,290
Kohl’s Corp. †		15,400		836,836
Kraft Foods, Inc., Class A		5,321		167,665
L-3 Communications Holdings, Inc.		6,753		476,019
Laboratory Corp of America Holdings †		2,300		202,216
Lexmark International, Inc., Class A †		13,000		452,660
Liberty Media Corp. - Interactive, Series A †		22,700		357,979
Lockheed Martin Corp.		15,743		1,100,593
Loews Corp.		14,300		556,413
Lorillard, Inc.		7,600		623,656
Lowe’s Cos., Inc.		34,200		857,736
Ltd. Brands, Inc.		4,161		127,868
Lubrizol Corp.		7,800		833,664
Macerich Co./The REIT		2,100		99,477
Macy’s, Inc.		19,700		498,410
Marathon Oil Corp.		28,529		1,056,429
Masco Corp.		47,200		597,552
Mattel, Inc.		40,859		1,039,044
McDonald’s Corp.		12,425		953,743
McKesson Corp.		2,700		190,026
MeadWestvaco Corp.		15,400		402,864
Medco Health Solutions, Inc. †		11,921		730,400
Medtronic, Inc.		6,082		225,581
Merck & Co., Inc.		25,719		926,913
MetLife, Inc.		9,700		431,068
Microsoft Corp.		163,550		4,566,316
Morgan Stanley		8,400		228,564
Murphy Oil Corp.		2,494		185,928
Newmont Mining Corp.		5,161		317,040
News Corp., Class A		64,900		944,944
Norfolk Southern Corp.		14,923		937,463
Northrop Grumman Corp.		26,379		1,708,832
Occidental Petroleum Corp.		15,090		1,480,329
Omnicare, Inc.		20,600		523,034


	SHARES		VALUE (Note 3)
United States - 42.1% (continued) (1)
Omnicom Group, Inc.		4,200	$	192,360
Oracle Corp.		36,786		1,151,402
Oshkosh Corp. †		1,300		45,812
Owens Corning †		36,148		1,126,010
Owens-Illinois, Inc. †		11,000		337,700
PDL BioPharma, Inc.		103,643		645,696
Peabody Energy Corp.		10,600		678,188
Penn National Gaming, Inc. †		11,683		410,657
PepsiCo, Inc.		20,772		1,357,035
PetSmart, Inc.		24,354		969,776
Pfizer, Inc.		132,943		2,327,832
Philip Morris International, Inc.		17,493		1,023,865
Plum Creek Timber Co., Inc. REIT		2,131		79,806
PNC Financial Services Group, Inc.		12,800		777,216
Procter & Gamble Co./The		56,808		3,654,459
ProLogis REIT		6,900		99,636
Protective Life Corp.		39,898		1,062,883
Prudential Financial, Inc.		8,139		477,841
Public Storage REIT		1,669		169,270
Qwest Communications International, Inc.		50,658		385,507
Rayonier, Inc. REIT		2,581		135,554
Raytheon Co.		45,167		2,093,039
Reinsurance Group of America, Inc.		10,100		542,471
Reynolds American, Inc.		48,074		1,568,174
Rockwell Automation, Inc.		2,800		200,788
Ross Stores, Inc.		6,713		424,597
RR Donnelley & Sons Co.		12,666		221,275
SanDisk Corp. †		7,000		349,020
Sara Lee Corp.		47,536		832,355
Sealed Air Corp.		9,599		244,295
Simon Property Group, Inc. REIT		4,342		431,986
Southwest Airlines Co.		19,200		249,216
Starbucks Corp.		9,100		292,383
STERIS Corp.		13,030		475,074
Target Corp.		19,800		1,190,574
Texas Instruments, Inc.		9,184		298,480
Thomas & Betts Corp. †		4,614		222,856
Time Warner, Inc.		43,366		1,395,084
Timken Co.		39,333		1,877,364
TJX Cos., Inc.		16,664		739,715
Travelers Cos., Inc./The		43,101		2,401,157
Tupperware Brands Corp.		409		19,497
Tyson Foods, Inc., Class A		36,400		626,808
United Parcel Service, Inc., Class B		11,100		805,638
United Technologies Corp.		17,449		1,373,585
UnitedHealth Group, Inc.		46,700		1,686,337
Unum Group		43,109		1,044,100
URS Corp. †		12,000		499,320
Valero Energy Corp.		28,700		663,544
Ventas, Inc. REIT		2,400		125,952
Verizon Communications, Inc.		73,412		2,626,681
Viacom, Inc., Class B		11,437		453,020
Vishay Intertechnology, Inc. †		29,200		428,656
Vornado Realty Trust REIT		1,648		137,328
W&T Offshore, Inc.		16,600		296,642
Walgreen Co.		18,840		734,006
Wal-Mart Stores, Inc.		65,405		3,527,292


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	36
AQR Funds	Annual Report	December 2010	36


Schedule of Investments			December 31, 2010


AQR GLOBAL EQUITY FUND


	SHARES		VALUE (Note 3)
United States - 42.1% (continued) (1)
Walter Energy, Inc.		9,600	$	1,227,264
Waste Management, Inc.		35,273		1,300,516
WellPoint, Inc. †		26,191		1,489,220
Wells Fargo & Co.		32,570		1,009,344
Western Digital Corp. †		19,000		644,100
Western Union Co./The		57,600		1,069,632
Weyerhaeuser Co. REIT		8,600		162,798
Whirlpool Corp.		3,500		310,905
Williams Cos., Inc./The		5,456		134,872
Williams-Sonoma, Inc.		7,790		278,025
Wyndham Worldwide Corp.		24,444		732,342
Wynn Resorts Ltd.		2,000		207,680

				180,188,380

TOTAL COMMON STOCKS (cost $324,170,566)				382,325,496


PREFERRED STOCKS - 0.1%

Germany - 0.1%
Volkswagen AG		2,748		448,546


Switzerland - 0.0%
Schindler Holding AG		1,025		121,630

TOTAL PREFERRED STOCKS (cost $323,173)				570,176


RIGHTS - 0.0% (d)

Canada - 0.0% (d)(1)
Ivanhoe Mines Ltd., expires 1/26/11 †
(cost $—)		4,885		6,588


WARRANTS - 0.0% (d)

Hong Kong - 0.0% (d)
Henderson Land Development Co. Ltd., expires 6/1/11 †
(cost $— )		3		1


MONEY MARKET FUNDS - 7.4%
Dreyfus Institutional Cash Advantage Fund, Class I, 0.180% (e)		385		385
J.P. Morgan Prime Money Market Fund - Capital Shares, 0.130% (e)(f)(h)		31,574,680		31,574,680

TOTAL MONEY MARKET FUNDS (cost $31,575,065; includes $4,199,946 of cash collateral received for securities on loan)				31,575,065

TOTAL INVESTMENTS - 96.9% (cost $356,068,804)				414,477,326


OTHER ASSETS IN EXCESS OF LIABILITIES - 3.1% (g)				13,208,392

NET ASSETS - 100.0%			$	427,685,718


SECTOR	VALUE		% OF NET ASSETS
Consumer Discretionary	$	44,965,680		10.5	%
Consumer Staples		39,404,640		9.2
Energy		41,394,986		9.7
Financials		68,431,114		16.0
Health Care		38,901,652		9.1
Industrials		55,539,586		13.0
Information Technology		32,888,198		7.7
Materials		33,005,370		7.7
Telecommunication Services		19,497,515		4.5
Utilities		8,873,520		2.1
Money Market Funds		31,575,065		7.4

Total Investments		414,477,326		96.9
Other Assets in Excess of Liabilities (g)		13,208,392		3.1

Net Assets	$	427,685,718		100.0	%

†	Non income-producing security.

(a)	All or a portion of the security on loan. The aggregate market value of such securities is $4,038,816; cash collateral of $4,199,946 was received with which the Fund purchased a money market fund.

(b)	Security fair valued at December 31, 2010.

(c)	Rule 144A, Section 4(2) or other security which is restricted as to resale to institutional investors. The Fund Advisor has deemed this security to be liquid based upon procedures approved by the Board of Trustees.

(d)	Represents less than 0.05 percent of net assets.

(e)	Represents annualized seven-day yield as of December 31, 2010.

(f)	Represents security, or portion thereof, purchased with the cash collateral received for securities on loan.

(g)	Includes appreciation(depreciation) on futures contracts, forward foreign currency exchange contracts and swaps.

(h)	A portion of the security is pledged as collateral to the broker for forward foreign exchange contracts.

All securities are Level 2, unless otherwise noted in parentheses.

(1)	Level 1 security (See Note 5).

(3)	Level 3 security (See Note 5).

The following abbreviations are used in portfolio descriptions:

ADR - American Depositary Receipt

CVA - Dutch Certificate of Shares

REIT - Real Estate Investment Trust


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	37
AQR Funds	Annual Report	December 2010	37


Schedule of Investments			December 31, 2010


AQR GLOBAL EQUITY FUND

Total return swap contracts outstanding as of December 31, 2010

COUNTERPARTY

UNDERLYING REFERENCE INSTRUMENT

TERMINATION
DATE

NOTIONAL
VALUE

UNREALIZED
APPRECIATION
(DEPRECIATION)

The Royal Bank
of Scotland

Swiss Market Index

03/18/2011

$(34,190,041)

$493,528

Collateral is included for forward foreign currency exchange contracts, in the collateral listed below.

Open futures contracts outstanding at December 31, 2010:


NUMBER OF CONTRACTS	TYPE	EXPIRATION DATE	VALUE AT TRADE DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Long Contracts:
316	Amsterdam Index	January 21, 2011		$29,760,193		$30,082,059		$321,866
461	CAC40 10 Euro	January 21, 2011		24,031,622		23,560,026		(471,596)
109	DAX Index	March 18, 2011		25,709,357		25,323,199		(386,158)
344	E-Mini S&P 500 Futures	March 18, 2011		21,194,773		21,551,600		356,827
173	FTSE 100 Index Futures	March 18, 2011		15,798,776		15,961,630		162,854
132	FTSE/MIB Index	March 18, 2011		18,215,165		17,889,971		(325,194)
55	IBEX 35 Index	January 21, 2011		7,420,420		7,224,314		(196,106)
6	SGX MSCI Singapore Index Futures	January 28, 2011		350,110		354,459		4,349

								(533,158)

Short Contracts:
70	Hang Seng Index	January 28, 2011		(10,192,034)		(10,364,500)		(172,466)
217	OMXS30 Index	January 21, 2011		(3,715,445)		(3,734,562)		(19,117)
68	S&P/Toronto Stock Exchange 60 Index	March 17, 2011		(10,354,809)		(10,499,230)		(144,421)
356	SPI 200	March 17, 2011		(43,540,859)		(43,151,530)		389,329
48	TOPIX Index	March 10, 2011		(5,214,721)		(5,302,756)		(88,035)

								(34,710)

								$(567,868)

Cash held as collateral with broker for futures contracts was $14,655,129 at December 31, 2010.

Forward foreign currency exchange contracts outstanding as of December 31, 2010:


PURCHASE CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT PURCHASED		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Australian Dollar, Expiring 03/16/11	The Royal Bank of Scotland	AUD		45,563,000		$43,411,004		$46,290,034		$2,879,030
Canadian Dollar, Expiring 03/16/11	The Royal Bank of Scotland	CAD		7,474,000		7,319,414		7,510,477		191,063
Swiss Franc, Expiring 03/16/11	The Royal Bank of Scotland	CHF		4,411,000		4,575,337		4,736,119		160,782
Danish Krone, Expiring 03/16/11	The Royal Bank of Scotland	DKK		1,384,000		246,983		249,098		2,115
Euro, Expiring 03/16/11	The Royal Bank of Scotland	EUR		451,000		599,956		604,944		4,988
British Pound, Expiring 03/16/11	The Royal Bank of Scotland	GBP		7,553,000		11,830,947		11,818,959		(11,988)
Hong Kong Dollar, Expiring 03/16/11	The Royal Bank of Scotland	HKD		9,084,000		1,170,459		1,169,249		(1,210)


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	38
AQR Funds	Annual Report	December 2010	38


Schedule of Investments			December 31, 2010


AQR GLOBAL EQUITY FUND


PURCHASE CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT PURCHASED		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
(continued)
Israeli Shekel, Expiring 03/16/11	The Royal Bank of Scotland	ILS		5,706,000		$1,553,182		$1,609,721		$56,539
Japanese Yen, Expiring 03/16/11	The Royal Bank of Scotland	JPY		1,148,164,000		13,913,596		14,167,307		253,711
Norwegian Krone, Expiring 03/16/11	The Royal Bank of Scotland	NOK		236,843,000		38,770,824		40,603,676		1,832,852
Swedish Krona, Expiring 03/16/11	The Royal Bank of Scotland	SEK		360,437,000		51,711,770		53,477,294		1,765,524
Singapore Dollar, Expiring 03/16/11	The Royal Bank of Scotland	SGD		463,000		353,879		361,421		7,542

						175,457,351		182,598,299		7,140,948


SALES CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT SOLD		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Australian Dollar, Expiring 03/16/11	The Royal Bank of Scotland	AUD		(2,643,000)		$(2,630,517)		$(2,685,173)		$(54,656)
Canadian Dollar, Expiring 03/16/11	The Royal Bank of Scotland	CAD		(14,035,000)		(13,733,358)		(14,103,498)		(370,140)
Swiss Franc, Expiring 03/16/11	The Royal Bank of Scotland	CHF		(22,348,000)		(22,729,885)		(23,995,192)		(1,265,307)
Danish Krone, Expiring 03/16/11	The Royal Bank of Scotland	DKK		(8,811,000)		(1,558,251)		(1,585,841)		(27,590)
Euro, Expiring 03/16/11	The Royal Bank of Scotland	EUR		(41,447,000)		(54,543,392)		(55,594,517)		(1,051,125)
British Pound, Expiring 03/16/11	The Royal Bank of Scotland	GBP		(2,743,000)		(4,252,999)		(4,292,255)		(39,256)
Hong Kong Dollar, Expiring 03/16/11	The Royal Bank of Scotland	HKD		(5,114,000)		(658,039)		(658,251)		(212)
Israeli Shekel, Expiring 03/16/11	The Royal Bank of Scotland	ILS		(227,000)		(62,678)		(64,039)		(1,361)
Japanese Yen, Expiring 03/16/11	The Royal Bank of Scotland	JPY		(1,711,039,000)		(20,456,432)		(21,112,676)		(656,244)
Norwegian Krone, Expiring 03/16/11	The Royal Bank of Scotland	NOK		(22,255,000)		(3,570,829)		(3,815,333)		(244,504)
New Zealand Dollar, Expiring 03/16/11	The Royal Bank of Scotland	NZD		(31,364,000)		(23,225,124)		(24,363,659)		(1,138,535)
Swedish Krona, Expiring 03/16/11	The Royal Bank of Scotland	SEK		(532,000)		(77,973)		(78,932)		(959)
Singapore Dollar, Expiring 03/16/11	The Royal Bank of Scotland	SGD		(14,000)		(10,614)		(10,928)		(314)

						(147,510,091)		(152,360,294)		(4,850,203)

						$27,947,260		$30,238,005		$2,290,745


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	39
AQR Funds	Annual Report	December 2010	39


Schedule of Investments			December 31, 2010


AQR GLOBAL EQUITY FUND

Money Market fund investment is pledged as collateral to the broker for forward foreign exchange contracts in the amount of $59,700.

AUD - Australian Dollar

CAD - Canadian Dollar

CHF - Swiss Franc

DKK - Danish Krone

EUR - Euro

GBP - British Pound

HKD - Hong Kong Dollar

ILS - Israeli Shekel

JPY - Japanese Yen

NOK - Norwegian Krone

NZD - New Zealand Dollar

SEK - Swedish Krona

SGD - Singapore Dollar


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	40
AQR Funds	Annual Report	December 2010	40


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL EQUITY FUND


COMMON STOCKS - 86.9%	SHARES		VALUE (Note 3)
Australia - 7.7%
AGL Energy Ltd.		25,094	$	392,053
Alumina Ltd.		85,028		216,624
AMP Ltd.		10,692		57,983
Ansell Ltd.		107,298		1,396,711
ASX Ltd. (a)		5,817		224,720
Australia & New Zealand Banking Group Ltd.		122,242		2,926,188
AXA Asia Pacific Holdings Ltd.		35,273		228,286
Bank of Queensland Ltd.		19,807		211,387
Bendigo and Adelaide Bank Ltd.		4,075		41,591
BHP Billiton Ltd.		118,782		5,535,647
Boral Ltd.		70,433		349,189
Caltex Australia Ltd.		56,047		825,426
CFS Retail Property Trust REIT		69,740		125,772
Challenger Ltd.		156,509		755,127
Commonwealth Bank of Australia		35,177		1,831,837
Computershare Ltd.		15,439		170,543
CSL Ltd.		19,994		743,854
CSR Ltd.		59,287		102,068
Dexus Property Group REIT		186,006		151,539
DUET Group		191,223		330,281
Fairfax Media Ltd. (a)		315,385		453,237
Fortescue Metals Group Ltd. †		45,904		308,388
Foster’s Group Ltd.		275,777		1,606,699
Goodman Group REIT		193,631		128,967
GPT Group REIT		58,413		176,274
GPT Group - In Specie (3)†(b)		143,427		—
Leighton Holdings Ltd.		6,235		196,952
Lend Lease Group		21,131		186,989
Mirvac Group REIT		88,938		111,835
National Australia Bank Ltd.		105,612		2,567,949
Newcrest Mining Ltd.		28,545		1,186,611
OneSteel Ltd.		184,445		489,699
Origin Energy Ltd. (a)		33,140		566,295
OZ Minerals Ltd.		117,352		207,719
Pacific Brands Ltd. †		251,820		253,107
Paladin Energy Ltd. †(a)		24,740		124,968
Qantas Airways Ltd. †		99,772		259,775
Rio Tinto Ltd. (a)		23,105		2,027,687
Santos Ltd.		9,784		132,018
Stockland REIT		89,584		330,710
Suncorp Group Ltd.		142,126		1,254,359
TABCORP Holdings Ltd.		208,363		1,518,412
Tatts Group Ltd.		142,376		376,781
Telstra Corp. Ltd.		160,562		459,078
Transurban Group		37,755		198,645
UGL Ltd.		6,100		90,268
Wesfarmers Ltd.		27,381		900,833
Westfield Group REIT		84,935		833,794
Westfield Retail Trust REIT †		84,935		223,751
Westpac Banking Corp.		73,229		1,667,270

				35,455,896

Belgium - 0.2%
Anheuser-Busch InBev NV		7,392		424,029


	SHARES		VALUE (Note 3)
Belgium - 0.2% (continued)
Groupe Bruxelles Lambert SA		2,641	$	223,081
KBC Groep NV †		3,393		116,063

				763,173

Bermuda - 0.0% (c)
Catlin Group Ltd.		43,157		250,511


Cayman Islands - 0.0% (c)
Sands China Ltd. †		72,000		158,262


China - 0.0% (c)
Foxconn International Holdings Ltd. †(a)		69,406		48,443
Yangzijiang Shipbuilding Holdings Ltd.		63,319		94,462

				142,905

Denmark - 1.6%
AP Moller - Maersk A/S, Class B		3		27,274
Coloplast A/S, Class B		7,590		1,035,735
Danske Bank A/S †		54,696		1,408,558
Novo Nordisk A/S, Class B		44,694		5,056,459

				7,528,026

Finland - 1.6%
Kesko OYJ B Shares, Class B		12,311		577,555
Kone OYJ, Class B		5,570		310,585
Nokia OYJ		73,103		760,231
Stora Enso OYJ R Shares (a)		273,203		2,822,591
UPM-Kymmene OYJ		105,655		1,880,385
Wartsila OYJ		12,860		983,829

				7,335,176

France - 8.1%
Accor SA		26,393		1,180,884
Arkema SA		15,891		1,150,444
BNP Paribas		64,714		4,137,580
Bouygues SA		19,596		849,053
Christian Dior SA		13,165		1,890,429
Compagnie de Saint-Gobain		26,563		1,373,508
Klepierre REIT		3,675		133,253
Legrand SA		40,178		1,645,289
L’Oreal SA		10,722		1,196,874
LVMH Moet Hennessy Louis Vuitton SA		6,597		1,090,818
Metropole Television SA		34,221		832,256
Natixis †		506,383		2,378,031
PPR		1,669		266,767
Rhodia SA		45,610		1,516,108
Safran SA		4,358		155,090
Sanofi-Aventis SA		15,188		977,534
Schneider Electric SA		3,120		469,635
SEB SA		3,699		386,194
Societe BIC SA		14,724		1,270,777
Thales SA		19,344		680,223
Total SA		120,598		6,448,548
Unibail-Rodamco SE REIT		3,619		719,366
Valeo SA †		55,452		3,159,586
Vivendi SA		73,040		1,981,403
Zodiac Aerospace		15,462		1,167,207

				37,056,857


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	41
AQR Funds	Annual Report	December 2010	41


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL EQUITY FUND


	SHARES		VALUE (Note 3)
Germany - 7.8%
Adidas AG		21,660	$	1,414,491
Allianz SE		17,348		2,069,299
Aurubis AG		7,693		452,907
BASF SE		44,493		3,564,600
Bayer AG		47,425		3,529,278
Daimler AG †		30,620		2,080,026
Deutsche Bank AG		20,349		1,068,345
Deutsche Boerse AG		5,256		364,567
Deutsche Lufthansa AG †		30,430		664,532
Deutsche Post AG		32,873		559,884
Deutsche Telekom AG		188,151		2,435,007
E.ON AG		40,607		1,244,955
Hannover Rueckversicherung AG (a)		23,501		1,265,650
Infineon Technologies AG †		112,051		1,048,556
K+S AG		9,989		755,846
MAN SE		16,292		1,948,084
Muenchener Rueckversicherungs AG		12,154		1,848,000
RWE AG		22,140		1,484,527
Siemens AG		42,638		5,302,483
SMA Solar Technology AG (a)		4,982		462,395
Software AG		4,595		676,170
Suedzucker AG		33,604		900,965
Tognum AG		18,031		476,513
United Internet AG		26,666		435,582

				36,052,662

Hong Kong - 2.4%
AIA Group Ltd. †		285,400		802,196
ASM Pacific Technology Ltd.		6,404		80,870
BOC Hong Kong Holdings Ltd.		201,053		683,611
Cheung Kong Holdings Ltd.		66,278		1,021,330
Cheung Kong Infrastructure Holdings Ltd.		14,827		67,875
CLP Holdings Ltd.		39,509		320,768
Hang Lung Group Ltd.		30,276		198,897
Hang Lung Properties Ltd.		128,000		598,209
Hang Seng Bank Ltd.		36,235		595,288
Hong Kong Exchanges and Clearing Ltd.		38,454		871,760
Hongkong Electric Holdings Ltd.		92,500		583,022
Hutchison Whampoa Ltd.		72,832		749,163
Hysan Development Co. Ltd.		86,000		404,623
Li & Fung Ltd.		41,668		241,732
Lifestyle International Holdings Ltd.		20,500		50,438
Link REIT/The REIT		81,382		252,659
Mongolia Energy Corp. Ltd. †		95,406		28,455
New World Development Ltd.		88,896		166,768
NWS Holdings Ltd.		39,000		59,183
PCCW Ltd.		131,000		57,935
Shanghai Industrial Urban Development Group Ltd. †		8		3
Sun Hung Kai Properties Ltd.		43,046		714,124
Swire Pacific Ltd., Class A		27,030		444,055
Television Broadcasts Ltd.		35,403		191,127
Wharf Holdings Ltd.		105,243		809,066
Wheelock & Co. Ltd.		124,621		503,866
Yue Yuen Industrial Holdings Ltd.		122,609		441,003

				10,938,026


	SHARES		VALUE (Note 3)
Ireland - 0.3%
Experian PLC		106,291	$	1,329,444


Italy - 2.2%
Enel SpA		168,489		847,618
ENI SpA		255,085		5,612,731
Fiat SpA		53,479		1,110,344
Intesa Sanpaolo SpA		19,725		53,835
Mediaset SpA		111,019		674,991
Parmalat Finanziaria SpA (3)†(b)		45,800		—
Pirelli & C SpA		58,775		477,490
Saipem SpA		9,242		458,097
Telecom Italia SpA		793,791		1,033,948

				10,269,054

Japan - 19.2%
Aeon Co. Ltd. (a)		57,300		715,756
Aeon Mall Co. Ltd.		2,900		77,658
Aisin Seiki Co. Ltd.		30,400		1,072,312
Asahi Glass Co. Ltd.		149,413		1,739,470
Asahi Kasei Corp.		87,000		566,498
Astellas Pharma, Inc.		13,797		524,910
Bridgestone Corp.		43,900		845,916
Brother Industries Ltd.		19,300		285,145
Canon, Inc. (a)		21,715		1,116,566
Central Japan Railway Co.		120		1,004,183
Chubu Electric Power Co., Inc.		38,797		953,399
Cosmo Oil Co. Ltd.		187,000		611,338
Credit Saison Co. Ltd.		39,812		650,400
Daicel Chemical Industries Ltd.		193,000		1,405,920
Daido Steel Co. Ltd.		89,000		521,631
Daiichi Sankyo Co. Ltd.		32,600		712,762
Daito Trust Construction Co. Ltd.		2,787		190,670
Daiwa House Industry Co. Ltd.		17,295		212,080
Dentsu, Inc.		7,700		238,158
East Japan Railway Co.		23,613		1,533,835
FANUC Corp.		4,300		657,971
Fuji Heavy Industries Ltd.		173,721		1,341,104
FUJIFILM Holdings Corp.		39,843		1,436,596
Fujitsu Ltd.		183,635		1,273,621
Fukuoka Financial Group, Inc.		82,046		355,511
Hino Motors Ltd.		121,000		652,997
Hitachi High-Technologies Corp.		3,206		74,780
Hitachi Ltd.		242,000		1,286,166
Honda Motor Co. Ltd.		53,697		2,121,577
Hoya Corp.		30,263		732,502
IHI Corp.		514,000		1,142,362
Isuzu Motors Ltd.		304,000		1,375,129
ITOCHU Corp.		184,044		1,856,323
Itochu Techno-Solutions Corp.		15,200		569,242
Japan Real Estate Investment Corp. REIT		17		176,298
Japan Retail Fund Investment Corp. REIT		48		91,889
Japan Tobacco, Inc.		32		118,286
JFE Holdings, Inc.		17,247		598,621
JTEKT Corp.		32,970		387,261
JX Holdings, Inc.		84,695		573,734
Kaneka Corp.		82,625		571,466


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	42
AQR Funds	Annual Report	December 2010	42


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL EQUITY FUND


	SHARES		VALUE (Note 3)
Japan - 19.2% (continued)
Kansai Electric Power Co., Inc./The		19,132	$	472,267
Kao Corp.		7,085		190,609
KDDI Corp.		255		1,472,060
Kinden Corp.		84,564		780,079
Kobe Steel Ltd.		639,000		1,616,275
Komatsu Ltd.		21,138		636,854
Konica Minolta Holdings, Inc.		87,000		900,119
Kuraray Co. Ltd.		65,000		928,842
Kyocera Corp.		2,200		223,749
Makita Corp.		24,600		1,002,070
Marubeni Corp.		34,974		245,102
Maruichi Steel Tube Ltd.		23,400		496,700
Miraca Holdings, Inc.		19,106		767,767
Mitsubishi Chemical Holdings Corp.		85,000		574,765
Mitsubishi Electric Corp.		110,000		1,150,624
Mitsubishi Estate Co. Ltd.		46,020		851,397
Mitsubishi UFJ Financial Group, Inc.		323,091		1,743,972
Mitsui & Co. Ltd.		134,343		2,212,785
Mitsui Fudosan Co. Ltd.		28,205		561,122
Mitsui OSK Lines Ltd.		52,000		352,728
Mitsumi Electric Co. Ltd.		23,189		424,223
Mizuho Financial Group, Inc.		286,710		538,396
Mizuho Securities Co. Ltd.		66,185		188,926
Nippon Building Fund, Inc. REIT		19		194,922
Nippon Electric Glass Co. Ltd.		81,000		1,163,885
Nippon Kayaku Co. Ltd.		31,000		327,156
Nippon Meat Packers, Inc.		82,000		1,069,587
Nippon Shokubai Co. Ltd.		52,000		536,754
Nippon Telegraph & Telephone Corp.		19,019		866,991
Nishi-Nippon City Bank Ltd./The		31,737		96,093
Nisshin Seifun Group, Inc.		30,584		387,565
Nisshin Steel Co. Ltd.		93,000		206,631
Nitto Denko Corp.		19,683		924,115
Nomura Real Estate Holdings, Inc.		3,300		59,942
Nomura Real Estate Office Fund, Inc. REIT		10		72,221
NTT Data Corp.		281		970,072
NTT DoCoMo, Inc.		971		1,692,872
OJI Paper Co. Ltd.		96,000		463,783
Omron Corp.		14,937		394,057
ORIX Corp.		3,669		359,848
Osaka Gas Co. Ltd.		237,802		922,790
Rengo Co. Ltd.		24,299		164,639
Sapporo Hokuyo Holdings, Inc.		55,600		260,076
SBI Holdings, Inc.		600		90,576
Secom Co. Ltd.		2,273		107,514
Sega Sammy Holdings, Inc.		67,900		1,289,118
Seino Holdings Corp.		88,837		609,358
Sekisui Chemical Co. Ltd.		39,000		279,310
Sekisui House Ltd.		19,000		191,654
Seven & I Holdings Co. Ltd.		22,639		602,922
Shimizu Corp.		35,000		149,252
Showa Shell Sekiyu KK (a)		43,100		394,203
Softbank Corp.		25,300		873,270
Sojitz Corp.		339,162		742,392
Sony Corp.		71,471		2,558,815
Sumitomo Corp.		136,300		1,920,743


	SHARES		VALUE (Note 3)
Japan - 19.2% (continued)
Sumitomo Heavy Industries Ltd.		189,000	$	1,210,173
Sumitomo Mitsui Financial Group, Inc.		44,536		1,578,545
Sumitomo Realty & Development Co. Ltd.		13,261		315,805
Sumitomo Trust & Banking Co. Ltd./The		27,075		169,793
Taisei Corp.		30,000		70,025
Takeda Pharmaceutical Co. Ltd.		54,981		2,703,818
Teijin Ltd.		78,000		332,433
Toho Co. Ltd.		4,000		64,203
Toho Gas Co. Ltd.		5,627		28,119
Tokai Rika Co. Ltd.		7,799		147,112
Tokio Marine Holdings, Inc.		38,500		1,144,936
Tokyo Gas Co. Ltd.		241,071		1,068,644
Tokyo Tatemono Co. Ltd.		14,000		64,595
Tokyu Land Corp.		26,483		132,664
Tosoh Corp.		236,000		765,054
Toyota Auto Body Co. Ltd.		19,457		362,668
Toyota Motor Corp.		66,953		2,638,598
USS Co. Ltd.		16,584		1,354,750
West Japan Railway Co.		82		306,386
Yamada Denki Co. Ltd.		8,630		587,725
Yamaha Corp.		19,700		243,467
Yamaha Motor Co. Ltd. †		40,000		649,790
Yamatake Corp.		4,437		104,846
Yamato Holdings Co. Ltd.		24,460		347,344

				88,038,093

Jersey, Channel Islands - 0.6%
Wolseley PLC †		79,442		2,553,807


Netherlands - 4.7%
Corio NV REIT		2,174		140,138
European Aeronautic Defence and Space Co. NV †		28,971		678,691
ING Groep NV CVA †		168,182		1,647,176
Koninklijke Ahold NV		129,789		1,721,269
Koninklijke DSM NV		50,073		2,865,507
Koninklijke Philips Electronics NV		78,133		2,404,744
Royal Dutch Shell PLC A Shares, Class A		134,779		4,518,989
Royal Dutch Shell PLC B Shares, Class B		169,535		5,637,696
Unilever NV CVA		59,667		1,868,768

				21,482,978

New Zealand - 0.0% (c)
Telecom Corp of New Zealand Ltd. (a)		18,537		31,141


Singapore - 1.6%
Ascendas Real Estate Investment Trust REIT		49,637		80,242
CapitaMall Trust REIT		71,994		109,695
Cosco Corp. Singapore Ltd.		138,000		230,743
DBS Group Holdings Ltd.		16,128		180,337
Fraser and Neave Ltd.		135,000		675,142
Jardine Cycle & Carriage Ltd.		11,066		316,096
Keppel Corp. Ltd.		62,571		553,091
Neptune Orient Lines Ltd. †(a)		305,000		519,376
Oversea-Chinese Banking Corp. Ltd.		156,479		1,206,888
SembCorp Industries Ltd.		32,017		128,395


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	43
AQR Funds	Annual Report	December 2010	43


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL EQUITY FUND


	SHARES		VALUE (Note 3)
Singapore - 1.6% (continued)
SembCorp Marine Ltd.		121,000	$	507,099
Singapore Airlines Ltd.		21,000		251,032
Singapore Exchange Ltd. (a)		29,472		193,633
Singapore Press Holdings Ltd.		131,000		407,428
Singapore Technologies Engineering Ltd.		63,265		168,881
Singapore Telecommunications Ltd.		304,524		724,952
StarHub Ltd.		1,988		4,090
United Overseas Bank Ltd.		59,097		840,149
UOL Group Ltd.		18,000		66,814

				7,164,083

Spain - 3.5%
Banco Bilbao Vizcaya Argentaria SA		152,295		1,558,168
Banco Santander SA		491,960		5,262,801
Endesa SA (a)		56,918		1,480,622
Inditex SA		46,833		3,519,365
Repsol YPF SA		64,158		1,803,703
Telefonica SA		103,688		2,376,486

				16,001,145

Sweden - 2.8%
Boliden AB		89,218		1,818,475
Investor AB B Shares, Class B		19,364		414,528
NCC AB, Class B		25,911		571,036
Scania AB B Shares, Class B		143,187		3,297,406
Tele2 AB B Shares, Class B		220,860		4,584,222
Volvo AB B Shares, Class B †		136,146		2,399,319

				13,084,986

Switzerland - 7.6%
ABB Ltd. †		198,004		4,434,770
Clariant AG †		26,447		537,547
Compagnie Financiere Richemont SA, Class A		48,078		2,835,966
Nestle SA		142,933		8,399,592
Novartis AG		112,428		6,638,733
Roche Holding AG		31,146		4,579,986
Sulzer AG		12,242		1,873,464
UBS AG †		105,229		1,733,095
Xstrata PLC		153,966		3,663,754

				34,696,907

United Kingdom - 15.0%
Anglo American PLC		22,708		1,192,912
Associated British Foods PLC		35,727		662,347
AstraZeneca PLC		79,641		3,644,861
Aviva PLC		255,557		1,577,480
Barclays PLC		325,648		1,351,528
BHP Billiton PLC		85,688		3,461,878
BP PLC		816,873		6,046,452
British American Tobacco PLC		104,266		4,027,569
British Land Co. PLC REIT		29,205		240,737
British Sky Broadcasting Group PLC		44,987		519,261
BT Group PLC		975,377		2,781,925
Burberry Group PLC		53,720		948,097
Centrica PLC		911,245		4,741,297
Daily Mail & General Trust PLC, Class A		41,282		371,573
Dixons Retail PLC †		43,714		15,752


	SHARES		VALUE (Note 3)
United Kingdom - 15.0% (continued)
GlaxoSmithKline PLC		177,478	$	3,456,280
HSBC Holdings PLC		442,253		4,538,895
IMI PLC		58,065		860,706
Imperial Tobacco Group PLC		17,525		540,978
Investec PLC		163,166		1,349,861
ITV PLC †		1,040,724		1,145,944
J Sainsbury PLC		36,239		213,795
Kingfisher PLC		408,288		1,689,107
Land Securities Group PLC REIT		24,126		255,564
Legal & General Group PLC		478,485		727,733
Lloyds Banking Group PLC †		2,714,734		2,814,211
Mondi PLC		280,485		2,265,669
Next PLC		3,144		97,510
Old Mutual PLC		138,247		267,343
Rio Tinto PLC		53,849		3,854,581
Rolls-Royce Group PLC †		62,372		610,262
Rolls-Royce Group PLC, Class C (3)†(b)		5,323,584		8,335
Royal Bank of Scotland Group PLC †		1,471,653		907,569
Segro PLC REIT		49,428		222,255
Stagecoach Group PLC		49,172		163,524
Tate & Lyle PLC		127,083		1,034,125
Tesco PLC		238,989		1,591,408
Unilever PLC		20,202		623,138
Vodafone Group PLC		2,882,258		7,598,166
WH Smith PLC		55,209		422,736

				68,843,364

TOTAL COMMON STOCKS (cost $342,587,756)				399,176,496


PREFERRED STOCKS - 0.4%

Germany - 0.2%
Volkswagen AG		6,683		1,090,842


Switzerland - 0.2%
Schindler Holding AG		7,196		853,903

TOTAL PREFERRED STOCKS (cost $991,222)				1,944,745


MONEY MARKET FUNDS - 10.0%
Dreyfus Institutional Cash Advantage Fund, Class I, 0.180% (d)		860		860
J.P. Morgan Prime Money Market Fund - Capital Shares, 0.130% (d)(e)		45,794,801		45,794,801

TOTAL MONEY MARKET FUNDS
(cost $45,795,661; includes $7,149,866 of cash collateral received for securities on loan)				45,795,661

TOTAL INVESTMENTS - 97.3% (cost $389,374,639)				446,916,902

OTHER ASSETS IN EXCESS OF LIABILITIES - 2.7% (f)				12,323,298

NET ASSETS - 100.0%			$	459,240,200


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	44
AQR Funds	Annual Report	December 2010	44


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL EQUITY FUND


SECTOR	VALUE		% OF NET ASSETS
Consumer Discretionary	$	50,970,862		11.1	%
Consumer Staples		29,374,671		6.4
Energy		33,782,652		7.3
Financials		76,004,092		16.5
Health Care		35,768,689		7.8
Industrials		65,525,483		14.3
Information Technology		14,638,359		3.2
Materials		53,126,054		11.5
Telecommunication Services		26,992,143		5.9
Utilities		14,938,236		3.3
Money Market Funds		45,795,661		10.0

Total Investments		446,916,902		97.3
Other Assets in Excess of Liabilities (f)		12,323,298		2.7

Net Assets	$	459,240,200		100.0	%

†	Non income-producing security.

(a)	All or a portion of the security on loan. The aggregate market value of such securities is $6,868,811; cash collateral of $7,149,866 was received with which the Fund purchased a money market fund.

(b)	Security fair valued at December 31, 2010.

(c)	Represents less than 0.05 percent of net assets.

(d)	Represents annualized seven-day yield as of December 31, 2010.

(e)	Represents security, or portion thereof, purchased with the cash collateral received for securities on loan.

(f)	Includes appreciation(depreciation) on futures contracts, forward foreign currency exchange contracts and swaps.

All securities are Level 2, unless otherwise noted in parentheses.

(3)	Level 3 security (See Note 5).

The following abbreviations are used in portfolio descriptions:

CVA - Dutch Certificate of Shares

REIT - Real Estate Investment Trust

Total return swap contracts outstanding as of December 31, 2010

COUNTERPARTY

UNDERLYING REFERENCE INSTRUMENT

TERMINATION
DATE

NOTIONAL
VALUE

UNREALIZED
APPRECIATION
(DEPRECIATION)

The Royal Bank
of Scotland

Swiss Market Index

3/18/2011

$(30,248,177)

$439,723

Collateral is included in the collateral for forward foreign currency exchange contracts.

Open futures contracts outstanding at December 31, 2010:


NUMBER OF CONTRACTS	TYPE	EXPIRATION DATE	VALUE AT TRADE DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Long Contracts:
443	Amsterdam Index	January 21, 2011		$41,721,467		$42,172,000		$450,533
700	CAC40 10 Euro	January 21, 2011		36,486,606		35,774,443		(712,163)
118	DAX Index	March 18, 2011		27,828,982		27,414,105		(414,877)
185	FTSE 100 Index Futures	March 18, 2011		16,897,605		17,068,795		171,190
215	FTSE/MIB Index	March 18, 2011		29,661,574		29,138,969		(522,605)
2	IBEX 35 Index	January 21, 2011		269,833		262,702		(7,131)
11	SGX MSCI Singapore Index Futures	January 28, 2011		641,715		649,842		8,127

								(1,026,926)

Short Contracts:
68	Hang Seng Index	January 28, 2011		(9,901,211)		(10,068,372)		(167,161)
710	OMXS30 Index	January 21, 2011		(12,156,747)		(12,219,074)		(62,327)
275	SPI 200	March 17, 2011		(33,635,602)		(33,333,345)		302,257
174	TOPIX Index	March 10, 2011		(18,917,970)		(19,222,489)		(304,519)

								(231,750)

								$(1,258,676)

Cash held as collateral with broker for futures contracts was $15,310,150 at December 31, 2010.


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	45
AQR Funds	Annual Report	December 2010	45


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL EQUITY FUND

Forward foreign currency exchange contracts outstanding as of December 31, 2010:


PURCHASE CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT PURCHASED		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Australian Dollar, Expiring 03/16/11	The Royal Bank of Scotland	AUD		68,926,100		$65,736,659		$70,025,930		$4,289,271
Swiss Franc, Expiring 03/16/11	The Royal Bank of Scotland	CHF		3,630,000		3,746,929		3,897,555		150,626
Danish Krone, Expiring 03/16/11	The Royal Bank of Scotland	DKK		31,000		5,431		5,579		148
Euro, Expiring 03/16/11	The Royal Bank of Scotland	EUR		986,000		1,316,375		1,322,561		6,186
British Pound, Expiring 03/16/11	The Royal Bank of Scotland	GBP		6,308,300		9,819,784		9,871,250		51,466
Hong Kong Dollar, Expiring 03/16/11	The Royal Bank of Scotland	HKD		22,769,000		2,933,772		2,930,716		(3,056)
Israeli Shekel, Expiring 03/16/11	The Royal Bank of Scotland	ILS		13,534,000		3,684,060		3,818,080		134,020
Japanese Yen, Expiring 03/16/11	The Royal Bank of Scotland	JPY		1,186,035,000		14,298,662		14,634,601		335,939
Norwegian Krone, Expiring 03/16/11	The Royal Bank of Scotland	NOK		332,142,000		54,328,522		56,941,462		2,612,940
Swedish Krona, Expiring 03/16/11	The Royal Bank of Scotland	SEK		527,540,000		75,559,551		78,270,021		2,710,470
Singapore Dollar, Expiring 03/16/11	The Royal Bank of Scotland	SGD		928,000		708,367		724,638		16,271

						232,138,112		242,442,393		10,304,281


SALES CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT SOLD		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Australian Dollar, Expiring 03/16/11	The Royal Bank of Scotland	AUD		(9,121,000)		$(9,047,817)		$(9,266,541)		$(218,724)
Swiss Franc, Expiring 03/16/11	The Royal Bank of Scotland	CHF		(32,105,800)		(32,115,306)		(34,472,203)		(2,356,897)
Danish Krone, Expiring 03/16/11	The Royal Bank of Scotland	DKK		(16,587,000)		(2,934,626)		(2,985,397)		(50,771)
Euro, Expiring 03/16/11	The Royal Bank of Scotland	EUR		(55,567,600)		(73,018,371)		(74,535,045)		(1,516,674)
British Pound, Expiring 03/16/11	The Royal Bank of Scotland	GBP		(9,774,000)		(15,252,507)		(15,294,387)		(41,880)
Hong Kong Dollar, Expiring 03/16/11	The Royal Bank of Scotland	HKD		(7,259,000)		(934,029)		(934,345)		(316)
Israeli Shekel, Expiring 03/16/11	The Royal Bank of Scotland	ILS		(658,000)		(181,492)		(185,628)		(4,136)
Japanese Yen, Expiring 03/16/11	The Royal Bank of Scotland	JPY		(3,825,174,200)		(45,747,513)		(47,199,195)		(1,451,682)
Norwegian Krone, Expiring 03/16/11	The Royal Bank of Scotland	NOK		(7,433,000)		(1,192,630)		(1,274,292)		(81,662)
Swedish Krona, Expiring 03/16/11	The Royal Bank of Scotland	SEK		(7,455,000)		(1,095,777)		(1,106,083)		(10,306)
Singapore Dollar, Expiring 03/16/11	The Royal Bank of Scotland	SGD		(96,000)		(72,821)		(74,939)		(2,118)

						(181,592,889)		(187,328,055)		(5,735,166)

						$50,545,223		$55,114,338		$4,569,115


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	46
AQR Funds	Annual Report	December 2010	46


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL EQUITY FUND

Cash pledged as collateral by the broker for forward foreign exchange contracts in the amount of $2,720,000.

AUD - Australian Dollar

CHF - Swiss Franc

DKK - Danish Krone

EUR - Euro

GBP - British Pound

HKD - Hong Kong Dollar

ILS - Israeli Shekel

JPY - Japanese Yen

NOK - Norwegian Krone

SEK - Swedish Krona

SGD - Singapore Dollar


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	47
AQR Funds	Annual Report	December 2010	47


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


LONG INVESTMENTS - 126.2%	SHARES		VALUE (Note 3)
COMMON STOCKS - 49.8%

Consumer Discretionary - 9.4%
AutoChina International Ltd. (China) †		59,429	$	1,542,777
Cablevision Systems Corp., Class A		69,766		2,360,881
Caribou Coffee Co., Inc. †		73,839		744,297
CBS Corp., Class A		9,650		183,639
China Networks International Holdings Ltd. (3)†(a)		432,416		52,971
China XD Plastics Co. Ltd. (China) †		366,664		1,972,652
Comcast Corp., Class A		1,201,128		24,995,474
Discovery Communications, Inc., Class C †		480,733		17,638,094
Dollar General Corp. †		74,178		2,275,039
Emmis Communications Corp., Class A †		578,313		439,518
Express, Inc.		56,156		1,055,733
Fuel Systems Solutions, Inc. †		23,089		678,355
Jo-Ann Stores, Inc. †		92,600		5,576,372
Kandi Technologies Corp. (China) (2)†		392,493		2,068,438
Lennar Corp. B Shares, Class B		204,766		3,188,207
Liberty Global, Inc. †		697,519		23,638,919
Lincoln Educational Services Corp.		35,000		542,850
Madison Square Garden, Inc., Class A †		95,148		2,452,915
Mediacom Communications Corp., Class A †		599,684		5,073,327
News Corp., Class A		720,732		10,493,858
Playboy Enterprises, Inc., Class B †		364,462		1,902,492
Valuevision Media, Inc., Class A †		74,977		458,109
VCG Holding Corp. †		34,604		75,437
Viacom, Inc., Class B		71,249		2,822,173
Vitamin Shoppe, Inc. †		24,077		809,950

				113,042,477

Consumer Staples - 2.0%
Alberto-Culver Co. (c)		241,249		8,935,863
Celsius Holdings, Inc. †		184,456		77,471
Central Garden and Pet Co. †		583,483		5,741,473
Del Monte Foods Co.		362,871		6,821,975
Embotelladora Andina SA, Class A ADR (Chile)		10,000		238,000
Green Mountain Coffee Roasters, Inc. †		31,981		1,050,896
Molson Coors Brewing Co., Class B		4,626		232,179
SkyPeople Fruit Juice, Inc. (China) †		152,332		705,297

				23,803,154

Energy - 3.0%
Baker Hughes, Inc.		400		22,868
C&J Energy Services, Inc. 144A (3)†(a)		77,733		777,330
CIC Energy Corp./Bahamas (Bahamas) †		103,593		717,275
Cloud Peak Energy, Inc. †		152,119		3,533,724
Concho Resources, Inc./Midland TX †		11,246		985,937
EXCO Resources, Inc.		217,200		4,218,024
Gastar Exploration Ltd. †		26,289		113,043
International Coal Group, Inc. †		337,845		2,614,920
Kodiak Oil & Gas Corp. †		5,633		37,178
McDermott International, Inc. †		138,907		2,873,986
Omega Navigation Enterprises, Inc., Class A (Greece) †		276,761		354,254
Petrobank Energy & Resources Ltd. (Canada) †(b)		15,530		394,638


	SHARES		VALUE (Note 3)
Energy - 3.0% (continued)
Petrominerales Ltd. (Canada)		9,535	$	318,215
QEP Resources, Inc.		68,934		2,502,994
Scorpio Tankers, Inc. (Monaco) †		54,000		545,940
Seadrill Ltd. (Bermuda)		143,305		4,860,906
SilverBirch Energy Corp. (Canada) †(b)		5,359		38,400
Storm Resources Ltd. (Canada) †		3,914		15,756
T-3 Energy Services, Inc. †		256,823		10,229,260
Uranium Energy Corp. †		233,188		1,408,455

				36,563,103

Financials - 9.1%
57th Street General Acquisition Corp. †		292,050		2,818,282
American Capital Agency Corp. REIT		80,000		2,299,200
Ashford Hospitality Trust, Inc. REIT †		131,385		1,267,865
Australia Acquisition Corp. (Australia) †(c)		612,000		5,722,200
Cazador Acquisition Corp. Ltd. (Cayman Islands) †		319,668		3,167,910
CBOE Holdings, Inc.		11,600		265,176
Center Financial Corp. †		96,473		731,265
Chatham Lodging Trust REIT		1,425		24,581
Compass Diversified Holdings		2,493		44,101
Cypress Sharpridge Investments, Inc. REIT		145,010		1,872,079
Dynex Capital, Inc. REIT		149,334		1,630,727
Equity One, Inc. REIT		74,976		1,363,064
European CleanTech SE, Class A (Luxembourg) (2)†		621,000		7,914,474
First American Financial Corp.		47,677		712,294
First Horizon National Corp. †		56,308		663,308
First Mercury Financial Corp.		331,762		5,440,897
FlatWorld Acquisition Corp. (Virgin Islands, British) †		219,450		2,209,862
Golub Capital BDC, Inc.		19,950		341,544
Green Dot Corp., Class A †		33,797		1,917,642
HCP, Inc. REIT		45,750		1,683,142
Helikos SE (Luxembourg) (2)†		72,000		932,634
Hicks Acquisition Co. II, Inc. †		810,000		8,262,000
Huntington Bancshares, Inc./OH		375,384		2,578,888
IFM Investments Ltd. ADR (China) †		21,000		105,000
Invesco Mortgage Capital, Inc. REIT		105,107		2,295,537
Janus Capital Group, Inc.		2,500		32,425
JWC Acquisition Corp. †		1,032,750		10,482,412
KKR Financial Holdings LLC		269,846		2,509,568
L&L Acquisition Corp. †		306,000		3,053,880
Lexington Realty Trust REIT		300,306		2,387,433
Loews Corp.		7,700		299,607
Marshall & Ilsley Corp.		813,973		5,632,693
Mercer Insurance Group, Inc.		98,872		2,767,427
NewAlliance Bancshares, Inc.		904,621		13,551,223
Patriot National Bank (3)†(a)(b)		2,000,000		2,167,200
Rome Bancorp, Inc.		23,194		278,792
Santa Monica Media Corp. (3)†(a)		15,377		—
Senior Housing Properties Trust REIT		111,513		2,446,595
SLM Corp. †		57,250		720,778
SP Acquisition Holdings, Inc. (3)†(a)		27,000		—
Sports Properties Acquisition Corp. (3)†(a)		35,850		—
Starwood Property Trust, Inc. REIT		74,258		1,595,062
Student Loan Corp./The		11,558		374,942


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	48
AQR Funds	Annual Report	December 2010	48


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


	SHARES		VALUE (Note 3)
Financials - 9.1% (continued)
Tower Bancorp, Inc.		10,441	$	230,120
Trian Acquisition I Corp. (3)†(a)		15,200		—
Two Harbors Investment Corp. REIT		17,500		171,325
Webster Financial Corp.		131,248		2,585,586
Whitney Holding Corp./LA		85,740		1,213,221
Wilber Corp.		110,948		1,120,575
Wilmington Trust Corp.		4,364		18,940

				109,903,476

Health Care - 4.3%
Access Pharmaceuticals, Inc. †(c)		228,024		565,500
ADAM, Inc. †(c)		131,600		946,204
Adcare Health Systems, Inc. †(c)		42,948		168,356
Alcon, Inc. (Switzerland) (c)		30,000		4,902,000
American Surgical Holdings, Inc. (2)		15,747		44,407
BMP Sunstone Corp. †		568,803		5,636,838
Caraco Pharmaceutical Laboratories Ltd. †		11,906		54,053
China Cord Blood Corp. (Hong Kong) †		26,127		104,769
Cormedix, Inc. †		150,800		274,456
Crucell NV ADR (Netherlands) †		95,289		2,981,593
CryoPort, Inc. †		571,428		342,857
Cypress Bioscience, Inc. †		764,323		4,952,813
Dionex Corp. †		40,878		4,824,013
DynaVox, Inc., Class A †		34,800		178,524
Eurand NV (Netherlands) †		527,035		6,234,824
Genzyme Corp. †		38,400		2,734,080
Indevus Pharmaceuticals, Inc. (3)†(a)		6,006		4,625
Insulet Corp. †		89,949		1,394,209
King Pharmaceuticals, Inc. †		312,729		4,393,842
Lannett Co., Inc. †		73,808		412,587
Martek Biosciences Corp. †		915		28,639
Momenta Pharmaceuticals, Inc. †		168,654		2,524,750
ReGeneRx Biopharmaceuticals, Inc. †		217,790		47,914
Rosetta Genomics Ltd. (Israel) †		382,500		361,960
St Jude Medical, Inc. †		46,460		1,986,165
Tenet Healthcare Corp. †		327,600		2,191,644
Tengion, Inc. †		26,320		66,853
WuXi PharmaTech Cayman, Inc. ADR (China) †		148,246		2,392,690
YM Biosciences, Inc. (Canada) †		375,384		874,645

				51,625,810

Industrials - 6.2%
Advanced Battery Technologies, Inc. †		965,000		3,715,250
AirTran Holdings, Inc. †		586,876		4,337,014
Allied Defense Group, Inc. †(c)		190,011		636,537
Applied Signal Technology, Inc.		63,880		2,420,413
Babcock & Wilcox Co. †		81,251		2,079,213
Baldor Electric Co.		156,445		9,862,293
Baltic Trading Ltd.		40,500		413,505
Bucyrus International, Inc.		88,570		7,918,158
CAI International, Inc. †		38,204		748,798
China Dredging Group Co. Ltd. (Switzerland) (2)†		1,000,000		5,000,000
China Electric Motor, Inc. (China) †		2,400		10,848
Dollar Thrifty Automotive Group, Inc. †		196,324		9,278,272
Douglas Dynamics, Inc.		15,722		238,188


	SHARES		VALUE (Note 3)
Industrials - 6.2% (continued)
Dynamex, Inc. †		147,458	$	3,651,060
Fushi Copperweld, Inc. (China) †		199,075		1,767,786
Greenbrier Cos., Inc. †		13,291		278,978
Harbin Electric, Inc. (China) †		172,921		3,000,179
Hardinge, Inc.		74,385		724,510
HEICO Corp., Class A		177,853		6,637,474
Hubbell, Inc., Class A		2,194		124,290
Ladish Co., Inc. †		189,029		9,188,700
RCM Technologies, Inc. †		265,735		1,233,010
Regulus Resources, Inc. (Canada) †		85,723		98,349
Rush Enterprises, Inc., Class B †		1,000		17,980
Sapphire Industry Corp. (3)†(a)		25,025		—
X-TAL Minerals Corp. (Canada) †		775,282		1,365,414

				74,746,219

Information Technology - 8.6%
Art Technology Group, Inc. †		1,236,533		7,394,467
Authentidate Holding Corp. †		1,274,704		567,243
Authentidate Holding Corp. ADR (3)†(a)		218,000		321,648
AutoNavi Holdings Ltd. ADR (China) †		6,960		111,569
Avago Technologies Ltd. (Singapore) (c)		43,879		1,249,235
BroadSoft, Inc. †		36,536		872,480
Camelot Information Systems, Inc. ADR (China) †		47,756		1,142,324
Changyou.com Ltd. ADR (China) †		29,325		836,056
CommScope, Inc. †		189,450		5,914,629
CoreLogic, Inc.		47,677		882,978
CPI International, Inc. †		252,140		4,878,909
Dice Holdings, Inc. †		203,772		2,924,128
Equinix, Inc. †		7,162		581,984
Funtalk China Holdings Ltd. (China) †		9,832		55,747
GigOptix, Inc. †		200,477		551,312
hiSoft Technology International Ltd. ADR (China) †		700		21,140
Hypercom Corp. †		862,503		7,219,150
Intel Corp.		9,520		200,206
IntraLinks Holdings, Inc. †		89,126		1,667,547
Kemet Corp. †		213,461		3,112,261
L-1 Identity Solutions, Inc. †		382,847		4,559,708
LTX-Credence Corp. †		457,062		3,382,259
Magic Software Enterprises Ltd. (Israel)		239,007		1,477,063
McAfee, Inc. †		191,089		8,849,332
Micron Technology, Inc. †		31,163		249,927
Molex, Inc., Class A		578,121		10,909,143
Motorola Solutions, Inc. †		977,392		8,864,945
NaviSite, Inc. †		407,977		1,505,435
Novell, Inc. †		1,625,362		9,622,143
NU Horizons Electronics Corp. †		220,422		1,536,341
Occam Networks, Inc. †		498,974		4,326,105
Orckit Communications Ltd. (Israel) †		15,174		44,308
RAE Systems, Inc. †		477,177		768,255
RealPage, Inc. †		84,516		2,614,080
Sonic Solutions, Inc. †		85,847		1,287,705
SS&C Technologies Holdings, Inc. †		32,400		664,524
Telestone Technologies Corp. (China) †		115,818		1,229,987
Tessco Technologies, Inc.		56,321		898,320
Voltaire Ltd. (Israel) †		107,907		933,396

				104,227,989


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	49
AQR Funds	Annual Report	December 2010	49


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


	SHARES		VALUE (Note 3)
Materials - 3.8%
Airgas, Inc.		57,200	$	3,572,712
Aurcana Corp. (Canada) †		1,246,774		978,699
BHP Billiton plc ADR (United Kingdom)		155,985		12,556,793
CF Industries Holdings, Inc.		1		135
Edgewater Exploration Ltd. (Canada) †(b)		500,000		649,122
Goldcorp, Inc. (Canada)		215,145		9,933,946
Graham Packaging Co., Inc. †		10,750		140,180
Metals USA Holdings Corp. †		61,600		938,784
Monsanto Co.		3,820		266,025
Noranda Aluminum Holding Corp. †		122,380		1,786,748
Puda Coal, Inc. (China) †		200,959		2,863,666
Rock of Ages Corp. †		2,597		13,582
Rockwood Holdings, Inc. †		63,749		2,493,861
TriStar Gold, Inc. (Canada) †		183,521		107,122
Uni-Pixel, Inc. †		38,764		282,977
Western Coal Corp. (Canada) †		779,693		9,651,511

				46,235,863

Telecommunication Services - 1.9%
IDT Corp.		37,707		965,676
Qwest Communications International, Inc.		1,734,901		13,202,597
Syniverse Holdings, Inc. †		197,796		6,102,006
Telephone & Data Systems, Inc. Special Shares		101,584		3,201,928

				23,472,207

Utilities - 1.5%
Allegheny Energy, Inc.		421,534		10,217,984
China Hydroelectric Corp. ADR (China) †		24,500		181,055
Nicor, Inc.		99,899		4,986,958
Pennichuck Corp.		32,806		897,572
Questar Corp.		68,934		1,200,141

				17,483,710

TOTAL COMMON STOCKS (cost $568,430,375)				601,104,008


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	50
AQR Funds	Annual Report	December 2010	50


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


CONVERTIBLE PREFERRED STOCKS - 2.7%	MOODY’S RATING* (UNAUDITED)							SHARES		VALUE (Note 3)
Consumer Discretionary - 0.1%
Beazer Homes USA, Inc., $25.00 par, 7.250%		NR							52,875	$	1,246,264


Consumer Staples - 0.8%
Bunge Ltd., Perpetual (Bermuda), $100.00 par, 4.875%		Ba1							15,000		1,410,000
Universal Corp., Perpetual, $1,000.00 par, 6.750%		BB	**						8,350		8,425,150

											9,835,150

Energy - 0.2%
Energy XXI Bermuda Ltd., Perpetual (Bermuda), $250.00 par, 5.625% (2)†		NR							1,200		376,875
Superior Well Services, Inc., Perpetual, Series A, $1,000.00 par, 4.000% (2)		NR							1,169		1,083,523
Whiting Petroleum Corp., Perpetual, $100.00 par, 6.250%		B	**						1,144		316,670

											1,777,068

Financials - 1.3%
Boston Private Capital Trust I, $50.00 par, 4.875%		NR							3,750		103,359
Dole Food Automatic Common Exchange 144A, $12.50 par, 7.000% †(b)		NR							3,750		47,930
MF Global Holdings Ltd., Perpetual, $100.00 par, 9.750%		NR							19,550		2,370,437
SLM Corp., Perpetual, Series A, $50.00 par, 6.970%		Ba3							12,500		535,000
Sovereign Capital Trust IV, $50.00 par, 4.375%		Baa3							243,634		9,988,994
UBS AG (Switzerland), $25.00 par, 9.375% (2)†		NR							26,000		706,940
UBS AG (Switzerland), $100.00 par, 6.750% †		NR							21,500		644,355
Wells Fargo & Co., Perpetual, Series L, $1,000.00 par, 7.500%		Baa							3 500		500,275
Wintrust Financial Corp., $50.00 par, 7.500% (2)†		NR							24,300		1,343,839

											16,241,129

Industrials - 0.2%
Kansas City Southern, Perpetual, $1,000.00 par, 5.125%		B-	**						1,275		1,989,000
Timberjack Corp. (3)†(a) $188,000 par, 8.000%		NR							188,000		580,905

											2,569,905


Utilities - 0.1%
PPL Corp., $50.00 par, 9.500%		NR							22,650		1,245,070

TOTAL CONVERTIBLE PREFERRED STOCKS (cost $30,303,979)											32,914,586


CORPORATE BONDS - 19.2%				INTEREST RATE		MATURITY DATE		PRINCIPAL AMOUNT (000’S)
Communications - 1.8%
Clear Channel Communications, Inc. (2)(c)		Ca			6.250%		03/15/11	$	425	$	423,938
Global Crossing UK Finance plc (United Kingdom) (2)		B3			10.750%		12/15/14		1,835		1,899,225
Interactive Network, Inc./FriendFinder Networks Inc 144A (2)(b)(c)		B	**		14.000%		09/30/13		1,110		1,148,850
Primus Telecommunications Holding, Inc./Primus Telecommunications Canada Inc 144A (2)(b)		Caa1			13.000%		12/15/16		3,425		3,716,125
Securus Technologies, Inc. (2)		NR			17.000%		05/30/15		1,850		1,831,500
Securus Technologies, Inc. (2)		NR			17.000%		07/30/15		1,800		1,782,000
Sprint Capital Corp. (2)		Ba3			7.625%		01/30/11		4,850		4,862,125
WCP Wireless Site Funding LLC/WCP Wireless Site RE Funding LLC 144A (2)(b)		NR			6.829%		11/15/15		3,325		3,187,028
WCP Wireless Site Funding LLC/WCP Wireless Site RE Funding LLC 144A (2)(b)		NR			9.247%		11/15/15		3,000		2,856,262

											21,707,053


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	51
AQR Funds	Annual Report	December 2010	51


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND



	MOODY’S RATING* (UNAUDITED)			INTEREST RATE		MATURITY DATE		PRINCIPAL AMOUNT (000’S)		VALUE (Note 3)
Consumer Discretionary - 3.2%
American Airlines Equipment Trust 1990, Series B (2)		Caa1			10.500%		09/15/11	$	2,575	$	2,597,531
American Airlines Pass Through Trust 2001-01, Series 2001-1, Class A-2 (2)		B2			6.817%		05/23/11		1,530		1,544,535
American Airlines Pass Through Trust 2001-02, Series 2001-2, Class A-2 (2)		Ba1			7.858%		10/01/11		925		962,000
AmeriQual Group LLC and AmeriQual Finance Corp. 144A (2)(b)(c)		Caa2			9.000%		04/01/12		2,765		2,709,700
AMR Corp., Series B MTN (2)		CCC+	**		10.400%		03/10/11		1,960		1,977,150
Baker & Taylor, Inc. 144A (2)(b)(c)		B3			11.500%		07/01/13		3,250		2,656,875
Brookstone Co., Inc. 144A (2)(b)(c)		CCC+	**		13.000%		10/15/14		516		476,010
China Networks International Holdings Ltd. (BRITISH VIRGIN) (2)		NR			10.000%		04/30/16		750		750,000
Delta Air Lines 2001-1 Class B Pass Through Trust, Series 2001-1, Class B (2)		NR			7.711%		09/18/11		1,890		1,937,250
Dollar General Corp. (2)		B1			10.625%		07/15/15		3,650		3,969,375
GameStop Corp./GameStop, Inc. (2)		Ba1			8.000%		10/01/12		1,083		1,107,367
Mandalay Resort Group (2)(c)		Caa1			6.375%		12/15/11		3,575		3,597,344
Pegasus Solutions, Inc. 144A (2)(b)(d)		NR			13.000%		04/15/14		2,941		2,529,346
Sally Holdings LLC/Sally Capital, Inc. (2)(c)		B3			9.250%		11/15/14		5,500		5,775,000
SouthPeak Interactive Corp. (3)(a)		NR			10.000%		07/19/13		2,500		1,341,795
Unifi, Inc. (2)		Caa1			11.500%		05/15/14		3,600		3,816,000
Valassis Communications, Inc. (2)(c)		Ba3			8.250%		03/01/15		824		862,110

											38,609,388

Consumer Staples - 0.5%
Great Atlantic & Pacific Tea Co. 144A (2)(b)(e)		NR			11.375%		08/01/15		3,555		3,199,500
North Atlantic Trading Co. 144A (2)(b)(c)		NR			10.000%		03/01/12		1,940		1,823,600
Vector Group Ltd. 144A (2)(b)		B1			11.000%		08/15/15		1,700		1,746,750

											6,769,850

Energy - 2.3%
Black Elk Energy Offshore Operations LLC and Black Elk Finance Corp., Series AI 144A (2)(b)		Caa2			13.750%		12/01/15		5,800		5,771,000
Compton Petroleum Finance Corp. (Canada) (2)		NR			10.000%		09/15/11		3,650		3,321,500
Energy XXI Gulf Coast, Inc. (2)(d)		B3			16.000%		06/15/14		1,502		1,704,709
Golden Close Maritime Corp. MTN (Bermuda) (2)		NR			11.000%		12/09/15		2,500		2,587,500
Harvest Operations Corp. (Canada) (2)		NR			7.500%		05/31/15		275		290,595
InterOil ASA (Canada) (2)		NR			15.000%		03/14/14		6,500		1,151,828
LDK Solar Co. Ltd., Series EXCH (Cayman Islands) (2)		NR			4.750%		04/15/13		2,900		2,845,625
Panoro Energy ASA 144A (Norway) (2)(b)		NR			12.000%		11/15/18		2,300		2,300,000
Polarcus Alima AS (Norway) (2)		NR			12.500%		10/29/15		3,800		3,876,000
RDS Ultra-Deepwater Ltd. 144A (Cayman Islands) (2)(b)		B3			11.875%		03/15/17		845		880,913
Sevan Marine ASA (Norway) (2)		NR			14.000%		12/22/14		12,000		2,064,516
Sevan Marine ASA 144A (Norway) (2)(b)		NR			12.000%		08/10/15		1,000		1,055,000

											27,849,186

Financials - 4.0%
Allied Capital Corp. (2)		Ba1			6.000%		04/01/12		1,650		1,692,621
Ally Financial, Inc. (2)		B3			7.250%		03/02/11		775		779,908
Ally Financial, Inc. (2)		B3			6.000%		12/15/11		810		830,250
American General Finance Corp., Series A (2)		B3			4.625%		06/22/11		7,775		10,286,119
Bankrate, Inc. 144A (2)(b)(c)		B2			11.750%		07/15/15		1,655		1,837,050
Centro NP LLC (2)		Caa2			4.500%		02/01/11		3,475		3,414,188
CNO Financial Group, Inc. (2)		B2			7.000%		12/30/16		3,635		5,307,100
Ford Motor Credit Co. LLC (2)		Ba2			7.375%		02/01/11		1,505		1,509,499
Icahn Enterprises LP/Icahn Enterprises Finance Corp. 144A (2)(b)		Ba3			8.000%		01/15/18		2,055		2,044,725
Jack Cooper Holdings Corp. 144A (2)(b)		NR			12.750%		12/15/15		1,775		1,757,250
Landry’s Holdings, Inc. 144A (2)(b)		Caa1			11.500%		06/01/14		1,545		1,514,100


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	52
AQR Funds	Annual Report	December 2010	52


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


	MOODY’S RATING* (UNAUDITED)			INTEREST RATE		MATURITY DATE		PRINCIPAL AMOUNT (000’S)		VALUE (Note 3)
Financials - 4.0% (continued)
Offshore Group Investments Ltd. 144A (Cayman Islands) (2)(b)(c)		B3			11.500%		08/01/15	$	1,950	$	2,115,750
Rare Restaurant Group LLC/RRG Finance Corp. 144A (2)(b)		NR			9.250%		05/15/14		1,300		1,131,000
Regions Financial Corp. (2)		B1			7.000%		03/01/11		1,705		1,708,410
Rouse Co. LP (The) (2)		NR			6.750%		11/09/15		4,045		4,186,575
Royal Bank of Scotland Group plc (United Kingdom) (2)		Ba2			6.375%		02/01/11		1,705		1,710,507
Synovus Financial Corp. (2)(c)		B3			5.125%		06/15/17		1,375		1,143,319
TMX Finance LLC/TitleMax Finance Corp. 144A (2)(b)(c)		B2			13.250%		07/15/15		380		418,000
UCI Holdco, Inc./Old (2)(d)(c)		Caa1			9.250%		12/15/13		4,630		4,618,067

											48,004,438

Healthcare - 2.5%
Adcare Health Systems, Inc. (3)(a)		NR			10.000%		10/26/13		1,850		1,898,283
Incyte Corp. Ltd. (2)(c)		NR			4.750%		10/01/15		1,000		2,076,250
King Pharmaceuticals, Inc. (2)(c)		BB	**		1.250%		04/01/26		10,323		10,258,481
Merge Healthcare, Inc. (2)		B2			11.750%		05/01/15		1,930		2,055,450
Omnicare, Inc. (2)		Ba3			3.750%		12/15/25		1,200		1,338,000
Omnicare, Inc. (2)		Ba3			6.125%		06/01/13		3,260		3,276,300
PDL BioPharma, Inc. 144A (2)(b)		NR			2.875%		02/15/15		1,400		1,472,800
Tenet Healthcare Corp. (2)(c)		Caa1			6.375%		12/01/11		500		504,688
US Oncology Holdings, Inc. (2)(d)		Caa1			6.737%		03/15/12		7,058		7,110,935

											29,991,187

Industrials - 2.5%
Continental Airlines, Inc., Series 2001-1, Class C (2)(c)		NR			7.033%		06/15/11		2,061		2,076,413
Eastman Kodak Co. (2)(c)		NR			7.000%		04/01/17		7,000		7,306,250
Floatel Superior Ltd. (Bahamas) (2)		NR			13.000%		09/02/15		1,100		1,177,000
GenCorp, Inc. (2)		CCC	**		4.063%		12/31/39		325		304,687
Nalco Co. (2)		B1			8.875%		11/15/13		4,525		4,595,703
Ship Finance International Ltd. (Bermuda) (2)		B1			8.500%		12/15/13		3,250		3,306,875
Thermadyne Holdings Corp. (2)		NR			9.250%		02/01/14		2,721		2,775,420
United Continental Holdings, Inc. (2)		NR			6.860%		04/22/14		6,874		6,873,943
Western Express, Inc. 144A (2)(b)		Caa1			12.500%		04/15/15		2,300		2,035,500

											30,451,791

Information Technology - 0.3%
Amkor Technology, Inc. (2)(c)		Ba3			9.250%		06/01/16		2,325		2,464,500
Micron Technology, Inc. (2)(c)		NR			1.875%		06/01/27		1,081		1,043,165

											3,507,665

Materials - 0.8%
AEP Industries, Inc. (2)		NR			7.875%		03/15/13		2,030		2,022,388
Appleton Papers, Inc. 144A (2)(b)		B1			10.500%		06/15/15		600		594,000
Appleton Papers, Inc. 144A (2)(b)		B3			11.250%		12/15/15		1,810		1,448,000
Kangaroo Resources Ltd. (Australia) (2)		NR			10.000%		06/30/12		2,800		2,800,000
Sterling Chemicals, Inc. (2)		B3			10.250%		04/01/15		2,700		2,781,000

											9,645,388

Telecommunication Services - 0.6%
CW Media Holdings, Inc. 144A (Canada) (2)(b)(d)		Ba2			13.500%		08/15/15		813		923,022
FiberTower Corp. (2)		NR			9.000%		01/01/16		3,949		3,514,176
MediMedia USA, Inc. 144A (2)(b)(c)		Caa2			11.375%		11/15/14		2,350		2,021,000
Morris Publishing Group LLC (2)		NR			10.000%		09/01/14		960		933,761

											7,391,959

Utilities - 0.7%
Dynegy Holdings, Inc. (2)		Caa2			6.875%		04/01/11		234		234,000


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	53
AQR Funds	Annual Report	December 2010	53


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


	MOODY’S RATING* (UNAUDITED)			INTEREST RATE		MATURITY DATE		PRINCIPAL AMOUNT (000’S)		VALUE (Note 3)
Utilities - 0.7% (continued)
Mirant Americas Generation LLC (2)		B3			8.300%		05/01/11	$	1,925	$	1,953,875
Mirant North America LLC (2)(c)		WR			7.375%		12/31/13		5,847		5,957,157

											8,145,032

TOTAL CORPORATE BONDS (cost $229,891,272)											232,072,937


CONVERTIBLE BONDS - 45.4%
Communications - 3.3%
Ciena Corp. 144A (2)(b)(c)		NR			4.000%		03/15/15		8,000		10,020,000
Clearwire Communications LLC/Clearwire Finance, Inc. 144A (2)(b)		CCC-	**		8.250%		12/01/40		700		710,500
Digital River, Inc. 144A (2)(b)(c)		NR			2.000%		11/01/30		2,600		2,541,500
Equinix, Inc. (2)		B-	**		4.750%		06/15/16		500		614,375
Finisar Corp. 144A (2)(b)(c)		NR			5.000%		10/15/29		700		2,020,375
Playboy Enterprises, Inc. (2)(c)		NR			3.000%		03/15/25		1,410		1,367,700
priceline.com, Inc. 144A (2)(b)(c)		BBB-	**		1.250%		03/15/15		7,675		11,263,062
Virgin Media, Inc. (2)(c)		B	**		6.500%		11/15/16		7,000		11,585,000

											40,122,512

Consumer Discretionary - 12.8%
AirTran Holdings, Inc. (2)		NR			5.500%		04/15/15		3,659		7,478,081
Alliance Data Systems Corp. (2)		NR			1.750%		08/01/13		3,000		3,217,500
Alliance Data Systems Corp. (2)(c)		NR			4.750%		05/15/14		6,500		10,676,250
AMR Corp. (2)(c)		CCC+	**		6.250%		10/15/14		7,500		8,493,750
ArvinMeritor, Inc. (2)(f)		CCC	**		4.625%		03/01/26		2,000		2,527,500
Coinstar, Inc. (2)(c)		BB+	**		4.000%		09/01/14		2,150		3,415,812
Convergys Corp. (2)(c)		BB-	**		5.750%		09/15/29		1,500		2,079,375
DR Horton, Inc., Series DHI (2)(c)		Ba3			2.000%		05/15/14		7,781		8,792,530
Exide Technologies (2)(c)		CCC+	**		0.000%		09/18/13		650		547,170
FTI Consulting, Inc. (2)(c)		B1			3.750%		07/15/12		1,325		1,696,000
Gaylord Entertainment Co. 144A (2)(b)(c)		NR			3.750%		10/01/14		9,875		14,392,812
Hertz Global Holdings, Inc. (2)(c)		B-	**		5.250%		06/01/14		11,500		22,051,250
Jakks Pacific, Inc. 144A (2)(b)(c)		NR			4.500%		11/01/14		3,925		5,288,938
Lennar Corp. 144A (2)(b)		B3			2.750%		12/15/20		400		437,000
Lennar Corp. 144A (2)(b)		B3			2.000%		12/01/20		600		594,750
MGM Resorts International 144A (2)(b)(c)		Caa1			4.250%		04/15/15		5,000		5,475,000
Navistar International Corp. (2)(c)		B	**		3.000%		10/15/14		1,875		2,503,125
Palm Harbor Homes, Inc. (2)(e)(c)		NR			3.250%		05/15/24		70		12,600
Regis Corp. (2)(c)		NR			5.000%		07/15/14		5,000		6,387,500
Saks, Inc. 144A (2)(b)(c)		NR	**		7.500%		12/01/13		800		1,684,000
Sonic Automotive, Inc. (2)(c)		B-	**		5.000%		10/01/29		7,500		9,318,750
Titan International, Inc. 144A (2)(b)(c)		B+	**		5.625%		01/15/17		5,475		11,497,500
TRW Automotive, Inc. 144A (2)(b)(c)		Ba2			3.500%		12/01/15		5,850		11,246,625
United Rentals, Inc. (2)(c)		NR			4.000%		11/15/15		5,850		12,848,063

											152,661,881

Consumer Staples - 2.4%
Alliance One International, Inc. (2)(c)		Caa1			5.500%		07/15/14		3,400		3,829,250
Central European Distribution Corp. (2)(c)		B-	**		3.000%		03/15/13		2,000		1,855,000
Chiquita Brands International, Inc. (2)(c)		B	**		4.250%		08/15/16		5,000		4,843,750
Nash Finch Co. (2)(f)(c)		B3			1.631%		03/15/35		4,800		2,430,000
Rite Aid Corp. (2)(c)		Ca			8.500%		05/15/15		1,050		977,813
Spartan Stores, Inc. (2)		NR			3.375%		05/15/27		475		450,063
Tyson Foods, Inc. (2)(c)		BB+	**		3.250%		10/15/13		4,425		5,426,156
Vector Group Ltd. (2)(c)		NR			3.750%		11/15/14		6,504		8,455,200
Vector Group Ltd. (2)(c)		NR			3.875%		06/15/26		425		491,937

											28,759,169


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	54
AQR Funds	Annual Report	December 2010	54


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


	MOODY’S RATING* (UNAUDITED)			INTEREST RATE		MATURITY DATE		PRINCIPAL AMOUNT (000’S)		VALUE (Note 3)
Energy - 2.3%
Exterran Energy Corp. (2)		B1			4.750%		01/15/14	$	1,150	$	1,135,625
Exterran Holdings, Inc. (2)(c)		B+	**		4.250%		06/15/14		3,675		4,566,188
GMX Resources, Inc. (2)		NR			4.500%		05/01/15		1,875		1,399,219
Goodrich Petroleum Corp. (2)(c)		NR			5.000%		10/01/29		1,000		973,750
Goodrich Petroleum Corp. (2)		NR			3.250%		12/01/26		200		198,500
Green Plains Renewable Energy, Inc. 144A (2)(b)(c)		NR			5.750%		11/01/15		4,100		4,258,875
Harvest Natural Resources, Inc. (2)		NR			8.250%		03/01/13		475		1,047,375
International Coal Group, Inc. (2)(c)		B-	**		4.000%		04/01/17		3,500		5,337,500
James River Coal Co. 144A (2)(b)(c)		CCC+	**		4.500%		12/01/15		500		605,000
PetroBakken Energy Ltd., Reg S (Canada) (2)		NR			3.125%		02/08/16		700		661,500
Petrominerales Ltd., Series PMG (Canada) (2)(b)		NR			2.625%		08/25/16		1,900		2,138,944
Pioneer Natural Resources Co. (2)		BB+	**		2.875%		01/15/38		750		1,135,312
Seadrill Ltd. (Bermuda) (2)		NR			3.625%		11/08/12		1,500		1,860,000
Western Refining, Inc. (2)		CCC+	**		5.750%		06/15/14		1,775		2,127,781
Willbros Group, Inc./Panama (Panama) (2)(c)		NR			2.750%		03/15/24		125		127,969

											27,573,538

Financials - 8.1%
American Equity Investment Life Holding Co. 144A (2)(b)		NR			5.250%		12/06/29		1,025		1,525,969
American Equity Investment Life Holding Co. 144A (2)(b)(c)		NR			3.500%		09/15/15		200		235,750
Annaly Capital Management, Inc. (2)(c)		NR			4.000%		02/15/15		6,775		7,867,469
BioMed Realty LP 144A (2)(b)(c)		NR			3.750%		01/15/30		3,375		3,898,125
Boston Properties LP (2)(c)		A-	**		3.750%		05/15/36		3,000		3,307,500
CapitalSource, Inc. (2)(f)		NR			4.000%		07/15/34		625		621,094
CBIZ, Inc. 144A (2)(b)		NR			4.875%		10/01/15		1,400		1,529,500
CNO Financial Group, Inc. 144A (2)(b)		NR			7.000%		12/30/16		2,795		4,080,700
CNO Financial Group, Inc. 144A (2)(b)		NR			7.000%		12/30/16		1,410		2,058,600
Developers Diversified Realty Corp. (2)(c)		NR			1.750%		11/15/40		2,850		3,017,437
Digital Realty Trust LP 144A (2)(b)(c)		NR			5.500%		04/15/29		8,450		11,344,125
Dollar Financial Corp. (2)		NR			2.875%		06/30/27		150		150,562
Hilltop Holdings, Inc. (2)(c)		NR			7.500%		08/15/25		998		1,076,593
Host Hotels & Resorts LP 144A (2)(b)		BB+	**		2.500%		10/15/29		3,425		4,824,969
Icahn Enterprises LP 144A (2)(b)		NR			4.000%		08/15/13		550		520,438
Janus Capital Group, Inc. (2)		Baa3			3.250%		07/15/14		250		296,250
Jefferies Group, Inc. (2)(c)		Baa2			3.875%		11/01/29		100		104,875
Kilroy Realty LP 144A (2)(b)(c)		NR			4.250%		11/15/14		5,425		6,238,750
KKR Financial Holdings LLC (2)		NR			7.000%		07/15/12		125		130,000
Leucadia National Corp. (2)(c)		B3			3.750%		04/15/14		250		350,313
Lexington Realty Trust 144A (2)(b)(c)		NR			6.000%		01/15/30		550		671,000
MF Global Holdings Ltd. (2)(c)		Baa2			9.000%		06/20/38		5,500		6,586,250
MGIC Investment Corp. (2)		CCC+	**		5.000%		05/01/17		10,850		12,463,937
National Financial Partners Corp. 144A (2)(b)(c)		CCC+	**		4.000%		06/15/17		4,025		4,975,906
Penson Worldwide, Inc. 144A (2)(b)(c)		NR			8.000%		06/01/14		4,275		3,884,906
PMI Group, Inc. (2)(c)		CCC+	**		4.500%		04/15/20		2,850		2,351,250
ProLogis (2)		BBB-	**		3.250%		03/15/15		100		110,750
Radian Group, Inc. (2)(c)		CCC+	**		3.000%		11/15/17		5,175		5,065,031
SL Green Operating Partnership LP 144A (2)(b)(c)		NR			3.000%		10/15/17		4,125		4,212,656
Stewart Information Services Corp. 144A (2)(b)(c)		NR			6.000%		10/15/14		4,125		4,594,219
World Acceptance Corp. (2)(c)		NR			3.000%		10/01/11		150		152,437

											98,247,361

Healthcare - 2.2%
American Oriental Bioengineering, Inc. 144A (2)(b)		NR			5.000%		07/15/15		1,000		823,750
China Medical Technologies, Inc. 144A (Cayman Islands) (2)(b)		B+	**		6.250%		12/15/16		2,625		2,647,969
China Medical Technologies, Inc., Series CMT (Cayman Islands) (2)		NR			4.000%		08/15/13		250		212,500
Enzon Pharmaceuticals, Inc. (2)(c)		NR			4.000%		06/01/13		3,150		4,185,563
Greatbatch, Inc. (2)(c)		NR			2.250%		06/15/13		2,000		1,950,000


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	55
AQR Funds	Annual Report	December 2010	55


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


	MOODY’S RATING* (UNAUDITED)			INTEREST RATE		MATURITY DATE		PRINCIPAL AMOUNT (000’S)		VALUE (Note 3)
Healthcare - 2.2% (continued)
Hologic, Inc., Series 2010 (2)(f)		BB+	**		2.000%		12/15/37	$	1,550	$	1,619,750
MannKind Corp. (2)		NR			3.750%		12/15/13		500		325,000
MannKind Corp. 144A (2)(b)(c)		NR			5.750%		08/15/15		1,540		2,079,000
Molina Healthcare, Inc., Series MOH (2)(c)		NR			3.750%		10/01/14		3,375		3,370,781
NovaMed, Inc. (2)		NR			1.000%		06/15/12		700		635,250
SonoSite, Inc. (2)(c)		NR			3.750%		07/15/14		1,000		1,097,500
Stewart Enterprises, Inc. (2)		Ba3			3.125%		07/15/14		25		24,125
Valeant Pharmaceuticals International, Inc. 144A (Canada) (2)(b)(c)		NR			5.375%		08/01/14		3,000		6,240,000
West Pharmaceutical Services, Inc. (2)(c)		NR			4.000%		03/15/47		2,000		1,832,500

											27,043,688

Industrials - 4.5%
Bristow Group, Inc. (2)		BB	**		3.000%		06/15/38		1,000		1,002,500
China Linen Textile Industry, Ltd. (Cayman Islands) (3)(a)		NR			7.500%		11/12/12		1,850		1,864,435
EnPro Industries, Inc. (2)(c)		NR			3.938%		10/15/15		3,575		4,978,187
Genco Shipping & Trading Ltd. (Marshall Islands) (2)(c)		NR			5.000%		08/15/15		500		510,625
General Cable Corp. (2)(c)		Ba3			0.875%		11/15/13		3,000		2,966,250
Kaman Corp. 144A (2)(b)(c)		NR			3.250%		11/15/17		3,800		3,966,250
Kemet Corp. (2)		NR			2.250%		11/15/26		443		439,124
L-1 Identity Solutions, Inc. (2)		B+	**		3.750%		05/15/27		3,537		3,528,158
MasTec, Inc. (2)		NR			4.250%		12/15/14		2,400		2,877,000
MasTec, Inc. (2)		B+	**		4.000%		06/15/14		2,125		2,560,625
Orbital Sciences Corp. (2)(c)		BB-	**		2.438%		01/15/27		800		830,000
RTI International Metals, Inc. (2)		NR			3.000%		12/01/15		3,475		3,600,969
Terex Corp. (2)(c)		Caa1			4.000%		06/01/15		4,500		9,185,625
Textron, Inc., Series TXT (2)(c)		BBB-	**		4.500%		05/01/13		3,500		6,650,000
Trex Co., Inc. (2)(c)		NR			6.000%		07/01/12		3,970		4,982,350
TTM Technologies, Inc. (2)(c)		BB-	**		3.250%		05/15/15		2,450		2,930,812
Ultrapetrol Bahamas Ltd. 144A (Bahamas) (2)(b)		NR			7.250%		01/15/17		900		948,375

											53,821,285

Information Technology - 5.1%
ADC Telecommunications, Inc. (2)		NR			3.500%		07/15/17		2,924		2,924,000
ADC Telecommunications, Inc. (2)		NR			3.500%		07/15/15		1,837		1,837,000
Arris Group, Inc. (2)(c)		NR			2.000%		11/15/26		650		665,438
Bell Microproducts, Inc., Series B (2)(c)		NR			3.750%		03/05/24		6,900		6,917,250
Cadence Design Systems, Inc. 144A (2)(b)(c)		NR			2.625%		06/01/15		3,325		4,201,969
CommScope, Inc. (2)(c)		B	**		3.250%		07/01/15		3,500		4,550,000
Concur Technologies, Inc. 144A (2)(b)(c)		NR			2.500%		04/15/15		200		236,250
DST Systems, Inc., Series C (2)(f)(c)		NR			4.125%		08/15/23		3,225		3,587,812
EMC Corp./Massachusetts, Series A (2)(c)		A-	**		1.750%		12/01/11		1,725		2,494,781
EMC Corp./Massachusetts, Series B (2)(c)		A-	**		1.750%		12/01/13		3,000		4,518,750
GSI Commerce, Inc. (2)		NR			2.500%		06/01/27		25		27,156
Hutchinson Technology, Inc. (2)(c)		NR	**		3.250%		01/15/26		250		179,063
Mentor Graphics Corp. (2)(c)		NR			6.250%		03/01/26		150		159,750
Micron Technology, Inc. (2)		B+	**		4.250%		10/15/13		250		440,000
ON Semiconductor Corp. (2)(c)		Ba2			1.875%		12/15/25		250		368,437
Photronics, Inc. (2)(c)		NR			5.500%		10/01/14		2,200		3,049,750
Quantum Corp. MTN 144A (2)(b)		NR			3.500%		11/15/15		700		771,750
Rambus, Inc. (2)(c)		NR			5.000%		06/15/14		6,450		8,393,063
SanDisk Corp. (2)		BB-	**		1.500%		08/15/17		775		874,781
Take-Two Interactive Software, Inc. (2)(c)		NR			4.375%		06/01/14		3,825		5,154,187
Telvent GIT SA 144A (Spain) (2)(b)		NR			5.500%		04/15/15		1,400		1,520,750
THQ, Inc. (2)(c)		NR			5.000%		08/15/14		2,500		2,603,125
Verigy Ltd. (Singapore) (2)(c)		NR			5.250%		07/15/14		1,325		1,571,781
VeriSign, Inc. (2)(c)		NR			3.250%		08/15/37		3,870		4,339,238

											61,386,081


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	56
AQR Funds	Annual Report	December 2010	56


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


	MOODY’S RATING* (UNAUDITED)			INTEREST RATE		MATURITY DATE		PRINCIPAL AMOUNT (000’S)		VALUE (Note 3)
Materials - 3.1%
Alcoa, Inc. (2)(c)		Baa3			5.250%		03/15/14	$	400	$	989,500
ArcelorMittal (Luxembourg) (2)(c)		Baa3			5.000%		05/15/14		6,375		9,211,875
Cemex SAB de CV 144A (Mexico) (2)(b)		NR			4.875%		03/15/15		3,200		3,496,000
Kaiser Aluminum Corp. 144A (2)(b)		NR			4.500%		04/01/15		300		367,800
Northgate Minerals Corp. (Canada) (2)(c)		NR			3.500%		10/01/16		1,925		2,071,781
Owens-Brockway Glass Container, Inc. 144A (2)(b)(c)		Ba3			3.000%		06/01/15		4,400		4,427,500
ShengdaTech, Inc. 144A (2)(b)		NR			6.500%		12/15/15		1,200		1,204,500
ShengdaTech, Inc. 144A (2)(b)		NR			6.000%		06/01/18		200		193,000
Sino-Forest Corp. 144A (Canada) (2)(b)(c)		BB	**		4.250%		12/15/16		450		586,125
Steel Dynamics, Inc. (2)		BB+	**		5.125%		06/15/14		400		507,000
Sterlite Industries India Ltd. (India) (2)(c)		NR			4.000%		10/30/14		5,350		5,564,000
Stillwater Mining Co. (2)		B+	**		1.875%		03/15/28		1,000		1,142,500
United States Steel Corp. (2)(c)		Ba2			4.000%		05/15/14		4,000		7,760,000

											37,521,581

Telecommunication Services - 1.6%
Alaska Communications Systems Group, Inc. (2)(c)		NR			5.750%		03/01/13		650		684,938
Cleveland Unlimited, Inc. † 144A (2)(b)(e)		Caa2			5.000%		12/15/10		1,830		1,830,000
Level 3 Communications, Inc. (2)(c)		Caa3			6.500%		10/01/16		2,675		2,885,656
Level 3 Communications, Inc. (2)		Caa3			3.500%		06/15/12		500		475,000
Level 3 Communications, Inc., Series B (2)		Caa3			7.000%		03/15/15		1,280		1,206,400
NII Holdings, Inc. (2)		B-	**		3.125%		06/15/12		1,980		1,942,875
tw telecom inc (2)(c)		B3			2.375%		04/01/26		1,075		1,183,844
XM Satellite Radio, Inc. 144A (2)(b)(c)		BB-	**		7.000%		12/01/14		8,100		9,942,750

											20,151,463

TOTAL CONVERTIBLE BONDS (cost $483,487,318)											547,288,559


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	57
AQR Funds	Annual Report	December 2010	57


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


CLOSED END FUNDS - 0.9%	SHARES		VALUE (Note 3)
BlackRock Apex Municipal Fund, Inc.		858	$	7,336
Blackrock Core Bond Trust (c)		21,262		266,200
BlackRock Corporate High Yield Fund III, Inc.		17,906		121,224
BlackRock Corporate High Yield Fund V, Inc.		24,223		279,533
BlackRock Corporate High Yield Fund VI, Inc. (c)		6,139		71,397
BlackRock Corporate High Yield Fund, Inc.		6,485		44,033
BlackRock Credit Allocation Income Trust II, Inc.		46,685		458,913
Blackrock Credit Allocation Income Trust III, Inc. (c)		33,890		356,523
Blackrock Credit Allocation Income Trust IV		50,655		612,925
BlackRock Debt Strategies Fund, Inc.		15,366		58,544
BlackRock Income Opportunity Trust, Inc.		29,727		288,055
BlackRock Limited Duration Income Trust		4,207		68,574
BlackRock MuniAssets Fund, Inc.		520		6,079
Credit Suisse Asset Management Income Fund, Inc.		2,821		10,043
Eaton Vance Tax-Advantaged Bond and Options Strategies Fund		2,387		39,934
Invesco Municipal Income Opportunities Trust		3,227		19,943
Invesco Municipal Income Opportunities Trust II		2,196		14,977
Invesco Van Kampen Bond Fund		3,681		68,614
Montgomery Street Income Securities, Inc.		661		10,431
Morgan Stanley Income Securities, Inc.		2,908		48,942
Nuveen California Municipal Value Fund		2,219		19,150
Nuveen Quality Preferred Income Fund		69,458		513,989
Nuveen Quality Preferred Income Fund II		112,713		890,433
Nuveen Quality Preferred Income Fund III		19,772		152,442
Petroleum & Resources Corp.		43,122		1,164,725
Royce Focus Trust, Inc. †		68,244		516,607
Royce Micro-Cap Trust, Inc.		20,022		196,216
Royce Value Trust, Inc.		1,261		18,335
Sprott Physical Gold Trust (Canada) †		303,963		3,752,423
Transamerica Income Shares, Inc.		348		7,204
Western Asset Global Corporate Defined Opportunity Fund, Inc.		28,801		516,402
Western Asset Income Fund		5,860		75,535
Western Asset Investment Grade Defined Opportunity Trust, Inc.		2,246		44,942

TOTAL CLOSED END FUNDS (cost $10,051,725)				10,720,623

RIGHTS - 0% (g)
Celgene Corp. † (cost $308,407)		58,190		285,131


	SHARES		VALUE (Note 3)
WARRANTS - 2.7%
Consumer Discretionary - 0.1%
China XD Plastics Co. Ltd. (3)†(a)		183,332	$	48,638
Jack Cooper Holdings Corp. †		1,775		7,100
Kandi Technologies Corp. (3)†(a)		169,478		199,077
SouthPeak Interactive Corp. (3)†(a)		5,800,464		140,661
Talbots, Inc. †		195,798		256,496

				651,972

Consumer Staples - 0.0% (g)
Celsius Holdings, Inc. †		52,500		5,250
HQ Sustainable Maritime Industries, Inc. (3)†		62,284		89,951

				95,201

Energy - 0.0% (g)
Camac Energy, Inc. (3)†		88,191		49,784
Uranium Energy Corp. (3)†(a)		318,906		387,853

				437,637

Financials - 2.4%
57th Street General Acquisition Corp. †		292,050		102,217
Comerica, Inc. †		444,071		7,327,172
Edgewater Exploration Ltd. (Canada) (3)†(a)		250,000		73,869
European CleanTech SE (Germany) (2)†		621,000		219,106
Gerova Financial Group Ltd. †		138,792		81,887
GSME Acquisition Partners I †		56,004		13,441
Helikos SE (Germany) (2)†		72,000		62,785
Lincoln National Corp. †		607,525		11,962,167
PNC Financial Services Group, Inc. †		258,400		3,728,712
Signature Bank †		107,610		2,772,034
Sterling Bancshares, Inc. †		9,708		23,493
Texas Capital Bancshares, Inc. †		16,077		184,885
Valley National Bancorp †		49,509		126,248
Wells Fargo & Co. †		151,514		1,683,321

				28,361,337

Health Care - 0.0% (g)
Access Pharmaceuticals, Inc. (3)†(a)		68,407		7,809
Cormedix, Inc. †		75,400		22,620
CryoPort, Inc. (3)†(a)		571,428		63,943
ReGeneRx Biopharmaceuticals, Inc. †		240,000		12,000
Rosetta Genomics Ltd. (Israel) (3)†(a)		191,250		49,868
Rosetta Genomics Ltd., Series B (Israel) (3)†(a)		95,625		—

				156,240

Industrials - 0.0% (g)
Advanced Battery Technologies, Inc. (3)†(a)		482,500		111,289
China Wood, Inc. (3)†(a)		94,000		70,942

				182,231

Information Technology - 0.0% (g)
Authentidate Holding Corp. (3)†(a)		1,090,000		130,309
Magic Software Enterprises Ltd. (Israel) (3)†		132,782		171,355


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	58
AQR Funds	Annual Report	December 2010	58


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


	SHARES		VALUE (Note 3)
Information Technology - 0.0% (continued) (g)
Orckit Communications Ltd. (Israel) (3)†(a)		84,282	$	54,906

				356,570

Materials - 0.2%
Aurcana Corp. (Canada) (3)†		623,387		157,810
Kangaroo Resources Ltd. (Australia) (3)†(a)		24,137,931		1,735,517
Kinross Gold Corp. (Canada) †(a)		37,797		178,401

				2,071,728

Utilities - 0.0% (g)
China Hydroelectric Corp. †		24,500		7,350

TOTAL WARRANTS (cost $27,822,069)				32,320,266

MONEY MARKET FUNDS - 5.5%
Dreyfus Institutional Cash Advantage Fund, Class I, 0.180% (2)(h)		89,497		89,497
J.P. Morgan Prime Money Market Fund Capital Shares, 0.130% (2)(h)		66,343,045		66,343,045

TOTAL MONEY MARKET FUNDS (cost $66,432,542)				66,432,542

TOTAL INVESTMENTS, BEFORE SECURITIES SOLD SHORT (cost $1,416,727,687)				1,523,138,652


SECURITIES SOLD SHORT- (54.3)%

COMMON STOCKS - (52.6)%

Consumer Discretionary - (13.6)%
Beazer Homes USA, Inc. †		(182,112)		(981,584)
CBS Corp., Class B		(9,650)		(183,833)
Coinstar, Inc. †		(46,336)		(2,615,204)
Comcast Corp., Class A		(1,201,128)		(26,388,782)
Discovery Communications, Inc., Class A †		(480,733)		(20,046,566)
DR Horton, Inc.		(363,431)		(4,335,732)
Eastman Kodak Co. †		(746,349)		(4,000,431)
Exide Technologies †		(22,479)		(211,527)
Gaylord Entertainment Co. †		(308,068)		(11,071,964)
Icahn Enterprises LP		(675)		(23,666)
Jakks Pacific, Inc. †		(205,942)		(3,752,263)
Lennar Corp., Class A		(227,838)		(4,271,963)
Liberty Global, Inc., Class A †		(697,519)		(24,678,222)
MGM Resorts International †		(204,547)		(3,037,523)
News Corp., Class B		(720,732)		(11,834,419)
priceline.com, Inc. †		(21,086)		(8,424,911)
Regis Corp.		(242,479)		(4,025,151)
Saks, Inc. †		(135,826)		(1,453,338)
Sirius XM Radio, Inc. †		(3,181,842)		(5,218,221)
Sonic Automotive, Inc., Class A		(433,828)		(5,743,883)
Stewart Enterprises, Inc., Class A		(790)		(5,285)
Talbots, Inc. †		(54,773)		(466,666)
TRW Automotive Holdings Corp. †		(174,160)		(9,178,232)
Viacom, Inc., Class A		(71,249)		(3,267,479)
Virgin Media, Inc.		(320,485)		(8,730,011)

				(163,946,856)


	SHARES		VALUE (Note 3)
Consumer Staples - (2.0)%
Alliance One International, Inc. †		(477,918)	$	(2,026,372)
American Oriental Bioengineering, Inc. (China) †		(42,401)		(101,763)
Bunge Ltd. (Bermuda)		(10,326)		(676,560)
Central European Distribution Corp. †		(4,200)		(96,180)
Central Garden and Pet Co., Class A †		(583,483)		(5,764,812)
Chiquita Brands International, Inc. †		(142,564)		(1,998,747)
Dole Food Co., Inc. †		(3,020)		(40,800)
Embotelladora Andina SA, Class B ADR (Chile)		(10,000)		(302,700)
Green Mountain Coffee Roasters, Inc. †		(31,981)		(1,050,896)
Nash Finch Co.		(24,573)		(1,044,598)
Rite Aid Corp. †		(241,388)		(213,194)
Spartan Stores, Inc.		(1,913)		(32,425)
Tyson Foods, Inc., Class A		(172,842)		(2,976,339)
Universal Corp.		(117,001)		(4,761,941)
Vector Group Ltd.		(183,643)		(3,180,697)

				(24,268,024)

Energy - (1.9)%
Boardwalk Pipeline Partners LP		(2,300)		(71,599)
Bristow Group, Inc. †		(10,4480		(494,713)
Diamond Offshore Drilling, Inc.		(1,240)		(82,919)
Energy XXI Bermuda Ltd. (Bermuda) †		(10,800)		(298,836)
Exterran Holdings, Inc. †		(128,797)		(3,084,688)
GMX Resources, Inc. †		(42,025)		(231,978)
Goodrich Petroleum Corp. †		(16,131)		(284,551)
Green Plains Renewable Energy, Inc. †		(220,277)		(2,480,319)
Harvest Natural Resources, Inc. †		(77,332)		(941,130)
International Coal Group, Inc. †		(554,054)		(4,288,378)
James River Coal Co. †		(16,255)		(411,739)
PetroBakken Energy Ltd., Class A (Canada)		(7,035)		(153,706)
Petrobank Energy & Resources Ltd. (Canada) †(b)		(15,531)		(394,664)
Petrominerales Ltd. (Canada)		(48,159)		(1,607,159)
Pioneer Natural Resources Co.		(12,675)		(1,100,443)
Seadrill Ltd. (Bermuda)		(169,127)		(5,736,788)
Western Refining, Inc. †		(131,434)		(1,390,572)
Whiting Petroleum Corp. †		(2,525)		(295,905)
Willbros Group, Inc. †		(647)		(6,353)

				(23,356,440)

Financials - (10.8)%
American Equity Investment Life Holding Co.		(99,527)		(1,249,064)
Annaly Capital Management, Inc. REIT		(261,717)		(4,689,969)
Banco Santander SA ADR (Spain)		(20,034)		(213,362)
Bank of Montreal (Canada)		(102,514)		(5,901,731)
Berkshire Hills Bancorp, Inc.		(9,135)		(201,884)
BioMed Realty Trust, Inc. REIT		(118,871)		(2,216,944)
Boston Properties, Inc. REIT		(13,000)		(1,119,300)
CNA Financial Corp. †		(4,275)		(115,639)
CNO Financial Group, Inc. †		(1,287,232)		(8,727,433)
Comerica, Inc.		(349,955)		(14,782,099)
Community Bank System, Inc.		(20,287)		(563,370)
Developers Diversified Realty Corp. REIT		(116,457)		(1,640,879)
Digital Realty Trust, Inc. REIT		(139,150)		(7,171,791)
Dollar Financial Corp. †		(2,106)		(60,295)


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	59
AQR Funds	Annual Report	December 2010	59


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


	SHARES		VALUE (Note 3)
Financials - (10.8)% (continued)
First Niagara Financial Group, Inc.		(865,322)	$	(12,097,202)
Hancock Holding Co.		(36,016)		(1,255,518)
Hilltop Holdings, Inc. †		(37,500)		(372,000)
Host Hotels & Resorts, Inc. REIT		(196,067)		(3,503,717)
Jefferies Group, Inc.		(1,335)		(35,551)
Kilroy Realty Corp. REIT		(92,022)		(3,356,042)
KKR Financial Holdings LLC		(700)		(6,510)
Leucadia National Corp.		(9,080)		(264,954)
Lexington Realty Trust REIT		(55,872)		(444,182)
Lincoln National Corp.		(555,588)		(15,450,902)
M&T Bank Corp.		(260)		(22,633)
MF Global Holdings Ltd. †		(481,976)		(4,029,319)
MGIC Investment Corp. †		(629,805)		(6,417,713)
Nara Bancorp, Inc. †		(76,112)		(747,420)
National Financial Partners Corp. †		(275,083)		(3,686,112)
Penson Worldwide, Inc. †		(211,200)		(1,032,768)
PMI Group, Inc. †		(307,167)		(1,013,651)
PNC Financial Services Group, Inc.		(167,355)		(10,161,796)
ProLogis REIT		(3,500)		(50,540)
Radian Group, Inc.		(358,644)		(2,894,257)
Signature Bank †		(99,627)		(4,981,350)
SL Green Realty Corp. REIT		(33,600)		(2,268,336)
SLM Corp. †		(57,250)		(720,778)
Sterling Bancshares, Inc.		(6,264)		(43,973)
Stewart Information Services Corp.		(205,889)		(2,373,900)
Texas Capital Bancshares, Inc. †		(13,343)		(283,806)
Valley National Bancorp		(25,779)		(368,640)
Wells Fargo & Co.		(90,164)		(2,794,182)
Wintrust Financial Corp.		(24,567)		(811,448)
World Acceptance Corp. †		(1,001)		(52,853)

				(130,195,813)

Health Care - (1.5)%
China Medical Technologies, Inc. ADR (China) †		(337)		(3,788)
Enzon Pharmaceuticals, Inc. †		(194,598)		(2,368,258)
Greatbatch, Inc. †		(20,095)		(485,294)
Hologic, Inc. †		(49,100)		(924,062)
Incyte Corp. Ltd. †		(105,900)		(1,753,704)
MannKind Corp. †		(144,979)		(1,168,531)
Molina Healthcare, Inc. †		(34,498)		(960,769)
Mylan, Inc./PA †		(1)		(21)
NovaMed, Inc. †		(10,993)		(126,749)
Novartis AG ADR (Switzerland)		(10,373)		(611,488)
PDL BioPharma, Inc.		(133,923)		(834,340)
SonoSite, Inc. †		(16,814)		(531,323)
St Jude Medical, Inc. †		(46,460)		(1,986,165)
Valeant Pharmaceuticals International, Inc. (Canada)		(195,579)		(5,532,930)
West Pharmaceutical Services, Inc.		(28,208)		(1,162,170)

				(18,449,592)

Industrials - (8.1)%
AMR Corp. †		(549,277)		(4,278,868)
ArvinMeritor, Inc. †		(71,500)		(1,467,180)
Avis Budget Group, Inc. †		(128,625)		(2,001,405)
CBIZ, Inc. †		(136,992)		(854,830)
EnPro Industries, Inc. †		(90,478)		(3,760,266)


	SHARES		VALUE (Note 3)
Industrials - (8.1)% (continued)
FTI Consulting, Inc. †		(33,022)	$	(1,231,060)
Genco Shipping & Trading Ltd. †		(19,411)		(279,518)
GenCorp, Inc. †		(22,277)		(115,172)
General Cable Corp. †		(30,877)		(1,083,474)
HEICO Corp.		(177,853)		(9,075,839)
Hertz Global Holdings, Inc. †		(1,255,749)		(18,195,803)
Hubbell, Inc., Class B		(2,194)		(131,925)
Kaman Corp.		(22,563)		(655,906)
Kansas City Southern †		(40,307)		(1,929,093)
MasTec, Inc. †		(213,245)		(3,111,245)
Navistar International Corp. †		(30,150)		(1,745,987)
Orbital Sciences Corp. †		(15,437)		(264,436)
Robbins & Myers, Inc.		(229,716)		(8,219,238)
Rush Enterprises, Inc., Class A †		(1,000)		(20,440)
Southwest Airlines Co.		(119,113)		(1,546,087)
Terex Corp. †		(257,483)		(7,992,272)
Textron, Inc.		(242,662)		(5,736,530)
Titan International, Inc.		(514,273)		(10,048,894)
Trex Co., Inc. †		(138,054)		(3,307,774)
United Rentals, Inc. †		(489,648)		(11,139,492)

				(98,192,734)

Information Technology - (7.2)%
Alliance Data Systems Corp. †		(145,078)		(10,304,890)
Arris Group, Inc. †		(18,477)		(207,312)
Cadence Design Systems, Inc. †		(356,971)		(2,948,580)
Calix, Inc. †		(146,725)		(2,479,653)
Ciena Corp. †		(308,000)		(6,483,400)
CommScope, Inc. †		(101,873)		(3,180,475)
Concur Technologies, Inc. †		(2,900)		(150,597)
Convergys Corp. †		(115,546)		(1,521,741)
Digital River, Inc. †		(32,713)		(1,125,982)
DST Systems, Inc.		(35,364)		(1,568,393)
Ebix, Inc. †		(41,413)		(980,246)
EMC Corp./Massachusetts †		(260,142)		(5,957,252)
Equinix, Inc. †		(11,954)		(971,382)
Finisar Corp. †		(62,568)		(1,857,644)
GSI Commerce, Inc. †		(537)		(12,458)
GT Solar International, Inc. †		(60,360)		(550,483)
Kemet Corp. †		(4,088)		(59,603)
Mentor Graphics Corp. †		(201)		(2,412)
Micron Technology, Inc. †		(134,101)		(1,075,490)
Molex, Inc.		(578,121)		(13,134,909)
Motorola Mobility Holdings, Inc. †		(36,217)		(1,053,915)
Motorola Solutions, Inc. †		(42,758)		(1,626,942)
ON Semiconductor Corp. †		(29,965)		(296,054)
Photronics, Inc. †		(367,819)		(2,173,810)
Quantum Corp. †		(128,457)		(477,860)
Rambus, Inc. †		(237,137)		(4,856,566)
Rovi Corp. †		(9,345)		(579,483)
SanDisk Corp. †		(12,200)		(608,292)
Sohu.com, Inc. (China) †		(31,532)		(2,001,967)
Take-Two Interactive Software, Inc. †		(286,655)		(3,508,657)
Telvent GIT SA (Spain) †		(28,773)		(760,183)
THQ, Inc. †		(187,984)		(1,139,183)
TTM Technologies, Inc. †		(118,266)		(1,763,346)
VeriFone Systems, Inc. †		(198,678)		(7,661,024)
Verigy Ltd. (Singapore) †		(63,612)		(828,228)


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	60
AQR Funds	Annual Report	December 2010	60


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


	SHARES		VALUE (Note 3)
Information Technology - (7.2)% (continued)
VeriSign, Inc.		(100,869)	$	(3,295,390)
WebMD Health Corp. †		(1)		(51)

				(87,203,853)

Materials - (4.6)%
Alcoa, Inc.		(57,855)		(890,388)
Allegheny Technologies, Inc.		(86,428)		(4,769,097)
ArcelorMittal NYRS (Luxembourg)		(154,343)		(5,885,099)
BHP Billiton Ltd. ADR (Australia)		(155,985)		(14,494,126)
Cemex SAB de CV ADR (Mexico) †		(188,374)		(2,017,486)
Goldcorp, Inc. (Canada)		(215,146)		(9,933,979)
Kaiser Aluminum Corp.		(4,543)		(227,559)
Kinross Gold Corp. (Canada)		(22,328)		(423,339)
Monsanto Co.		(3,820)		(266,025)
Northgate Minerals Corp. (Canada)		(358,342)		(1,146,694)
Owens-Illinois, Inc. †		(50,040)		(1,536,228)
ShengdaTech, Inc. (China) †		(5,646)		(27,665)
Sino-Forest Corp. (Hong Kong) †		(17,440)		(408,773)
Steel Dynamics, Inc.		(14,830)		(271,389)
Sterlite Industries India Ltd. ADR (India)		(119,220)		(1,971,899)
Stillwater Mining Co. †		(28,467)		(607,771)
United States Steel Corp.		(112,905)		(6,595,910)
Walter Energy, Inc.		(25,683)		(3,283,315)

				(54,756,742)


	SHARES		VALUE (Note 3)
Telecommunication Services - (1.7)%
Alaska Communications Systems Group, Inc.		(19,855)	$	(220,390)
CenturyLink, Inc.		(281,563)		(12,999,764)
IDT Corp., Class B		(37,707)		(967,185)
Level 3 Communications, Inc. †		(2,255,790)		(2,210,674)
Telephone & Data Systems, Inc.		(101,584)		(3,712,895)
tw telecom inc †		(36,428)		(621,097)

				(20,732,005)

Utilities - (1.2)%
AGL Resources, Inc.		(84,221)		(3,019,323)
FirstEnergy Corp.		(280,314)		(10,377,224)
PPL Corp.		(30,590)		(805,129)

				(14,201,676)

TOTAL COMMON STOCKS SOLD SHORT (proceeds $563,755,882)				(635,303,735)

CONVERTIBLE BONDS - (0.1)%

MOODY’S
RATING*

(UNAUDITED)

INTEREST
RATE

MATURITY
DATE

PRINCIPAL
AMOUNT
(000’S)

VALUE
(Note 3)

Consumer Staples - (0.1)%

Molson Coors Brewing Co. (2)

BBB-

2.500%

7/30/13

(550)

(636,625)

Information Technology - 0.0% (g)

Intel Corp. (2)

A-

2.950%

12/15/35

(500)

(498,125)

TOTAL CONVERTIBLE BONDS SOLD SHORT
(proceeds $1,099,998)

(1,134,750)


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	61
AQR Funds	Annual Report	December 2010	61


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


CLOSED END FUNDS - (1.6)%	SHARES		VALUE (Note 3)
iShares Silver Trust †		(21,824)	$	(658,648)
SPDR Barclays Capital High Yield Bond ETF		(357,386)		(14,191,798)
SPDR Gold Shares †		(30,396)		(4,216,533)

TOTAL CLOSED END FUNDS SOLD SHORT (proceeds $18,740,200)				(19,066,979)

TOTAL SECURITIES SOLD SHORT (proceeds $583,596,080)				(655,505,464)

TOTAL INVESTMENTS, NET OF SECURITIES SOLD SHORT - 71.9% (cost $833,131,607)				867,633,188

OTHER ASSETS IN EXCESS OF LIABILITIES - 28.1%(i)				339,362,602

NET ASSETS - 100.0%			$	1,206,995,790

All securities are United States companies, unless noted otherwise in parentheses.

All securities are Level 1, unless noted otherwise in parentheses.

(2)	Level 2 security (See Note 5).

(3)	Level 3 security (See Note 5).

†	Non income-producing security.

(a)	Security fair valued at December 31, 2010.

(b)	Rule 144A, Section 4(2) or other security which is restricted as to resale to institutional investors. The Fund Adviser has deemed this security to be liquid based upon procedures approved by the Board of Trustees.

(c)	All or portion of this security has been segregated as collateral for securities sold short and can be sold or replaced subject to the broker’s right to re-hypothecate. At December 31, 2010, the value of these securities was $508,661,630.

(d)	Represents a Pay-In-Kind Bond.

(e)	Defaulted security.

(f)	Represents a step bond. The rate shown reflects the yield at December 31, 2010.

(g)	Represents less than 0.05 percent of net assets.

(h)	Represents annualized seven-day yield as of December 31, 2010.

(i)	Includes appreciation (depreciation) on futures contracts, forward foreign currency exchange contracts, swaps and written options.

*	The rating reflected is as December 31, 2010. Rating of certain bonds may have changed subsequent to the date.

**	S & P Rating provided.

The following abbreviations are used in portfolio descriptions:

144A - Restricted Security

ADR - American Depositary Receipt

MTN - Medium Term Note

NR - Not Rated by Moody’s

NYRS - New York Registry Shares

REIT - Real Estate Investment Trust

Open Written Call Options contracts outstanding at December 31, 2010:


SHARES	ISSUER	COUNTERPARTY	EXPIRATION DATE	PROCEEDS		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
242	Airgas, Inc. (exercise price $72.50)	J.P. Morgan	January 22, 2011		$(3,690)		$(1,210)		$2,480
330	Airgas, Inc. (exercise price $57.50)	J.P. Morgan	January 22, 2011		(204,270)		(168,300)		35,970
309	Baldor Electric Co. (exercise price $65)	J.P. Morgan	February 19, 2011		(5,871)		(3,090)		2,781
374	Comerica, Inc. (exercise price $45)	J.P. Morgan	January 21, 2012		(261,422)		(143,990)		117,432
71	CommScope, Inc. (exercise price $32)	J.P. Morgan	January 22, 2011		(781)		(355)		426
145	Genzyme Corp. (exercise price $60)	J.P. Morgan	January 22, 2011		(145,580)		(168,200)		(22,620)
145	Genzyme Corp. (exercise price $62.50)	J.P. Morgan	January 22, 2011		(111,505)		(131,950)		(20,445)
152	Talbots, Inc. (exercise price $15)	J.P. Morgan	January 22, 2011		(12,502)		(456)		12,046
306	Talbots, Inc. (exercise price $16)	J.P. Morgan	January 22, 2011		(17,090)		(306)		16,784
458	Talbots, Inc. (exercise price $18)	J.P. Morgan	January 22, 2011		(14,313)		(916)		13,397
3276	Tenet Healthcare Corp. (exercise price $6)	J.P. Morgan	January 22, 2011		(217,854)		(278,460)		(60,606)
322	Wells Fargo & Co. (exercise price $35)	J.P. Morgan	January 21, 2012		(118,816)		(80,500)		38,316

					$(1,113,694)		$(977,733)		$135,961


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	62
AQR Funds	Annual Report	December 2010	62


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND

Credit default swap contracts buy protection as of December 31, 2010


COUNTERPARTY	REFERENCE ENTITY	FIXED ANNUAL RATE PAID BY FUND	NOTIONAL AMOUNT		UPFRONT PREMIUM PAID (RECEIVED)		TERMINATION DATE		UNREALIZED APPRECIATION (DEPRECIATION)
Deutsche Bank	Banco Santander SA	1.00%		$3,380,000		$204,285		6/20/2015		$226,853
Deutsche Bank	Banco Santander SA	3.00%		3,420,000		126,733		12/20/2015		61,984
Bank of America	Host Hotels & Resorts LP	1.00%		3,450,000		195,025		12/20/2015		(5,717)
Bank of America	Markit CDX North America High Yield Index - Series 15	5.00%		11,250,000		(143,081)		12/20/2015		(206,889)
Deutsche Bank	Markit CDX North America High Yield Index - Series 15	5.00%		61,450,000		587,319		12/20/2015		(2,498,934)

										$(2,422,703)

Cash pledged as collateral to brokers for credit default swap contracts was $3,696,086 at December 31, 2010.

Open futures contracts outstanding at December 31, 2010:


NUMBER OF CONTRACTS	TYPE	EXPIRATION DATE	VALUE AT TRADE DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Short Contracts:
480	2-Year U.S. Treasury Note	March 31, 2011		$(105,144,174)		$(105,075,000)		$69,174
857	5-Year U.S. Treasury Note	March 31, 2011		(102,375,821)		(100,884,969)		1,490,852
2,371	E-Mini S&P 500 Futures	March 18, 2011		(146,437,177)		(148,543,150)		(2,105,973)

								$(545,947)

Cash held as collateral with broker for futures contracts was $13,104,344 at December 31, 2010.

Forward foreign currency exchange contracts outstanding as of December 31, 2010:

PURCHASE
CONTRACTS

COUNTERPARTY

CURRENCY

CURRENCY
AMOUNT
PURCHASED

VALUE AT
SETTLEMENT
DATE

VALUE AT
DECEMBER 31,
2010

UNREALIZED
APPRECIATION

(DEPRECIATION)

Australian
Dollar,
Expiring
03/01/11

The Royal Bank of Scotland

AUD

1,526,000

$1,284,968

$1,553,209

$268,241


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	63
AQR Funds	Annual Report	December 2010	63


Schedule of Investments			December 31, 2010


AQR DIVERSIFIED ARBITRAGE FUND


SALES CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT SOLD		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Australian Dollar, Expiring 03/01/11	The Royal Bank of Scotland	AUD		(1,526,000)		$(1,294,811)		$(1,553,209)		$(258,398)
Canadian Dollar, Expiring 02/22/11	The Royal Bank of Scotland	CAD		(619,221)		(610,623)		(622,564)		(11,941)
Canadian Dollar, Expiring 04/29/11	The Royal Bank of Scotland	CAD		(1,547,648)		(1,535,426)		(1,553,285)		(17,859)
Euro, Expiring 02/28/11	The Royal Bank of Scotland	EUR		(2,358,403)		(3,092,456)		(3,163,719)		(71,263)
Euro, Expiring 06/22/11	The Royal Bank of Scotland	EUR		(8,093,000)		(10,614,128)		(10,849,665)		(235,537)
Euro, Expiring 10/22/12	The Royal Bank of Scotland	EUR		(6,210,000)		(8,471,372)		(8,317,363)		154,009
Norwegian Krone, Expiring 03/14/11	The Royal Bank of Scotland	NOK		(243,750)		(39,207)		(41,792)		(2,585)
Norwegian Krone, Expiring 06/14/11	The Royal Bank of Scotland	NOK		(243,750)		(39,016)		(41,589)		(2,573)
Norwegian Krone, Expiring 06/22/11	The Royal Bank of Scotland	NOK		(840,000)		(141,010)		(143,262)		(2,252)
Norwegian Krone, Expiring 09/14/11	The Royal Bank of Scotland	NOK		(243,750)		(38,829)		(41,385)		(2,556)
Norwegian Krone, Expiring 12/22/11	The Royal Bank of Scotland	NOK		(840,000)		(139,681)		(141,853)		(2,172)
Norwegian Krone, Expiring 06/22/12	The Royal Bank of Scotland	NOK		(840,000)		(138,326)		(140,537)		(2,211)
Norwegian Krone, Expiring 09/14/12	The Royal Bank of Scotland	NOK		(6,500,000)		(1,016,022)		(1,082,831)		(66,809)
Norwegian Krone, Expiring 12/21/12	The Royal Bank of Scotland	NOK		(12,840,000)		(2,095,711)		(2,128,270)		(32,559)

						(29,266,618)		(29,821,324)		(554,706)

						$(27,981,650)		$(28,268,115)		$(286,465)

Cash pledged as collateral to brokers for forward foreign exchange contracts as of December 31, 2010 was $1,101,237.

AUD - Australian Dollar

CAD - Canadian Dollar

EUR - Euro

NOK - Norwegian Krone


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	64
AQR Funds	Annual Report	December 2010	64


Consolidated Schedule of Investments			December 31, 2010


AQR MANAGED FUTURES STRATEGY FUND


MONEY MARKET FUNDS - 93.7%	SHARES		VALUE (Note 3)
BlackRock Liquidity Funds TempFund Portfolio, Class I, 0.180% (a)		19,616,703	$	19,616,703
Dreyfus Institutional Cash Advantage Fund, Class I, 0.180% (a)		29,425,056		29,425,056
Dreyfus Treasury & Agency Cash Management, Class I, 0.010% (a)		49,041,758		49,041,758
J.P. Morgan Prime Money Market Fund - Capital Shares, 0.130% (a)(c)		673,778,529		673,778,529
UBS Money Series - UBS Select Prime Preferred Fund, Class I, 0.190% (a)		49,041,758		49,041,758
UBS Money Series - UBS Select Treasury Preferred Fund, Class I, 0.020% (a)		49,041,758		49,041,758

TOTAL INVESTMENTS - 93.7% (cost $869,945,562)				869,945,562

OTHER ASSETS IN EXCESS OF LIABILITIES - 6.3% (b)				58,334,825

NET ASSETS - 100.0%			$	928,280,387

(a)	Represents annualized seven-day yield as of December 31, 2010.

(b)	Includes appreciation (depreciation) on futures contracts, forward foreign currency exchange contracts and swaps.

(c)	A portion of the security is pledged as collateral to the broker for forward foreign currency exchange contracts.

All securities are Level 2 (See Note 5).

Total return swap contracts outstanding as of December 31, 2010

COUNTERPARTY

UNDERLYING REFERENCE INSTRUMENT

TERMINATION
DATE

NOTIONAL
VALUE

UNREALIZED
APPRECIATION
(DEPRECIATION)

Merrill Lynch

10-Year Japanese Government Bond

03/10/2011

$12,107,611

$28,139

Merrill Lynch

Euro-SCHATZ Futures

03/08/2011

27,649,544

(11,986)

Merrill Lynch

KOSPI 200 Future

03/10/2011

22,740,209

1,282,171

Merrill Lynch

5-Year U.S. Treasury Note

03/31/2011

2,516,113

(44,019)

Merrill Lynch

2-Year U.S. Treasury Note

03/31/2011

25,218,925

(44,706)

Merrill Lynch

Gold 100 OZ Futures

02/24/2011

960,540

34,440

Merrill Lynch

LME Copper Futures

03/14/2011

7,923,550

970,325

Merrill Lynch

LME Nickel Futures

03/14/2011

703,740

38,700

Merrill Lynch

LME Primary Aluminum

03/14/2011

9,125,025

510,900

Barclays Capital

Coffee “C” Futures

03/21/2011

2,872,125

464,812

Barclays Capital

Soybean Futures

03/14/2011

2,090,800

154,000

Barclays Capital

Cocoa Future

03/16/2011

(1,017,500)

(105,450)

$3,277,326

Cash held as collateral with broker for total return swap contracts was $2,070,000 as of December 31, 2010.

Open futures contracts outstanding at December 31, 2010:


NUMBER OF CONTRACTS	TYPE	EXPIRATION DATE	VALUE AT TRADE DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Long Contracts:
3	5-Year U.S. Treasury Note	March 31, 2011		$354,757		$353,156		$(1,601)
43	10-Year U.S. Treasury Note	March 22, 2011		5,225,232		5,178,813		(46,419)
11	3-Month Euro Euribor	September 17, 2012		3,625,260		3,621,749		(3,511)
60	3-Month Euro Euribor	June 18, 2012		19,774,809		19,791,216		16,407
157	3-Month Euro Euribor	March 19, 2012		51,841,237		51,881,797		40,560
254	3-Month Euro Euribor	December 19, 2011		83,987,575		84,055,419		67,844
351	3-Month Euro Euribor	September 19, 2011		116,221,469		116,308,360		86,891


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	65
AQR Funds	Annual Report	December 2010	65


Consolidated Schedule of Investments			December 31, 2010


AQR MANAGED FUTURES STRATEGY FUND


NUMBER OF CONTRACTS	TYPE	EXPIRATION DATE	VALUE AT TRADE DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Long Contracts: (continued)
426	3-Month Euro Euribor	June 13, 2011		$141,165,329		$141,289,162		$123,833
14	90-Day Euro $ Futures	December 17, 2012		3,436,045		3,437,525		1,480
21	90-Day Euro $ Futures	September 17, 2012		5,194,667		5,171,513		(23,154)
74	90-Day Euro $ Futures	June 18, 2012		18,332,107		18,274,300		(57,807)
133	90-Day Euro $ Futures	March 19, 2012		32,994,026		32,934,125		(59,901)
216	90-Day Euro $ Futures	December 19, 2011		53,621,807		53,605,800		(16,007)
350	90-Day Euro $ Futures	September 19, 2011		86,972,191		87,014,375		42,184
456	90-Day Euro $ Futures	June 13, 2011		113,434,230		113,498,400		64,170
20	90-Day Sterling Futures	September 19, 2012		3,849,411		3,834,277		(15,134)
28	90-Day Sterling Futures	June 20, 2012		5,376,187		5,383,331		7,144
99	90-Day Sterling Futures	March 21, 2012		19,082,234		19,086,232		3,998
217	90-Day Sterling Futures	December 21, 2011		41,947,757		41,937,403		(10,354)
315	90-Day Sterling Futures	March 16, 2011		61,144,220		61,154,289		10,069
335	90-Day Sterling Futures	September 21, 2011		64,879,343		64,873,197		(6,146)
441	90-Day Sterling Futures	June 15, 2011		85,529,073		85,529,698		625
154	Amsterdam Index	January 21, 2011		14,504,696		14,660,244		155,548
11	Bank Acceptance Futures	June 13, 2011		2,724,540		2,723,293		(1,247)
32	Bank Acceptance Futures	September 19, 2011		7,911,646		7,910,230		(1,416)
356	CAC40 10 Euro	January 21, 2011		18,590,574		18,193,860		(396,714)
4	Canadian 10yr Bond Future	March 22, 2011		489,322		493,373		4,051
67	Coffee ‘C’ Futures	March 21, 2011		5,221,865		6,042,563		820,698
310	Corn Futures	March 14, 2011		9,046,703		9,749,500		702,797
79	DAX Index	March 18, 2011		18,634,940		18,353,511		(281,429)
525	DJIA Mini E-CBOT	March 18, 2011		29,790,883		30,221,625		430,742
311	E-Mini Russell 2000 Futures	March 18, 2011		24,004,704		24,329,530		324,826
439	E-Mini S&P 500 Futures	March 18, 2011		27,079,658		27,503,350		423,692
17	Euro - Bobl Futures	March 8, 2011		2,692,710		2,708,938		16,228
69	Euro - Bund Futures	March 8, 2011		11,588,678		11,599,565		10,887
304	Euro CHF 3-Month LIFFE	June 13, 2011		81,298,693		81,381,397		82,704
305	Euro CHF 3-Month LIFFE	March 14, 2011		81,621,428		81,673,640		52,212
112	Euro SFR 3-Month LIFFE	September 19, 2011		29,927,190		29,958,588		31,398
36	Euro-Buxl 30-Year Bond	March 8, 2011		5,204,369		5,211,117		6,748
983	Euro-SCHATZ Futures	March 8, 2011		143,536,518		143,749,652		213,134
193	FTSE 100 Index Futures	March 18, 2011		17,652,643		17,806,905		154,262
614	FTSE/JSE Top 40 Index	March 17, 2011		26,387,927		26,736,367		348,440
2	Gasoil Bullet	January 11, 2011		1,547,000		1,525,000		(22,000)
209	Globex Brent Futures	January 13, 2011		19,139,050		19,802,750		663,700
124	Globex Crude Oil Futures	January 19, 2011		11,075,630		11,331,120		255,490
14	Globex Heat Oil Futures	January 28, 2011		1,457,165		1,494,931		37,766
22	Globex RBOB Gasoline	January 28, 2011		2,143,596		2,245,597		102,001
119	Gold 100 OZ Futures	February 24, 2011		16,202,160		16,914,660		712,500
23	Hang Seng Index	January 28, 2011		3,358,246		3,405,479		47,233
73	LME Copper Futures	March 14, 2011		16,090,932		17,547,375		1,456,443
15	LME Nickel Futures	March 14, 2011		2,128,189		2,227,320		99,131
179	LME Primary Aluminum	March 14, 2011		10,806,758		11,056,607		249,849
633	MSCI Taiwan Stock Index Futures	January 28, 2011		19,924,490		20,211,690		287,200
404	NASDAQ 100 E-Mini Future	March 18, 2011		17,887,504		17,905,280		17,776
323	S&P MID 400 E-Mini Future	March 18, 2011		28,863,689		29,241,190		377,501
192	S&P/Toronto Stock Exchange 60 Index	March 17, 2011		29,226,305		29,644,885		418,580
242	SGX MSCI Singapore Index Futures	January 28, 2011		14,219,265		14,296,522		77,257
622	SGX S&P CNX Nifty Index Futures	January 27, 2011		7,551,388		7,668,016		116,628
272	Soybean Futures	March 14, 2011		17,688,479		19,080,800		1,392,321
231	Soybean Meal Futures	March 14, 2011		8,014,717		8,637,090		622,373
231	Soybean Oil Futures	March 14, 2011		7,516,035		8,090,082		574,047
147	SPI 200	March 17, 2011		17,992,884		17,818,188		(174,696)
239	Sugar #11 (World Markets)	February 28, 2011		7,845,546		8,597,881		752,335
175	TOPIX Index	March 10, 2011		19,054,638		19,332,963		278,325


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	66
AQR Funds	Annual Report	December 2010	66


Consolidated Schedule of Investments			December 31, 2010


AQR MANAGED FUTURES STRATEGY FUND


NUMBER OF CONTRACTS	TYPE	EXPIRATION DATE	VALUE AT TRADE DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Long Contracts: (continued)
76	U.S. Treasury Bond	March 22, 2011		9,180,554		9,281,500		100,946
165	Wheat Futures	March 14, 2011		6,491,889		6,552,562		60,673

								11,826,111

Short Contracts:
379	Australian 3-year Bond Future	March 15, 2011		$(103,929,191)		$(103,948,905)		$(19,714)
995	Australian 10-year Bond Future	March 15, 2011		(39,858,334)		(40,132,159)		(273,825)
62	Cocoa Futures	March 16, 2011		(1,736,708)		(1,881,700)		(144,992)
15	Cotton No. 2 Futures	March 9, 2011		(1,137,346)		(1,086,075)		51,271
45	H-SHARES Index Futures	January 28, 2011		(3,573,725)		(3,664,881)		(91,156)
67	IBEX 35 Index	January 21, 2011		(9,032,387)		(8,800,528)		231,859
299	Lean Hogs Futures	February 14, 2011		(8,978,390)		(9,538,100)		(559,710)
39	LME Primary Aluminum Futures	March 14, 2011		(2,257,045)		(2,408,981)		(151,936)
11	LME Zinc Futures	March 14, 2011		(612,123)		(674,712)		(62,589)
4	Long Gilt	March 29, 2011		(741,409)		(748,318)		(6,909)
340	Natural Gas Futures	January 27, 2011		(3,734,050)		(3,744,250)		(10,200)
1	Silver Futures	March 29, 2011		(153,632)		(154,685)		(1,053)

								(1,038,954)

								$10,787,157

Cash held as collateral with broker for futures contracts was $36,685,459 at December 31, 2010.

Forward foreign currency exchange contracts outstanding as of December 31, 2010:


PURCHASE CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT PURCHASED		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Australian Dollar, Expiring 03/16/11	The Royal Bank of Scotland	AUD		192,009,000		$185,533,265		$195,072,823		$9,539,558
Brazilian Real, Expiring 03/16/11	The Royal Bank of Scotland	BRL		14,240,000		8,185,791		8,448,724		262,933
Canadian Dollar, Expiring 03/16/11	The Royal Bank of Scotland	CAD		79,708,000		78,178,865		80,097,016		1,918,151
Swiss Franc, Expiring 03/16/11	The Royal Bank of Scotland	CHF		69,192,000		70,997,653		74,291,894		3,294,241
Chilean Peso, Expiring 03/16/11	The Royal Bank of Scotland	CLP		992,000,000		2,032,306		2,107,588		75,282
Columbian Peso, Expiring 03/16/11	The Royal Bank of Scotland	COP		370,000,000		192,447		194,682		2,235
Czech Republic Koruna, Expiring 03/16/11	The Royal Bank of Scotland	CZK		270,400,000		14,340,643		14,452,772		112,129
Euro, Expiring 03/16/11	The Royal Bank of Scotland	EUR		22,330,000		29,989,158		29,952,122		(37,036)
British Pound, Expiring 03/16/11	The Royal Bank of Scotland	GBP		101,682,999		159,020,188		159,113,896		93,708
Hungarian Forint, Expiring 03/16/11	The Royal Bank of Scotland	HUF		2,916,000,000		13,523,657		13,946,890		423,233
Indonesian Rupiah, Expiring 03/16/11	The Royal Bank of Scotland	IDR		24,900,000,000		2,736,264		2,733,697		(2,567)
Israeli Shekel, Expiring 03/16/11	The Royal Bank of Scotland	ILS		28,710,000		7,877,058		8,099,386		222,328
Indian Rupee, Expiring 03/16/11	The Royal Bank of Scotland	INR		1,226,400,000		26,645,820		27,069,456		423,636


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	67
AQR Funds	Annual Report	December 2010	67


Consolidated Schedule of Investments			December 31, 2010


AQR MANAGED FUTURES STRATEGY FUND


PURCHASE CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT PURCHASED		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
(continued)
Japanese Yen, Expiring 03/16/11	The Royal Bank of Scotland	JPY		10,567,697,000		$127,761,517		$130,395,838		$2,634,321
Korean Won, Expiring 03/16/11	The Royal Bank of Scotland	KRW		17,736,910,000		15,289,451		15,571,038		281,587
Mexican Peso, Expiring 03/16/11	The Royal Bank of Scotland	MXN		427,000,000		34,048,715		34,435,669		386,954
Malaysian Ringgit, Expiring 03/16/11	The Royal Bank of Scotland	MYR		27,890,000		8,910,810		9,003,752		92,942
Norwegian Krone, Expiring 03/16/11	The Royal Bank of Scotland	NOK		572,827,000		94,846,077		98,203,800		3,357,723
Philippine Peso, Expiring 03/16/11	The Royal Bank of Scotland	PHP		270,500,000		6,196,646		6,173,873		(22,773)
Poland Zloty, Expiring 03/16/11	The Royal Bank of Scotland	PLN		54,510,000		17,702,817		18,367,241		664,424
Russian Ruble, Expiring 03/16/11	The Royal Bank of Scotland	RUB		720,000,000		23,327,265		23,438,758		111,493
Swedish Krona, Expiring 03/16/11	The Royal Bank of Scotland	SEK		320,942,000		45,725,189		47,617,501		1,892,312
Singapore Dollar, Expiring 03/16/11	The Royal Bank of Scotland	SGD		28,890,000		22,112,070		22,551,813		439,743
Turkish Lira, Expiring 03/16/11	The Royal Bank of Scotland	TRY		19,610,000		12,822,022		12,632,021		(190,001)
Taiwanese Dollar, Expiring 03/16/11	The Royal Bank of Scotland	TWD		584,300,000		19,462,094		20,075,917		613,823
South African Rand, Expiring 03/16/11	The Royal Bank of Scotland	ZAR		111,400,000		15,768,177		16,668,254		900,077

						1,043,225,965		1,070,716,421		27,490,456


SALES CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT SOLD		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Swiss Franc, Expiring 03/16/11	The Royal Bank of Scotland	CHF		(93,840,000)		$(95,806,979)		$(100,756,609)		$(4,949,630)
Czech Republic Koruna, Expiring 03/16/11	The Royal Bank of Scotland	CZK		(115,000,000)		(6,112,317)		(6,146,704)		(34,387)
Euro, Expiring 03/16/11	The Royal Bank of Scotland	EUR		(363,044,000)		(478,132,289)		(486,965,439)		(8,833,150)
British Pound, Expiring 03/16/11	The Royal Bank of Scotland	GBP		(92,483,000)		(143,815,825)		(144,717,707)		(901,882)
Hungarian Forint, Expiring 03/16/11	The Royal Bank of Scotland	HUF		(740,000,000)		(3,362,858)		(3,539,334)		(176,476)
Japanese Yen, Expiring 03/16/11	The Royal Bank of Scotland	JPY		(4,785,497,000)		(56,997,748)		(59,048,712)		(2,050,964)
Korean Won, Expiring 03/16/11	The Royal Bank of Scotland	KRW		(21,100,000,000)		(18,282,912)		(18,523,458)		(240,546)
Mexican Peso, Expiring 03/16/11	The Royal Bank of Scotland	MXN		(14,000,000)		(1,105,959)		(1,129,038)		(23,079)
Malaysian Ringgit, Expiring 03/16/11	The Royal Bank of Scotland	MYR		(16,500,000)		(5,213,137)		(5,326,709)		(113,572)
New Zealand Dollar, Expiring 03/16/11	The Royal Bank of Scotland	NZD		(71,967,000)		(53,325,901)		(55,904,205)		(2,578,304)
Philippine Peso, Expiring 03/16/11	The Royal Bank of Scotland	PHP		(182,000,000)		(4,100,396)		(4,153,955)		(53,559)


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	68
AQR Funds	Annual Report	December 2010	68


Consolidated Schedule of Investments			December 31, 2010


AQR MANAGED FUTURES STRATEGY FUND


SALES CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT SOLD		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
(continued)
Poland Zloty, Expiring 03/16/11	The Royal Bank of Scotland	PLN		(30,900,000)		$(9,962,937)		$(10,411,810)		$(448,873)
Russian Ruble, Expiring 03/16/11	The Royal Bank of Scotland	RUB		(181,800,000)		(5,733,549)		(5,918,286)		(184,737)
Swedish Krona, Expiring 03/16/11	The Royal Bank of Scotland	SEK		(93,532,000)		(13,662,395)		(13,877,150)		(214,755)
Singapore Dollar, Expiring 03/16/11	The Royal Bank of Scotland	SGD		(18,100,000)		(13,773,674)		(14,129,035)		(355,361)
Turkish Lira, Expiring 03/16/11	The Royal Bank of Scotland	TRY		(12,600,000)		(8,103,288)		(8,116,443)		(13,155)
Taiwanese Dollar, Expiring 03/16/11	The Royal Bank of Scotland	TWD		(138,000,000)		(4,670,914)		(4,741,531)		(70,617)

						(922,163,078)		(943,406,125)		(21,243,047)

						$121,062,887		$127,310,296		$6,247,409

Money Market fund investment is pledged as collateral for forward foreign exchange contracts in the amount of $7,532,150.

AUD - Australian Dollar

BRL - Brazilian Real

CAD - Canadian Dollar

CHF - Swiss Franc

CLP - Chilean Peso

COP - Columbian Peso

CZK - Czech Republic Koruna

EUR - Euro

GBP - British Pound

HUF - Hungarian Forint

IDR - Indonesian Rupiah

ILS - Israeli Shekel

INR - Indian Rupee

JPY - Japanese Yen

KRW - Korean Won

MXN - Mexican Peso

MYR - Malaysian Ringgit

NOK - Norwegian Krone

NZD - New Zealand Dollar

PHP - Philippine Peso

PLN - Poland Zloty

RUB - Russian Ruble

SEK - Swedish Krona

SGD - Singapore Dollar

TRY - Turkish Lira

TWD - Taiwan Dollar

ZAR - South African Rand


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	69
AQR Funds	Annual Report	December 2010	69


Consolidated Schedule of Investments			December 31, 2010


AQR RISK PARITY FUND

GOVERNMENT RELATED OBLIGATIONS - 27.1%

MOODY’S
RATING*

(UNAUDITED)

INTEREST
RATE

MATURITY
DATE

CURRENCY

PRINCIPAL
AMOUNT
(000’S)

VALUE
(Note 3)

Sovereign Debt - 27.1%

France Government Bond OAT (France)

1.600%

7/25/2015

EUR

1,685

2,380,265

France Government Bond OAT (France)

2.250%

7/25/2020

EUR

802

1,163,761

United Kingdom Gilt Inflation Linked, Series 3MO (United Kingdom)

1.250%

11/22/2017

GBP

1,748

2,965,466

TOTAL GOVERNMENT RELATED OBLIGATIONS
(cost $6,622,632)

6,509,492

U.S. TREASURY OBLIGATIONS - 16.0% (1)

U.S. Treasury Inflation Protected Securities Bonds - 16.0%

U.S. Treasury Bond

0.500%

4/15/2015

USD

2,300

2,372,709

U.S. Treasury Bond

2.125%

1/15/2019

USD

1,300

1,465,402

TOTAL U.S. TREASURY OBLIGATIONS
(cost $3,878,722)

3,838,111

SHARES

MONEY MARKET FUNDS - 51.0%

BlackRock Liquidity Funds TempFund Portfolio, Class I, 0.180% (a)

900,002

Dreyfus Institutional Cash Advantage Fund, Class I, 0.180% (a)

1,350,003

Dreyfus Treasury Cash Management, Class I, 0.010% (a)

2,250,005

J.P. Morgan Prime Money Market Fund - Capital Shares, 0.130% (a)(c)

3,214,433

UBS Money Series - UBS Select Prime Preferred Fund, Class I, 0.190% (a)

2,250,005

UBS Money Series - UBS Select Treasury Preferred Fund, Class I, 0.020% (a)

2,250,005

TOTAL MONEY MARKET FUNDS
(cost $12,214,453)

12,214,453

TOTAL INVESTMENTS - 94.1%
(cost $22,715,807)

22,562,056

OTHER ASSETS IN EXCESS OF LIABILITIES - 5.9% (b)

1,420,489

NET ASSETS - 100.0%

23,982,545

All securities are Level 2, unless noted otherwise in parenthesis.

(1)	Level 1 security (See Note 5).

All securities are United States companies, unless noted otherwise in parentheses.

(a)	Represents annualized seven-day yield as of December 31, 2010.

(b)	Includes appreciation(depreciation) on futures contracts and forward foreign currency exchange contracts and swaps.

(c)	A portion of the security is pledged as collateral for forward foreign currency exchange contracts.

*	The rating reflected is as December 31, 2010. Rating of certain bonds may have changed subsequent to the date.


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	70
AQR Funds	Annual Report	December 2010	70


Consolidated Schedule of Investments			December 31, 2010


AQR RISK PARITY FUND

Credit default swap contracts sell protection as of December 31, 2010:


COUNTERPARTY	REFERENCE ENTITY	FIXED ANNUAL RATE RECEIVED BY FUND	CURRENCY		NOTIONAL AMOUNT		UPFRONT PREMIUM (RECEIVED) PAID		TERMINATION DATE		UNREALIZED APPRECIATION (DEPRECIATION)
Deutsche Bank	Markit CDX North America Investment Grade Index Series 15	1.000%		USD		2,400,000		$9,379		12/20/2015		$8,125
Deutsche Bank	iTraxx Europe Series 14.V1	1.000%		EUR		250,000		787		12/20/2015		(1,401)
Deutsche Bank	Markit CDX North America High Yield Index Series 15	5.000%		USD		1,850,000		47,773		12/20/2015		9,777
Deutsche Bank	Markit CDX Emerging Market Index Series 14	5.000%		USD		300,000		40,872		12/20/2015		560
The Royal Bank of Scotland	Markit CDX North America High Yield Index Series 15	5.000%		USD		225,000		(912)		12/20/2015		7,912
The Royal Bank of Scotland	Markit CDX Emerging Market Index Series 14	5.000%		USD		300,000		42,357		12/20/2015		(925)
The Royal Bank of Scotland	iTraxx Europe Crossover Series 14.V1	5.000%		EUR		100,000		1,845		12/20/2015		1,805
The Royal Bank of Scotland	Markit CDX North America Investment Grade Index Series 15	1.000%		USD		525,000		853		12/20/2015		2,976
The Royal Bank of Scotland	iTraxx Europe Series 14.V1	1.000%		EUR		25,000		4		12/20/2015		(65)
The Royal Bank of Scotland	Markit CMBX North America AJ 4	0.960%		USD		25,000		(7,043)		2/17/2051		317
Bank of America	Markit CDX Emerging Market Index Series 14	5.000%		USD		850,000		111,319		12/20/2015		6,072
Bank of America	Markit CDX North America High Yield Index Series 15	5.000%		USD		3,150,000		(21,762)		12/20/2015		119,754
Bank of America	Markit CDX North America Investment Grade Index Series 15	1.000%		USD		2,775,000		5,038		12/20/2015		15,200
Bank of America	Markit CMBX North America AJ 3	0.755%		USD		50,000		(12,191)		12/13/2049		2,576
Bank of America	Markit CMBX North America AJ 4	0.697%		USD		50,000		(15,056)		2/17/2051		1,605
Bank of America	Markit CMBX North America AJ 5	0.750%		USD		50,000		(12,443)		2/15/2051		2,088
Bank of America	iTraxx Europe Crossover Series 14.V1	5.000%		EUR		1,300,000		7,804		12/20/2015		31,853
Bank of America	iTraxx Europe Series 14.V1	1.000%		EUR		2,075,000		(724)		12/20/2015		3,420

												$211,649

Money market fund investment pledged as collateral for credit default swap contracts was $320,000 at December 31, 2010. Additional collateral for positions held at the Royal Bank of Scotland is included in the collateral for forward foreign currency exchange contracts.


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	71
AQR Funds	Annual Report	December 2010	71


Consolidated Schedule of Investments			December 31, 2010


AQR RISK PARITY FUND

Interest rate swap contracts outstanding as of December 31, 2010


COUNTERPARTY	PAYMENTS MADE BY THE FUND	PAYMENTS RECEIVED BY THE FUND	CURRENCY		NOTIONAL AMOUNT		TERMINATION DATE		UNREALIZED APPRECIATION (DEPRECIATION)
The Royal Bank of Scotland	3 month Hong Kong Interbank Offer Rate	2.145%		HKD		1,550,000		3/16/2016		$(1,107)
The Royal Bank of Scotland	3 month Hong Kong Interbank Offer Rate	1.748%		HKD		2,760,959		3/16/2016		(8,760)
The Royal Bank of Scotland	3 month Johannesburg Interbank Agreed Rate	7.080%		ZAR		1,320,000		3/16/2016		(1,364)
The Royal Bank of Scotland	3 month Johannesburg Interbank Agreed Rate	7.390%		ZAR		2,390,000		3/16/2016		2,203
The Royal Bank of Scotland	3 month Johannesburg Interbank Agreed Rate	7.155%		ZAR		3,282,843		3/16/2016		(1,826)
The Royal Bank of Scotland	3 month South Korea Interbank Offered Rate	3.680%		KRW		200,000,000		3/16/2016		(2,826)
The Royal Bank of Scotland	3.950%	(1)		KRW		220,000,000		3/16/2016		748
The Royal Bank of Scotland	3 month South Korea Interbank Offered Rate	3.690%		KRW		710,000,000		3/16/2016		(9,750)
The Royal Bank of Scotland	3 month South Korea Interbank Offered Rate	3.930%		KRW		860,000,000		3/16/2016		(3,611)
The Royal Bank of Scotland	3 month South Korea Interbank Offered Rate	3.750%		KRW		1,455,153,531		3/16/2016		(16,515)
The Royal Bank of Scotland	6 month Budapest Interbank Offered Rate	5.970%		HUF		38,000,000		3/16/2016		(8,328)
The Royal Bank of Scotland	6 month Budapest Interbank Offered Rate	6.300%		HUF		43,955,931		3/16/2016		(6,638)
The Royal Bank of Scotland	6 month Budapest Interbank Offered Rate	7.150%		HUF		49,000,000		3/16/2016		1,189
The Royal Bank of Scotland	6 month Singapore Interbank Offered Rate	1.750%		SGD		220,000		3/16/2016		(3,131)
The Royal Bank of Scotland	6 month Singapore Interbank Offered Rate	1.816%		SGD		365,898		3/16/2016		(4,306)
The Royal Bank of Scotland	6 month Warsaw Interbank Offered Rate	4.986%		PLN		990,000		3/16/2016		(8,334)
The Royal Bank of Scotland	6 month Warsaw Interbank Offered Rate	4.940%		PLN		2,060,979		3/16/2016		(18,569)
The Royal Bank of Scotland	6 month Warsaw Interbank Offered Rate	5.270%		PLN		590,000		3/16/2016		(2,427)
The Royal Bank of Scotland	3 month Johannesburg Interbank Agreed Rate	7.040%		ZAR		1,320,000		3/16/2016		(1,697)
The Royal Bank of Scotland	3 month Johannesburg Interbank Agreed Rate	7.350%		ZAR		1,370,000		3/16/2016		918
The Royal Bank of Scotland	6.955%	(2)		ZAR		1,560,000		3/16/2016		2,842
The Royal Bank of Scotland	3 month Hong Kong Interbank Offered Rate	1.630%		HKD		1,590,000		3/16/2016		(6,213)
The Royal Bank of Scotland	6 month Prague Interbank Offered Rate	2.330%		CZK		3,000,000		3/16/2016		(2,728)
The Royal Bank of Scotland	6 month Prague Interbank Offered Rate	2.680%		CZK		4,000,000		3/16/2016		(115)
The Royal Bank of Scotland	6 month Prague Interbank Offered Rate	2.210%		CZK		5,438,792		3/16/2016		(6,585)
The Royal Bank of Scotland	3.730%	(1)		KRW		200,000,000		3/16/2016		(2,667)

										$(109,597)

(1)	3 Month South Korea Interbank Offered Rate

(2)	3 Month Johannesburg Interbank Agreed Rate

Cash collateral held by the broker is included in the forward foreign currency exchange contracts cash collateral.

Total return swap contracts outstanding as of December 31, 2010

COUNTERPARTY

UNDERLYING REFERENCE INSTRUMENT

TERMINATION
DATE

NOTIONAL
VALUE

UNREALIZED
APPRECIATION
(DEPRECIATION)

Merrill Lynch

Australia 10-Year Bond Future

03/15/2011

$105,105

$785

Merrill Lynch

10-Year Japanese Government Bond

03/10/2011

5,188,976

12,060

Merrill Lynch

10-Year U.S. Treasury Note

03/22/2011

6,634,935

(131,310)

Merrill Lynch

Euro - Bund Futures

03/08/2011

3,709,109

(10,697)

Merrill Lynch

Long Gilt

03/29/2011

749,972

(1,654)

Merrill Lynch

Swiss Market Index

03/18/2011

69,292

(1,081)

Royal Bank of Scotland

Kospi 200 Futures

03/10/2011

339,642

22,504

$(109,393)


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	72
AQR Funds	Annual Report	December 2010	72


Consolidated Schedule of Investments			December 31, 2010


AQR RISK PARITY FUND

Open futures contracts outstanding at December 31, 2010:


NUMBER OF CONTRACTS	TYPE	EXPIRATION DATE	VALUE AT TRADE DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Long Contracts:
5	10-Year Mini Japanese Government Bond Futures	March 9, 2011		$860,721		$866,839		$6,118
3	Amsterdam Index	January 21, 2011		282,540		285,589		3,049
9	CAC40 10 Euro	January 21, 2011		469,372		459,957		(9,415)
3	Coffee ‘C’ Futures	May 18, 2011		244,951		272,025		27,074
9	Corn Futures	May 13, 2011		262,117		286,425		24,308
2	Cotton No.2 Futures	March 9, 2011		135,201		144,810		9,609
1	Cotton No.2 Futures	May 6, 2011		68,347		68,805		458
2	DAX Index	March 18, 2011		472,193		464,646		(7,547)
4	E-Mini Russell 2000 Futures	March 18, 2011		309,057		312,920		3,863
49	E-Mini S&P 500 Futures	March 18, 2011		3,022,025		3,069,850		47,825
8	FTSE 100 Index Futures	March 18, 2011		731,503		738,110		6,607
4	FTSE/JSE Top 40 Index	March 17, 2011		171,664		174,178		2,514
1	FTSE/MIB Index	March 18, 2011		138,761		135,530		(3,231)
1	Globes RBOB Gas Futures	February 25, 2011		98,158		102,194		4,036
3	Globex Brent FCL Futures	February 10, 2011		276,090		284,010		7,920
1	Globex Brent Futures	January 13, 2011		94,110		94,750		640
12	Globex Crude Oil Futures	February 18, 2011		1,078,800		1,106,640		27,840
1	Globex Crude Oil Futures	January 19, 2011		91,490		91,380		(110)
1	Globex Heat Oil Futures	February 25, 2011		104,719		107,037		2,318
6	Gold 100 OZ Futures	February 24, 2011		823,511		852,840		29,329
4	H-SHARES Index Futures	January 28, 2011		317,212		325,767		8,555
1	IBEX 35 Index	January 21, 2011		135,967		131,351		(4,616)
1	Lean Hogs Futures	April 14, 2011		32,343		33,550		1,207
1	Live Cattle Futures	April 29, 2011		43,023		44,880		1,857
2	LME Aluminum Futures	July 1, 2011		116,886		123,062		6,176
2	LME Aluminum Futures	November 2, 2011		113,253		123,201		9,948
2	LME Copper Futures	March 14, 2011		418,253		480,750		62,497
2	LME Copper Futures	June 13, 2011		449,252		477,975		28,723
7	LME HG Aluminum Futures	June 13, 2011		411,153		435,138		23,985
8	LME PRI Aluminum Futures	March 14, 2011		470,338		494,150		23,812
10	MSCI Taiwan Stock Index Futures	January 28, 2011		314,657		319,300		4,643
1	Natural Gas Futures	February 27, 2011		10,363		11,013		650
22	Natural Gas Futures	February 24, 2011		227,480		243,210		15,730
3	S&P MID 400 E-Mini Future	March 18, 2011		266,980		271,590		4,610
2	SGX MSCI Singapore Index Futures	January 28, 2011		116,549		118,153		1,604
10	SGX S&P CNX Nifty Index Futures	January 27, 2011		120,969		123,280		2,311
5	Soybean Futures	March 14, 2011		302,573		350,749		48,176
7	Sugar #11 (World Markets)	April 29, 2011		200,271		229,869		29,598
6	TOPIX Index	March 10, 2011		655,938		662,844		6,906
6	Wheat Futures	May 13, 2011		239,892		246,225		6,333

								465,910

Short Contracts:
2	LME Aluminum Futures	July 1, 2011		(116,997)		(123,062)		(6,065)
2	LME Aluminum Futures	November 2, 2011		(112,621)		(123,200)		(10,579)
2	LME Copper Futures	March 14, 2011		(425,623)		(480,751)		(55,128)
8	LME PRI Aluminum Futures	March 14, 2011		(460,190)		(494,150)		(33,960)

								(105,732)

								$360,178


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	73
AQR Funds	Annual Report	December 2010	73


Consolidated Schedule of Investments			December 31, 2010


AQR RISK PARITY FUND

Cash held as collateral with brokers for futures contracts was $650,572 at December 31, 2010.

Forward foreign currency exchange contracts outstanding as of December 31, 2010:


PURCHASE CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT PURCHASED		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Brazilian Real, Expiring 03/16/11	The Royal Bank of Scotland	BRL		1,695,000		$970,477		$1,005,659		$35,182
Euro, Expiring 03/16/11	The Royal Bank of Scotland	EUR		50,000		65,995		67,067		1,072
Euro, Expiring 01/03/11	The Royal Bank of Scotland	EUR		363,000		476,692		486,983		10,291
British Pound, Expiring 03/16/11	The Royal Bank of Scotland	GBP		40,000		62,986		62,592		(394)
Israeli Shekel, Expiring 03/16/11	The Royal Bank of Scotland	ILS		3,583,000		979,418		1,010,801		31,383
Japanese Yen, Expiring 03/16/11	The Royal Bank of Scotland	JPY		7,577,000		91,119		93,493		2,374
Korean Won, Expiring 03/16/11	The Royal Bank of Scotland	KRW		816,164,000		704,845		716,502		11,657
Mexican Peso, Expiring 03/16/11	The Royal Bank of Scotland	MXN		16,438,000		1,309,204		1,325,652		16,448
Singapore Dollar, Expiring 03/16/11	The Royal Bank of Scotland	SGD		929,000		708,696		725,186		16,490
Turkish Lira, Expiring 03/16/11	The Royal Bank of Scotland	TRY		953,000		624,256		613,887		(10,369)
Taiwanese Dollar, Expiring 03/16/11	The Royal Bank of Scotland	TWD		30,818,000		1,025,763		1,058,873		33,110
South African Rand, Expiring 03/16/11	The Royal Bank of Scotland	ZAR		4,944,000		691,104		739,747		48,643

						7,710,555		7,906,442		195,887


SALES CONTRACTS	COUNTERPARTY	CURRENCY	CURRENCY AMOUNT SOLD		VALUE AT SETTLEMENT DATE		VALUE AT DECEMBER 31, 2010		UNREALIZED APPRECIATION (DEPRECIATION)
Brazilian Real, Expiring 03/16/11	The Royal Bank of Scotland	BRL		(38,000)		$(21,936)		$(22,546)		$(610)
Euro, Expiring 03/16/11	The Royal Bank of Scotland	EUR		(4,664,000)		(6,132,364)		(6,256,010)		(123,646)
Euro, Expiring 03/16/11	The Royal Bank of Scotland	EUR		(363,000)		(476,619)		(486,906)		(10,287)
British Pound, Expiring 03/16/11	The Royal Bank of Scotland	GBP		(1,779,000)		(2,776,434)		(2,783,785)		(7,351)
British Pound, Expiring 03/16/11	The Royal Bank of Scotland	GBP		(126,000)		(193,851)		(197,165)		(3,314)
Japanese Yen, Expiring 03/16/11	The Royal Bank of Scotland	JPY		(3,927,000)		(46,814)		(48,456)		(1,642)
Korean Won, Expiring 03/16/11	The Royal Bank of Scotland	KRW		(23,027,000)		(20,010)		(20,215)		(205)
Singapore Dollar, Expiring 03/16/11	The Royal Bank of Scotland	SGD		(103,000)		(78,521)		(80,403)		(1,882)
Turkish Lira, Expiring 03/16/11	The Royal Bank of Scotland	TRY		(74,000)		(47,663)		(47,668)		(5)
Taiwanese Dollar, Expiring 03/16/11	The Royal Bank of Scotland	TWD		(1,405,000)		(46,951)		(48,274)		(1,323)

						(9,841,163)		(9,991,428)		(150,265)

						$(2,130,608)		$(2,084,986)		$45,622


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	74
AQR Funds	Annual Report	December 2010	74


Consolidated Schedule of Investments			December 31, 2010


AQR RISK PARITY FUND

Money Market fund investment is pledged as collateral for forward foreign exchange contracts in the amount of $537,300.

BRL - Brazilian Real

CZK - Czech Republic Koruna

EUR - Euro

GBP - British Pound

HKD - Hong Kong Dollar

HUF - Hungarian Forint

ILS - Israeli Shekel

JPY - Japanese Yen

KRW - Korean Won

MXN - Mexican Peso

PLN - Polish Zlotych

SGD - Singapore Dollar

TRY - Turkish Lira

TWD - Taiwan Dollar

ZAR - South African Rand


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	75
AQR Funds	Annual Report	December 2010	75


Schedule of Investments			December 31, 2010


AQR MOMENTUM FUND


COMMON STOCKS - 97.3%	SHARES		VALUE (Note 3)
Consumer Discretionary - 29.2%
Abercrombie & Fitch Co., Class A		3,300	$	190,179
Advance Auto Parts, Inc.		3,200		211,680
Amazon.com, Inc. †		15,800		2,844,000
AutoNation, Inc. †(a)		1,100		31,020
AutoZone, Inc. †		1,800		490,662
BorgWarner, Inc. †(a)		4,100		296,676
Brinker International, Inc.		5,700		119,016
Cablevision Systems Corp., Class A (a)		10,000		338,400
CarMax, Inc. †		10,200		325,176
CBS Corp., Class B		9,600		182,880
Cheesecake Factory, Inc./The †		3,900		119,574
Chipotle Mexican Grill, Inc. †		2,000		425,320
Clear Channel Outdoor Holdings, Inc., Class A †		9,300		130,572
Coach, Inc.		13,507		747,072
Coinstar, Inc. †		2,100		118,524
Dana Holding Corp. †(a)		8,800		151,448
Darden Restaurants, Inc.		5,800		269,352
Deckers Outdoor Corp. †(a)		2,300		183,402
Dick’s Sporting Goods, Inc. †(a)		4,600		172,500
Dillard’s, Inc., Class A (a)		3,700		140,378
DIRECTV, Class A †		8,000		319,440
Discovery Communications, Inc., Class A †(a)		16,666		694,972
Dollar General Corp. †		4,000		122,680
Dollar Tree, Inc. †		6,200		347,696
Family Dollar Stores, Inc. (a)		8,000		397,680
Foot Locker, Inc.		7,900		154,998
Ford Motor Co. †(a)		155,943		2,618,283
Fortune Brands, Inc.		4,600		277,150
Fossil, Inc. †		3,300		232,584
Gentex Corp. (a)		2,900		85,724
Genuine Parts Co.		2,800		143,752
Guess?, Inc. (a)		700		33,124
Harley-Davidson, Inc.		1,600		55,472
Hasbro, Inc.		3,700		174,566
HSN, Inc. †(a)		1,300		39,832
Hyatt Hotels Corp., Class A †		6,400		292,864
Interpublic Group of Cos., Inc./The †		20,600		218,772
Jarden Corp.		4,300		132,741
JC Penney Co., Inc.		7,500		242,325
Johnson Controls, Inc.		27,300		1,042,860
Las Vegas Sands Corp. †(a)		18,600		854,670
Lear Corp. †		1,400		138,194
Leggett & Platt, Inc.		1,500		34,140
Liberty Global, Inc., Class A †(a)		7,200		254,736
Liberty Media Corp. - Capital, Series A †		3,500		218,960
Liberty Media Corp. - Interactive, Series A †		26,000		410,020
Liberty Media Corp. - Starz, Series A †		1,900		126,312
Ltd. Brands, Inc.		14,600		448,658
Macy’s, Inc.		18,000		455,400
Marriott International, Inc., Class A (a)		11,500		477,710
Mattel, Inc.		18,600		472,998
McDonald’s Corp.		47,800		3,669,128
MGM Resorts International †		12,700		188,595
NetFlix, Inc. †		3,100		544,670
Newell Rubbermaid, Inc.		2,900		52,722


	SHARES		VALUE (Note 3)
Consumer Discretionary - 29.2% (continued)
NIKE, Inc., Class B		18,900	$	1,614,438
O’Reilly Automotive, Inc. †		5,800		350,436
Panera Bread Co., Class A †(a)		2,400		242,904
Penn National Gaming, Inc. †		3,500		123,025
PetSmart, Inc. (a)		3,400		135,388
Phillips-Van Heusen Corp.		3,200		201,632
Polo Ralph Lauren Corp.		4,100		454,772
priceline.com, Inc. †		2,226		889,398
Ross Stores, Inc.		5,800		366,850
Royal Caribbean Cruises Ltd. †		5,300		249,100
Saks, Inc. †		11,300		120,910
Sally Beauty Holdings, Inc. †		8,500		123,505
Scripps Networks Interactive, Inc., Class A		500		25,875
Signet Jewelers Ltd. (Bermuda) †		3,900		169,260
Sirius XM Radio, Inc. †(a)		136,000		223,040
Sotheby’s (a)		4,100		184,500
Stanley Black & Decker, Inc.		5,400		361,098
Starbucks Corp.		30,134		968,206
Starwood Hotels & Resorts Worldwide, Inc.		7,500		455,850
Tempur-Pedic International, Inc. †(a)		3,900		156,234
Tenneco, Inc. †		3,100		127,596
Tiffany & Co.		4,800		298,896
Time Warner Cable, Inc.		14,900		983,847
Tractor Supply Co. (a)		3,500		169,715
TRW Automotive Holdings Corp. †		4,800		252,960
Tupperware Brands Corp.		800		38,136
Ulta Salon Cosmetics & Fragrance, Inc. †		3,600		122,400
Under Armour, Inc., Class A †		2,800		153,552
Urban Outfitters, Inc. †		700		25,067
Viacom, Inc., Class B		22,600		895,186
Virgin Media, Inc. (a)		10,700		291,468
Walt Disney Co./The		9,600		360,096
Whirlpool Corp. (a)		900		79,947
Williams-Sonoma, Inc.		1,500		53,535
Wyndham Worldwide Corp.		6,700		200,732
Wynn Resorts Ltd.		3,900		404,976
Yum! Brands, Inc.		20,600		1,010,430

				36,347,219

Consumer Staples - 4.8%
Altria Group, Inc.		87,800		2,161,636
Brown-Forman Corp., Class B		3,000		208,860
Coca-Cola Enterprises, Inc.		12,323		308,445
Corn Products International, Inc.		900		41,400
Dr Pepper Snapple Group, Inc.		7,700		270,732
Estee Lauder Cos., Inc./The, Class A		7,400		597,180
Green Mountain Coffee Roasters, Inc. †(a)		5,400		177,444
Hansen Natural Corp. †		2,900		151,612
Herbalife Ltd. (Cayman Islands)		1,200		82,044
Hershey Co./The		6,400		301,760
HJ Heinz Co.		1,900		93,974
Hormel Foods Corp. (a)		2,300		117,898
Kraft Foods, Inc., Class A		1,800		56,718
McCormick & Co., Inc.		3,300		153,549
Mead Johnson Nutrition Co.		6,700		417,075
Nu Skin Enterprises, Inc., Class A (a)		4,600		139,196


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	76
AQR Funds	Annual Report	December 2010	76


Schedule of Investments			December 31, 2010


AQR MOMENTUM FUND


	SHARES		VALUE (Note 3)
Consumer Staples - 4.8% (continued)
Sara Lee Corp.		11,100	$	194,361
Smithfield Foods, Inc. †		1,600		33,008
Tyson Foods, Inc., Class A		10,300		177,366
United Natural Foods, Inc. †(a)		800		29,344
Whole Foods Market, Inc. †(a)		6,100		308,599

				6,022,201

Energy - 6.6%
Arch Coal, Inc.		5,600		196,336
Baker Hughes, Inc.		17,700		1,011,909
Brigham Exploration Co. †(a)		7,100		193,404
CARBO Ceramics, Inc. (a)		1,600		165,664
Cimarex Energy Co.		3,300		292,149
Complete Production Services, Inc. †		4,400		130,020
Concho Resources, Inc./Midland TX †(a)		5,100		447,117
ConocoPhillips		10,900		742,290
Dril-Quip, Inc. †		1,800		139,896
El Paso Corp.		19,900		273,824
Energy XXI Bermuda Ltd. (Bermuda) †		4,500		124,515
FMC Technologies, Inc. †		5,400		480,114
Forest Oil Corp. †		2,600		98,722
McDermott International, Inc. †		9,800		202,762
National Oilwell Varco, Inc.		17,700		1,190,325
Newfield Exploration Co. †		4,600		331,706
Oil States International, Inc. †		2,600		166,634
Patterson-UTI Energy, Inc.		5,600		120,680
Peabody Energy Corp.		10,900		697,382
Pioneer Natural Resources Co.		3,600		312,552
Rosetta Resources, Inc. †		3,300		124,212
Rowan Cos., Inc. †		4,200		146,622
RPC, Inc. (a)		2,100		38,052
SM Energy Co. (a)		1,600		94,288
Sunoco, Inc.		2,700		108,837
Superior Energy Services, Inc. †		3,800		132,962
Whiting Petroleum Corp. †		2,600		304,694

				8,267,668

Financials - 6.8%
Alexandria Real Estate Equities, Inc. REIT (a)		600		43,956
Alleghany Corp. †		100		30,637
American Campus Communities, Inc. REIT		900		28,584
American Capital Ltd. †(a)		17,800		134,568
American Express Co.		2,600		111,592
American International Group, Inc. †		3,400		195,908
Ameriprise Financial, Inc.		9,200		529,460
Apartment Investment & Management Co., Class A REIT		1,000		25,840
Arch Capital Group Ltd. (Bermuda) †		1,400		123,270
Ares Capital Corp.		3,600		59,328
AvalonBay Communities, Inc. REIT (a)		3,500		393,925
BGC Partners, Inc., Class A		14,300		118,833
Boston Properties, Inc. REIT		1,800		154,980
Brookfield Properties Corp.		18,200		319,046
Camden Property Trust REIT (a)		700		37,786
CB Richard Ellis Group, Inc., Class A †		12,300		251,904
CIT Group, Inc. †		6,100		287,310
City National Corp./CA (a)		500		30,680


	SHARES		VALUE (Note 3)
Financials - 6.8% (continued)
Comerica, Inc. (a)		3,400	$	143,616
Credit Acceptance Corp. †		500		31,385
Douglas Emmett, Inc. REIT (a)		8,500		141,100
East West Bancorp, Inc.		1,700		33,235
Entertainment Properties Trust REIT (a)		1,000		46,250
Equity Residential REIT		10,700		555,865
Erie Indemnity Co., Class A		1,200		78,564
Essex Property Trust, Inc. REIT (a)		300		34,266
Fifth Third Bancorp		8,500		124,780
Forest City Enterprises, Inc., Class A †		7,500		125,175
General Growth Properties, Inc. REIT		25,400		393,192
Hartford Financial Services Group, Inc.		2,700		71,523
HCP, Inc. REIT		4,700		172,913
Home Properties, Inc. REIT (a)		1,100		61,039
Host Hotels & Resorts, Inc. REIT		19,500		348,465
Huntington Bancshares, Inc./OH (a)		9,400		64,578
Jones Lang LaSalle, Inc.		2,100		176,232
KeyCorp		23,200		205,320
Kimco Realty Corp. REIT		2,100		37,884
M&T Bank Corp.		800		69,640
Macerich Co./The REIT		3,002		142,205
Mid-America Apartment Communities, Inc. REIT (a)		1,800		114,282
New York Community Bancorp, Inc. (a)		18,300		344,955
Plum Creek Timber Co., Inc. REIT		600		22,470
ProLogis REIT		4,100		59,204
Prudential Financial, Inc.		3,100		182,001
Public Storage REIT		900		91,278
Rayonier, Inc. REIT		1,500		78,780
Realty Income Corp. REIT		1,000		34,200
SEI Investments Co.		5,100		121,329
Simon Property Group, Inc. REIT		3,100		308,419
SL Green Realty Corp. REIT (a)		2,500		168,775
SLM Corp. †		4,600		57,914
Tanger Factory Outlet Centers REIT		1,000		51,190
Taubman Centers, Inc. REIT		1,700		85,816
UDR, Inc. REIT (a)		7,900		185,808
Unum Group		5,400		130,788
Ventas, Inc. REIT		2,100		110,208
Vornado Realty Trust REIT		1,500		124,995
Weingarten Realty Investors REIT (a)		5,400		128,304
Zions Bancorp.		5,000		121,150

				8,456,700

Health Care - 2.9%
Agilent Technologies, Inc. †		2,200		91,146
Alexion Pharmaceuticals, Inc. †(a)		3,400		273,870
AMERIGROUP Corp. †(a)		600		26,352
AmerisourceBergen Corp.		3,700		126,244
BioMarin Pharmaceutical, Inc. †		4,400		118,492
Brookdale Senior Living, Inc. †		6,500		139,165
Cardinal Health, Inc.		5,300		203,043
Catalyst Health Solutions, Inc. †(a)		800		37,192
Cooper Cos., Inc./The (a)		1,500		84,510
Dendreon Corp. †(a)		6,867		239,795
Edwards Lifesciences Corp. †		2,900		234,436
Endo Pharmaceuticals Holdings, Inc. †		3,500		124,985


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	77
AQR Funds	Annual Report	December 2010	77


Schedule of Investments			December 31, 2010


AQR MOMENTUM FUND


	SHARES		VALUE (Note 3)
Health Care - 2.9% (continued)
Health Net, Inc. †		1,900	$	51,851
Hill-Rom Holdings, Inc.		3,500		137,795
HMS Holdings Corp. †		1,900		123,063
Humana, Inc. †		1,300		71,162
Illumina, Inc. †		5,200		329,368
Incyte Corp. Ltd. †(a)		8,500		140,760
McKesson Corp.		1,800		126,684
Mylan, Inc./PA †		5,800		122,554
Perrigo Co. (a)		3,100		196,323
Salix Pharmaceuticals Ltd. †(a)		1,500		70,440
SXC Health Solutions Corp. †		1,500		64,290
Varian Medical Systems, Inc. †		3,800		263,264
Watson Pharmaceuticals, Inc. †		2,900		149,785	��

				3,546,569

Industrials - 17.9%
Acuity Brands, Inc. (a)		2,600		149,942
AGCO Corp. †(a)		2,900		146,914
Amerco, Inc. †(a)		300		28,812
AMETEK, Inc.		6,400		251,200
BE Aerospace, Inc. †(a)		4,200		155,526
Boeing Co./The		900		58,734
Bucyrus International, Inc.		1,900		169,860
Caterpillar, Inc.		25,900		2,425,794
CNH Global NV (Netherlands) †		2,500		119,350
Cooper Industries PLC		6,600		384,714
Crane Co.		700		28,749
CSX Corp.		15,500		1,001,455
Cummins, Inc.		8,400		924,084
Deere & Co.		17,200		1,428,460
Delta Air Lines, Inc. †(a)		5,700		71,820
Donaldson Co., Inc.		2,700		157,356
Dover Corp.		9,600		561,120
Eaton Corp.		6,300		639,513
Emerson Electric Co.		31,800		1,818,006
Expeditors International of Washington, Inc.		7,400		404,040
Fastenal Co. (a)		5,300		317,523
FedEx Corp.		2,000		186,020
Fluor Corp.		5,700		377,682
Gardner Denver, Inc.		2,100		144,522
Genesee & Wyoming, Inc., Class A †		2,300		121,785
Goodrich Corp.		6,800		598,876
Honeywell International, Inc.		29,100		1,546,956
IHS, Inc., Class A †(a)		900		72,351
Joy Global, Inc.		3,400		294,950
Kansas City Southern †(a)		3,600		172,296
KBR, Inc.		3,900		118,833
MSC Industrial Direct Co., Class A		2,200		142,318
Navistar International Corp. †		2,500		144,775
Nordson Corp. (a)		1,600		147,008
Norfolk Southern Corp.		6,000		376,920
Owens Corning †		1,400		43,610
PACCAR, Inc.		12,700		729,234
Parker Hannifin Corp.		6,700		578,210
Precision Castparts Corp.		1,600		222,736
Regal-Beloit Corp. (a)		400		26,704
Rockwell Automation, Inc.		5,300		380,063


	SHARES		VALUE (Note 3)
Industrials - 17.9% (continued)
Roper Industries, Inc.		2,700	$	206,361
Ryder System, Inc.		500		26,320
Seaboard Corp.		21		41,811
Snap-On, Inc.		600		33,948
Southwest Airlines Co.		8,000		103,840
Stericycle, Inc. †(a)		2,900		234,668
Terex Corp. †(a)		1,200		37,248
Textron, Inc. (a)		1,400		33,096
Timken Co.		3,700		176,601
TransDigm Group, Inc. †		2,000		144,020
Union Pacific Corp.		19,500		1,806,870
United Continental Holdings, Inc. †		16,400		390,648
United Parcel Service, Inc., Class B		5,000		362,900
US Airways Group, Inc. †(a)		2,800		28,028
WABCO Holdings, Inc. †		2,900		176,697
WESCO International, Inc. †(a)		2,800		147,840
Woodward Governor Co.		3,200		120,192
WW Grainger, Inc. (a)		3,800		524,818

				22,264,727

Information Technology - 22.9%
Acme Packet, Inc. †		3,400		180,744
Advanced Micro Devices, Inc. †(a)		7,100		58,078
Akamai Technologies, Inc. †		9,400		442,270
Alliance Data Systems Corp. †(a)		1,800		127,854
Altera Corp. (a)		15,800		562,164
Apple, Inc. †		40,457		13,049,810
Ariba, Inc. †		5,100		119,799
Aruba Networks, Inc. †(a)		6,900		144,072
Atheros Communications, Inc. †(a)		900		32,328
Atmel Corp. †		19,900		245,168
Autodesk, Inc. †		7,900		301,780
Broadcom Corp., Class A		22,200		966,810
Citrix Systems, Inc. †		8,000		547,280
Cognizant Technology Solutions Corp., Class A †		12,200		894,138
Compuware Corp. †		10,300		120,201
Concur Technologies, Inc. †(a)		700		36,351
Cree, Inc. †(a)		1,985		130,792
Cypress Semiconductor Corp. †		6,900		128,202
Dolby Laboratories, Inc., Class A †(a)		4,600		306,820
F5 Networks, Inc. †		4,266		555,262
Factset Research Systems, Inc.		1,300		121,888
Fairchild Semiconductor International, Inc. †		7,700		120,197
Fortinet, Inc. †		3,800		122,930
Gartner, Inc. †(a)		1,600		53,120
Harris Corp.		600		27,180
IAC/InterActiveCorp †(a)		6,700		192,290
Informatica Corp. †(a)		4,500		198,135
Intuit, Inc. †		14,200		700,060
JDS Uniphase Corp. †(a)		10,100		146,248
Lexmark International, Inc., Class A †		2,000		69,640
Loral Space & Communications, Inc. †		500		38,250
MICROS Systems, Inc. †		3,700		162,282
Monster Worldwide, Inc. †		5,100		120,513
NCR Corp. †		7,900		121,423


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	78
AQR Funds	Annual Report	December 2010	78


Schedule of Investments			December 31, 2010


AQR MOMENTUM FUND


	SHARES		VALUE (Note 3)
Information Technology - 22.9% (continued)
NetApp, Inc. †		15,100	$	829,896
Netlogic Microsystems, Inc. †		3,900		122,499
Novellus Systems, Inc. †		3,700		119,584
Parametric Technology Corp. †		5,300		119,409
Polycom, Inc. †		3,600		140,328
Quest Software, Inc. †		1,100		30,514
Rackspace Hosting, Inc. †		4,700		147,627
Red Hat, Inc. †		7,000		319,550
RF Micro Devices, Inc. †		16,200		119,070
Riverbed Technology, Inc. †		6,900		242,673
Rovi Corp. †		5,000		310,050
Salesforce.com, Inc. †		5,800		765,600
SanDisk Corp. †		10,300		513,558
Skyworks Solutions, Inc. †(a)		8,100		231,903
Solera Holdings, Inc. (a)		1,300		66,716
SuccessFactors, Inc. †(a)		4,900		141,904
Tellabs, Inc.		4,300		29,154
Teradata Corp. †		6,300		259,308
TIBCO Software, Inc. †		9,500		187,245
Trimble Navigation Ltd. †		4,900		195,657
TriQuint Semiconductor, Inc. †		10,400		121,576
Veeco Instruments, Inc. †(a)		3,000		128,880
VeriFone Systems, Inc. †(a)		4,500		173,520
VeriSign, Inc.		3,500		114,345
Vishay Intertechnology, Inc. †		8,200		120,376
VMware, Inc., Class A †		11,900		1,058,029
WebMD Health Corp. †(a)		1,000		51,060
Xerox Corp.		55,000		633,600
Zebra Technologies Corp., Class A †		3,200		121,568

				28,559,278

Materials - 5.3%
Albemarle Corp.		4,000		223,120
Allegheny Technologies, Inc. (a)		1,500		82,770
Allied Nevada Gold Corp. †(a)		6,500		171,015
Ashland, Inc.		3,000		152,580
Ball Corp.		2,700		183,735
Cliffs Natural Resources, Inc.		5,800		452,458
Compass Minerals International, Inc. (a)		500		44,635
Cytec Industries, Inc.		2,600		137,956
Dow Chemical Co./The		6,000		204,840
Eastman Chemical Co.		2,800		235,424
EI du Pont de Nemours & Co.		38,500		1,920,380
FMC Corp.		2,500		199,725
Hecla Mining Co. †(a)		6,100		68,686
Huntsman Corp.		8,300		129,563
International Flavors & Fragrances, Inc.		1,800		100,062
Kronos Worldwide, Inc.		600		25,494
Lubrizol Corp.		1,856		198,369
MeadWestvaco Corp.		5,200		136,032
Mosaic Co./The		2,200		167,992
Newmont Mining Corp.		900		55,287
PPG Industries, Inc.		8,700		731,409
Rockwood Holdings, Inc. †(a)		1,200		46,944
Sherwin-Williams Co./The		2,000		167,500
Solutia, Inc. †		6,500		150,020


	SHARES		VALUE (Note 3)
Materials - 5.3% (continued)
Stillwater Mining Co. †		5,700	$	121,695
Titanium Metals Corp. †		2,900		49,822
Walter Energy, Inc.		2,100		268,464
WR Grace & Co. †		3,700		129,981

				6,555,958

Telecommunication Services - 0.5%
Crown Castle International Corp. †		3,000		131,490
MetroPCS Communications, Inc. †		9,600		121,248
NII Holdings, Inc. †		3,600		160,776
Windstream Corp. (a)		14,000		195,160

				608,674

Utilities - 0.4%
American Water Works Co., Inc.		2,800		70,812
Aqua America, Inc. (a)		1,600		35,968
CMS Energy Corp. (a)		2,100		39,060
Nicor, Inc.		800		39,936
Northeast Utilities		1,300		41,444
NSTAR		2,700		113,913
OGE Energy Corp.		1,900		86,526
Oneok, Inc.		2,000		110,940

				538,599

TOTAL COMMON STOCKS (cost $110,979,690)				121,167,593

MONEY MARKET FUND - 15.8%
J.P. Morgan Prime Money Market Fund - Capital Shares, 0.130% (2)(b)(c)		19,675,828		19,675,828

TOTAL MONEY MARKET FUND (cost $19,675,828; includes $6,988,139 of cash collateral received for securities on loan)				19,675,828

TOTAL INVESTMENTS - 113.1% (cost $130,655,518)				140,843,421

LIABILITIES IN EXCESS OF OTHER ASSETS - (13.1%) (d)				(16,352,068)

NET ASSETS - 100.0%			$	124,491,353

All securities are United States companies, unless noted otherwise in parentheses.

†	Non income-producing security.

(a)	All or a portion of the security on loan. The aggregate market value of such securities is $6,787,555; cash collateral of $6,988,139 was received with which the Fund purchased a money market fund.

(b)	Represents annualized seven-day yield as of December 31, 2010.

(c)	Represents security, or portion thereof, purchased with the cash collateral received for securities on loan.

(d)	Includes (depreciation) on futures contracts.

All securities are Level 1, unless noted otherwise in parentheses.

(2)	Level 2 security (See Note 5).

The following abbreviations are used in portfolio descriptions:

REIT - Real Estate Investment Trust


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	79
AQR Funds	Annual Report	December 2010	79


Schedule of Investments			December 31, 2010


AQR MOMENTUM FUND

Open futures contracts outstanding at December 31, 2010:

NUMBER OF
CONTRACTS

TYPE

EXPIRATION
DATE

VALUE AT
TRADE DATE

VALUE AT
DECEMBER 31,
2010

UNREALIZED
APPRECIATION
(DEPRECIATION)

Long Contracts:

E-Mini S&P 500 Futures

March 18, 2011

$3,259,234

$3,257,800

$(1,434)

Cash held as collateral with broker for futures contracts was $298,540 at December 31, 2010.


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	80
AQR Funds	Annual Report	December 2010	80


Schedule of Investments			December 31, 2010


AQR SMALL CAP MOMENTUM FUND


COMMON STOCKS - 97.5%	SHARES		VALUE (Note 3)
Consumer Discretionary - 17.6%
99 Cents Only Stores †		1,000	$	15,940
A. H. Belo Corp., Class A †(a)		3,400		29,580
AFC Enterprises, Inc. †		2,600		36,140
American Axle & Manufacturing Holdings, Inc. †		12,400		159,464
Amerigon, Inc. †(a)		2,700		29,376
AnnTaylor Stores Corp. †		9,000		246,510
Arbitron, Inc.		2,200		91,344
Arctic Cat, Inc. †		3,000		43,920
Asbury Automotive Group, Inc. †		3,700		68,376
Ballantyne Strong, Inc. †		2,500		19,425
Biglari Holdings, Inc. †		121		49,635
BJ’s Restaurants, Inc. †		3,800		134,634
Blyth, Inc.		700		24,136
Bon-Ton Stores, Inc./The †		2,900		36,714
Brown Shoe Co., Inc.		5,900		82,187
Buckle, Inc./The		3,600		135,972
Cabela’s, Inc. †		6,700		145,725
Caribou Coffee Co., Inc. †		1,600		16,128
Casual Male Retail Group, Inc. †		4,600		21,804
Cato Corp./The, Class A		3,800		104,158
CEC Entertainment, Inc. †		1,100		42,713
Cheesecake Factory, Inc./The †		3,100		95,046
Children’s Place Retail Stores, Inc./The †		4,000		198,560
Coinstar, Inc. †		2,000		112,880
Collectors Universe		1,100		15,301
Cost Plus, Inc. †		3,600		34,920
CPI Corp.		2,200		49,610
Cracker Barrel Old Country Store, Inc.		3,300		180,741
CROCS, Inc. †		13,900		237,968
Cumulus Media, Inc., Class A †		3,500		15,085
Dana Holding Corp. †		6,900		118,749
Denny’s Corp. †		12,400		44,392
Destination Maternity Corp. †		500		18,965
DineEquity, Inc. †		2,400		118,512
Domino’s Pizza, Inc. †(a)		7,100		113,245
Dorman Products, Inc. †		1,932		70,016
DSW, Inc., Class A †(a)		6,611		258,490
Einstein Noah Restaurant Group, Inc. †		1,200		16,860
EW Scripps Co., Class A †		5,600		56,840
Finish Line, Inc./The, Class A		10,200		175,338
Gaylord Entertainment Co. †		8,100		291,114
Geeknet, Inc. †		600		14,994
Genesco, Inc. †		3,700		138,713
G-III Apparel Group Ltd. †		1,500		52,725
Global Sources Ltd. (Bermuda) †		2,000		19,040
Global Traffic Network, Inc. †		1,700		15,725
Gray Television, Inc. †		4,800		8,976
Group 1 Automotive, Inc.		2,700		112,752
Helen of Troy Ltd. (Bermuda) †		4,400		130,856
hhgregg, Inc. †(a)		700		14,665
Hibbett Sports, Inc. †(a)		4,500		166,050
HSN, Inc. †		5,500		168,520
Iconix Brand Group, Inc. †		10,500		202,755
Interval Leisure Group, Inc. †		3,500		56,490
iRobot Corp. †		1,400		34,832
Jakks Pacific, Inc. †		3,500		63,770


	SHARES		VALUE (Note 3)
Consumer Discretionary - 17.6% (continued)
Jo-Ann Stores, Inc. †		4,302	$	259,066
JoS. A. Bank Clothiers, Inc. †		4,900		197,568
K12, Inc. †		600		17,196
Kenneth Cole Productions, Inc., Class A †		2,700		33,723
Kid Brands, Inc. †		4,400		37,620
Kingold Jewelry, Inc. (China) †		1,500		6,120
Knology, Inc. †		2,600		40,638
Krispy Kreme Doughnuts, Inc. †		8,000		55,840
K-Swiss, Inc., Class A †(a)		1,300		16,211
Leapfrog Enterprises, Inc. †		10,000		55,500
Libbey, Inc. †		2,200		34,034
Life Time Fitness, Inc. †(a)		6,100		250,039
Lifetime Brands, Inc. †		1,400		19,656
Lithia Motors, Inc., Class A		2,800		40,012
Liz Claiborne, Inc. †		14,700		105,252
Mac-Gray Corp.		1,100		16,445
Maidenform Brands, Inc. †		3,500		83,195
Men’s Wearhouse, Inc./The		7,900		197,342
Monarch Casino & Resort, Inc. †		1,200		15,000
Monro Muffler Brake, Inc.		600		20,754
Morgans Hotel Group Co. †		5,100		46,257
Morton’s Resturant Group, Inc. †		2,500		16,200
Motorcar Parts of America, Inc. †		2,000		26,080
NutriSystem, Inc. (a)		1,100		23,133
OfficeMax, Inc. †		12,900		228,330
Peet’s Coffee & Tea, Inc. †(a)		1,800		75,132
Pep Boys - Manny, Moe & Jack/The		5,600		75,208
Perry Ellis International, Inc. †		1,900		52,193
PF Chang’s China Bistro, Inc.		2,800		135,688
Pier 1 Imports, Inc. †		15,300		160,650
Pinnacle Entertainment, Inc. †		7,700		107,954
Pre-Paid Legal Services, Inc. †		600		36,150
PRIMEDIA, Inc.		3,600		15,120
Quiksilver, Inc. †		16,500		83,655
RC2 Corp. †		3,400		74,018
Red Lion Hotels Corp. †		2,000		15,960
Rentrak Corp. †(a)		700		21,112
Retail Ventures, Inc. †		3,400		55,420
RG Barry Corp. (a)		1,400		15,568
Ruby Tuesday, Inc. †		8,400		109,704
Saks, Inc. †		7,000		74,900
Shoe Carnival, Inc. †		1,800		48,600
Shuffle Master, Inc. †		6,200		70,990
Shutterfly, Inc. †		3,723		130,417
Sinclair Broadcast Group, Inc., Class A		11,700		95,706
Skechers U.S.A., Inc., Class A †		800		16,000
Standard Motor Products, Inc.		1,900		26,030
Steinway Musical Instruments, Inc. †		800		15,880
Steven Madden Ltd. †(a)		3,791		158,161
Stoneridge, Inc. †		3,600		56,844
Sturm, Ruger & Co., Inc.		2,300		35,167
Summer Infant, Inc. †		2,200		16,676
Texas Roadhouse, Inc. †		11,600		199,172
Timberland Co./The, Class A †		7,400		181,966
Tuesday Morning Corp. †		8,600		45,408
U.S. Auto Parts Network, Inc. †		2,500		21,000
Ulta Salon Cosmetics & Fragrance, Inc. †		3,100		105,400


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	81
AQR Funds	Annual Report	December 2010	81


Schedule of Investments			December 31, 2010


AQR SMALL CAP MOMENTUM FUND


	SHARES		VALUE (Note 3)
Consumer Discretionary - 17.6% (continued)
Unifi, Inc. †		1,200	$	20,316
Valassis Communications, Inc. †		8,300		268,505
Vitamin Shoppe, Inc. †		1,300		43,732
Zumiez, Inc. †		4,000		107,480

				9,570,469

Consumer Staples - 2.8%
B&G Foods, Inc.		7,200		98,856
Boston Beer Co., Inc., Class A †(a)		1,100		104,599
Cal-Maine Foods, Inc.		2,500		78,950
Craft Brewers Alliance, Inc. †		2,200		16,280
Darling International, Inc. †		8,700		115,536
Diamond Foods, Inc. (a)		3,000		159,540
Elizabeth Arden, Inc. †		2,700		62,127
Hain Celestial Group, Inc./The †		6,900		186,714
Ingles Markets, Inc., Class A		900		17,280
Inter Parfums, Inc.		1,700		32,045
John B. Sanfilippo & Son, Inc. †		1,300		16,172
Limoneira Co.		600		17,220
Medifast, Inc. †		1,232		35,580
MGP Ingredients, Inc.		1,400		15,456
Nash Finch Co.		400		17,004
Omega Protein Corp. †		2,800		22,680
Pantry, Inc./The †(a)		2,700		53,622
Prestige Brands Holdings, Inc. †		6,200		74,090
Pricesmart, Inc.		2,300		87,469
Schiff Nutrition International, Inc.		4,300		39,044
Star Scientific, Inc. †(a)		15,800		30,810
Vector Group Ltd.		8,500		147,220
WD-40 Co. (a)		1,400		56,392
Weis Markets, Inc. (a)		400		16,132

				1,500,818

Energy - 7.4%
Abraxas Petroleum Corp. †		7,600		34,732
Apco Oil and Gas International, Inc.		300		17,250
Approach Resources, Inc. †		900		20,790
Basic Energy Services, Inc. †		2,700		44,496
Bristow Group, Inc. †		2,500		118,375
Callon Petroleum Co. †(a)		4,600		27,232
CAMAC Energy, Inc. †		4,900		9,751
Cheniere Energy, Inc. †		6,900		38,088
Clayton Williams Energy, Inc. †		1,100		92,367
Cloud Peak Energy, Inc. †		3,100		72,013
Complete Production Services, Inc. †		3,200		94,560
Crosstex Energy, Inc.		6,100		54,046
CVR Energy, Inc. †		7,000		106,260
Enbridge Energy Management LLC †		1,017		64,935
Endeavour International Corp. †		1,200		16,560
Energy XXI Bermuda Ltd. (Bermuda) †		2,300		63,641
Evolution Petroleum Corp. †		2,400		15,648
Frontier Oil Corp. †		10,600		190,906
FX Energy, Inc. †		2,700		16,605
Georesources, Inc. †		1,300		28,873
Green Plains Renewable Energy, Inc. †		2,300		25,898
Gulfport Energy Corp. †(a)		4,500		97,425
Harvest Natural Resources, Inc. †(a)		4,300		52,331
Houston American Energy Corp.		2,400		43,416


	SHARES		VALUE (Note 3)
Energy - 7.4% (continued)
Hyperdynamics Corp. †		6,900	$	34,224
International Coal Group, Inc. †		33,800		261,612
Knightsbridge Tankers Ltd. (Bermuda)		3,100		69,037
Kodiak Oil & Gas Corp. †		14,900		98,340
Lufkin Industries, Inc.		4,900		305,711
Magellan Petroleum Corp. †		5,500		15,840
Magnum Hunter Resources Corp. †		6,500		46,800
McMoRan Exploration Co. †		13,100		224,534
Miller Petroleum, Inc. †		5,300		27,560
Mitcham Industries, Inc. †		1,500		17,325
Newpark Resources, Inc. †		2,700		16,632
Northern Oil and Gas, Inc. †		6,300		171,423
OYO Geospace Corp. †		500		49,555
Petroleum Development Corp. †		3,800		160,398
Rex Energy Corp. †(a)		2,100		28,665
Rosetta Resources, Inc. †		4,800		180,672
Ship Finance International Ltd. (Bermuda)		7,600		163,552
Swift Energy Co. †		4,500		176,175
T-3 Energy Services, Inc. †		1,100		43,813
Teekay Tankers Ltd., Class A (Bermuda)(a)		7,800		96,252
Tesco Corp. (Canada) †		1,900		30,172
Uranerz Energy Corp. †		11,900		47,481
Uranium Energy Corp. †		10,100		61,004
Uranium Resources, Inc. †		19,100		64,940
USEC, Inc. †		13,400		80,668
VAALCO Energy, Inc. †		3,700		26,492
Venoco, Inc. †(a)		2,100		38,745
W&T Offshore, Inc.		3,100		55,397
Warren Resources, Inc. †		5,100		23,052
Western Refining, Inc. †		6,000		63,480

				4,025,749

Financials - 16.0%
Abington Bancorp, Inc.		1,300		15,509
Agree Realty Corp. REIT		1,000		26,190
American Equity Investment Life Holding Co.		15,400		193,270
American Safety Insurance Holdings Ltd. †		700		14,966
Ameris Bancorp †		2,701		28,469
Amtrust Financial Services, Inc.		4,600		80,500
Argo Group International Holdings Ltd. (Bermuda)		2,000		74,900
Arlington Asset Investment Corp., Class A		1,600		38,384
Ashford Hospitality Trust, Inc. REIT †		7,700		74,305
Associated Estates Realty Corp. REIT		8,100		123,849
Astoria Financial Corp. (a)		3,900		54,249
Bancorp Rhode Island, Inc.		600		17,454
Bancorp, Inc./DE †		1,600		16,272
Bank of the Ozarks, Inc. (a)		3,100		134,385
BGC Partners, Inc., Class A (a)		12,300		102,213
BlackRock Kelso Capital Corp.		12,600		139,356
BofI Holding, Inc. †(a)		1,000		15,510
Capital Southwest Corp. (a)		300		31,140
CapLease, Inc. REIT		3,900		22,698
Cardinal Financial Corp.		3,800		44,194
Cathay General Bancorp		12,200		203,740
Center Financial Corp. †		7,200		54,576
Citizens & Northern Corp.		1,100		16,346


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	82
AQR Funds	Annual Report	December 2010	82


Schedule of Investments			December 31, 2010


AQR SMALL CAP MOMENTUM FUND


	SHARES		VALUE (Note 3)
Financials - 16.0% (continued)
CNA Surety Corp. †		1,800	$	42,624
Colonial Properties Trust REIT (a)		11,100		200,355
Community Bank System, Inc.		5,900		163,843
CompuCredit Holdings Corp. †		2,300		16,054
Credit Acceptance Corp. †		500		31,385
Danvers Bancorp, Inc.		1,300		22,971
DiamondRock Hospitality Co. REIT †		10,800		129,600
Dime Community Bancshares, Inc.		2,000		29,180
Dollar Financial Corp. †		2,000		57,260
Eagle Bancorp, Inc. †		1,300		18,759
Education Realty Trust, Inc. REIT		4,200		32,634
Encore Capital Group, Inc. †		1,874		43,945
Enstar Group Ltd. (Bermuda) †		500		42,290
Enterprise Financial Services Corp.		1,500		15,690
Epoch Holding Corp.		1,100		17,083
Extra Space Storage, Inc. REIT		9,800		170,520
Ezcorp, Inc., Class A †		6,800		184,484
FBL Financial Group, Inc., Class A		3,100		88,877
Federal Agricultural Mortgage Corp., Class C		2,000		32,640
FelCor Lodging Trust, Inc. REIT †		10,000		70,400
Financial Institutions, Inc.		1,300		24,661
First Cash Financial Services, Inc. †		2,700		83,673
First Commonwealth Financial Corp.		8,600		60,888
First Financial Bancorp (a)		4,200		77,616
First Industrial Realty Trust, Inc. REIT †		7,600		66,576
First Merchants Corp.		3,700		32,782
First Potomac Realty Trust REIT		10,700		179,974
FNB Corp./PA (a)		18,100		177,742
FPIC Insurance Group, Inc. †		700		25,872
Gladstone Capital Corp. (a)		4,800		55,296
Gladstone Commercial Corp. REIT		1,400		26,362
Gladstone Investment Corp.		2,700		20,655
Glimcher Realty Trust REIT		11,600		97,440
Global Indemnity PLC (Ireland) †		1,500		30,675
Greenlight Capital Re Ltd., Class A (Cayman Islands) †		1,500		40,215
Hersha Hospitality Trust REIT		22,400		147,840
HFF, Inc., Class A †		4,500		43,470
Horace Mann Educators Corp.		6,500		117,260
Infinity Property & Casualty Corp.		2,400		148,320
Internet Capital Group, Inc. †		4,200		59,724
Ladenburg Thalmann Financial Services, Inc. †(a)		13,100		15,327
Lakeland Bancorp, Inc.		1,400		15,358
Lexington Realty Trust REIT		13,300		105,735
Main Street Capital Corp.		2,100		38,199
MainSource Financial Group, Inc.		1,300		13,533
MarketAxess Holdings, Inc.		5,882		122,404
Marlin Business Services Corp. †		700		8,855
MCG Capital Corp.		9,100		63,427
Meadowbrook Insurance Group, Inc.		10,600		108,650
Medical Properties Trust, Inc. REIT		1,500		16,245
Meridian Interstate Bancorp, Inc. †(a)		400		4,716
MGIC Investment Corp. †		25,900		263,921
MidWestOne Financial Group, Inc.		100		1,511
Monmouth Real Estate Investment Corp., Class A REIT		3,200		27,200


	SHARES		VALUE (Note 3)
Financials - 16.0% (continued)
MPG Office Trust, Inc. REIT †		5,600	$	15,400
MVC Capital, Inc.		4,300		62,780
National Financial Partners Corp. †		5,400		72,360
National Health Investors, Inc. REIT		500		22,510
Nelnet, Inc., Class A		4,100		97,129
NewStar Financial, Inc. †(a)		4,800		50,736
NGP Capital Resources Co. (a)		1,800		16,560
One Liberty Properties, Inc. REIT		1,000		16,700
OneBeacon Insurance Group Ltd., Class A		7,300		110,668
PennantPark Investment Corp. (a)		9,574		117,186
Pennsylvania Real Estate Investment Trust REIT (a)		9,100		132,223
Peoples Bancorp, Inc./OH		1,000		15,650
PHH Corp. †		7,000		162,050
Portfolio Recovery Associates, Inc. †		1,700		127,840
Post Properties, Inc. REIT		6,900		250,470
PrivateBancorp, Inc.		5,800		83,404
Provident Financial Services, Inc.		7,400		111,962
PS Business Parks, Inc. REIT		500		27,860
Ramco-Gershenson Properties Trust REIT		3,300		41,085
Renasant Corp.		1,400		23,674
S&T Bancorp, Inc. (a)		2,400		54,216
Safeguard Scientifics, Inc. †		1,200		20,496
Safety Insurance Group, Inc.		2,700		128,439
Sandy Spring Bancorp, Inc.		1,500		27,645
Saul Centers, Inc. REIT		1,400		66,290
Southwest Bancorp, Inc./OK †		2,100		26,040
StellarOne Corp.		1,200		17,448
Sterling Bancorp/NY		2,100		21,987
Strategic Hotels & Resorts, Inc. REIT †		19,800		104,742
Sun Communities, Inc. REIT (a)		1,709		56,927
Sunstone Hotel Investors, Inc. REIT †(a)		3,400		35,122
Susquehanna Bancshares, Inc.		19,900		192,632
Taylor Capital Group, Inc. †(a)		1,300		17,095
Texas Capital Bancshares, Inc. †		2,600		55,302
Thomas Properties Group, Inc. †		1,900		8,018
TICC Capital Corp. (a)		7,600		85,196
TowneBank/VA (a)		1,800		28,602
Triangle Capital Corp.		4,500		85,500
United Bankshares, Inc. (a)		3,500		102,200
United Financial Bancorp, Inc.		1,900		29,013
United Fire & Casualty Co.		2,400		53,568
Urstadt Biddle Properties, Inc., Class A REIT		3,900		75,855
U-Store-It Trust REIT		4,900		46,697
Virginia Commerce Bancorp, Inc. †(a)		4,500		27,810
Virtus Investment Partners, Inc. †		800		36,296
Washington Banking Co.		1,200		16,452
Webster Financial Corp.		11,000		216,700
WesBanco, Inc.		1,300		24,648
West Coast Bancorp/OR †		9,000		25,380
Western Alliance Bancorp †		7,200		52,992
Winthrop Realty Trust REIT		1,200		15,348
World Acceptance Corp. †		2,000		105,600
WSFS Financial Corp.		1,400		66,416

				8,740,110


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	83
AQR Funds	Annual Report	December 2010	83


Schedule of Investments			December 31, 2010


AQR SMALL CAP MOMENTUM FUND


	SHARES		VALUE (Note 3)
Health Care - 10.7%
ABIOMED, Inc. †		2,500	$	24,025
Accelrys, Inc. †		3,900		32,370
Acorda Therapeutics, Inc. †		600		16,356
Air Methods Corp. †		1,300		73,151
Akorn, Inc. †(a)		8,400		50,988
Align Technology, Inc. †(a)		2,600		50,804
Alkermes, Inc. †(a)		3,000		36,840
Analogic Corp. (a)		1,200		59,412
AngioDynamics, Inc. †		1,100		16,907
Ardea Biosciences, Inc. †		1,700		44,200
Arena Pharmaceuticals, Inc. †(a)		13,500		23,220
Ariad Pharmaceuticals, Inc. †		13,100		66,810
Arqule, Inc. †		4,500		26,415
Array Biopharma, Inc. †		5,300		15,847
ArthroCare Corp. †		3,000		93,180
Assisted Living Concepts, Inc., Class A †		500		16,265
AtriCure, Inc. †		1,600		16,384
AVANIR Pharmaceuticals, Inc., Class A †(a)		13,300		54,264
AVI BioPharma, Inc. †		7,700		16,324
Bio-Reference Labs, Inc. †(a)		1,800		39,924
Biotime, Inc. †		3,900		32,487
BMP Sunstone Corp. †		3,100		30,721
BSD Medical Corp. †		3,400		15,708
Caliper Life Sciences, Inc. †		5,600		35,504
Cepheid, Inc. †		9,200		209,300
Chelsea Therapeutics International Ltd. †		5,100		38,250
Chemed Corp.		3,100		196,881
Cleveland BioLabs, Inc. †		2,400		17,328
Corcept Therapeutics, Inc. †		4,200		16,212
Corvel Corp. †		700		33,845
Cyberonics, Inc. †		4,300		133,386
Cyclacel Pharmaceuticals, Inc. †		10,600		15,582
Cytori Therapeutics, Inc. †(a)		3,000		15,570
Delcath Systems, Inc. †(a)		6,300		61,740
Depomed, Inc. †		5,300		33,708
DexCom, Inc. †		7,000		95,550
Dionex Corp. †		2,100		247,821
Dynavax Technologies Corp. †		10,300		32,960
Ensign Group, Inc./The		3,200		79,584
Enzon Pharmaceuticals, Inc. †		5,400		65,718
Exact Sciences Corp. †(a)		4,900		29,302
Five Star Quality Care, Inc. †		4,300		30,401
Hanger Orthopedic Group, Inc. †		2,400		50,856
Healthspring, Inc. †		7,600		201,628
HealthStream, Inc. †		2,300		18,492
HMS Holdings Corp. †		1,300		84,201
Idenix Pharmaceuticals, Inc. †(a)		7,300		36,792
Impax Laboratories, Inc. †		9,000		180,990
Inhibitex, Inc. †(a)		9,600		24,960
Insulet Corp. †		1,600		24,800
Jazz Pharmaceuticals, Inc. †(a)		3,200		62,976
Keryx Biopharmaceuticals, Inc. ��		11,000		50,380
MAKO Surgical Corp. †		3,900		59,358
MAP Pharmaceuticals, Inc. †		3,000		50,220
MedCath Corp. †		2,300		32,085
Medicines Co./The †		6,100		86,193
Medidata Solutions, Inc. †		1,300		31,044


	SHARES		VALUE (Note 3)
Health Care - 10.7% (continued)
Metabolix, Inc. †		1,400	$	17,038
Metropolitan Health Networks, Inc. †		6,300		28,161
Momenta Pharmaceuticals, Inc. †(a)		1,100		16,467
MWI Veterinary Supply, Inc. †		2,000		126,300
Nabi Biopharmaceuticals †		6,200		35,898
Nektar Therapeutics †(a)		13,710		176,174
Neogen Corp. †		2,300		94,369
Neurocrine Biosciences, Inc. †		8,100		61,884
NPS Pharmaceuticals, Inc. †		6,800		53,720
NxStage Medical, Inc. †		7,000		174,160
OPKO Health, Inc. †		9,300		34,131
OraSure Technologies, Inc. †		2,700		15,525
Pain Therapeutics, Inc. †		2,500		16,875
Par Pharmaceutical Cos., Inc. †		4,900		188,699
Parexel International Corp. †		1,300		27,599
PDI, Inc. †		1,500		15,810
Pharmacyclics, Inc. †		6,900		41,952
Pharmasset, Inc. †		4,400		191,004
pSivida Corp. †		3,100		15,841
Pure Bioscience †(a)		7,100		15,762
Questcor Pharmaceuticals, Inc. †		9,700		142,881
Raptor Pharmaceutical Corp. †		4,500		16,425
Rural/Metro Corp. †		2,000		29,160
SciClone Pharmaceuticals, Inc. †		4,900		20,482
Seattle Genetics, Inc. †		13,100		195,845
Sequenom, Inc. †(a)		6,400		51,328
SIGA Technologies, Inc. †		4,700		65,800
Somaxon Pharmaceuticals, Inc. †		5,500		17,325
SonoSite, Inc. †		1,600		50,560
Staar Surgical Co. †(a)		2,600		15,860
Universal American Corp.		4,600		94,070
Uroplasty, Inc. †		4,200		16,884
Vascular Solutions, Inc. †		1,300		15,236
ViroPharma, Inc. †		12,500		216,500
Volcano Corp. †		7,100		193,901
Zalicus, Inc. †		10,300		16,274
ZIOPHARM Oncology, Inc. †		4,200		19,572
Zoll Medical Corp. †(a)		1,900		70,737

				5,832,428

Industrials - 15.3%
3D Systems Corp. †		2,600		81,874
A. O. Smith Corp.		4,600		175,168
AAON, Inc. (a)		1,800		50,778
Acacia Research - Acacia Technologies †		5,626		145,938
Aceto Corp.		2,700		24,300
Active Power, Inc. †		11,800		29,028
Actuant Corp., Class A (a)		6,300		167,706
Advisory Board Co./The †		1,800		85,734
Air Transport Services Group, Inc. †		10,800		85,320
Alamo Group, Inc.		1,000		27,820
Altra Holdings, Inc. †(a)		4,700		93,342
American Railcar Industries, Inc. †		1,800		39,834
Applied Industrial Technologies, Inc.		6,300		204,624
Applied Signal Technology, Inc.		1,000		37,890
ArvinMeritor, Inc. †		13,600		279,072
Astronics Corp. †		1,500		31,500


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	84
AQR Funds	Annual Report	December 2010	84


Schedule of Investments			December 31, 2010


AQR SMALL CAP MOMENTUM FUND


	SHARES		VALUE (Note 3)
Industrials - 15.3% (continued)
Atlas Air Worldwide Holdings, Inc. †		4,000	$	223,320
Barrett Business Services, Inc.		1,000		15,550
Belden, Inc.		5,800		213,556
Blount International, Inc. †		7,000		110,320
CAI International, Inc. †		1,700		33,320
Cascade Corp.		1,100		52,008
Casella Waste Systems, Inc., Class A †		2,300		16,307
CDI Corp.		1,700		31,603
Ceradyne, Inc. †		2,300		72,519
Chart Industries, Inc. †		4,400		148,632
CIRCOR International, Inc.		1,700		71,876
Coleman Cable, Inc. †		2,500		15,700
Colfax Corp. †		2,700		49,707
Commercial Vehicle Group, Inc. †		3,500		56,875
Consolidated Graphics, Inc. †		1,600		77,488
Corporate Executive Board Co./The		3,300		123,915
Covenant Transportation Group, Inc., Class A †		1,800		17,496
CPI Aerostructures, Inc. †		1,100		15,477
Deluxe Corp.		7,300		168,046
Dolan Co./The †		4,300		59,856
DXP Enterprises, Inc. †		1,500		36,000
Dycom Industries, Inc. †		3,500		51,625
EnerSys †		5,700		183,084
EnPro Industries, Inc. †		2,600		108,056
Esterline Technologies Corp. †		1,300		89,167
Franklin Electric Co., Inc.		1,900		73,948
Furmanite Corp. †		2,400		16,584
GeoEye, Inc. †		3,300		139,887
Greenbrier Cos., Inc. †		2,600		54,574
HEICO Corp. (a)		3,500		178,605
Herley Industries, Inc. †		1,300		22,516
Herman Miller, Inc.		5,500		139,150
Hexcel Corp. †		10,600		191,754
HUB Group, Inc., Class A †		2,900		101,906
Hurco Cos., Inc. †		700		16,555
II-VI, Inc. †		3,400		157,624
Interface, Inc., Class A (a)		7,900		123,635
Kadant, Inc. †(a)		1,100		25,927
Kelly Services, Inc., Class A †		4,200		78,960
Knoll, Inc.		4,500		75,285
Kratos Defense & Security Solutions, Inc. †		3,000		39,510
Ladish Co., Inc. †		1,100		53,471
Lindsay Corp.		1,600		95,088
LMI Aerospace, Inc. †		1,000		15,990
Lydall, Inc. †		2,000		16,100
Macquarie Infrastructure Co. LLC †		5,600		118,552
McGrath RentCorp.		2,400		62,928
Middleby Corp. †		2,000		168,840
Miller Industries, Inc.		1,400		19,922
Mobile Mini, Inc. †		3,100		61,039
Multi-Color Corp.		800		15,568
NACCO Industries, Inc., Class A (a)		700		75,859
National Presto Industries, Inc. (a)		400		52,004
NN, Inc. †		3,900		48,204
Odyssey Marine Exploration, Inc. †		6,200		17,236
Old Dominion Freight Line, Inc. †		7,900		252,721


	SHARES		VALUE (Note 3)
Industrials - 15.3% (continued)
Pacer International, Inc. †(a)		6,800	$	46,512
Park-Ohio Holdings Corp. †		1,500		31,365
PMFG, Inc. †		1,000		16,400
Polypore International, Inc. †		5,200		211,796
Quality Distribution, Inc. †		3,200		29,088
Quanex Building Products Corp.		2,300		43,631
Raven Industries, Inc.		1,700		81,073
RBC Bearings, Inc. †		2,700		105,516
Robbins & Myers, Inc.		2,200		78,716
Rush Enterprises, Inc., Class A †		3,300		67,452
Satcon Technology Corp. †		12,700		57,150
Sauer-Danfoss, Inc. †		2,400		67,800
Schawk, Inc.		2,300		47,334
Seaspan Corp. (Hong Kong)		3,000		37,260
SFN Group, Inc. †		7,500		73,200
Standex International Corp. (a)		1,500		44,865
Steelcase, Inc., Class A		16,300		172,291
TAL International Group, Inc.		4,700		145,089
Tennant Co.		1,700		65,297
Textainer Group Holdings Ltd.		3,600		102,564
Titan International, Inc.		4,100		80,114
Titan Machinery, Inc. †		2,300		44,390
Tredegar Corp.		800		15,504
Trex Co., Inc. †(a)		1,000		23,960
TriMas Corp. †		3,900		79,794
Twin Disc, Inc.		1,600		47,776
Ultralife Corp. †		2,500		16,525
United Rentals, Inc. †		7,800		177,450
UniTek Global Services, Inc. †		1,700		16,694
Valence Technology, Inc. †		9,700		16,296
Vicor Corp.		3,400		55,760
Wabash National Corp. †		10,700		126,795
Xerium Technologies, Inc. †		1,200		19,140

				8,355,970

Information Technology - 20.1%
ACI Worldwide, Inc. †		2,500		67,175
Actuate Corp. †		3,600		20,520
Acxiom Corp. †(a)		4,900		84,035
Advent Software, Inc. †		1,000		57,920
Alliance Fiber Optic Products, Inc. †		1,300		20,384
Amtech Systems, Inc. †		1,400		35,210
ANADIGICS, Inc. †		8,800		60,984
Ancestry.com, Inc. †		3,000		84,960
Ariba, Inc. †		6,600		155,034
AXT, Inc. †		4,900		51,156
Black Box Corp.		1,900		72,751
BSQUARE Corp. †		2,700		23,625
Callidus Software, Inc. †		6,700		33,768
Cardtronics, Inc. †		6,900		122,130
Cass Information Systems, Inc.		400		15,176
Cavium Networks, Inc. †(a)		5,200		195,936
CEVA, Inc. †		4,900		100,450
Checkpoint Systems, Inc. †		800		16,440
Ciena Corp. †		8,700		183,135
Cirrus Logic, Inc. †(a)		9,600		153,408
Cognex Corp.		4,500		132,390
Coherent, Inc. †		3,700		167,018


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	85
AQR Funds	Annual Report	December 2010	85


Schedule of Investments			December 31, 2010


AQR SMALL CAP MOMENTUM FUND


	SHARES		VALUE (Note 3)
Information Technology - 20.1% (continued)
CommVault Systems, Inc. †		1,100	$	31,482
Constant Contact, Inc. †		2,500		77,475
CSG Systems International, Inc. †		800		15,152
Daktronic, Inc.		3,400		54,128
DDi Corp.		4,900		57,624
Dice Holdings, Inc. †		6,000		86,100
Digital River, Inc. †		5,900		203,078
DSP Group, Inc. †		1,900		15,466
DTS, Inc. †		2,900		142,245
EasyLink Services International Corp., Class A †		2,700		11,340
Electro Rent Corp.		1,000		16,160
Electro Scientific Industries, Inc. †		2,300		36,869
eMagin Corp. †		2,800		16,800
EMS Technologies, Inc. †		800		15,824
Entropic Communications, Inc. †(a)		12,000		144,960
ePlus, Inc. †		700		16,548
ExlService Holdings, Inc. †		1,400		30,072
Finisar Corp. †		9,500		282,055
Forrester Research, Inc.		3,300		116,457
Fundtech Ltd. (Israel) †		1,000		16,170
Gerber Scientific, Inc. †		2,000		15,740
Glu Mobile, Inc. †		7,600		15,732
GSI Technology, Inc. †		2,000		16,200
GT Solar International, Inc. †(a)		1,900		17,328
Hittite Microwave Corp. †		2,900		177,016
iGate Corp. (a)		4,500		88,695
iGO, Inc. †		4,800		18,432
Integrated Silicon Solution, Inc. †		4,400		35,332
Interactive Intelligence, Inc. †		1,300		34,008
Internap Network Services Corp. †		2,700		16,416
IPG Photonics Corp. †		5,000		158,100
Ixia †(a)		5,500		92,290
IXYS Corp. †		2,100		24,402
j2 Global Communications, Inc. †		4,400		127,380
Kemet Corp. †		4,600		67,068
Kenexa Corp. †		2,100		45,759
L-1 Identity Solutions, Inc. †		1,300		15,483
Lattice Semiconductor Corp. †(a)		23,400		141,804
Lawson Software, Inc. †		22,700		209,975
LeCroy Corp. †		2,300		22,632
Limelight Networks, Inc. †		15,100		87,731
Lionbridge Technologies, Inc. †(a)		8,600		31,734
Liquidity Services, Inc. †		1,100		15,455
Littelfuse, Inc.		2,700		127,062
LivePerson, Inc. †		6,051		68,376
LogMeIn, Inc. †(a)		4,300		190,662
LoopNet, Inc. †		1,500		16,665
LTX-Credence Corp. †		2,767		20,476
Magma Design Automation, Inc. †		7,500		37,575
Manhattan Associates, Inc. †		4,000		122,160
Marchex, Inc., Class B		1,800		17,172
MAXIMUS, Inc.		1,100		72,138
Measurement Specialties, Inc. †		2,300		67,505
Mercury Computer Systems, Inc. †		2,900		53,302
Micrel, Inc.		1,600		20,784
Mindspeed Technologies, Inc. †		5,400		32,940


	SHARES		VALUE (Note 3)
Information Technology - 20.1% (continued)
MIPS Technologies, Inc. †(a)		8,000	$	121,280
MoSys, Inc. †		2,800		15,932
Move, Inc. †		17,500		44,975
MTS Systems Corp.		800		29,968
Nanometrics, Inc. †		1,200		15,396
Netgear, Inc. †		4,967		167,289
Netscout Systems, Inc. †		5,300		121,953
NetSuite, Inc. †		3,000		75,000
Network Engines, Inc. †(a)		10,900		16,568
Newport Corp. †		4,100		71,217
Oclaro, Inc. †		8,200		107,830
Omnivision Technologies, Inc. †		7,993		236,673
OpenTable, Inc. †		3,200		225,536
Opnet Technologies, Inc.		1,800		48,186
OSI Systems, Inc. †		2,100		76,356
PC Connection, Inc. †		1,900		16,834
Perficient, Inc. †		3,300		41,250
PFSweb, Inc. †		4,200		16,632
Photronics, Inc. †		8,000		47,280
Plantronics, Inc.		5,100		189,822
Power-One, Inc. †(a)		13,700		139,740
Powerwave Technologies, Inc. †		15,200		38,608
Progress Software Corp. †		6,000		253,920
Quantum Corp. †		14,800		55,056
QuickLogic Corp. †(a)		6,900		43,953
Radiant Systems, Inc. †		4,700		91,979
Richardson Electronics Ltd. (a)		3,200		37,408
RightNow Technologies, Inc. †		1,800		42,606
Rubicon Technology, Inc. †(a)		800		16,864
Saba Software, Inc. †		3,800		23,256
Sapient Corp.		16,400		198,440
SAVVIS, Inc. †		6,551		167,181
Semtech Corp. †		5,400		122,256
Silicon Image, Inc. †(a)		12,900		94,815
Smith Micro Software, Inc. †		4,400		69,256
Sonic Solutions, Inc. †		3,400		51,000
Sourcefire, Inc. †(a)		714		18,514
Spectrum Control, Inc. †		1,600		23,984
Stamps.com, Inc.		2,000		26,500
Standard Microsystems Corp. †		1,700		49,011
Stratasys, Inc. †		3,700		120,768
support.com, Inc. †		9,600		62,208
Sycamore Networks, Inc.		2,300		47,357
Symmetricom, Inc. †		2,700		19,143
Synchronoss Technologies, Inc. †		4,100		109,511
Taleo Corp., Class A †		5,500		152,075
Terremark Worldwide, Inc. †(a)		7,800		101,010
Travelzoo, Inc. †		1,200		49,464
Ultimate Software Group, Inc. †		2,500		121,575
Ultra Clean Holdings †		1,700		15,827
Ultratech, Inc. †		2,000		39,760
Universal Display Corp. †(a)		5,100		156,315
ValueClick, Inc. †		11,700		187,551
VASCO Data Security International, Inc. †		2,000		16,260
Veeco Instruments, Inc. †(a)		1,700		73,032
Verint Systems, Inc. †		1,800		57,060
Viasat, Inc. †		5,100		226,491


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	86
AQR Funds	Annual Report	December 2010	86


Schedule of Investments			December 31, 2010


AQR SMALL CAP MOMENTUM FUND


	SHARES		VALUE (Note 3)
Information Technology - 20.1% (continued)
VirnetX Holding Corp.		6,100	$	90,585
Virtusa Corp. †		1,300		21,268
Vocus, Inc. †		1,800		49,788
Wave Systems Corp., Class A †		10,200		40,188
Websense, Inc. †		2,800		56,700
Westell Technologies, Inc., Class A †		10,100		33,027
Wright Express Corp. †		4,400		202,400
X-Rite, Inc. †		3,400		15,538
Zix Corp. †(a)		8,800		37,576
Zygo Corp. †		1,700		20,791

				10,934,731

Materials - 5.4%
A.M. Castle & Co. †		1,200		22,092
AMCOL International Corp.		1,600		49,600
Balchem Corp. (a)		2,800		94,668
Boise, Inc. (a)		15,000		118,950
Brush Engineered Materials, Inc. †		2,300		88,872
Buckeye Technologies, Inc.		5,100		107,151
Capital Gold Corp. †		3,200		16,224
Carpenter Technology Corp.		6,000		241,440
Clearwater Paper Corp. †(a)		1,300		101,790
Ferro Corp. †		12,800		187,392
Flotek Industries, Inc. †		3,800		20,710
General Moly, Inc. †		7,500		48,600
Globe Specialty Metals, Inc.		10,100		172,609
Gold Resource Corp.		3,300		97,020
Golden Minerals Co. †		1,900		50,730
Golden Star Resources Ltd. †		36,000		165,240
Graphic Packaging Holding Co. †(a)		15,000		58,350
Great Northern Iron Ore Properties (a)		100		14,049
Hawkins, Inc.		1,000		44,400
Innophos Holdings, Inc.		3,600		129,888
KapStone Paper and Packaging Corp. †(a)		4,300		65,790
Kraton Performance Polymers, Inc. †		2,700		83,565
LSB Industries, Inc. †		2,000		48,520
Material Sciences Corp. †		2,500		15,975
Metalline Mining Co. †		13,400		16,750
Minerals Technologies, Inc.		1,500		98,115
Neenah Paper, Inc.		1,600		31,488
NL Industries, Inc.		1,400		15,624
Omnova Solutions, Inc. †		5,500		45,980
PolyOne Corp. †		13,400		167,366
Quaker Chemical Corp.		1,400		58,338
Senomyx, Inc. †		3,400		24,242
Sensient Technologies Corp.		3,800		139,574
Stillwater Mining Co. †		5,200		111,020
UFP Technologies, Inc. †		1,300		15,847
Universal Stainless & Alloy †		800		25,024
US Gold Corp. †(a)		13,700		110,559
WHX Corp. †		1,600		20,768
ZAGG, Inc. †		3,100		23,622

				2,947,942

Telecommunication Services - 1.2%
8x8, Inc. †(a)		14,800		35,224
Alaska Communications Systems Group, Inc. (a)		12,900		143,190
Consolidated Communications Holdings, Inc.		2,000		38,600


	SHARES		VALUE (Note 3)
Telecommunication Services - 1.2% (continued)
General Communication, Inc., Class A †		3,000	$	37,980
Globalstar, Inc. †(a)		18,800		27,260
Hughes Communications, Inc. †		1,500		60,660
ICO Global Communications Holdings Ltd. †		10,400		15,600
IDT Corp., Class B		3,200		82,080
Syniverse Holdings, Inc. †		4,700		144,995
Towerstream Corp. †		4,600		18,676
USA Mobility, Inc.		1,500		26,655
Vonage Holdings Corp. †(a)		15,600		34,944

				665,864

Utilities - 1.0%
Allete, Inc.		2,600		96,876
Artesian Resources Corp., Class A		800		15,160
Chesapeake Utilities Corp. (a)		1,900		78,888
El Paso Electric Co. †		4,000		110,120
Empire District Electric Co./The (a)		1,400		31,080
Middlesex Water Co.		1,700		31,195
South Jersey Industries, Inc.		2,700		142,614
Southwest Gas Corp.		1,100		40,337
York Water Co.		1,100		19,019

				565,289

TOTAL COMMON STOCKS (cost $47,439,167)				53,139,370


MONEY MARKET FUND - 11.7%
J.P. Morgan Prime Money Market Fund - Capital Shares, 0.130% (2)(b)(c)		6,400,850		6,400,850

TOTAL MONEY MARKET FUND (cost $6,400,850; includes $2,021,905 of cash collateral received for securities on loan)				6,400,850

TOTAL INVESTMENTS - 109.2% (cost $53,840,017)				59,540,220

LIABILITIES IN EXCESS OF OTHER ASSETS - (9.2%) (d)				(5,035,638)

NET ASSETS - 100.0%			$	54,504,582

All securities are United States companies, unless noted otherwise in parentheses.

†	Non income-producing security.

(a)	All or a portion of the security on loan. The aggregate market value of such securities is $1,892,746; cash collateral of $2,021,905 was received with which the Fund purchased a money market fund.

(b)	Represents security, or portion thereof, purchased with the cash collateral received for securities on loan.

(c)	Represents annualized seven-day yield as of December 31, 2010.

(d)	Includes (depreciation) on futures contracts.

All Securities are Level 1, unless noted otherwise in parentheses.

(2)	Level 2 security (See Note 5).

The following abbreviations are used in portfolio descriptions:

REIT - Real Estate Investment Trust


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	87
AQR Funds	Annual Report	December 2010	87


Schedule of Investments			December 31, 2010


AQR SMALL CAP MOMENTUM FUND

Open futures contracts outstanding at December 31, 2010:

NUMBER OF
CONTRACTS

TYPE

EXPIRATION
DATE

VALUE AT
TRADE DATE

VALUE AT
DECEMBER 31,
2010

UNREALIZED
APPRECIATION

(DEPRECIATION)

Long Contracts:

E-Mini Russell 2000 Futures

March 18, 2011

$1,184,759

$1,173,450

$(11,309)

Cash held as collateral with broker for futures contracts was $189,960 at December 31, 2010.


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	88
AQR Funds	Annual Report	December 2010	88


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL MOMENTUM FUND


	SHARES		VALUE (Note 3)
COMMON STOCKS - 92.2%
Australia - 1.3%
Amcor Ltd.		7,128	$	49,327
Australia & New Zealand Banking Group Ltd.		4,197		100,466
Coal & Allied Industries Ltd.		318		39,073
Cochlear Ltd.		365		30,113
Commonwealth Bank of Australia		1,545		80,456
Equinox Minerals Ltd. (1)†		2,100		12,913
Fortescue Metals Group Ltd. †		27,957		187,818
Incitec Pivot Ltd.		11,205		45,525
OZ Minerals Ltd.		42,894		75,925
Paladin Energy Ltd. †		12,165		61,448
Wesfarmers Ltd.		3,047		100,037

				783,101

Austria - 0.6%
Erste Group Bank AG		4,657		220,658
Vienna Insurance Group AG Wiener Versicherung Gruppe		311		16,273
Voestalpine AG		2,788		133,876

				370,807

Belgium - 0.4%
Anheuser-Busch InBev NV		1,171		67,172
Bekaert SA		849		97,808
Umicore SA		1,609		84,100

				249,080

Bermuda - 0.2%
Seadrill Ltd.		3,031		103,798

Canada - 16.3% (1)
Agnico-Eagle Mines Ltd. (c)		2,900		223,560
Agrium, Inc.		2,600		239,420
Alamos Gold, Inc.		3,200		60,931
Alimentation Couche Tard, Inc., Class B		3,800		103,485
ARC Energy Trust		3,800		97,175
Bank of Montreal (a)		2,000		115,695
Barrick Gold Corp.		16,400		876,735
Baytex Energy Trust		2,300		107,888
BCE, Inc.		13,300		473,026
Bonavista Energy Trust		1,300		37,679
Brookfield Asset Management, Inc., Class A		4,300		143,672
Canadian Imperial Bank of Commerce (c)		7,100		559,697
Canadian National Railway Co.		1,300		86,806
Canadian Pacific Railway Ltd.		1,600		104,053
Canadian Utilities Ltd., Class A		900		49,273
Centerra Gold, Inc.		1,500		29,950
CGI Group, Inc., Class A †		1,800		31,158
Consolidated Thompson Iron Mines Ltd. †(c)		4,600		65,228
Detour Gold Corp. †(c)		1,600		47,002
Domtar Corp.		300		22,776
Eldorado Gold Corp.		11,200		208,524
Emera, Inc.		2,100		66,256
Enbridge, Inc.		7,300		413,396
Enerplus Resources Fund		1,900		58,645
European Goldfields Ltd. †		4,600		64,487


	SHARES		VALUE (Note 3)
Canada - 16.3% (1) (continued)
Fairfax Financial Holdings Ltd.		100	$	41,160
Finning International, Inc.		2,200		59,979
Franco-Nevada Corp.		1,300		43,514
Gabriel Resources Ltd. †		8,100		64,807
Genworth MI Canada, Inc.		1,100		30,543
George Weston Ltd.		1,200		101,686
Gildan Activewear, Inc. †		3,000		85,594
H&R Real Estate Investment Trust REIT		2,100		41,064
HudBay Minerals, Inc.		3,500		63,297
Industrial Alliance Insurance & Financial Services, Inc.		700		25,932
Intact Financial Corp. (c)		1,200		61,422
Ivanhoe Mines Ltd. †		4,300		99,532
Keyera Facilities Income Fund		1,700		60,137
Kinross Gold Corp.		1,734		32,999
Loblaw Cos. Ltd.		2,100		85,319
Lululemon Athletica, Inc. †		800		54,901
Lundin Mining Corp. †		8,700		63,566
Magna International, Inc.		6,900		360,468
Methanex Corp.		2,000		60,887
Metro, Inc., Class A		2,300		104,624
New Gold, Inc. †		3,600		35,071
Novagold Resources, Inc. †		4,200		60,063
Onex Corp.		2,400		73,016
Osisko Mining Corp. †		7,500		109,596
Pacific Rubiales Energy Corp.		3,100		105,294
Pan American Silver Corp.		1,500		61,787
Pembina Pipeline Corp.		2,000		43,476
Pengrowth Energy Trust		5,300		68,167
Penn West Energy Trust		6,300		151,152
Petrobank Energy & Resources Ltd. †(c)		300		7,623
Petrominerales Ltd.		684		22,833
Potash Corp of Saskatchewan, Inc.		5,200		808,273
RioCan Real Estate Investment Trust REIT		2,200		48,709
Rogers Communications, Inc., Class B		2,500		87,053
Saputo, Inc. (a)		2,000		79,666
SEMAFO, Inc. †		6,600		71,403
Silver Wheaton Corp. †		6,300		247,143
Teck Resources Ltd., Class B		7,400		460,168
TELUS Corp.		6,000		274,624
Tim Hortons, Inc.		1,600		66,180
Toronto-Dominion Bank/The		13,100		978,891
TransCanada Corp.		2,400		91,759
Uranium One, Inc.		12,900		61,796
Valeant Pharmaceuticals International, Inc.		4,529		128,899
Vermilion Energy, Inc.		1,300		60,470
Yellow Media, Inc.		9,600		59,900

				10,090,960

Cayman Islands - 0.2%
Sands China Ltd. †		45,200		99,353

China - 0.3%
AAC Acoustic Technologies Holdings, Inc.		10,000		26,675
Daphne International Holdings Ltd.		16,000		14,980
Great Wall Motor Co. Ltd., H Shares		6,500		20,055


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	89
AQR Funds	Annual Report	December 2010	89


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL MOMENTUM FUND


	SHARES		VALUE (Note 3)
China - 0.3% (continued)
Guangzhou Pharmaceutical Co. Ltd., H Shares		42,000	$	69,458
Harbin Power Equipment Co. Ltd., H Shares		40,000		63,079

				194,247

Denmark - 4.1%
AP Moller - Maersk A/S, Class B		67		609,128
Carlsberg A/S, Class B		2,166		218,321
Coloplast A/S, Class B		818		111,625
Danske Bank A/S †		10,797		278,049
FLSmidth & Co. A/S		1,140		109,531
Novo Nordisk A/S, Class B		9,091		1,028,511
Novozymes A/S, Class B		1,039		145,580
William Demant Holding A/S †		450		33,405

				2,534,150

Finland - 1.4%
Kesko OYJ B Shares, Class B		1,282		60,143
Kone OYJ, Class B		4,181		233,134
Metso OYJ		2,840		159,494
Stora Enso OYJ R Shares		10,977		113,409
UPM-Kymmene OYJ		6,832		121,592
Wartsila OYJ		2,000		153,006

				840,778

France - 6.5%
Accor SA		3,630		162,415
Air France-KLM †		3,368		61,723
Air Liquide SA		3,604		458,108
Bureau Veritas SA		591		45,026
Cap Gemini SA		805		37,781
Christian Dior SA		1,115		160,108
Cie Generale d’Optique Essilor International SA		1,995		129,044
Dassault Systemes SA		716		54,264
Edenred †		3,620		86,083
Eutelsat Communications		1,154		42,429
Fonciere Des Regions REIT		210		20,404
Hermes International		496		104,411
JCDecaux SA †		1,456		45,007
Legrand SA		1,719		70,393
LVMH Moet Hennessy Louis Vuitton SA		4,036		667,355
Pernod-Ricard SA		1,176		111,130
Peugeot SA †		2,907		110,890
PPR		921		147,209
Publicis Groupe SA		2,536		132,851
Rexel SA †		4,367		95,341
Safran SA		4,927		175,340
Schneider Electric SA		4,083		614,590
SEB SA		592		61,808
Sodexo		908		62,902
Technip SA		1,542		143,091
Unibail-Rodamco SE REIT		432		85,871
Vallourec SA		1,688		178,171

				4,063,745

Germany - 10.4%
Adidas AG		4,232		276,368
BASF SE		14,543		1,165,127


	SHARES		VALUE (Note 3)
Germany - 10.4% (continued)
Bayerische Motoren Werke AG		6,742	$	533,265
Continental AG †		1,773		141,391
Daimler AG †		14,990		1,018,275
Deutsche Lufthansa AG †		7,497		163,720
Fresenius Medical Care AG & Co. KGaA		2,599		150,010
GEA Group AG		2,796		81,117
Generali Deutschland Holding AG		159		19,509
Infineon Technologies AG †		20,153		188,589
K+S AG		2,667		201,806
Lanxess AG		1,642		129,613
Linde AG		3,031		460,326
MAN SE		1,933		231,135
Metro AG		1,483		107,458
Puma AG Rudolf Dassler Sport		56		18,555
Siemens AG		12,098		1,504,513
ThyssenKrupp AG		498		20,770
Wacker Chemie AG		216		37,806

				6,449,353

Hong Kong - 7.0%
ASM Pacific Technology Ltd.		3,000		37,884
BOC Hong Kong Holdings Ltd.		74,500		253,311
Cathay Pacific Airways Ltd.		33,000		91,021
Cheung Kong Holdings Ltd.		22,000		339,015
Cheung Kong Infrastructure Holdings Ltd.		16,000		73,245
CLP Holdings Ltd.		32,000		259,803
Dairy Farm International Holdings Ltd.		6,300		58,506
Digital China Holdings Ltd.		8,000		14,955
Galaxy Entertainment Group Ltd. †		55,000		62,206
Hang Lung Group Ltd.		19,000		124,820
Hang Lung Properties Ltd.		40,000		186,940
Hong Kong Exchanges and Clearing Ltd.		18,600		421,666
Hongkong & Shanghai Hotels/The		11,000		18,844
Hongkong Electric Holdings Ltd.		18,500		116,604
Hongkong Land Holdings Ltd. (a)		17,000		122,712
Hutchison Whampoa Ltd.		36,000		370,302
Hysan Development Co. Ltd.		8,000		37,639
Jardine Matheson Holdings Ltd.		3,200		140,741
Jardine Strategic Holdings Ltd.		7,000		193,642
Li & Fung Ltd.		48,000		278,467
Lifestyle International Holdings Ltd.		13,500		33,216
Link REIT/The REIT		37,500		116,423
Noble Group Ltd.		19,363		32,787
NWS Holdings Ltd.		33,000		50,078
Orient Overseas International Ltd.		7,000		67,847
Shangri-La Asia Ltd.		24,000		65,100
SJM Holdings Ltd.		38,000		60,275
Stella International Holdings Ltd.		7,500		14,949
Swire Pacific Ltd., Class A		19,500		320,351
United Laboratories International Holdings Ltd./The		12,000		24,621
VTech Holdings Ltd. (a)		2,000		23,509
Wharf Holdings Ltd.		23,000		176,815
Wheelock & Co. Ltd.		16,000		64,691
Wing Hang Bank Ltd.		4,500		62,196
Yue Yuen Industrial Holdings Ltd.		13,500		48,557

				4,363,738


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	90
AQR Funds	Annual Report	December 2010	90


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL MOMENTUM FUND


	SHARES		VALUE (Note 3)
Ireland - 1.1%
Experian PLC		14,182	$	177,383
Ryanair Holdings PLC		26,513		133,438
Shire PLC		8,346		202,086
WPP PLC		13,211		164,009

				676,916

Israel - 0.8%
Bank Hapoalim BM †		12,592		65,687
Bank Leumi Le-Israel BM		26,279		134,969
Bezeq The Israeli Telecommunication Corp. Ltd.		22,496		68,623
Clal Industries and Investments Ltd.		3,102		25,142
Israel Chemicals Ltd.		6,729		115,474
Israel Corp. Ltd./The †		62		75,372

				485,267

Italy - 0.8%
Fiat SpA		9,441		196,016
Saipem SpA		4,327		214,476
Terna Rete Elettrica Nazionale SpA		16,361		69,420

				479,912

Japan - 8.7%
ABC-Mart, Inc.		700		24,959
Aeon Co. Ltd.		9,300		116,170
All Nippon Airways Co. Ltd. †		55,000		204,895
Asahi Glass Co. Ltd.		7,000		81,494
Central Japan Railway Co.		2		16,736
Credit Saison Co. Ltd.		3,800		62,080
Daito Trust Construction Co. Ltd.		2,800		191,560
Dena Co. Ltd.		2,900		104,007
Fanuc Ltd.		3,200		489,653
Fuji Electric Holdings Co. Ltd.		17,000		52,738
Fuji Heavy Industries Ltd.		15,000		115,798
Hino Motors Ltd.		4,000		21,587
Hitachi Ltd.		67,660		359,595
IHI Corp.		27,000		60,007
Isuzu Motors Ltd.		24,000		108,563
ITOCHU Corp.		13,300		134,148
Japan Real Estate Investment Corp. REIT		6		62,223
Japan Retail Fund Investment Corp. REIT		33		63,173
JX Holdings, Inc.		36,700		248,610
Kawasaki Kisen Kaisha Ltd.		14,000		61,016
Keihin Corp.		1,700		38,166
Kobe Steel Ltd.		8,000		20,235
Koito Manufacturing Co. Ltd.		1,000		15,563
Komatsu Ltd.		14,700		442,888
McDonald’s Holdings Co. Japan Ltd.		1,000		25,083
Mitsubishi Chemical Holdings Corp.		17,500		118,334
Mitsubishi Electric Corp.		31,000		324,267
Mitsui OSK Lines Ltd.		16,000		108,532
NGK Spark Plug Co. Ltd.		2,000		30,595
NHK Spring Co. Ltd.		4,000		43,399
Nidec Corp.		700		70,658
Nippon Building Fund, Inc. REIT		6		61,554
Nippon Yusen KK		24,000		105,772
NOK Corp.		1,200		24,900
Omron Corp.		1,500		39,572


	SHARES		VALUE (Note 3)
Japan - 8.7% (continued)
Oracle Corp. Japan		1,000	$	49,071
Oriental Land Co. Ltd.		600		55,554
ORIX Corp.		450		44,135
Sanrio Co. Ltd. †		2,600		60,818
Sega Sammy Holdings, Inc.		3,200		60,754
Shiseido Co. Ltd.		900		19,619
SMC Corp.		800		136,660
Softbank Corp.		15,100		521,200
Sumitomo Corp.		15,400		217,017
Sysmex Corp.		400		27,694
Takata Corp.		600		17,687
THK Co. Ltd.		1,800		41,214
Toshiba Corp.		6,000		32,598
Universal Entertainment Corp. †		1,300		37,836
USS Co. Ltd.		400		32,676

				5,403,063

Jersey, Channel Islands - 0.4%
Randgold Resources Ltd.		716		59,291
Wolseley PLC †		3,655		117,497
Wynn Macau Ltd.		26,800		59,975

				236,763

Luxembourg - 0.3%
RTL Group SA		547		56,867
Tenaris SA		4,968		122,316

				179,183

Mexico - 0.0% (b)
Fresnillo PLC		249		6,543


Netherlands - 1.2%
Akzo Nobel NV		425		26,546
ASML Holding NV		323		12,436
European Aeronautic Defence and Space Co. NV †		5,606		131,329
HAL Trust		326		41,129
Koninklijke DSM NV		2,023		115,770
Koninklijke Vopak NV		762		36,167
QIAGEN NV †		1,612		31,763
Royal Dutch Shell PLC, Class A		11,143		370,682

				765,822

Norway - 0.6%
DnB NOR ASA		15,556		219,692
Telenor ASA		4,187		68,493
Yara International ASA		1,579		92,268

				380,453

Portugal - 0.3%
Jeronimo Martins SGPS SA		6,068		92,884
Portugal Telecom SGPS SA		7,413		84,952

				177,836

Singapore - 1.5%
Fraser and Neave Ltd.		11,000		55,012
Genting Singapore PLC †		94,000		161,095
Indofood Agri Resources Ltd. †		35,000		76,583
Jardine Cycle & Carriage Ltd.		2,000		57,129


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	91
AQR Funds	Annual Report	December 2010	91


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL MOMENTUM FUND


	SHARES		VALUE (Note 3)
Singapore - 1.5% (continued)
Keppel Corp. Ltd.		20,000	$	176,788
Keppel Land Ltd.		18,000		67,519
Oversea-Chinese Banking Corp. Ltd.		15,000		115,692
SembCorp Industries Ltd.		13,000		52,133
SembCorp Marine Ltd.		17,000		71,245
SIA Engineering Co. Ltd.		10,000		33,002
Singapore Technologies Engineering Ltd.		16,000		42,711

				908,909

Spain - 0.5%
Inditex SA		4,347		326,665

Sweden - 7.0%
Alfa Laval AB		6,815		143,945
Assa Abloy AB, Class B		5,783		163,199
Atlas Copco AB A Shares		19,453		491,266
Boliden AB		4,561		92,964
Electrolux AB (a)		806		22,882
Hennes & Mauritz AB, Class B		26,741		890,982
Hexagon AB, Class B		5,153		110,718
Industrivarden AB, Class C		4,099		71,945
Kinnevik Investment AB, Class B		5,351		109,019
Ratos AB, Class B		1,515		56,036
Sandvik AB		19,693		384,409
Scania AB B Shares		13,034		300,156
Skandinaviska Enskilda Banken AB, Class A		22,491		187,860
Skanska AB, Class B		2,602		51,605
SKF AB, Class B		8,759		250,057
Svenska Handelsbanken AB, Class A		3,079		98,463
Swedbank AB †		15,009		209,963
Swedish Match AB		2,095		60,735
Tele2 AB B Shares		3,216		66,752
Volvo AB B Shares †		33,614		592,384

				4,355,340

Switzerland - 3.2%
Adecco SA		324		21,314
Compagnie Financiere Richemont SA, Class A		8,093		477,380
Geberit AG		236		54,738
Givaudan SA		44		47,646
Holcim Ltd.		749		56,855
Kuehne & Nagel International AG		682		95,181
Lindt & Spruengli AG		20		60,563
Nestle SA		7,532		442,625
Sonova Holding AG		440		56,895
Sulzer AG		416		63,663
Swatch Group AG/The		767		343,047
Swisscom AG		178		78,490
Xstrata PLC		8,406		200,028

				1,998,425

United Kingdom - 17.1%
Admiral Group PLC		4,753		112,893
Aggreko PLC		5,019		116,626
Anglo American PLC		4,806		252,472
Antofagasta PLC		5,256		133,552
ARM Holdings PLC		23,893		163,761


	SHARES		VALUE (Note 3)
United Kingdom - 17.1% (continued)
Associated British Foods PLC		6,654	$	123,359
British Airways PLC †		15,783		67,558
British American Tobacco PLC		31,350		1,210,982
British Land Co. PLC REIT		3,082		25,405
BT Group PLC		105,524		300,971
Burberry Group PLC		6,668		117,683
Carnival PLC		12,038		562,272
Centrica PLC		24,337		126,628
Compass Group PLC		30,872		281,370
Diageo PLC		9,350		173,966
GKN PLC		20,726		72,243
HSBC Holdings PLC		5,975		61,322
IMI PLC		4,267		63,250
Inmarsat PLC		1,932		20,404
Intercontinental Hotels Group PLC		5,082		99,689
International Power PLC		11,111		76,413
Intertek Group PLC		2,171		60,280
Investec PLC		9,710		80,330
Johnson Matthey PLC		1,514		48,439
Kingfisher PLC		6,023		24,917
Legal & General Group PLC		47,374		72,052
Lloyds Banking Group PLC †		641,091		664,583
Old Mutual PLC		29,077		56,229
Pearson PLC		3,639		57,589
Petrofac Ltd.		7,969		198,839
Rio Tinto PLC		18,207		1,303,281
Rolls-Royce Group PLC †		10,014		97,979
SABMiller PLC		5,301		187,535
Sage Group PLC/The		14,253		61,137
Severn Trent PLC		3,568		82,838
Smith & Nephew PLC		3,096		32,828
Smiths Group PLC		2,405		46,949
Standard Chartered PLC		31,681		858,846
United Utilities Group PLC		5,125		47,614
Vedanta Resources PLC		86		3,407
Vodafone Group PLC		859,013		2,264,517
Weir Group PLC/The		4,443		123,958
Whitbread PLC		3,097		87,025

				10,623,991

United States - 0.0% (b)
Brookfield Properties Corp. (1)		1,900		33,577

TOTAL COMMON STOCKS (cost $51,482,350)				57,181,775


PREFERRED STOCKS - 3.9%

Germany - 3.6%
Fresenius SE		1,863		160,239
ProSiebenSat.1 Media AG		3,399		102,422
Henkel AG & Co. KGaA		6,682		415,920
Volkswagen AG		8,034		1,311,361
Porsche Automobil Holding SE		3,215		258,771

				2,248,713

Switzerland - 0.3%
Schindler Holding AG		1,560		185,115

TOTAL PREFERRED STOCKS (cost $2,351,770)				2,433,828


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	92
AQR Funds	Annual Report	December 2010	92


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL MOMENTUM FUND


	SHARES		VALUE (Note 3)

EXCHANGE-TRADED FUND - 1.9%

United States - 1.9%
iShares MSCI EAFE Index Fund (1) (cost $1,153,681)		20,471	$	1,192,026


RIGHTS - 0.0% (b)

Canada - 0.0% (b)
Ivanhoe Mines Ltd., expires 1/26/11 †(1) (cost $-)		4,300		5,799


WARRANTS - 0.0% (b)

Hong Kong - 0.0% (b)
Henderson Land Development Co. Ltd., expires 6/1/11 † (cost $-)		2		1


MONEY MARKET FUND - 2.0%
J.P. Morgan Prime Money Market Fund - Capital Shares, 0.130% (d)(e)(g)		1,275,687	$	1,275,687

TOTAL MONEY MARKET FUND (cost $1,275,687; includes $234,166 of cash collateral received for securities on loan)				1,275,687

TOTAL INVESTMENTS - 100.0% (cost $56,263,488)				62,089,116

ASSETS IN EXCESS OF OTHER LIABILITIES - (0.0%) (b)(f)				2,263

NET ASSETS - 100.0%			$	62,091,379


SECTOR	VALUE		% OF NET ASSETS
Consumer Discretionary	$	11,555,070		18.6	%
Consumer Staples		4,178,490		6.7
Energy		2,889,825		4.7
Financials		8,996,003		14.5
Health Care		2,217,191		3.6
Industrials		13,036,024		21.0
Information Technology		1,132,984		1.8
Materials		10,338,617		16.7
Mutual Fund		1,192,026		1.9
Telecommunication Services		4,309,105		6.9
Utilities		968,094		1.6
Money Market Funds		1,275,687		2.0

Total Investments		62,089,116		100.0
Assets in Excess of Other Liabilities (f)		2,263		(0.0)

Net Assets	$	62,091,379		100.0	%

†	Non income-producing security.

(a)	All or a portion of the security on loan. The aggregate market value of such securities is $224,019; cash collateral of $234,166 was received with which the Fund purchased a money market fund.

(b)	Represents less than 0.05 percent of net assets.

(c)	Private Placement security.

(d)	Represents annualized seven-day yield as of December 31, 2010.

(e)	Represents security, or portion thereof, purchased with the cash collateral received for securities on loan.

(f)	Includes appreciation(depreciation) on forward foreign currency exchange contracts and swaps.

(g)	A portion of the security is pledged as collateral for a equity swap contract.

All securities are Level 2, unless noted otherwise in parentheses.

(1)	Level 1 security (See Note 5).

(3)	Level 3 security (See Note 5).

The following abbreviations are used in portfolio descriptions:

REIT - Real Estate Investment Trust

Forward foreign currency exchange contracts outstanding as of December 31, 2010:

PURCHASE
CONTRACTS

COUNTERPARTY

CURRENCY

CURRENCY
AMOUNT
PURCHASED

VALUE AT
SETTLEMENT
DATE

VALUE AT
DECEMBER 31,
2010

UNREALIZED
APPRECIATION

(DEPRECIATION)

British Pound,
Expiring 03/16/11

The Royal Bank of Scotland

GBP

1,327,687

$2,063,521

$2,077,569

$14,048

SALES CONTRACTS

COUNTERPARTY

CURRENCY

CURRENCY
AMOUNT
SOLD

VALUE AT
SETTLEMENT
DATE

VALUE AT
DECEMBER 31,
2010

UNREALIZED

APPRECIATION

(DEPRECIATION)

British Pound,
Expiring 03/16/11

The Royal Bank of Scotland

GBP

(540,000)

$(841,388)

$(844,994)

$(3,606)

$1,222,133

$1,232,575

$10,442

Cash pledged as collateral for forward foreign exchange contracts in the amount of $40,000.

GBP - British Pound


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	93
AQR Funds	Annual Report	December 2010	93


Schedule of Investments			December 31, 2010


AQR INTERNATIONAL MOMENTUM FUND

Equity basket swap contract with Deutsche Bank as of December 31, 2010:


REFERENCE ENTITY	SHARES LONG	VALUE AT CONTRACT DATE	RESET DATE		UNREALIZED APPRECIATION (DEPRECIATION)
Antofagasta PLC	1,945	$46,154		1/17/2011		$2,830
Fresnillo PLC	3,595	85,754		1/17/2011		7,901
Inmarsat PLC	2,654	28,196		1/17/2011		(434)
Old Mutual PLC	7,263	13,517		1/17/2011		400
Petrofac Ltd.	25	587		1/17/2011		32
Rio Tinto PLC	9,358	641,219		1/17/2011		22,561
Rolls-Royce Group PLC	9,577	93,577		1/17/2011		1,422
Standard Chartered PLC	8,875	238,680		1/17/2011		(348)
Vedanta Resources PLC	838	31,479		1/17/2011		(760)

						33,604

Segregated cash balance for swap agreements						38,795

						$72,399

The Swap contract listed above resets monthly. The final termination date is July 15, 2011.

Money Market Fund investment is pledged as collateral for swap contract was $1,041,113 at December 31, 2010.


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	94
AQR Funds	Annual Report	December 2010	94


Statements of Assets and Liabilities			December 31, 2010


	AQR GLOBAL EQUITY FUND		AQR INTERNATIONAL EQUITY FUND		AQR DIVERSIFIED ARBITRAGE FUND		AQR MANAGED FUTURES STRATEGY FUND*
ASSETS:
Investments in securities, at cost		$356,068,804		$389,374,639		$1,416,727,687		$869,945,562

Investments in securities, at value**		$414,477,326		$446,916,902		$1,523,138,652		$869,945,562
Cash (including foreign currency of $—; $1,192,762; $—; $—, (respectively)		—		1,192,762		—		—
Restricted cash		—		—		4,797,323		—
Swaps, at value		493,528		439,723		—		3,277,326
Unrealized appreciation on forward foreign currency contracts		2,290,745		4,569,115		—		6,247,409
Due from brokers		14,655,129		15,310,150		336,629,291		36,685,459
Unrealized appreciation on futures contracts		—		—		—		10,787,157
Receivables:
Securities sold		4,001,296		1,106,842		9,846,344		—
Foreign tax reclaim		372,267		890,495		—		—
Dividends and interest		434,866		447,812		7,412,639		75,443
Capital shares sold		200		6,079		3,029,624		2,694,975
Prepaid expenses		—		—		110,126		37,257
Total Assets		436,725,357		470,879,880		1,884,963,999		929,750,588
LIABILITIES:
Securities sold short, at value (proceeds $—; $—; $583,596,080; $—, respectively)		—		—		655,505,464		—
Call options written, at value (proceeds $—; $—; $1,113,694; $—, respectively)		—		—		977,733		—
Due to broker		—		—		—		67,835
Due to custodian		179,058		—		2,480,977		280,263
Swaps, at value		—		—		1,452,422		—
Unrealized depreciation on futures contracts		567,868		1,258,676		545,947		—
Unrealized depreciation on forward foreign currency contracts		—		—		286,465		—
Payables:
Securities purchased		3,802,366		—		14,457,094		—
Collateral received on securities loaned		4,199,946		7,149,866		—		—
Collateral received for forward foreign currency contracts		—		2,720,000		—		—
Accrued Investment advisory fees		106,448		191,672		753,977		607,884
Accrued Custody, administration & accounting fees		101,816		126,741		142,536		104,959
Accrued Transfer agency fees		5,427		7,325		77,117		—
Accrued Shareholder servicing fees		896		21,731		—		—
Accrued Distribution fees—Class N		314		306		78,623		35,798
Capital shares redeemed		5,000		11,886		590,638		373,171
Dividends payable on securities sold short		—		—		619,216		—
Other accrued expenses and liabilities		70,500		151,477		—		291
Total Liabilities		9,039,639		11,639,680		677,968,209		1,470,201
Net Assets		$427,685,718		$459,240,200		$1,206,995,790		$928,280,387

NET ASSETS CONSIST OF:
Paid-in capital ($0.001 par value common stock, unlimited authorized shares)		$370,124,331		$396,956,097		$1,181,357,433		$909,692,316
Undistributed (accumulated) net investment income (loss)		1,172,016		5,785,081		2,523,534		2,742,185
Undistributed (accumulated) net realized gain (loss)		(5,408,293)		(4,892,647)		(8,247,142)		(4,465,220)
Net unrealized appreciation (depreciation)		61,797,664		61,391,669		31,361,965		20,311,106
Net Assets		$427,685,718		$459,240,200		$1,206,995,790		$928,280,387

NET ASSETS:
Class I		$1,841,838		$85,968,655		$824,237,659		$657,237,349
Class N		1,497,723		1,472,368		382,758,131		271,043,038
Class Y		424,346,157		371,799,177		n/a		n/a
SHARES OUTSTANDING:
Class I		167,896		8,227,394		73,942,810		63,824,670
Class N		136,540		138,711		34,430,118		26,365,662
Class Y		38,596,429		34,152,071		n/a		n/a
NET ASSET VALUE PER SHARE:
Class I		$10.97		$10.45		$11.15		$10.30
Class N		$10.97		$10.61		$11.12		$10.28
Class Y		$10.99		$10.89		n/a		n/a

Consolidated financial statement, see Note 2 in the Notes to Financial Statements for additional information.

Investments in securities includes the market value of securities out on loan of $4,038,816; $6,868,811; $—; and $—, respectively.

Foreign currency at cost of $—; $1,177,366; $— and $—.


		The accompanying notes are an integral part of these financial statements.		(continued on p. 96)


AQR Funds	Annual Report	December 2010	95
AQR Funds	Annual Report	December 2010	95


Statements of Assets and Liabilities			December 31, 2010


	AQR RISK PARITY FUND*		AQR MOMENTUM FUND		AQR SMALL CAP MOMENTUM FUND		AQR INTERNATIONAL MOMENTUM FUND
ASSETS:
Investments in securities, at cost		$22,715,807		$130,655,518		$53,840,017		$56,263,488

Investments in securities, at value		$22,562,056		$140,843,421		$59,540,220		$62,089,116
Cash (including foreign currency of $—; $—; $—; ($1,887,356) respectively)		—		—		37,744		277,498
Swaps, at value		360,425		—		—		72,399
Unrealized appreciation on forward foreign currency contracts		45,622		—		—		10,442
Due from brokers		650,572		298,540		189,960		—
Unrealized appreciation on futures contracts		360,178		—		—		—
Receivables:
Securities sold		—		32,524,623		13,225,466		21,114,394
Foreign tax reclaim		—		—		—		7,432
Dividends and interest		43,331		152,801		44,360		56,035
Capital shares sold		659,287		96,352		42,158		73,737
Prepaid expenses		131,707		—		—		—
Total Assets		24,813,178		173,915,737		73,079,908		83,701,053
LIABILITIES:
Due to broker		44,558		—		—		—
Collateral received for forward foreign currency contracts		—		—		—		40,000
Due to custodian		43,959		54		—		—
Swaps at value		169,866		—		—		—
Unrealized depreciation on futures contracts		—		1,434		11,309		—
Payables:
Securities purchased		487,518		42,341,679		16,471,595		21,217,882
Collateral received on securities loaned		—		6,988,139		2,021,905		234,166
Accrued Investment advisory fees		3,872		19,888		4,759		33,247
Accrued Custody, administration & accounting fees		4,636		13,613		14,115		34,517
Accrued Transfer agency fees		2,148		1,776		1,951		2,560
Accrued Shareholder servicing fees		—		14,292		6,352		7,371
Accrued Distribution fees Class N		2,244		—		—		—
Accrued Trustees fees		190		104		85		—
Other accrued expenses and liabilities		71,642		43,405		43,255		39,931
Total Liabilities		830,633		49,424,384		18,575,326		21,609,674
Net Assets		$23,982,545		$124,491,353		$54,504,582		$62,091,379

NET ASSETS CONSIST OF:
Paid-in capital ($0.001 par value common stock, unlimited authorized shares)		$23,846,124		$113,665,510		$48,185,417		$56,234,793
Undistributed (accumulated) net investment income (loss)		47,308		322,578		—		72,009
Undistributed (accumulated) net realized gain (loss)		(123,552)		316,796		630,271		(160,138)
Net unrealized appreciation (depreciation)		212,665		10,186,469		5,688,894		5,944,715
Net Assets		$23,982,545		$124,491,353		$54,504,582		$62,091,379

NET ASSETS:
Class I		$12,747,565		n/a		n/a		n/a
Class L		n/a		$124,491,353		$54,504,582		$62,091,379
Class N		11,234,980		n/a		n/a		n/a
SHARES OUTSTANDING:
Class I		1,240,567		n/a		n/a		n/a
Class L		n/a		8,646,886		3,788,903		4,559,775
Class N		1,094,489		n/a		n/a		n/a
NET ASSET VALUE PER SHARE:
Class I		$10.28		n/a		n/a		n/a
Class L		n/a		$14.40		$14.39		$13.62
Class N		$10.27		n/a		n/a		n/a

Consolidated financial statement, see Note 2 in the Notes to Financial Statements for additional information.

Investments in securities includes the market value of securities out on loan of $—; $6,787,555; $1,892,746 and $224,019, respectively.

Foreign currency at cost of $—; $—; $—; (1,893,392).


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	96
AQR Funds	Annual Report	December 2010	96


Statements of Operations			December 31, 2010


	AQR GLOBAL EQUITY FUND		AQR INTERNATIONAL EQUITY FUND		AQR DIVERSIFIED ARBITRAGE FUND		AQR MANAGED FUTURES STRATEGY FUND**
��	FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE PERIOD 1/6/10*-12/31/10
INVESTMENT INCOME:
Dividend income†		$8,603,462		$10,810,134		$5,925,076		$5,513
Interest income		—		—		18,925,626		30,154
Securities lending income, net		87,533		152,895		—		—
Total Income		8,690,995		10,963,029		24,850,702		35,667

EXPENSES:
Investment advisory fees		1,502,446		1,894,392		5,480,605		2,980,585
Custody, administration & accounting fees		260,541		363,459		377,363		181,188
Legal fees		72,827		66,544		164,416		105,504
Audit and tax fees		110,840		93,497		107,048		58,885
Shareholder reporting fees		37,242		15,859		277,741		80,580
Transfer agent fees		31,509		50,523		457,843		88,945
Trustees fees		33,622		27,128		51,882		16,459
Organization and offering costs		24,804		—		—		80,500
Shareholder servicing fees		455,454		644,980		1,182,906		—
Distribution fees—Class N		2,780		2,260		580,768		160,102
Dividends on securities sold short		—		—		9,188,509		—
Other fees		135,631		212,366		295,588		69,362
Total Expenses		2,667,696		3,371,008		18,164,669		3,822,110

Less waivers and reimbursements:
Investment advisory fees waived		—		(110,503)		—		(96,550)
Shareholder servicing fees waived		(447,840)		(644,980)		(235,386)		—
Expense reimbursements		(287,811)		—		—		—
Net Expenses		1,932,045		2,615,525		17,929,283		3,725,560
Net Investment Income (Loss)		6,758,950		8,347,504		6,921,419		(3,689,893)
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from:
Investments in securities		13,868,729		7,906,460		53,331,878		—
Forward foreign currency contracts		5,990,830		3,097,471		(209,109)		(572,573)
Foreign currency and foreign currency translations		(646,192)		(626,082)		429,825		(18,362)
Futures and swaps on futures contracts		(38,711)		(314,296)		(12,098,978)		26,716,217
Net increase from payments by affiliates		—		—		544,199		—
Securities sold short		—		—		(37,061,283)		—
Swap contracts		—		—		(5,831,063)		—
Written options		—		—		7,361,398		—

Net realized gain (loss)		19,174,656		10,063,553		6,466,867		26,125,282

Net change in unrealized appreciation (depreciation) on:
Investments in securities		24,457,310		23,769,794		88,034,117		—
Futures and swaps on futures contracts		220,340		(2,139,284)		(963,085)		14,064,483
Forward foreign currency contracts		2,908,082		5,343,590		(282,918)		6,247,409
Foreign currency and foreign currency translations		860,587		60,163		(20,358)		(786)
Securities sold short		—		—		(58,350,282)		—
Swap contracts		—		—		(2,196,784)		—
Written options		—		—		141,330		—

Net change in unrealized appreciation (depreciation)		28,446,319		27,034,263		26,362,020		20,311,106

Net gain (loss) and change in unrealized appreciation (depreciation)		47,620,975		37,097,816		32,828,887		46,436,388

Net increase (decrease) in net assets resulting from operations		$54,379,925		$45,445,320		$39,750,306		$42,746,495

† Net of foreign taxes withheld of		$433,484		$956,948		$65,404		$—

Commencement of operations.

Consolidated financial statement, see Note 2 in the Notes to Financial Statements for additional information.


		The accompanying notes are an integral part of these financial statements.		(continued on p. 98)


AQR Funds	Annual Report	December 2010	97
AQR Funds	Annual Report	December 2010	97


Statements of Operations			December 31, 2010


	AQR RISK PARITY FUND**		AQR MOMENTUM FUND		AQR SMALL CAP MOMENTUM FUND		AQR INTERNATIONAL MOMENTUM FUND
	FOR THE PERIOD 9/30/10*-12/31/10		FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE YEAR ENDED DECEMBER 31, 2010
INVESTMENT INCOME:
Dividend income†		—		$644,526		$174,431		$697,437
Interest income		$67,735		5,182		262		—
Securities lending income, net		—		2,009		11,387		10,729
Total Income		67,735		651,717		186,080		708,166

EXPENSES:
Investment advisory fees		36,242		87,137		49,659		117,405
Custody, administration & accounting fees		6,169		32,790		41,797		107,413
Legal fees		42,189		46,675		47,996		48,942
Audit and tax fees		54,734		39,744		39,746		51,813
Shareholder reporting fees		242		7,041		5,352		7,791
Transfer agent fees		6,418		25,029		22,430		34,001
Trustees fees		199		1,829		702		2,684
Organization and Offering costs		21,302		—		—		—
Shareholder servicing fees		—		52,283		21,282		50,316
Distribution fees—Class N		5,890		—		—		—
Other fees		12,001		47,584		32,555		68,511
Total Expenses		185,386		340,112		261,519		488,876

Less waivers and reimbursements:
Investment advisory fees waived		(36,242)		(87,135)		(49,659)		(117,405)
Shareholder servicing fees waived		—		(52,283)		(21,282)		(50,316)
Expense reimbursements		(97,341)		(25,641)		(97,632)		(98,466)
Net Expenses		51,803		175,053		92,946		222,689
Net Investment Income (Loss)		15,932		476,664		93,134		485,477

REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from:
Investments in securities		(46,065)		(40,999)		609,413		(686,185)
Forward foreign currency contracts		231,097		—		—		(331,704)
Foreign currency and foreign currency translations		(20,419)		—		—		(137,994)
Futures and swaps on futures contracts		98,263		337,965		410,041		—
Swap contracts		141,580		—		—		638,038

Net realized gain (loss)		404,456		296,966		1,019,454		(517,845)

Net change in unrealized appreciation (depreciation) on:
Investments in securities		(153,751)		9,825,024		5,504,471		5,162,776
Futures and swaps on futures contracts		250,785		(1,293)		(11,309)		—
Forward foreign currency contracts		45,622		—		—		179,153
Foreign currency and foreign currency translations		(32,043)		—		—		35,338
Swap contracts		102,052		—		—		43,827

Net change in unrealized appreciation (depreciation)		212,665		9,823,731		5,493,162		5,421,094

Net gain (loss) and change in unrealized appreciation (depreciation)		617,121		10,120,697		6,512,616		4,903,249

Net increase (decrease) in net assets resulting from operations		$633,053		$10,597,361		$6,605,750		$5,388,726


† Net of foreign taxes withheld of		$—		$—		$—		$64,195

Commencement of operations.

Consolidated financial statement, see Note 2 in the Notes to Financial Statements for additional information.


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	98
AQR Funds	Annual Report	December 2010	98


Statements of Changes in Net Assets			December 31, 2010


	AQR GLOBAL EQUITY FUND		AQR INTERNATIONAL EQUITY FUND
	FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE PERIOD 8/28/09*-12/31/09
OPERATIONS:
Net investment income (loss)		$6,758,950		$8,347,504		$1,090,896
Net realized gain (loss)		19,174,656		10,063,553		21,921,983
Net change in unrealized appreciation (depreciation)		28,446,319		27,034,263		(3,084,692)
Net increase (decrease) in net assets resulting from operations		54,379,925		45,445,320		19,928,187

DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I		(57,496)		(1,939,218)		(610,914)
Class L		—		—		—
Class N		(43,413)		(30,891)		—
Class Y		(14,066,551)		(8,858,115)		(4,816,996)
Total		(14,167,460)		(10,828,224)		(5,427,910)
Net realized gain:
Class I		(12,252)		(751,420)		(1,232,295)
Class L		—		—		—
Class N		(10,061)		(12,796)		(20)
Class Y		(2,827,146)		(3,126,673)		(9,229,217)
Total		(2,849,459)		(3,890,889)		(10,461,532)
Total distributions		(17,016,919)		(14,719,113)		(15,889,442)
CAPITAL TRANSACTIONS:
CLASS I
Proceeds from shares sold		1,656,523		44,905,053		43,887,953
Reinvestment of distributions		69,748		2,584,353		1,798,893
Cost of shares redeemed		—		(12,356,169)		(92,897)
Redemption fees		—		92		1,147

Net increase from capital transactions		1,726,271		35,133,329		45,595,096
CLASS N
Proceeds from shares sold		2,068,625		1,454,807		5,697
Reinvestment of distributions		52,615		42,682		20
Cost of shares redeemed		(754,495)		(97,610)		—
Redemption fees		2		—		—

Net increase (decrease) from capital transactions		1,366,747		1,399,879		5,717

CLASS Y
Proceeds from shares sold		—		3,598,979		38,215,777
In-kind subscription (see Note 11)		370,340,997		—		316,649,562
Capital contribution (see Note 7)		—		—		15,777
Reinvestment of distributions		16,893,697		11,984,789		14,046,213
Cost of shares redeemed		(5,000)		(28,131,786)		(14,085,511)
Redemption fees		—		15,873		31,554

Net increase (decrease) from capital transactions		387,229,694		(12,532,145)		354,873,372

Net increase (decrease) in net assets resulting from capital transactions		390,322,712		24,001,063		400,474,185
Total increase (decrease) in net assets		427,685,718		54,727,270		404,512,930

NET ASSETS:
Beginning of period		—		404,512,930		—
End of period		$427,685,718		$459,240,200		$404,512,930

Undistributed accumulated net investment income (loss) at end of period		$1,172,016		$5,785,081		$472,899

(continued on p. 100)


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	99
AQR Funds	Annual Report	December 2010	99


Statements of Changes in Net Assets			December 31, 2010


	AQR GLOBAL EQUITY FUND		AQR INTERNATIONAL EQUITY FUND
	FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE PERIOD 8/28/09*-12/31/09
CHANGES IN SHARES OUTSTANDING:
CLASS I
Shares outstanding, beginning of period		—		4,502,376		—
Shares sold		161,426		4,730,717		4,324,237
Shares issued in reinvestment of distributions		6,470		253,120		187,580
Shares redeemed		—		(1,258,819)		(9,441)

Shares outstanding, end of period		167,896		8,227,394		4,502,376

CLASS N
Shares outstanding, beginning of period		—		584		—
Shares sold		203,862		144,573		582
Shares issued in reinvestment of distributions		4,880		4,116		2
Shares redeemed		(72,202)		(10,562)		—

Shares outstanding, end of period		136,540		138,711		584
CLASS Y
Shares outstanding, beginning of period		—		35,486,692		—
Shares sold		—		343,970		3,779,363
Shares issued in connection with in-kind subscription (see Note 11)		37,034,100		—		31,664,956
Shares issued in reinvestment of distributions		1,562,784		1,126,390		1,410,263
Shares redeemed		(455)		(2,804,981)		(1,367,890)

Shares outstanding, end of period		38,596,429		34,152,071		35,486,692

Commencement of operations.

Consolidated financial statement, see Note 2 in the Notes to Financial Statements for additional information.

The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	100
AQR Funds	Annual Report	December 2010	100


Statements of Changes in Net Assets			December 31, 2010


	AQR DIVERSIFIED ARBITRAGE FUND				AQR MANAGED FUTURES STRATEGY FUND**
	FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE PERIOD 1/15/09*-12/31/09		FOR THE PERIOD 1/6/10*-12/31/10
OPERATIONS:
Net investment income (loss)		$6,921,419		$797,409		$(3,689,893)
Net realized gain (loss)		6,466,867		(905,928)		26,125,282
Net change in unrealized appreciation (depreciation)		26,362,020		4,999,945		20,311,106
Net increase (decrease) in net assets resulting from operations		39,750,306		4,891,426		42,746,495

DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I		(2,529,523)		(424,290)		(4,988,075)
Class L		—		—		—
Class N		(496,243)		(135,050)		(1,283,887)
Total		(3,025,766)		(559,340)		(6,271,962)
Net realized gain:
Class I		(9,148,432)		(1,105,118)		(8,519,610)
Class N		(4,389,758)		(655,481)		(2,443,893)
Total		(13,538,190)		(1,760,599)		(10,963,503)
Total distributions		(16,563,956)		(2,319,939)		(17,235,465)

CAPITAL TRANSACTIONS:
CLASS I
Proceeds from shares sold		744,622,281		167,891,859		658,743,237
Reinvestment of distributions		10,961,113		1,492,419		13,031,535
Cost of shares redeemed		(105,043,527)		(11,064,860)		(33,812,899)
Redemption fees		29		527		12,633

Net increase from capital transactions		650,539,896		158,319,945		637,974,506
CLASS N
Proceeds from shares sold		366,744,101		95,158,643		289,880,071
Reinvestment of distributions		4,779,404		788,750		3,704,252
Cost of shares redeemed		(77,340,720)		(17,858,676)		(28,806,659)
Redemption fees		5,055		1,555		17,187

Net increase (decrease) from capital transactions		294,187,840		78,090,272		264,794,851

Net increase (decrease) in net assets resulting from capital transactions		944,727,736		236,410,217		902,769,357

Total increase (decrease) in net assets		967,914,086		238,981,704		928,280,387

NET ASSETS:
Beginning of period		239,081,704		100,000		—
End of period		$1,206,995,790		$239,081,704		$928,280,387

Undistributed accumulated net investment income (loss) at end of period		$2,523,534		$165,585		$2,742,185

(continued on p. 102)


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	101
AQR Funds	Annual Report	December 2010	101


Statements of Changes in Net Assets			December 31, 2010


	AQR DIVERSIFIED ARBITRAGE FUND				AQR MANAGED FUTURES STRATEGY FUND**
	FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE PERIOD 1/15/09*-12/31/09		FOR THE PERIOD 1/6/10*-12/31/10
CHANGES IN SHARES OUTSTANDING:
CLASS I
Shares outstanding, beginning of period		14,819,735		—		—
Shares sold		67,644,901		15,719,603		65,937,073
Shares issued in reinvestment of distributions		990,163		139,609		1,286,430
Shares redeemed		(9,511,989)		(1,039,477)		(3,398,833)

Shares outstanding, end of period		73,942,810		14,819,735		63,824,670

CLASS N
Shares outstanding, beginning of period		7,332,864		10,000		—
Shares sold		33,746,669		8,908,187		28,893,378
Shares issued in reinvestment of distributions		432,917		73,922		366,394
Shares redeemed		(7,082,332)		(1,659,245)		(2,894,110)

Shares outstanding, end of period		34,430,118		7,332,864		26,365,662

Commencement of operations.

Consolidated financial statement, see Note 2 in the Notes to Financial Statements for additional information.


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	102
AQR Funds	Annual Report	December 2010	102


Statements of Changes in Net Assets			December 31, 2010


	AQR RISK PARITY FUND**		AQR MOMENTUM FUND
	FOR THE PERIOD 9/30/10*-12/31/10		FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE PERIOD 7/9/09*-12/31/09
OPERATIONS:
Net investment income (loss)		$15,932		$476,664		$26,142
Net realized gain (loss)		404,456		296,966		481,637
Net change in unrealized appreciation (depreciation)		212,665		9,823,731		362,738
Net increase (decrease) in net assets resulting from operations		633,053		10,597,361		870,517

DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class I		(127,380)		—		—
Class L		—		(134,564)		(25,511)
Class N		(121,230)		—		—
Total		(248,610)		(134,564)		(25,511)
Net realized gain:
Class I		—		—		—
Class L		—		(309,664)		(172,296)
Class N		—		—		—
Total		—		(309,664)		(172,296)
Total distributions		(248,610)		(444,228)		(197,807)

CAPITAL TRANSACTIONS:
CLASS I
Proceeds from shares sold		12,413,848		—		—
Reinvestment of distributions		127,380		—		—
Cost of shares redeemed		(12,269)		—		—
Redemption fees		—		—		—

Net increase from capital transactions		12,528,959		—		—
CLASS L
Proceeds from shares sold		—		113,707,968		6,150,686
Reinvestment of distributions		—		443,920		197,602
Cost of shares redeemed		—		(6,747,740)		(88,950)
Redemption fees		—		1,497		527

Net increase from capital transactions		—		107,405,645		6,259,865
CLASS N
Proceeds from shares sold		11,092,756		—		—
Reinvestment of distributions		120,969		—		—
Cost of shares redeemed		(145,014)		—		—
Redemption fees		432		—		—

Net increase (decrease) from capital transactions		11,069,143		—		—

Net increase (decrease) in net assets resulting from capital transactions		23,598,102		107,405,645		6,259,865
Total increase (decrease) in net assets		23,982,545		117,558,778		6,932,575

NET ASSETS:
Beginning of period		—		6,932,575		—
End of period		$23,982,545		$124,491,353		$6,932,575

Undistributed accumulated net investment income (loss) at end of period		$47,308		$322,578		$631

(continued on p. 104)


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	103
AQR Funds	Annual Report	December 2010	103


Statements of Changes in Net Assets			December 31, 2010


	AQR RISK PARITY FUND**		AQR MOMENTUM FUND
	FOR THE PERIOD 9/30/10*-12/31/10		FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE PERIOD 7/9/09*-12/31/09
CHANGES IN SHARES OUTSTANDING:

CLASS I

Shares outstanding, beginning of period		—		—		—
Shares sold		1,229,100		—		—
Shares issued in reinvestment of distributions		12,687		—		—
Shares redeemed		(1,220)		—		—

Shares outstanding, end of period		1,240,567		—		—

CLASS L

Shares outstanding, beginning of period		—		568,597		—
Shares sold		—		8,561,328		559,779
Shares issued in reinvestment of distributions		—		31,043		16,494
Shares redeemed		—		(514,082)		(7,676)

Shares outstanding, end of period		—		8,646,886		568,597

CLASS N

Shares outstanding, beginning of period		—		—		—
Shares sold		1,096,773		—		—
Shares issued in reinvestment of distributions		12,061		—		—
Shares redeemed		(14,345)		—		—

Shares outstanding, end of period		1,094,489		—		—

Commencement of operations.

Consolidated financial statement, see Note 2 in the Notes to Financial Statements for additional information.

The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	104
AQR Funds	Annual Report	December 2010	104


Statements of Changes in Net Assets			December 31, 2010


	AQR SMALL CAP MOMENTUM FUND				AQR INTERNATIONAL MOMENTUM FUND
	FOR THE YEAR ENDED 1/1/10-12/31/10		FOR THE PERIOD 7/9/09*-12/31/09		FOR THE YEAR ENDED 1/1/10-12/31/10		FOR THE PERIOD 7/9/09*-12/31/09
OPERATIONS:
Net investment income (loss)		$93,134		$9,168		$485,477		$38,766
Net realized gain (loss)		1,019,454		274,977		(517,845)		779,256
Net change in unrealized appreciation (depreciation)		5,493,162		195,732		5,421,094		523,621
Net increase (decrease) in net assets resulting from operations		6,605,750		479,877		5,388,726		1,341,643

DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class L		(88,580)		(9,247)		(198,118)		(177,254)
Total		(88,580)		(9,247)		(198,118)		(177,254)
Net realized gain:
Class L		(487,666)		(180,969)		(61,012)		(437,399)
Total		(487,666)		(180,969)		(61,012)		(437,399)
Total distributions		(576,246)		(190,216)		(259,130)		(614,653)

CAPITAL TRANSACTIONS:
CLASS L
Proceeds from shares sold		47,944,290		3,072,017		45,816,669		29,481,521
Reinvestment of distributions		576,046		189,528		259,022		614,344
Cost of shares redeemed		(3,285,924)		(312,595)		(18,877,307)		(1,064,593)
Redemption fees		1,061		994		1,346		3,791

Net increase (decrease) in net assets resulting from capital transactions		45,235,473		2,949,944		27,199,730		29,035,063
Total increase (decrease) in net assets		51,264,977		3,239,605		32,329,326		29,762,053

NET ASSETS:
Beginning of period		3,239,605		—		29,762,053		—
End of period		$54,504,582		$3,239,605		62,091,379		$29,762,053

Undistributed accumulated net investment income (loss) at end of period		$—		$—		$72,009		$151,015

CHANGES IN SHARES OUTSTANDING:

CLASS L

Shares outstanding, beginning of period		284,134		—		2,485,331		—
Shares sold		3,707,891		294,508		3,653,199		2,523,592
Shares issued in reinvestment of distributions		40,199		17,013		19,417		52,508
Shares redeemed		(243,321)		(27,387)		(1,598,172)		(90,769)

Shares outstanding, end of period		3,788,903		284,134		4,559,775		2,485,331

Commencement of operations.

Consolidated financial statement, see Note 2 in the Notes to Financial Statements for additional information.


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	105
AQR Funds	Annual Report	December 2010	105


Statement of Cash Flows			December 31, 2010


	AQR DIVERSIFIED ARBITRAGE FUND
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations		$39,750,306
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Payments to purchase securities		(3,352,887,172)
Payments to cover short securities		(672,441,774)
Proceeds from securities sold short		1,083,733,121
Proceeds from sale of securities		2,263,077,192
Realized gain on investments in securities and foreign currency		(53,761,703)
Realized loss on securities sold short and written options		29,699,885
Unrealized appreciation on investment in securities and foreign currency		(88,013,759)
Unrealized depreciation on securities sold short and written options		58,208,952
Amortization of bond premium		2,381,163
(Increases)/decreases in operating assets:
Swaps, at value		26,133
Unrealized appreciation on futures contracts		417,138
Dividends and interest		(6,161,327)
Restricted Cash		(4,797,323)
Due from brokers		(241,982,553)
Prepaid expenses		(110,126)
Receivable from securities sold		(1,082,287)
Increases/(decreases) in operating liabilities
Due to custodian		2,480,977
Unrealized depreciation on forward foreign currency contracts		282,918
Unrealized depreciation on futures contracts		545,947
Swaps, at value		1,452,422
Dividends on securities sold short		317,165
Accrued Investment advisory fees		629,229
Accrued Custody, admin and accounting fees		142,536
Accrued Shareholder servicing fees		(57,670)
Accrued Distribution fees		78,623
Accrued Trustees fees		(2,627)
Accrued Transfer agency fees		77,117
Payable for securities purchased		4,021,916
Other accrued expenses		(150,142)
Net cash used in operating activities		$(934,125,723)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from shares sold		1,108,712,734
Payments on shares redeemed		(181,895,137)
Distributions to shareholders		(823,439)
Net cash provided by financing activities		$925,994,158
Net change in cash		(8,131,565)
Cash, beginning of year		8,131,565
Cash, end of year		$—

Non-cash financing activities not included herein consists of reinvestment of dividends and distribution of $15,740,517.


		The accompanying notes are an integral part of these financial statements.


AQR Funds	Annual Report	December 2010	106
AQR Funds	Annual Report	December 2010	106


Financial Highlights			December 31, 2010


	PER SHARE OPERATING PERFORMANCE:
			Change in Net Assets Resulting from Operations							Less Dividends and Distributions

	Net Asset Value, Beginning of Period		Net Investment Income (Loss)			Net Realized and Unrealized Gain (Loss)		Net Increase (Decrease) in Net Asset Value from Operations		Distributions from Net Investment Income		Distributions from Net Realized Gains		Total Distributions
AQR GLOBAL EQUITY FUND CLASS I¹
FOR THE YEAR ENDED DECEMBER 31, 2010		$10.00		0.16			1.25		1.41		(0.36)		(0.08)		(0.44)
AQR GLOBAL EQUITY FUND CLASS N†¹
FOR THE YEAR ENDED DECEMBER 31, 2010		$10.00		0.13			1.25		1.38		(0.33)		(0.08)		(0.41)
AQR GLOBAL EQUITY FUND CLASS Y¹
FOR THE YEAR ENDED DECEMBER 31, 2010		$10.00		0.18			1.27		1.45		(0.38)		(0.08)		(0.46)
AQR INTERNATIONAL EQUITY FUND CLASS I†
FOR THE YEAR ENDED DECEMBER 31, 2010¹		$9.78		0.16			0.84		1.00		(0.24)		(0.09)		(0.33)
FOR THE PERIOD 9/30/09³ TO 12/31/09¹		$10.00		(0.01)			0.22		0.21		(0.14)		(0.29)		(0.43)
AQR INTERNATIONAL EQUITY FUND CLASS N†
FOR THE YEAR ENDED DECEMBER 31, 2010¹		$9.91		0.14			0.88		1.02		(0.23)		(0.09)		(0.32)
FOR THE PERIOD 9/30/09³ TO 12/31/09¹		$10.00		—			0.20		0.20		—		(0.29)		(0.29)
AQR INTERNATIONAL EQUITY FUND CLASS Y†
FOR THE YEAR ENDED DECEMBER 31, 2010¹		$10.16		0.20			0.89		1.09		(0.27)		(0.09)		(0.36)
FOR THE PERIOD 8/28/09² TO 12/31/09¹		$10.00		0.03			0.57		0.60		(0.15)		(0.29)		(0.44)
AQR DIVERSIFIED ARBITRAGE FUND CLASS I†
FOR THE YEAR ENDED DECEMBER 31, 2010		$10.80		0.06			0.46		0.52		(0.04)		(0.13)		(0.17)
FOR THE PERIOD 1/15/09² TO 12/31/09¹		$10.00		0.13			0.79		0.92		(0.03)		(0.09)		(0.12)
AQR DIVERSIFIED ARBITRAGE FUND CLASS N†
FOR THE YEAR ENDED DECEMBER 31, 2010		$10.78		0.05			0.43		0.48		(0.01)		(0.13)		(0.14)
FOR THE PERIOD 1/15/09² TO 12/31/09¹		$10.00		0.10			0.79		0.89		(0.02)		(0.09)		(0.11)
AQR MANAGED FUTURES STRATEGY FUND CLASS I†
FOR THE PERIOD 1/6/10² TO 12/31/10¹		$10.00		(0.12)			0.66		0.54		(0.09)		(0.15)		(0.24)
AQR MANAGED FUTURES STRATEGY FUND CLASS N†
FOR THE PERIOD 1/6/10² TO 12/31/10¹		$10.00		(0.15)			0.66		0.51		(0.08)		(0.15)		(0.23)
AQR RISK PARITY FUND CLASS I
FOR THE PERIOD 9/30/10² TO 12/31/10		$10.00		0.02			0.38		0.40		(0.12)		—		(0.12)
AQR RISK PARITY FUND CLASS N
FOR THE PERIOD 9/30/10² TO 12/31/10		$10.00		0.01			0.38		0.39		(0.12)		—		(0.12)
AQR MOMENTUM FUND CLASS L†
FOR THE YEAR ENDED DECEMBER 31, 2010		$12.19		0.06			2.21		2.27		(0.02)		(0.04)		(0.06)
FOR THE PERIOD 7/9/09² TO 12/31/09¹		$10.00		0.07	¹		2.48		2.55		(0.05)		(0.31)		(0.36)
AQR SMALL CAP MOMENTUM FUND CLASS L†
FOR THE YEAR ENDED DECEMBER 31, 2010		$11.40		0.03			3.13		3.16		(0.03)		(0.14)		(0.17)
FOR THE PERIOD 7/9/09² TO 12/31/09¹		$10.00		0.04	¹		2.06		2.10		(0.03)		(0.67)		(0.70)
AQR INTERNATIONAL MOMENTUM FUND CLASS L†
FOR THE YEAR ENDED DECEMBER 31, 2010		$11.98		0.08			1.62		1.70		(0.05)		(0.01)		(0.06)
FOR THE PERIOD 7/9/09² TO 12/31/09¹		$10.00		0.04	¹		2.26		2.30		(0.09)		(0.23)		(0.32)

†	Redemption fees of less than $0.005 per share were incurred by the share class.

1	Based on average shares outstanding.

2	Commencement of operations.

3	Commencement of offering of shares.

4	Total investment return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period and redemption on the last day of the period and is not annualized.

5	Annualized for periods less than one year.

6	Portfolio turnover is not annualized.

7	The ratio is annualized for a short period of time and is not representative of what the ratio would be if the Fund class has operated for a longer period of time.

8	Total return unadjusted for year end financial reporting purposes for the AQR Diversified Arbitrage Fund was 4.71% and 4.43% for Class I and Class N, respectively.

9	Total return unadjusted for year end financial reporting purposes for the AQR Risk Parity Fund was 3.88% and 3.78% for Class I and Class N, respectively.

10	Total return unadjusted for year end financial reporting purposes for the AQR International Momentum Fund was 14.11%.

11	Ratios do not include the impact of the expenses of the underlying funds in which the Funds invest in.

12	For the year ended December 31, 2010, the Adviser contributed $544,199 into the AQR Diversified Arbitrage Fund. The impact of the Advisor’s contribution increased the total return by 0.08%.


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	107
AQR Funds	Annual Report	December 2010	107


Financial Highlights			December 31, 2010


				RATIOS/SUPPLEMENTAL DATA:

					Ratios to Average Net Assets of:⁵

Net Asset Value, End of Period		Total Return⁴		Net Assets, End of Period	Expenses, Net of Reimbursements and/or Waivers¹¹	Expenses, Net of Reimbursements and/or Waivers (Excluding Dividend Short Expense & Interest Expense)¹¹	Expenses, Before Reimbursements and/or Waivers¹¹	Net Investment Income (Loss)	Portfolio Turnover Rate⁶

	$10.97		14.12%	$1,841,838	0.79%	0.79%	0.79%	1.41%	72%

	$10.97		13.83%	$1,497,723	1.10%	1.10%	1.10%	1.28%	72%

	$10.99		14.54%	$424,346,157	0.50%	0.50%	0.71%	1.81%	72%

	$10.45		10.40%	$85,968,655	0.90%	0.90%	1.03%	1.72%	93%
	$9.78		2.20%	$44,016,038	0.90%	0.90%	1.01%	(0.47)%	29%

	$10.61		10.40%	$1,472,368	1.25%	1.25%	3.50%	1.51%	93%
	$9.91		2.04%	$5,785	1.25%	1.25%	472.86%⁷	(0.07)%	29%

	$10.89		10.84%	$371,799,177	0.55%	0.55%	0.77%	2.02%	93%
	$10.16		6.08%	$360,491,107	0.55%	0.55%	0.98%	0.99%	29%

	$11.15		4.81%^8,12	$824,237,659	2.59%	1.20%	2.62%	1.13%	361%
	$10.80		9.24%	$160,026,814	2.46%	1.20%	3.25%	1.30%	482%

	$11.12		4.52%^8,12	$382,758,131	2.89%	1.50%	2.92%	0.85%	361%
	$10.78		8.88%	$79,054,890	2.69%	1.50%	3.42%	0.98%	482%

	$10.30		5.41%	$657,237,349	1.25%	1.25%	1.28%	(1.27)%	0%

	$10.28		5.12%	$271,043,038	1.50%	1.50%	1.56%	(1.54)%	0%

	$10.28		3.98%⁹	$12,747,565	0.95%	0.95%	3.80%	0.44%	19%

	$10.27		3.88%⁹	$11,234,980	1.20%	1.20%	3.96%	0.22%	19%

	$14.40		18.60%	$124,491,353	0.49%	0.49%	0.98%	1.37%	180%
	$12.19		25.58%	$6,932,575	0.49%	0.49%	5.08%	1.23%	163%

	$14.39		27.69%	$54,504,582	0.65%	0.65%	1.85%	0.66%	380%
	$11.40		21.24%	$3,239,605	0.65%	0.65%	7.53%	0.65%	136%

	$13.62		14.20%¹⁰	$62,091,379	0.65%	0.65%	1.46%	1.44%	269%
	$11.98		23.08%	$29,762,053	0.65%	0.65%	2.22%	0.63%	160%


		The accompanying notes are an integral part of these financial statements.		(Continued)


AQR Funds	Annual Report	December 2010	108
AQR Funds	Annual Report	December 2010	108


Notes to Financial Statements			December 31, 2010

1. Organization

AQR Funds (the “Trust”), organized as a Delaware statutory trust on September 4, 2008, is an open-end management investment company, under the Investment Company Act of 1940, as amended (the “1940 Act”). As of December 31, 2010, the Trust consists of eight active series (collectively, the “Funds” and each individually a “Fund”): AQR Global Equity Fund, AQR International Equity Fund, AQR Diversified Arbitrage Fund, AQR Managed Futures Strategy Fund, AQR Risk Parity Fund, AQR Momentum Fund, AQR Small Cap Momentum Fund, and AQR International Momentum Fund. AQR Capital Management, LLC (“the Adviser”) serves as the investment adviser of each Fund. The Adviser has retained CNH Partners, LLC (“the Sub-Adviser”) an affiliate of the Adviser, to serve as an investment sub-adviser to the AQR Diversified Arbitrage Fund.

The investment objective of the AQR Global Equity Fund is long-term capital appreciation. The principal investment strategies of the AQR Global Equity Fund include seeking to outperform the MSCI World Total Return Index (the “Global Equity Benchmark”) while seeking to control its tracking error relative to this benchmark. The Global Equity Benchmark is a free float-adjusted market capitalization index that is designed to measure the performance of equities in developed markets, including the United States and Canada. The AQR Global Equity Fund commenced operations on December 31, 2009. The Fund offers Class I, Class N and Class Y shares.

The investment objective of the AQR International Equity Fund is long-term capital appreciation. The principal investment strategies of the AQR International Equity Fund include seeking to outperform the MSCI EAFE Total Return Index (the “International Equity Benchmark”) while seeking to control its tracking error relative to this benchmark. The International Equity Benchmark is a free float-adjusted market capitalization index that is designed to measure the performance of equities in developed markets, excluding the United States and Canada. The AQR International Equity Fund Class Y shares commenced operations on August 28, 2009. Class I and Class N shares commenced operations on September 30, 2009.

The investment objective of the AQR Diversified Arbitrage Fund is long-term absolute (positive) returns. The principal investment strategies of the AQR Diversified Arbitrage Fund include seeking to outperform the Merrill Lynch 3-Month Treasury Bill Index (the “Absolute Return Benchmark”) using arbitrage and alternative investment strategies such as merger arbitrage, convertible arbitrage, other forms of arbitrage (including, but not limited to, when-issued trading arbitrage, stub-trading arbitrage and dual-class arbitrage) and other types of non-arbitrage alternative investment strategies. The AQR Diversified Arbitrage Fund commenced operations on January 15, 2009. The Fund offers Class I and Class N shares.

The investment objective of the AQR Managed Futures Strategy Fund is to seek positive absolute returns. The Fund invests primarily in a portfolio of futures contracts and futures-related instruments. The Fund’s universe of investments includes more than 100 global developed and emerging market exchange-traded futures, futures related instruments and forward contracts across four major asset classes (commodities, currencies, fixed income and equities); however this universe of investments is subject to change under varying market conditions as these instruments evolve over time. The AQR Managed Futures Strategy Fund commenced operations on January 6, 2010. The Fund offers Class I and Class N shares.

The investment objective of the AQR Risk Parity Fund is to seek total return. Total return consists of capital appreciation and income. The Fund pursues its investment objective by allocating assets among major liquid asset classes (including global developed and emerging market equities, global nominal and inflation-linked government bonds, emerging market bonds, mortgage-backed securities, corporate and sovereign debt, the credit spreads of mortgage-backed securities and corporate and sovereign debt, developed and emerging market currencies, and commodities). The AQR Risk Parity Fund commenced operations on September 30, 2010. The Fund offers Class I and Class N shares.

The investment objective of the AQR Momentum Fund is to seek long-term capital appreciation. The Fund invests primarily in equity or equity-related securities (including, but not limited to, exchange-traded funds, equity index futures, and depository receipts) of large and mid-sized companies traded on a principal U.S. exchange or over-the-counter market that the Adviser determines to have positive momentum. The Adviser considers a security to have positive momentum primarily if it has a return over the prior twelve months, excluding the most recent one month, that ranks in the top third of its relevant universe at the time of purchase. The AQR Momentum Fund commenced operations on July 9, 2009. The Fund offers Class L shares.


AQR Funds	Annual Report	December 2010	109
AQR Funds	Annual Report	December 2010	109


Notes to Financial Statements			December 31, 2010

The investment objective of the AQR Small Cap Momentum Fund is to seek long-term capital appreciation. The Fund invests primarily in equity or equity-related securities (including, but not limited to, exchange-traded funds, equity index futures and depository receipts) of small cap companies traded on a principal U.S. exchange or over-the-counter market that the Adviser determines to have positive momentum. The Adviser considers a security to have positive momentum primarily if it has a return over the prior twelve months, excluding the most recent one month, that ranks in the top third of its relevant universe at the time of purchase. The AQR Small Cap Momentum Fund commenced operations on July 9, 2009. The Fund offers Class L shares.

The investment objective of the AQR International Momentum Fund is to seek long-term capital appreciation. The Fund invests primarily in equity or equity-related securities (including, but not limited to, exchange-traded funds, equity index futures and depositary receipts) of non-U.S. companies that the Adviser determines to have positive momentum. The Adviser considers a security to have positive momentum primarily if it has a return over the prior twelve months, excluding the most recent one month, that ranks in the top third of its relevant universe at the time of purchase. The AQR International Momentum Fund commenced operations on July 9, 2009. The Fund offers Class L shares.

2. Consolidation of Subsidiary — AQR Managed Futures Strategy Offshore Fund Ltd. and AQR Risk Parity Offshore Fund Ltd.

The consolidated Schedules of Investments, Statements of Assets and Liabilities, of Operations, of Changes in Net Assets and the Financial Highlights of the AQR Managed Futures Strategy Fund and AQR Risk Parity Fund includes the accounts of AQR Managed Futures Strategy Offshore Fund Ltd. and AQR Risk Parity Offshore Fund Ltd., respectively, wholly-owned and controlled subsidiaries (the “Subsidiaries”). All inter-company accounts and transactions have been eliminated in consolidation for the Funds. Each of the Subsidiaries has a fiscal year end of December 31st for financial statement consolidation purposes and a nonconforming tax year end of November 30th.

AQR Managed Futures Strategy Fund and AQR Risk Parity Fund may invest up to 25% of its total assets in its Subsidiary each of which acts as an investment vehicle in order to effect certain investments consistent with the Funds’ investment objectives and policies.

A summary of the Funds’ investment in the Subsidiaries are as follows:


	INCEPTION DATE OF SUBSIDIARY	SUBSIDIARY NET ASSETS AT DECEMBER 31, 2010		% OF TOTAL NET ASSETS AT DECEMBER 31, 2010

AQR Managed Futures Strategy Offshore Fund Ltd.	January 6, 2010	$	213,901,854		23.0	%
AQR Risk Parity Offshore Fund Ltd.	September 30, 2010		4,725,747		19.7

3. Significant Accounting Policies

The following summarizes the significant accounting policies of the Funds:

Use of Estimates: The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“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 increases and decreases in net assets from operations during the reported period. Actual results could differ from those estimates.

Securities Valuation: Each Fund’s portfolio securities are valued as of the close of business of the regular session of trading on the NYSE (normally 4:00 p.m. Eastern time). Equity securities, including securities sold short, are valued at the latest quoted sales prices or official closing prices taken from the primary market in which each security trades. In accordance with procedures adopted by the Board of Trustees, the Funds apply fair value pricing to international securities on a daily basis utilizing the quotations of an independent pricing service, unless the Adviser determines that use of another valuation methodology is appropriate. The pricing service uses statistical analysis and quantitative models to adjust local market prices using factors such as subsequent movement and changes in the prices of indices, securities and exchange rates in other markets, in determining fair value as of the time the Funds calculate their net asset value. Securities traded in the over-the-counter market, and which are not quoted by NASDAQ, are valued at the


AQR Funds	Annual Report	December 2010	110
AQR Funds	Annual Report	December 2010	110


Notes to Financial Statements			December 31, 2010

last sale price, if available, otherwise at the last quoted bid price (in the case of short sales, at the ask price). Bonds are valued using the latest bid prices or using valuations based on a matrix system (which considers such factors as security prices, yields, maturities, and ratings), both as furnished by independent pricing services. The Funds value debt securities maturing less than 61 days from the date of purchase at amortized cost, which approximates market value. The value of futures contracts purchased and sold by the Funds is accounted for using the unrealized gain or loss on the contracts that is determined by marking the contracts to their current settlement prices. Futures and options contracts are valued at the last quoted sales price on the valuation date. In the event that the exchange for a specific futures contract closes earlier than 4:00 p.m., the futures contract is valued at the Official Settlement Price of the exchange. Prices of futures contracts are monitored until 4:00 p.m. to determine if fair valuation would provide a more accurate valuation. Investments in open-end investment companies are valued at such investment company’s current day closing net asset value per share. Exchange-Traded Funds (“ETFs”) and closed-end investment companies are valued at the last quoted sales price. Equity, total return and commodity swap contracts are valued at fair value, based on the price of the underlying referenced instrument. Credit default swaps are valued daily primarily using independent pricing services or market makers. Interest rate swap contracts are valued at fair value as determined by an independent pricing service based on various valuation models which consider the terms of underlying contracts and market data inputs received from third parties.

The Funds may use pricing services to obtain readily available market quotations. Where market quotations are not readily available, or if an available market quotation is determined not to be reliable, a security will be valued based on its fair value as determined in accordance with the valuation procedures approved by the Funds’ Board of Trustees. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the prices used by other mutual funds to calculate their net assets.

Convertible Securities: The Funds invest in preferred stocks and fixed-income securities which are convertible into common stock. Convertible securities may be converted either at a stated price or rate within a specified period of time into a specified number of shares of common stock. Traditionally, convertible securities have paid dividends or interest greater than on the related common stocks, but less than fixed income non-convertible securities. By investing in a convertible security, the Funds may participate in any capital appreciation or depreciation of a company’s stock, but to a lesser degree than if it had invested in that company’s common stock. Convertible securities rank senior to common stock in a corporation’s capital structure and, therefore, entail less risk than the corporation’s common stock. The Funds may attempt to hedge certain of their investments in convertible debt securities by selling short the issuer’s common stock.

Short Sales: The AQR Diversified Arbitrage Fund sells securities it does not own as a hedge against some of its long positions and/or in anticipation of a decline in the market value of that security (short sale). When the Fund makes a short sale, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale. The Fund may have to pay a fee to borrow the particular security and may be obligated to remit any interest or dividends received on such borrowed securities. Dividends declared on short positions open are recorded on the ex-date as an expense. A gain, limited to the price at which the Fund sold the security short, or a loss, unlimited in magnitude, will be recognized upon the termination of a short sale if the market price at termination is less than or greater than, respectively, the proceeds originally received. The Fund is also subject to the risk that it may be unable to reacquire a security to terminate a short position except at a price substantially in excess of the last quoted price.

The Fund is required to pledge cash or securities to the broker as collateral for the securities sold short. Collateral requirements are calculated daily based on the current market value of the short positions. Cash deposited with broker for collateral for securities sold short is recorded as an asset on the Statement of Assets and Liabilities and securities segregated as collateral are denoted in the Schedule of Investments. The Fund may receive or pay the net of the following amounts: (i) a portion of the income from the investment of cash collateral; (ii) the broker’s fee on the borrowed securities; and (iii) a financing charge for the difference in the market value of the short position and cash collateral deposited with the broker. This income or fee is calculated daily based upon the market value of each borrowed security and a variable rate that is dependent on the availability of the security. The net amount of fees of $4,056,594 are included in interest income in the Statements of Operations.

Futures Contracts: Each Fund may invest in futures contracts (“futures”). Each Fund, excluding AQR Managed Futures Strategy Fund and AQR Risk Parity Fund, may invest in futures in order to hedge its investments or equitize its cash


AQR Funds	Annual Report	December 2010	111
AQR Funds	Annual Report	December 2010	111


Notes to Financial Statements			December 31, 2010

flows against fluctuations in value caused by changes in prevailing interest rates or market conditions. The AQR Managed Futures Strategy Fund and AQR Risk Parity Fund may invest in futures as part of its primary investment strategy. Investments in futures may increase exposure to a particular market. No monies are paid or received by a Fund upon the purchase or sale of a futures contract. Initially, a Fund will be required to deposit with the broker an amount of cash or cash equivalents, known as initial margin, based on the value of the contract. Subsequent payments, called variation margin, to and from the broker, will be made on a daily basis as the price of the underlying instruments fluctuates, making the long and short positions in the futures contract more or less valuable, a process known as ‘marking-to-the-market.’ Once a final determination of variation margin is made, additional cash is required to be paid by or released to a Fund, and a Fund will realize a loss or gain. The use of long futures contracts subject the Funds to risk of loss in excess of the amounts shown on the Statements of Assets and Liabilities, up to the notional amount of the futures contracts. The use of short futures contracts subjects the Funds to unlimited risk of loss. Futures contracts outstanding at period end, if any, are listed after each Fund’s Schedule of Investments.

Forward Currency Contracts: The Funds may buy and sell forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to protect against a decline in value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of a currency in which securities a fund intends to buy are denominated, when a fund holds cash reserves and short term investments), or for other investment purposes. The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in market value is recorded as an unrealized gain or loss. When the contract is closed, the Fund’s record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The Fund’s could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the Fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statements of Assets and Liabilities. Forward currency contracts outstanding at period end, if any, are listed after each Fund’s Schedule of Investments.

Equity (including total return and commodity) Swap Contracts: The Funds invest in equity swaps to obtain exposure to the underlying referenced instrument, obtain leverage or enjoy the returns from ownership without actually owning the underlying position. Equity swaps are two-party contracts that generally obligate one party to pay the positive return and the other party to pay the negative return on a specified reference security, basket of securities, security index or index component during the period of the swap. Equity swap contracts are marked to market daily based on the value of the underlying security and the change, if any, is recorded as an unrealized gain or loss. Equity swaps normally do not involve the delivery of securities or other underlying assets. If the other party to an equity swap defaults, a Fund’s risk of loss consists of the net amount of payments that such Fund is contractually entitled to receive, if any. Equity swaps are derivatives and their value can be very volatile. To the extent that the Adviser or Sub-Adviser, as applicable, do not accurately analyze and predict future market trends, the values of assets or economic factors, a Fund may suffer a loss, which may exceed the related amounts shown in the Statement of Assets and Liabilities. Periodic payments received or paid by the Funds are recorded as realized gains or losses. Equity swap contracts outstanding at period end, if any, are listed after each Fund’s Schedule of Investments.

Credit Default Swap Contracts: The Funds may enter into credit default swap contracts to provide a measure of protection against risk of loss following a default, or other credit event in respect of issuers within an underlying index or a single issuer, or to gain credit exposure to an underlying index or issuer. In a credit default contract, the protection buyer typically makes an up front payment and a periodic stream of payments to a counterparty, the protection seller, in exchange for the right to receive a contingent payment upon the occurrence of a credit event on the reference obligation or all other equally ranked obligations of the reference entity. Credit events are contract specific but may include bankruptcy, failure to pay, restructuring and obligation acceleration. An upfront payment received by a Fund, as the protection seller, is recorded as a liability on the Fund’s books. An upfront payment made by a Fund, as the protection buyer, is recorded as an asset on the Fund’s books. Periodic payments received or paid by a Fund are recorded as realized gains or losses. The credit default contracts are marked to market daily based upon quotations from an independent pricing service or market makers and the change, if any, is recorded as an unrealized gain or loss. Upon the occurrence of a credit event, the difference between the par value and market value of the reference obligation, net of any proportional amount of the upfront payment, is recorded as a realized gain or loss.


AQR Funds	Annual Report	December 2010	112
AQR Funds	Annual Report	December 2010	112


Notes to Financial Statements			December 31, 2010

In addition to bearing the risk that the credit event will occur, a Fund could be exposed to market risk due to unfavorable changes in interest rates or in the price of the underlying security or index or the possibility that the Fund may be unable to close out its position at the same time or at the same price as if it had purchased the underlying reference obligations. In certain circumstances, a Fund may enter into offsetting credit default contracts which would mitigate its risk of loss. Risks of loss may exceed amounts recognized on the statements of assets and liabilities. The Fund’s maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the fair value of the contract. This risk may be mitigated by having a master netting arrangement between the Fund and the counterparty. Where a Fund is a seller of protection, the maximum potential amount of future payments the Fund may be required to make is equal to the notional amount of the relevant credit default contract. The Funds’ risk of loss associated with these instruments may exceed their value, as recorded in the Statements of Assets and Liabilities. Credit default contracts outstanding, including their respective notional amounts at period end, if any, are listed after each Funds’ Schedule of Investments.

The credit default swaps in which the AQR Risk Parity Fund is providing protection at December 31, 2010 are summarized as follows:


	MAXIMUM PAYOUT/NOTIONAL AMOUNT BY PERIOD OF EXPIRATION ($ IN THOUSANDS)
CREDIT SPREAD ON UNDERLYING (BASIS POINTS)	0-5 YEARS USD		0-5 YEARS EUR		35-40 YEARS USD		WRITTEN CREDIT DERIVATIVES AT FAIR VALUE
0-250		7,150		2,350		175	$	243,847
251-500		5,225		1,400		—		165,702

Total		12,375		3,750		175	$	409,549

Implied credit spreads are an indication of the seller’s performance risk, related to the likelihood of a credit event occurring that would require a seller to make payment to a buyer. Implied credit spreads are used to determine the value of swap contracts and reflect the cost of buying/selling protection, which may include upfront payments made to enter into the contract. Therefore, higher spreads would indicate a greater likelihood that a seller will be obligated to perform (i.e., make payment) under the swap contract. Increasing values, in absolute terms and relative to notional amounts, are also indicative of greater performance risk. Implied credit spreads for credit default swaps on credit indexes are linked to the weighted average spread across the underlying reference obligations included in a particular index.

Interest Rate Swaps: The AQR Risk Parity Fund may enter into interest rate swaps as part of its investment strategy. Interest rate swaps generally involve agreements to exchange fixed and floating payment obligations, without the exchange of the underlying notional amounts. Periodic payments received or paid by the Fund are recorded as realized gains and losses. Interest rate swaps are marked to market daily based on quotations as provided by an independent pricing service and the change is recorded as unrealized gain or loss. The Fund’s risk of loss associated with these instruments may exceed their value, as recorded in the Statements of Assets and Liabilities. Interest rate contracts outstanding, including their respective notional amounts at period end, if any, are listed after each Fund’s Schedule of Investments.

High Yield Securities: Certain Funds may invest in lower-quality debt securities. Investments in lower-rated securities or unrated securities of comparable quality tend to be more sensitive to economic conditions than higher rated securities. These instruments involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other creditors’ claims.

Master Agreements: The Funds are a party to ISDA (International Swap and Derivatives Association, Inc.) Master Agreements (“Master Agreements”) with certain counterparties that govern over-the-counter derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to a Fund is held in a segregated account by the Fund’s custodian and with respect to those amounts


AQR Funds	Annual Report	December 2010	113
AQR Funds	Annual Report	December 2010	113


Notes to Financial Statements			December 31, 2010

which can be sold or repledged, are presented in the Fund’s Schedule of Investments. Collateral pledged by the Fund is segregated by the Fund’s custodian and identified in the Fund’s Schedule of Investments. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the Fund and the applicable counterparty. Collateral requirements are determined based on the Fund’s net position with each counterparty. Termination events applicable to the Fund may occur upon a decline in the Fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the Fund’s counterparties to elect early termination could impact a Fund’s future derivative activity. The Funds’ derivative assets and liabilities on the Statements of Assets and Liabilities are presented net when a legally enforceable master netting agreement exists between the Funds and a derivative counterparty.

Options: The Funds are authorized to write and purchase put and call options. When a Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired or deducted from (or added to) the proceeds of the security sold. When an option expires (or a Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium paid or received). Written uncovered call options subject the Funds to unlimited risk of loss. Written covered call options limit the upside potential of a security above the strike price. Put options written subject the Funds to risk of loss if the value of the security declines below the exercise price minus the put premium.

The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Written and purchased options are non-income producing investments.

Transactions in call options written during the period ended December 31, 2010 for the AQR Diversified Arbitrage Fund, were as follows:


	SHARES SUBJECT TO CALL			PREMIUM

Options outstanding, December 31, 2009		(884	)	$	(40,941	)
Options written		(165,576	)		(12,878,088	)
Options terminated in closing purchase transactions		7,270			1,685,740
Options expired		139,613			7,388,877
Options exercised		13,447			2,730,718
Options outstanding, December 31, 2010		(6,130	)	$	(1,113,694	)

Securities Lending: The Trust (excluding the AQR Diversified Arbitrage Fund, AQR Managed Futures Strategy Fund, and AQR Risk Parity Fund) may lend securities to brokers approved by the Adviser in order to generate additional income. Securities loaned are collateralized by cash, which is invested in Capital Shares of the JPMorgan Prime Money Market Fund. Upon termination of a loan, the Funds are required to return to the borrower the posted cash collateral. Loans are subject to termination by the Funds or the borrower at any time. Securities lending income is comprised of income earned on cash collateral investments (“Collateral Investments”), net of a rebate received from or paid to borrowers for use of cash collateral and lending agent fees. This amount is recorded as Income from securities lending (net) on the Statements of Operations. The Funds also receive payments from the borrower during the period of the loan, equivalent to dividends and interest earned on the securities loaned, which are recorded as Dividend or Interest income, respectively, on the Statements of Operations.

The Funds bear the risk of loss associated with the Collateral Investments and are not entitled to additional collateral from the borrower to cover any such losses. To the extent that the value of the Collateral Investments decline below the


AQR Funds	Annual Report	December 2010	114
AQR Funds	Annual Report	December 2010	114


Notes to Financial Statements			December 31, 2010

amount owed to a borrower, a Fund may incur losses that exceed the amount it earned on lending the security. Upon termination of a loan, a Fund may use leverage (borrow money) to repay the borrower for cash collateral posted if the Advisor does not believe that it is prudent to sell the Collateral Investments to fund the payment of this liability.

Securities lending also involves counterparty risks, including the risk that the loaned securities may not be returned in a timely manner or at all.

Federal Income Taxes: Each Fund is treated as a separate taxable entity for federal income tax purposes. Each Fund intends to qualify as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986 (“the Code”), as amended. If so qualified, each Fund will not be subject to federal income tax to the extent it distributes substantially all of its net investment income and capital gains to shareholders.

Management evaluates tax positions taken or expected to be taken in the course of preparing the Funds’ tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The Funds are required to analyze all open tax years. Open tax years are those years that are open for examination by the relevant income taxing authority. The returns of the Funds for the period from commencement of operations through December 31, 2010 are open for examination. As of December 31, 2010, the Funds had no examinations in progress.

The Funds have concluded that there is no tax liability/benefit resulting from uncertain income tax positions taken or expected to be taken. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax expense will significantly change in twelve months.

Securities Transactions and Investment Income: Investment transactions are accounted for on trade date (the date the order to buy or sell is executed). Securities gains and losses are calculated on a specifically identified cost basis. Interest income is determined on the basis of coupon interest accrued using effective interest method adjusted for amortization of premiums and accretion of discounts using the effective yield method. Dividend income/expense is recorded on the ex-dividend date.

Allocation of Income and Expenses: In calculating the net asset value per share of each class, investment income, realized and unrealized gains and losses and expenses other than class specific expenses are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. Each Fund is charged for those expenses that are directly attributable to each series, such as advisory fees and registration costs.

The Funds record distributions received in excess of income from underlying investments as a reduction of cost of investments and/or realized gain. Such amounts are based on estimates (if actual amounts are not available) and actual amounts of income, realized gain and return of capital may differ from the estimated amounts. The Funds adjust the estimated amounts of components of distributions (and consequently its net investment income) as necessary once the issuers provide information about the actual composition of the distributions.

The Funds may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Funds will accrue such taxes and recoveries as applicable, based upon their current interpretation of tax rules and regulations that exist in the markets in which they invest.

Organization and Offering Costs: Costs incurred by the AQR Global Equity Fund, AQR Managed Futures Strategy Fund, and AQR Risk Parity Fund in connection with the organization of the Funds, professional fees, printing fees and the offering of the initial registration were $24,804, $80,500 and $21,302, respectively. All costs were expensed as incurred.

Foreign Currency Translation: The books and records of the Funds are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the prevailing exchange rates of such currencies against the U.S. dollar. The market value of investment securities and the other assets and liabilities are translated at the exchange rate as of the valuation date. Purchases and sales of investment securities, income and expenses are translated at the exchange rate prevailing on the respective dates of such transactions.


AQR Funds	Annual Report	December 2010	115
AQR Funds	Annual Report	December 2010	115


Notes to Financial Statements			December 31, 2010

Although the net assets of the Funds are presented at the foreign exchange rates and market values at the close of the period, the Funds do not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held or sold during the period. Accordingly, such foreign currency gains (losses) are included in the reported net realized and unrealized gains (losses) on investment transactions.

Reported realized foreign currency gains or losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on each Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. Unrealized foreign exchange gains and losses arise from changes (due to the changes in the exchange rate) in the value of foreign currency and assets and liabilities (other than investments) denominated in foreign currencies, which are held at period end.

Cash and Cash Equivalents: Cash and cash equivalents includes US dollar and foreign currency at bank accounts at amounts which may exceed insured limits. The Funds are subject to risk to the extent that the institutions may be unable to fulfill their obligations.

Due to/from Broker: Due to/from Broker represents cash balances on deposit with the Funds’ primer brokers and counterparties. The Funds are subject to credit risk should the primer brokers and counterparties be unable to meet their obligations to the Funds.

Distributions to Shareholders: The Funds intend to declare and distribute substantially all of their net investment income and net realized capital gains, if any, at least annually. Income and capital gain distributions will be determined in accordance with Federal income tax regulations which may differ from GAAP. Distributions to shareholders are recorded on the ex-dividend date.

Indemnification: In the normal course of business, the Funds may enter into various agreements that provide for general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as any potential exposure involves future claims that may be made against the Funds. However, based on experience, the Funds expect the risk of loss to be remote.

4. Federal Income Tax Matters

At December 31, 2010, the cost of long security positions and aggregate gross unrealized appreciation (depreciation) of investments for federal income tax purposes were as follows:


FUND	COST OF INVESTMENTS		GROSS UNREALIZED APPRECIATION		GROSS UNREALIZED DEPRECIATION			NET UNREALIZED APPRECIATION (DEPRECIATION)
AQR Global Equity Fund	$	364,013,812	$	61,961,529	$	(11,498,015	)	$	50,463,514
AQR International Equity Fund		393,787,354		64,625,679		(11,496,131	)		53,129,548
AQR Diversified Arbitrage Fund		1,429,724,045		119,492,546		(26,077,939	)		93,414,607
AQR Managed Futures Strategy Fund		869,945,562		—		—			—
AQR Risk Parity Fund		22,715,807		20,150		(173,901	)		(153,751	)
AQR Momentum Fund		130,894,706		10,395,450		(446,735	)		9,948,715
AQR Small Cap Momentum Fund		53,896,672		6,015,578		(372,030	)		5,643,548
AQR International Momentum Fund		56,385,575		8,130,158		(2,426,617	)		5,703,541

The differences between book basis and tax basis appreciation (depreciation) on investments is primarily attributable to wash sale loss deferrals and passive foreign investment companies (AQR Global Equity Fund, AQR International Equity Fund and AQR International Momentum Fund).


AQR Funds	Annual Report	December 2010	116
AQR Funds	Annual Report	December 2010	116


Notes to Financial Statements			December 31, 2010

At December 31, 2010, the components of accumulated earnings/loss on a tax-basis were as follows:


FUND	CURRENT DISTRIBUTABLE ORDINARY INCOME		CURRENT DISTRIBUTABLE LONG TERM CAPITAL GAIN OR TAX BASIS CAPITAL LOSS CARRYFORWARDS			NET UNREALIZED APPRECIATION (DEPRECIATION)			OTHER TEMPORARY DIFFERENCES			TOTAL ACCUMULATED EARNINGS
AQR Global Equity Fund	$	5,197,406	$	1,346,648		$	51,017,333		$	—		$	57,561,387
AQR International Equity Fund		7,812,047		2,273,246			52,198,810			—			62,284,103
AQR Diversified Arbitrage Fund		4,148,727		—			21,489,630			—			25,638,357
AQR Managed Futures Strategy Fund		8,271,751		342,818			12,472,525			(2,499,023	)		18,588,071
AQR Risk Parity Fund		241,720		87,967			(50,834	)		(142,432	)		136,421
AQR Momentum Fund		647,448		229,680			9,948,715			—			10,825,843
AQR Small Cap Momentum Fund		412,458		263,159			5,643,548			—			6,319,165
AQR International Momentum Fund		123,457		(135,168	)		5,868,297			—			5,856,586

The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral losses on wash sales and other book and tax differences including passive foreign investment companies (“PFIC”), forward foreign currency contracts, swap contracts, and foreign income from wholly owned controlled foreign corporations.

At December 31, 2010, the effect of permanent book/tax reclassifications resulted in increase (decrease) to the components of net assets as follows:


FUND	UNDISTRIBUTED NET INVESTMENT INCOME			ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS			PAID-IN CAPITAL
AQR Global Equity Fund	$	8,580,526		$	(21,733,490	)	$	13,152,964
AQR International Equity Fund		7,792,902			(513,570	)		(7,279,332	)
AQR Diversified Arbitrage Fund		(1,537,704	)		1,416,963			120,741
AQR Managed Futures Strategy Fund		12,704,040			(19,626,999	)		6,922,959
AQR Risk Parity Fund		279,986			(528,008	)		248,022
AQR Momentum Fund		(20,153	)		20,153			—
AQR Small Cap Momentum Fund		(4,554	)		4,554			—
AQR International Momentum Fund		(366,365	)		366,365			—

For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to the tax treatment of net operating losses, swap contracts, distribution reclassifications, foreign currency reclassifications, sale of Real Estate Investment Trusts and PFIC’s. Results of operations and net assets were not affected by these reclassifications.


AQR Funds	Annual Report	December 2010	117
AQR Funds	Annual Report	December 2010	117


Notes to Financial Statements			December 31, 2010

The tax character of the distributions paid during the periods ended December 31, 2010 and December 31, 2009, were as follows:


	DECEMBER 31, 2010				DECEMBER 31, 2009
FUND	ORDINARY INCOME		CAPITAL GAINS		ORDINARY INCOME
AQR Global Equity Fund*	$	14,994,426	$	2,022,493		N/A
AQR International Equity Fund		14,719,113		—	$	15,889,442
AQR Diversified Arbitrage Fund		16,563,956		—		2,319,939
AQR Managed Futures Strategy Fund*		9,578,985		7,656,480		N/A
AQR Risk Parity Fund*		248,610		—		N/A
AQR Momentum Fund		431,429		12,799		197,807
AQR Small Cap Momentum Fund		546,289		29,957		190,216
AQR International Momentum Fund		259,130		—		614,653

The AQR Global Equity Fund, AQR Managed Futures Strategy Fund and AQR Risk Parity Fund commenced operations on December 31, 2009, January 6, 2010 and September 30, 2010, respectively.

As of December 31, 2010, for Federal Income Tax purposes, the AQR International Momentum Fund has capital loss carryforwards available to offset capital gains, if any, to the extent provided by the Treasury regulations.


FUND	AMOUNT		YEAR OF EXPIRATION
AQR International Momentum Fund	$	135,168		2018

5. Fair Value Measurements

The Funds utilize various inputs in determining the value of each Fund’s investments. GAAP establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs be used when available. These inputs are summarized in the three broad levels as follows:

Level 1 — quoted prices in active markets for identical securities

Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, pre-payment speeds, credit risk, etc.)

Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

Valuation methodology and inputs

An investment asset’s or liability’s level within the fair value hierarchy is based on the lowest level input, individually or in aggregate, that is significant to fair value measurement. The objective of fair value measurement remains the same even when there is a significant decrease in the volume and level of activity for an asset or liability and regardless of the valuation technique used.

The valuation techniques used by the Fund to measure fair value during the year ended December 31, 2010 maximized the use of observable inputs and minimized the use of unobservable inputs.

The inputs or methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities. The following are certain inputs and techniques that the Fund uses to evaluate how to classify each major category of assets and liabilities for Level 2 and Level 3, in accordance with GAAP.

Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, money market funds and less liquid listed equities. Corporate and sovereign bonds and other fixed income instruments are valued at estimated fair value based on quotations from counterparties and other market participants, as well as pricing models using quoted inputs as provided by an independent pricing service. As Level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations


AQR Funds	Annual Report	December 2010	118
AQR Funds	Annual Report	December 2010	118


Notes to Financial Statements			December 31, 2010

may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 instruments include less liquid corporate debt securities, illiquid warrants and illiquid securities. When observable prices are not available for these securities, the Funds use one or more valuation techniques (e.g., the market approach, the income approach or, the cost approach) for which sufficient and reliable data is available. Within Level 3, the use of the market approach generally consists of using comparable market transactions, while the use of the income approach generally consists of the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors. The inputs used by the Funds in estimating the value of Level 3 investments include the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers, subsequent rounds of financing, recapitalizations and other transactions across the capital structure, offerings in the equity or debt capital markets, and changes in financial ratios or cash flows. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Funds in the absence of market information. Assumptions used by the Funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Funds’ results of operations.

The Funds invest in derivative instruments. Derivative instruments can be exchange traded or privately negotiated over-the-counter (“OTC”). Exchange-traded derivatives, such as futures contracts and exchange traded option contracts, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Futures and option contracts that are listed on national exchanges and are freely transferable are valued at fair value based on their last sales price on the date of determination on the exchange that constitutes the principal market. OTC derivatives, including forwards, credit default swaps, total return swaps, and interest rate swaps, are valued by the Fund using observable inputs, such as quotations received from the counterparty, dealers or brokers, whenever available and considered reliable. Generally, a valuation model is used consistently for similar derivative types and model inputs, including, but not limited to, market prices, yield curves, credit spreads, volatilities and implied correlations which are obtained from outside brokers and/or pricing services when available. In instances where models are used, the value of an OTC derivative depends upon the contractual terms of, and specific risks inherent in, the instrument as well as the availability and reliability of observable inputs. Such inputs include market prices for reference securities, yield curves, credit curves, measures of volatility, prepayment rates and correlations of such inputs. Certain OTC derivatives, such as generic forwards, swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2. Equity total return swap transactions are valued at fair value, based on the price of the underlying security. Interest rate swap contracts are valued at estimated fair value as determined by the Fund based on various valuation models which consider the terms of underlying contracts and market data inputs received from third parties.

Credit default swaps are carried at their estimated fair value, as determined in good faith by pricing services approved by the Board of Trustees. In addition to credit quality, the Funds monitor a variety of factors including cash flow assumptions, market activity, market sentiment and valuation as part of its ongoing process of assessing payment and performance risk. As payment and performance risk increases, the value of a credit default swap increases, resulting in recognition of unrealized gains for long positions and unrealized losses for short positions. Conversely, as payment and performance risk decreases, unrealized gains are recognized for short positions and unrealized losses are recognized for long positions. The change in value is recorded within unrealized appreciation/(depreciation) until the occurrence of a credit event or the termination of the swap, at which time a realized gain/(loss) is recorded. Those OTC derivatives that have less liquidity or for which inputs are unobservable are classified within Level 3. While the valuations of these less liquid OTC derivatives may utilize some Level 1 and/or Level 2 inputs, they also include other unobservable inputs which are considered significant to the fair value determination. At each measurement date, the Funds’ update the Level 1 and Level 2 inputs to reflect observable inputs, though the resulting gains and losses are reflected within Level 3 due to the significance of the unobservable inputs.

Transfers

Transfers into, and out of, Level 3 are valued utilizing values as of the begining of the period. Transfers from Level 2 to Level 3 or from Level 3 to Level 2 are due to a decline or an increase in market activity (e.g. frequency of trades), which resulted in a lack of or increase in available market inputs to determine price.


AQR Funds	Annual Report	December 2010	119
AQR Funds	Annual Report	December 2010	119


Notes to Financial Statements			December 31, 2010

The following summarizes inputs used as of December 31, 2010 in valuing the Funds’ assets carried at fair value:


AQR GLOBAL EQUITY FUND	QUOTED PRICES IN ACTIVE MARKET (LEVEL 1)			OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTALS
*ASSETS*
Common Stocks†	$	208,013,517		$	174,311,979	$	—	$	382,325,496
Preferred Stocks†		—			570,176		—		570,176
Rights†		6,588			—		—		6,588
Warrants†		—			1		—		1
Foreign Currency Contracts*		—			2,290,745		—		2,290,745
Money Market Funds		—			31,575,065		—		31,575,065
Total Return Swap Contracts		—			493,528		—		493,528

Total Assets	$	208,020,105		$	209,241,494	$	—	$	417,261,599

*LIABILITIES*
Futures Contracts*	$	(567,868	)	$	—	$	—	$	(567,868	)

Total Liabilities	$	(567,868	)	$	—	$	—	$	(567,868	)

*	Derivative instruments, including futures, foreign currency, and total return swap contracts are valued at the net unrealized appreciation (depreciation) on the instrument.

†	Please refer to the Schedule of Investments to view securities segregated by country.

There were no material transfers between Levels 1 and 2 during the period.


AQR INTERNATIONAL EQUITY FUND	QUOTED PRICES IN ACTIVE MARKET (LEVEL 1)			OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTALS
*ASSETS*
Common Stocks†	$	—		$	399,168,161	$	8,335	$	399,176,496
Preferred Stock†		—			1,944,745		—		1,944,745
Money Market Funds		—			45,795,661		—		45,795,661
Foreign Currency Contracts*		—			4,569,115		—		4,569,115
Total Return Swap Contracts*		—			439,723		—		439,723

Total Assets	$	—		$	451,917,405	$	8,335	$	451,925,740

*LIABILITIES*
Futures Contracts*	$	(1,258,676	)	$	—	$	—	$	(1,258,676	)

Total Liabilities	$	(1,258,676	)	$	—	$	—	$	(1,258,676	)

†Please refer to the Schedule of Investments to view securities segregated by country.


AQR Funds	Annual Report	December 2010	120
AQR Funds	Annual Report	December 2010	120


Notes to Financial Statements			December 31, 2010

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


	COMMON STOCKS			COMMERCIAL PAPER
Balance as of December 31, 2009	$	676		$	88,336
Securities transferred in (out)		8,335			—
Securities purchased/(sold)		(11,089	)		(88,336	)
Change in unrealized appreciation (depreciation)		11,869			364,670
Realized gain (loss)		(1,456	)		(364,670	)

Balance as of December 31, 2010	$	8,335		$	—

The total change in unrealized appreciation (depreciation) included in the Statements of Operations attributable to Level 3 investments still held at December 31, 2010 is $0 for common stocks and there was no change for commercial paper.

*	Derivative instruments, including futures, foreign currency, and total return swap contracts are valued at the net unrealized appreciation (depreciation) on the instrument.

There were no material transfers between Levels 1 and 2 during the period.


AQR DIVERSIFIED ARBITRAGE FUND	QUOTED PRICES IN ACTIVE MARKET (LEVEL 1)			OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)			SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTALS
*ASSETS*
Common Stocks†	$	581,820,281		$	15,959,953		$	3,323,774	$	601,104,008
Convertible Preferred Stocks†		28,822,504			3,511,177			580,905		32,914,586
Corporate Bonds†		—			228,832,859			3,240,078		232,072,937
Convertible Bonds†		—			545,424,124			1,864,435		547,288,559
Closed End Funds		10,720,623			—			—		10,720,623
Rights†		285,131			—			—		285,131
Warrants†		28,494,794			281,891			3,543,581		32,320,266
Money Market Funds		—			66,432,542			—		66,432,542

Total Assets	$	650,143,333		$	860,442,546		$	12,552,773	$	1,523,138,652

*LIABILITIES*
Common Stocks (Sold Short)†	$	(635,303,735	)	$	—		$	—	$	(635,303,735	)
Convertible Bonds (Sold Short)†		—			(1,134,750	)		—		(1,134,750	)
Closed End Funds (Sold Short)		(19,066,979	)		—			—		(19,066,979	)
Foreign currency contracts*		—			(286,465	)		—		(286,465	)
Futures Contracts*		(545,947	)		—			—		(545,947	)
Credit Default Swap Contracts*		—			(1,452,422	)		—		(1,452,422	)
Written Option Contracts*		(977,733	)		—			—		(977,733	)

Total Liabilities	$	(655,894,394	)	$	(2,873,637	)	$	—	$	(658,768,031	)

† Please refer to the Schedule of Investments to view securities segregated by industry type.


AQR Funds	Annual Report	December 2010	121
AQR Funds	Annual Report	December 2010	121


Notes to Financial Statements			December 31, 2010

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


	COMMON STOCKS		CONVERTIBLE PREFERRED STOCK			CORPORATE BONDS			CONVERTIBLE BONDS		WARRANTS
Balance as of December 31, 2009	$	7,508	$	—		$	—		$	—	$	—
Securities purchased		3,009,864		750,120			3,492,980			1,850,000		974,398
Accrued Discounts/(Premiums)		—		—			87,215			—		—
Change in unrealized appreciation (depreciation)		306,402		(169,215	)		(340,117	)		14,435		2,569,183
Transfers into Level Three		—		—			—			—		—

Balance as of December 31, 2010	$	3,323,774	$	580,905		$	3,240,078		$	1,864,435	$	3,543,581

The total change in unrealized appreciation (depreciation) included in the Statements of Operations attributable to Level 3 investments still held at December 31, 2010 is $306,402, $(169,215), $(340,117), $14,435, and $2,569,183 for common stocks, convertible preferred stock, corporate bonds, convertible bonds and warrants, respectively.

*	Derivative instruments, including futures, and foreign currency are valued at the unrealized appreciation (depreciation) on the instrument. Written options and credit default swap contracts are reported at market value.

There were no material transfers between Levels 1 and 2 during the period.


AQR MANAGED FUTURES STRATEGY FUND	QUOTED PRICES IN ACTIVE MARKET (LEVEL 1)		OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTALS
*ASSETS*
Money Market Funds	$	—	$	869,945,562	$	—	$	869,945,562
Total Return Swap Contracts*		—		3,277,326		—		3,277,326
Futures Contracts*		10,787,157		—		—		10,787,157
Foreign Currency Contracts*		—		6,247,409		—		6,247,409

Total Assets	$	10,787,157	$	879,470,297	$	—	$	890,257,454

There were no material transfers between Levels 1 and 2 during the period.

There were no Level 3 securities held during the period.

*	Derivative instruments, including futures, foreign currency and total return swap contracts, are valued at the unrealized appreciation (depreciation) on the instrument.


AQR RISK PARITY FUND	QUOTED PRICES IN ACTIVE MARKET (LEVEL 1)		OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTALS
*ASSETS*
Government Related Obligations	$	—	$	6,509,492	$	—	$	6,509,492
U.S. Treasury Obligations		3,838,111		—		—		3,838,111
Money Market Funds		—		12,214,453		—		12,214,453
Futures Contracts*		360,178		—		—		360,178
Forward Currency Contracts		—		45,622		—		45,622
Credit Default Swaps*		—		409,549		—		409,549
Total Return Swap Contracts		—		22,504		—		22,504

Total Assets	$	4,198,289	$	19,201,620	$	—	$	23,399,909


AQR Funds	Annual Report	December 2010	122
AQR Funds	Annual Report	December 2010	122


Notes to Financial Statements			December 31, 2010


AQR RISK PARITY FUND	QUOTED PRICES IN ACTIVE MARKET (LEVEL 1)		OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)			SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTALS
*LIABILITIES*
Interest Rate Swap Contracts*		—		(109,597	)		—		(109,597	)
Total Return Swap Contracts*		—		(131,897	)		—		(131,897	)

Total Liabilities	$	—	$	(241,494	)	$	—	$	(241,494	)

*	Derivative instruments, including futures, foreign currency, interest rate and total return swap contracts, are valued at the unrealized appreciation (depreciation) on the instrument. Credit default swap contracts are reported at market value.

There were no material transfers between Levels 1 and 2 during the period.

There were no Level 3 securities held during the period.


AQR MOMENTUM FUND	QUOTED PRICES IN ACTIVE MARKET (LEVEL 1)			OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTALS
*ASSETS*
Common Stocks†	$	121,167,593		$	—	$	—	$	121,167,593
Money Market Funds		—			19,675,828		—		19,675,828

Total Assets	$	121,167,593		$	19,675,828	$	—	$	140,843,421

*LIABILITIES*
Futures Contracts*	$	(1,434	)	$	—	$	—	$	(1,434	)

Total Liabilities	$	(1,434	)	$	—	$	—	$	(1,434	)

*	Derivative instruments, including futures contracts, are valued at the unrealized appreciation (depreciation) on the instrument.

†	Please refer to the Schedule of Investments to view securities segregated by industry type.

There were no material transfers between Levels 1 and 2 during the period.


AQR SMALL CAP MOMENTUM FUND	QUOTED PRICES IN ACTIVE MARKET (LEVEL 1)			OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTALS
*ASSETS*
Common Stocks†	$	53,139,370		$	—	$	—	$	53,139,370
Money Market Funds		—			6,400,850		—		6,400,850

Total Assets	$	53,139,370		$	6,400,850	$	—	$	59,540,220

*LIABILITIES*
Futures Contracts*	$	(11,309	)	$	—	$	—	$	(11,309	)

Total Liabilities	$	(11,309	)	$	—	$	—	$	(11,309	)

*	Derivative instruments, including futures contracts, are valued at the unrealized appreciation (depreciation) on the instrument.

†	Please refer to the Schedule of Investments to view securities segregated by industry type.


AQR Funds	Annual Report	December 2010	123
AQR Funds	Annual Report	December 2010	123


Notes to Financial Statements			December 31, 2010

There were no material transfers between Levels 1 and 2 during the period.


AQR INTERNATIONAL MOMENTUM FUND	QUOTED PRICES IN ACTIVE MARKET (LEVEL 1)		OTHER SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)		TOTALS
*ASSETS*
Common Stocks†	$	10,137,450	$	47,044,325	$	—	$	57,181,775
Preferred Stocks†		—		2,433,828		—		2,433,828
Exchange Traded Funds		1,192,026		—		—		1,192,026
Rights†		5,799		—		—		5,799
Warrants†		—		1		—		1
Money Market Funds		—		1,275,687		—		1,275,687
Foreign Currency Contracts*		—		10,442		—		10,442
Equity Basket Swap Contract*		—		72,399		—		72,399

Total Assets	$	11,335,275	$	50,836,682	$	—	$	62,171,957

*	Derivative instruments, including foreign currency and swap contracts, are valued at the unrealized appreciation (depreciation) on the instrument.

†	Please refer to the Schedule of Investments to view securities segregated by country.

There were no material transfers between Levels 1 and 2 during the period.

6. Investment Transactions

During the period ended December 31, 2010, the cost of purchases and the proceeds from sales of investments (excluding swap contracts, foreign currency contracts, futures contracts and short-term investments) were as follows:


FUND	PURCHASES		SALES			SECURITIES SOLD SHORT		COVERS ON SECURITIES SOLD SHORT
AQR Global Equity Fund	$	243,374,567	$	(267,951,797	)	$	—	$	—
AQR International Equity		384,122,770		(334,119,034	)		—		—
AQR Diversified Arbitrage Fund		2,745,983,753		(1,733,464,236	)		1,082,414,196		(672,441,774	)
AQR Managed Futures Strategy Fund		—		—			—		—
AQR Risk Parity Fund		12,705,644		2,142,754			—		—
AQR Momentum Fund		168,059,666		(63,561,560	)		—		—
AQR Small Cap Momentum Fund		99,753,544		(55,963,166	)		—		—
AQR International Momentum Fund		115,279,358		(84,619,528	)		—		—

During the period ended December 31, 2010, the cost of in-kind purchases for the AQR Global Equity Fund was $335,420,940 (see Note 11).

The AQR Risk Parity Fund had long-term purchases and sales of U.S. Government obligations of $4,772,002 and $882,902, respectively.


AQR Funds	Annual Report	December 2010	124
AQR Funds	Annual Report	December 2010	124


Notes to Financial Statements			December 31, 2010

7. Derivative Instruments and Hedging Activities

Certain Funds use derivative instruments as part of their principal investment strategy to achieve their investment objectives. The effect of such derivative instruments on the Funds’ financial position and financial performance as reflected in the Statements of Assets and Liabilities and Statements of Operations for the period ended December 31, 2010 are as follows:


	ASSETS						LIABILITIES
FUND	UNREALIZED APPRECIATION ON FUTURES CONTRACTS		SWAPS AT VALUE		UNREALIZED APPRECIATION ON FORWARD CURRENCY CONTRACTS		WRITTEN OPTIONS AT MARKET VALUE		UNREALIZED DEPRECIATION ON FUTURES CONTRACTS		SWAPS AT VALUE		UNREALIZED DEPRECIATION ON FORWARD CURRENCY CONTRACTS
Equity Risk Exposure:
AQR Global Equity Fund		$1,235,225		$493,528		$—		$—		$1,803,093		$—		$—
AQR International Equity Fund		932,107		439,723		—		—		2,190,783		—		—
AQR Diversified Arbitrage Fund		—		—		—		977,733		2,105,973		—		—
AQR Managed Futures Strategy Fund		3,689,869		1,282,171		—		—		943,995		11,986		—
AQR Risk Parity Fund		92,487		35,349		—		—		24,809		144,742		—
AQR Momentum Fund		—		—		—		—		1,434		—		—
AQR Small Cap Momentum Fund		—		—		—		—		11,309		—		—
AQR International Momentum Fund		—		72,399		—		—		—		—		—

Foreign Exchange Rate Risk Exposure:
AQR Global Equity Fund		—		—		7,154,146		—		—		—		4,863,401
AQR International Equity Fund		—		—		10,307,337		—		—		—		5,738,222
AQR Diversified Arbitrage Fund		—		—		422,250		—		—		—		708,715
AQR Managed Futures Strategy Fund		166,314		—		27,742,833		—		—		—		21,495,424
AQR Risk Parity Fund		—		—		206,650		—		—		—		161,028
AQR International Momentum Fund		—		—		14,048		—		—		—		3,606

Interest Rate Risk Exposure:
AQR Diversified Arbitrage Fund		1,560,026		—		—		—		—		—		—
AQR Managed Futures Strategy Fund		817,199		28,139		—		—		543,145		88,725		—
AQR Risk Parity Fund		6,118		7,900		—		—		—		117,497		—

Credit Risk Exposure:
AQR Diversified Arbitrage Fund		—		—		—		—		—		1,452,422		—
AQR Risk Parity Fund		—		409,549		—		—		—		—		—

Commodity Exposure:
AQR Managed Futures Strategy Fund		8,553,395		2,173,177		—		—		952,480		105,450		—
AQR Risk Parity Fund		392,224		—		—		—		105,842		—		—

Netting
AQR Global Equity Fund		(1,235,225)		—		(4,863,401)		—		(1,235,225)		—		(4,863,401)
AQR International Equity Fund		(932,107)		—		(5,738,222)		—		(932,107)		—		(5,738,222)
AQR Diversified Arbitrage Fund		(1,560,026)		—		(422,250)		—		(1,560,026)		—		(422,250)
AQR Managed Futures Strategy Fund		(2,439,620)		(206,161)		(21,495,424)		—		(2,439,620)		(206,161)		(21,495,424)
AQR Risk Parity Fund		(130,651)		(262,239)		(161,028)		—		(130,651)		(262,239)		(161,028)
AQR Momentum Fund		—		—		—		—		—		—		—
AQR Small Cap Momentum Fund		—		—		—		—		—		—		—
AQR International Momentum Fund		—		—		(3,606)		—		—		—		(3,606)

Net Fair Value of Derivative Contracts
AQR Global Equity Fund		—		493,528		2,290,745		—		567,868		—		—
AQR International Equity Fund		—		439,723		4,569,115		—		1,258,676		—		—
AQR Diversified Arbitrage Fund		—		—		—		977,733		545,947		1,452,422		286,465
AQR Managed Futures Strategy Fund		10,787,157		3,277,326		6,247,409		—		—		—		—
AQR Risk Parity Fund		360,178		190,559		45,622		—		—		—		—
AQR Momentum Fund		—		—		—		—		1,434		—		—
AQR Small Cap Momentum Fund		—		—		—		—		11,309		—		—
AQR International Momentum Fund		—		72,399		10,442		—		—		—		—


AQR Funds	Annual Report	December 2010	125
AQR Funds	Annual Report	December 2010	125


Notes to Financial Statements			December 31, 2010

The following is the effect of Derivative Instruments on the Statements of Operations for the period ended December 31, 2010:


	REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED AS A RESULT FROM OPERATIONS:								NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED AS A RESULT FROM OPERATIONS:
FUND	FUTURES AND SWAPS ON FUTURES CONTRACTS*		SWAPS CONTRACTS		FORWARD CURRENCY CONTRACTS		WRITTEN OPTIONS		FUTURES AND SWAPS ON FUTURES CONTRACTS*		SWAPS CONTRACTS		FORWARD CURRENCY CONTRACTS		WRITTEN OPTIONS
Equity Risk Exposure:
AQR Global Equity Fund		$(38,711)		$—		$—		$—		$220,340		$—		$—		$—
AQR International Equity Fund		(314,296)		—		—		—		(2,139,284)		—		—		—
AQR Diversified Arbitrage Fund		(8,817,593)		—		—		7,361,398		(1,966,143)		—		—		141,330
AQR Managed Futures Strategy Fund		15,903,220		—		—		—		4,028,045		—		—		—
AQR Risk Parity Fund		326,160		—		—		—		(41,715)		—		—		—
AQR Momentum Fund		337,965		—		—		—		(1,293)		—		—		—
AQR Small Cap Momentum Fund		410,041		—		—		—		(11,309)		—		—		—
AQR International Momentum Fund		—		638,038		—		—		—		43,827		—		—

Foreign Exchange Rate Risk Exposure:
AQR Global Equity Fund		—		—		5,990,830		—		—		—		2,908,082		—
AQR International Equity Fund		—		—		3,097,471		—		—		—		5,343,590		—
AQR Diversified Arbitrage Fund		—		—		(209,109)		—		—		—		(282,918)		—
AQR Managed Futures Strategy Fund		28,689		—		(572,573)		—		166,314		—		6,247,409		—
AQR Risk Parity Fund		—		—		231,097		—		—		—		45,622		—
AQR International Momentum Fund		—		—		(331,704)		—		—		—		179,153		—

Interest Rate Risk Exposure:
AQR Diversified Arbitrage Fund		(3,281,385)		—		—		—		1,003,058		—		—		—
AQR Managed Futures Strategy Fund		3,939,811		—		—		—		201,482		—		—		—
AQR Risk Parity Fund		(486,453)		—		—		—		6,118		(109,597)		—		—

Credit Risk Exposure:
AQR Diversified Arbitrage Fund		—		(5,831,063)		—		—		—		(2,196,784)		—		—
AQR Risk Parity Fund		—		141,580		—		—		—		211,649		—		—

Commodity Risk Exposure:
AQR Managed Futures Strategy Fund		6,844,497		—		—		—		9,668,642		—		—		—
AQR Risk Parity Fund		258,556		—		—		—		286,382		—		—		—

*	Futures and swaps on futures are consolidated for financial reporting purposes.

For swaps, futures and forward foreign currency contracts, the Funds may be required to post collateral if a Fund is in a net liability position with the counterparty exceeding certain amounts. Additionally, counterparties may immediately terminate the position if a Fund fails to maintain sufficient asset coverage for its contracts or its net assets decline by stated percentages.

As of December 31, 2010, the following Funds had net liability positions:


FUND	DERIVATIVES IN NET LIABILITY POSITION			COLLATERAL POSTED
AQR Diversified Arbitrage Fund	$	(3,262,567	)	$	17,890,872
AQR Momentum Fund		(1,434	)		298,540
AQR Small Cap Momentum Fund		(11,309	)		189,960


AQR Funds	Annual Report	December 2010	126
AQR Funds	Annual Report	December 2010	126


Notes to Financial Statements			December 31, 2010

For the period ended December 31, 2010, the quarterly average values of the derivatives held by the Funds were as follows:


FUND	SWAP CONTRACTS (NOTIONAL VALUE)			FUTURES CONTRACTS*			WRITTEN OPTION CONTRACTS*			FOREIGN FORWARD CURRENCY CONTRACTS*
AQR Global Equity Fund	$	(8,547,510	)	$	41,879,161			$—		$	27,459,023
AQR International Equity Fund		(7,562,044	)		53,855,334			—			52,941,168
AQR Diversified Arbitrage Fund		15,052,288			(209,666,104	)		(755,462	)		(14,925,660	)
AQR Managed Futures Strategy Fund		107,215,016			1,076,775,011			—			78,652,326
AQR Risk Parity Fund		2,685,598,939			9,886,162			—			(442,124	)
AQR Momentum Fund		—			1,522,491			—			—
AQR Small Cap Momentum Fund		—			293,363			—			—
AQR International Momentum Fund		2,055,828			—			—			2,700,732

Values as of each quarter end are used to calculate the average represented.

The Funds’ derivative contracts held at December 31, 2010, are not accounted for as hedging instruments under GAAP.

8. Investment Advisory and Other Agreements

The Adviser serves as the investment adviser to each of the Funds pursuant to an Investment Advisory Agreement, dated December 4, 2008, as amended from time to time, or an Investment Management Agreement, dated June 10, 2010, as amended from time to time, entered into by the Trust, on behalf of the Funds (together, the “Advisory Agreement”). Under the Advisory Agreement, the Adviser furnishes a continuous investment program for each Fund’s portfolio, makes day-to-day investment decisions for the Funds, and manages the Funds’ investments in accordance with the stated policies of each Fund. The Adviser is also responsible for selecting brokers and dealers to execute purchase and sale orders for the portfolio transactions of each Fund, subject to its obligation to seek best execution. The Adviser provides persons satisfactory to the Trustees to serve as officers of the Funds. Pursuant to the Advisory Agreement, the Funds pay the Adviser a management fee calculated on the average daily net assets for each Fund, in the annual ratios below:


FUND	RATIO
AQR Global Equity Fund		0.40	%
AQR International Equity Fund		0.45
AQR Diversified Arbitrage Fund		1.00
AQR Managed Futures Strategy Fund		1.05
AQR Risk Parity Fund		0.75
AQR Momentum Fund		0.25
AQR Small Cap Momentum Fund		0.35
AQR International Momentum Fund		0.35

Effective October 1, 2010, the shareholders of the AQR Diversified Arbitrage Fund agreed to increase the Fund’s investment advisory fee from 0.70% to 1.00%.

The Trust and the Adviser have entered into a Fee Waiver and Expense Reimbursement Agreement whereby the Adviser has agreed to waive its fee and/or reimburse each Fund at least through December 31, 2010 for AQR Global Equity Fund and AQR International Equity Fund, May 1, 2011 for AQR Diversified Arbitrage Fund, AQR Managed Futures Strategy Fund, AQR Momentum Fund, AQR Small Cap Momentum Fund and AQR International Momentum Fund, and May 1, 2012 for AQR Risk Parity Fund. The Adviser has agreed to waive and/or reimburse each Fund to the extent that the total annual fund operating expense ratios (including consolidation), exclusive of interest, taxes, borrowing costs, acquired fund fees and expenses, dividend expense related to short sales, and extraordinary expenses exceed the following ratios:


FUND CLASS	RATIO
AQR Global Equity Fund — Class I		0.85	%
AQR Global Equity Fund — Class N		1.20


AQR Funds	Annual Report	December 2010	127
AQR Funds	Annual Report	December 2010	127


Notes to Financial Statements			December 31, 2010


FUND CLASS	RATIO
AQR Global Equity Fund — Class Y		0.50	%
AQR International Equity Fund — Class I		0.90
AQR International Equity Fund — Class N		1.25
AQR International Equity Fund — Class Y		0.55
AQR Diversified Arbitrage Fund — Class I		1.20
AQR Diversified Arbitrage Fund — Class N		1.50
AQR Managed Futures Strategy Fund — Class I		1.25
AQR Managed Futures Strategy Fund — Class N		1.50
AQR Risk Parity Fund – Class I		0.95
AQR Risk Parity Fund – Class N		1.20
AQR Momentum Fund — Class L		0.49
AQR Small Cap Momentum Fund — Class L		0.65
AQR International Momentum Fund — Class L		0.65

The Trust, in turn, agreed that the Funds will repay the fee waiver/expense reimbursement to the Adviser. Such repayment shall be made only out of the class of the Fund for which the applicable fee waiver and expense reimbursement was made. Repayments with respect to a Fund must be limited to amounts that do not cause the aggregate operating expenses of the Fund attributable to a share class during a year in which such repayment is made to exceed the applicable ratios reflected in the table above. A repayment shall be payable only to the extent it can be made during the thirty six months following the applicable period during which the Adviser waived fees or reimbursed the applicable Fund for its operating expenses under the Agreement.

For the period ended December 31, 2010, the amounts waived and reimbursed by the Adviser, as well as the amounts available for potential future recoupment by the Adviser and the expiration schedule at December 31, 2010 are as follows:


	FEES WAIVED/ REIMBURSED FOR THE PERIOD DECEMBER 31, 2010		TOTAL POTENTIAL RECOUPMENT AMOUNT		POTENTIAL RECOUPMENT AMOUNTS EXPIRING
	FEES WAIVED/ REIMBURSED FOR THE PERIOD DECEMBER 31, 2010		TOTAL POTENTIAL RECOUPMENT AMOUNT		DECEMBER 31, 2012			DECEMBER 31, 2013

AQR GLOBAL EQUITY FUND
Class I	$	—	$	—	$	—		$	—
Class N		—		—		—			—
Class Y		735,651		287,811		—			287,811	**

Totals	$	735,651	$	287,811	$	—		$	287,811

AQR INTERNATIONAL EQUITY FUND
Class I	$	60,578	$	68,908	$	8,330		$	60,578
Class N		19,745		21,120		1,375			19,745
Class Y		675,160		488,290		242,140	*		246,150	**

Totals	$	755,483	$	578,318	$	251,845		$	326,473

AQR DIVERSIFIED ARBITRAGE FUND
Class I	$	129,192	$	431,903	$	302,711	*	$	129,192
Class N		106,194		309,121		202,927			106,194

Totals	$	235,386	$	741,024	$	505,638		$	235,386


AQR Funds	Annual Report	December 2010	128
AQR Funds	Annual Report	December 2010	128


Notes to Financial Statements			December 31, 2010


	FEES WAIVED/ REIMBURSED FOR THE PERIOD DECEMBER 31, 2010		TOTAL POTENTIAL RECOUPMENT AMOUNT		POTENTIAL RECOUPMENT AMOUNTS EXPIRING
	FEES WAIVED/ REIMBURSED FOR THE PERIOD DECEMBER 31, 2010		TOTAL POTENTIAL RECOUPMENT AMOUNT		DECEMBER 31, 2012		DECEMBER 31, 2013

AQR MANAGED FUTURES STRATEGY FUND
Class I	$	43,567	$	43,567	$	—	$	43,567
Class N		52,983		52,983		—		52,983

Totals	$	96,550	$	96,550	$	—	$	96,550

AQR RISK PARITY FUND
Class I	$	68,981	$	68,981	$	—	$	68,981
Class N		64,602		64,602		—		64,602

Totals	$	133,583	$	133,583	$	—	$	133,583

AQR MOMENTUM FUND
Class L	$	165,059	$	290,318	$	125,259	$	165,059

AQR SMALL CAP MOMENTUM FUND
Class L	$	168,573	$	293,165	$	124,592	$	168,573

AQR INTERNATIONAL MOMENTUM FUND
Class L	$	266,187	$	387,726	$	121,539	$	266,187

The Adviser has agreed to forgo future recoupments pertaining to Shareholder Servicing Fee Waivers expiring on December 31, 2012 of $281,012 and $20,131 for the AQR International Equity Fund and AQR Diversified Arbitrage Fund, respectively.

The Adviser has agreed to forgo future recoupments incurred in the current period pertaining to Shareholder Servicing Fee Waivers expiring on December 31, 2013 of $447,840 and $429,010 for the AQR Global Equity Fund and AQR International Equity Fund, respectively.

Pursuant to the Sub-Advisory Agreement between the Sub-Adviser, the Adviser and the Trust, the Adviser will pay the Sub-Adviser an annual fee, payable monthly, at the annual rate of 0.70% of the Fund’s average daily net assets. Effective October 1, 2010, the shareholders of the AQR Diversified Arbitrage Fund approved the Amended and Restated Investment Sub-Advisory Agreement (the “A&R Sub-Advisory Agreement”), between the Sub-Adviser, the Adviser and the Trust. Under the A&R Sub-Advisory Agreement, the Adviser will pay the Sub-Adviser an annual fee, payable monthly, at an annual rate of 1.00% of the Fund’s average daily net assets.

The Advisor contributed capital in the amount of $15,777 in the AQR International Equity Fund Class Y shares during the period ended December 31, 2009.

For the year ended December 31, 2010 the Advisor contributed $544,199 into the AQR Diversified Arbitrage Fund. The impact of the Adviser’s contribution increased the Fund’s total return by 0.08%.

Effective September 12, 2010 for the AQR Managed Futures Strategy Fund and September 19, 2010 for the remaining active Funds in the Trust, J.P. Morgan Investor Services Co., serves as the Funds’ Administrator and Accounting Agent and JPMorgan Chase Bank, N.A., serves as Custodian. Prior to the aforementioned dates, The Bank of New York Mellon served as the Funds’ Administrator, Custodian and Accounting Agent.


AQR Funds	Annual Report	December 2010	129
AQR Funds	Annual Report	December 2010	129


Notes to Financial Statements			December 31, 2010

ALPS Fund Services, Inc. serves as the Funds’ Transfer Agent, and ALPS Distributors, Inc. serves as the Funds’ Distributor. Fees incurred by the Funds for sub-transfer agency services for the period ended December 31, 2010, were as follows:


FUND CLASS	AMOUNT
AQR Global Equity Fund — Class I	$	16
AQR Global Equity Fund — Class N		66
AQR International Equity Fund — Class I		14,035
AQR International Equity Fund — Class N		378
AQR Diversified Arbitrage Fund — Class I		167,438
AQR Diversified Arbitrage Fund — Class N		153,565
AQR Managed Futures Strategy Fund — Class I		41,738
AQR Managed Futures Strategy Fund — Class N		20,624
AQR Risk Parity Fund – Class I		1,529
AQR Risk Parity Funds – Class N		1,529
AQR Momentum Fund — Class L		2,201
AQR Small Cap Momentum Fund — Class L		178
AQR International Momentum Fund — Class L		10,872

9. Distribution and Service Plans

The Trust has adopted a Plan of Distribution (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act with respect to the Class N shares of the Funds, as applicable. The Plan allows for the payment of services related to the distribution and servicing of these shares at a rate of up to 0.25% per annum of the average daily net asset value of the Class N shares of the Funds, as applicable.

Pursuant to the Shareholder Services Agreement, between the Trust (excluding the AQR Diversified Arbitrage Fund, AQR Managed Futures Strategy Fund and AQR Risk Parity Fund) and the Adviser, the Adviser receives an annual fee (the “Shareholder Services Fee”), payable monthly, at the annual rate of 0.30%, 0.35%, and 0.15% of the average daily net assets of the Class I, Class N and Class L shares, respectively. The Adviser also provides a wide range of services to the Funds and their shareholders under a separate Shareholder Services Agreement. These services include, among others, access to performance information reporting, analysis and explanations of Fund reports as well as electronic access to Fund information. In addition, the Adviser may, from time to time, compensate third parties (including financial intermediaries) from the fees the Adviser receives under the Shareholder Services Agreement for non- distribution shareholder services such third parties provide to clients or customers that are shareholders of the Funds. Fees incurred by the Funds under the Plan and/or the shareholder services agreement for the period ended December 31, 2010, were as follows:

For the period January 1, 2010 through June 30, 2010, the Class Y shares of the Funds charged a 0.25% Shareholder Service Fee. Effective July 1, 2010, the Board of Trustees approved the elimination of this fee.

For the period January 1, 2010 through June 30, 2010, the Class I shares of the AQR Diversified Arbitrage Fund charged a 0.30% Shareholder Services Fee. For the period July 1, 2010 through September 30, 2010, the Board of Trustees approved the rate change to 0.25%. Effective October 1, 2010, the shareholders of the Fund in conjunction with the approval of the new investment advisory fee approved the elimination of the Shareholders Services fees for Class I shares.

For the period January 1, 2010 through September 30, 2010, the Class N shares of the AQR Diversified Arbitrage Fund charged a 0.35% Shareholder Services Fee. Effective October 1, 2010, the shareholders of the Fund in conjunction with the approval of the new investment advisory fee approved the elimination of the Shareholder Services fees for Class N shares.


FUND CLASS	AMOUNT
AQR Global Equity Fund — Class I	$	3,722
AQR Global Equity Fund — Class N		3,892
AQR Global Equity Fund — Class Y		447,840
AQR International Equity Fund — Class I		212,805


AQR Funds	Annual Report	December 2010	130
AQR Funds	Annual Report	December 2010	130


Notes to Financial Statements			December 31, 2010


FUND CLASS	AMOUNT
AQR International Equity Fund — Class N	$	3,165
AQR International Equity Fund — Class Y		429,010
AQR Diversified Arbitrage Fund — Class I		681,706
AQR Diversified Arbitrage Fund — Class N		501,200
AQR Momentum Fund — Class L		52,283
AQR Small Cap Momentum Fund — Class L		21,282
AQR International Momentum Fund — Class L		50,316

10. Purchases and Redemption of Shares

Investors may purchase shares of a Fund at their net asset value (“NAV”), based on the next calculation of the NAV after the order is placed. Neither the Fund nor the distributor charges a sales charge or other transaction fee to purchase shares, although other institutions may impose transaction fees on shares purchased through them.

Redemption requests will be processed at the next NAV calculated after a redemption request is accepted. The Funds (excluding AQR Diversified Arbitrage Fund) reserve the right to charge a redemption fee of 1% (2% in the case of AQR Global Equity Fund, AQR International Equity Fund and AQR International Momentum Fund), of redemption proceeds on Class I, Class N and Class L shares held for 60 days or less. The Funds charge this fee in order to discourage short-term investors. The Funds retain this fee for the benefit of the remaining shareholders. The AQR Global Equity and AQR International Equity Funds’ Class Y shares charge subscription and redemption fees of 0.10% each, regardless of the period such shares may have been held.

11. In-Kind Transactions

On December 31, 2009, the AQR Global Equity Fund acquired substantially all of the assets and liabilities of three privately offered funds (“Private Funds”) managed by the Adviser in exchange for Class Y shares of the Fund. This transaction was structured to qualify as a tax-free reorganization under the Code. The investment portfolios of the Private Funds, with a fair value of $369,372,153 and identified cost of $335,420,940 as of the date of the reorganization, was the principal asset acquired by the Fund. For financial statement purposes, assets received and shares issued by the Fund were recorded at fair value, and the Fund recorded the cost of such investments at their historical cost as recorded by the Private Funds. The cost basis of the investments received from the Private Funds was carried forward to align ongoing reporting of the Fund’s realized and unrealized gains and losses with amounts distributable for tax purposes. The net assets of the Private Funds at the date of acquisition were $370,340,997, including unrealized appreciation of $33,351,345. The net assets of the AQR Global Equity Fund immediately after the reorganization was $370,340,997. The Fund had no net assets or liabilities prior to the reorganization.

On August 28, 2009, the AQR International Equity Fund acquired all of the assets and liabilities of a privately offered fund managed by the Adviser in exchange for Class Y shares of the Fund. This transaction was structured to qualify as a tax-free reorganization under the Code. The investment portfolio of the privately offered fund, with a fair value of $273,684,897 and identified cost of $238,063,341 as of the date of the reorganization, was the principal asset acquired by the Fund. For financial statement purposes, assets received and shares issued by the Fund were recorded at fair value, and the Fund recorded the cost of such investments at their historical cost as recorded by the privately offered fund. The cost basis of the investments received from the privately offered fund was carried forward to align ongoing reporting of the Fund’s realized and unrealized gains and losses with amounts distributable for tax purposes. The net assets of the private fund at the date of acquisition were $316,649,562, including unrealized appreciation of $37,442,098. The net assets of the Fund immediately after the reorganization were $316,649,562. The Fund had no net assets or liabilities prior to the reorganization.

12. Risks and Concentrations

By using derivative instruments, the Funds are exposed to the counterparty’s credit risk, the risk that derivative counterparties may not perform in accordance with the contractual provisions offset by the value of any collateral received. The Funds’ exposure to credit risk associated with counterparty non-performance is limited to the unrealized gains inherent in such transactions that are recognized in the Statements of Assets and Liabilities. The Funds minimize counterparty credit risk through credit limits and approvals, credit monitoring procedures, executing master netting arrangements and managing margin and collateral requirements, as appropriate.


AQR Funds	Annual Report	December 2010	131
AQR Funds	Annual Report	December 2010	131


Notes to Financial Statements			December 31, 2010

The Funds may have elements of risk not typically associated with investments in the United States of America due to concentrated investments in a limited number of countries or regions, which may vary throughout the year. Such concentrations may subject the Funds to additional risks resulting from political or economic conditions in such countries or regions and the possible imposition of adverse governmental laws or currency exchange restrictions could cause the securities and their markets to be less liquid and their prices to be more volatile than those of comparable US companies.

Swap agreements involve, to varying degrees, elements of market risk (generally equity price risk related to equity index swap agreements, interest rate risk related to bond swap agreements and commodity risk related to synthetic swap agreements utilizing futures) and exposure to loss in excess of the amount reflected on the Statements of Assets and Liabilities. The notional amounts, which are disclosed as of period end in the swap tables included in the Schedules of Portfolio Investments, reflect the current investment exposure each Fund has under the swap agreement which may exceed the net asset value of the Fund.

As of December 31, 2010, a substantial portion of the AQR Global Equity, AQR International Equity and AQR International Momentum Funds’ net assets consisted of issuers that are denominated in foreign currencies. Changes in currency exchange rates will affect the value of and investment income from such securities.

As of December 31, 2010, the AQR Diversified Arbitrage Fund pledged a substantial portion of its assets for securities sold short to JP Morgan Chase Bank N.A.

13. Line of Credit

The Trust (excluding the AQR Managed Futures Strategy and AQR Risk Parity Funds) has secured an uncommitted, $150,000,000 line of credit with JPMorgan Chase Bank, N.A. Borrowings, if any, under this arrangement bear interest at the Fed Funds Rate plus the sum of (a) 1.5% per annum plus (b) if the LIBOR Reference Rate exceeds the Federal Funds Rate, the amount of such excess, which shall be paid quarterly. The maximum loan amount outstanding per Fund, will be the lesser of an amount which does not exceed the borrowing limits set forth in the Fund’s Prospectus and/or Registration Statement and does not cause the Asset Coverage Ratio for all borrowings to drop below 500%. The agreement is subject to an annual commitment fee which is payable in arrears on a quarterly basis. This line of credit expires on September 16, 2011. As of and for the year ended December 31, 2010, the Funds did not have any outstanding borrowings under this agreement.

14. Principal Ownership

As of December 31, 2010, the Funds had individual shareholder accounts, owning more than 5% of the total shares outstanding of the Fund. The AQR Global Equity Fund has 2 shareholders that have a combined interest of the Fund of 73%. The AQR International Equity Fund has 4 shareholders that have a combined interest of the Fund of 69%. The AQR Risk Parity Fund is 35% owned by the Adviser and its affiliates.

15. New Accounting Pronouncement

In January 2010, the Financial Accounting Standards Board issued an update to improve disclosure about fair value measurements. This update requires entities to disclose a) the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, b) the reasons for any transfers in or out of Level 3 and c) information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition, this update clarifies the requirements for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The requirement to disclose information about purchases, sales, issuances and settlements in the reconciliation of recurring Level 3 measurements is effective for financial statements issued for interim and annual reporting periods beginning after December 15, 2010.

16. Subsequent Events

The Funds have evaluated subsequent events through the date of issuance of this report and have determined that there are no material events that would require disclosure.


AQR Funds	Annual Report	December 2010	132
AQR Funds	Annual Report	December 2010	132


Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of AQR Funds:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations, of cash flows and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AQR Global Equity Fund, AQR International Equity Fund, AQR Diversified Arbitrage Fund, AQR Managed Futures Strategy Fund, AQR Risk Parity Fund, AQR Momentum Fund, AQR Small Cap Momentum Fund, and AQR International Momentum Fund (eight of the portfolios constituting AQR Funds, hereinafter referred to as the “Funds”) at December 31, 2010, and the results of each of their operations, the changes in each of their net assets, the cash flows of AQR Diversified Arbitrage Fund and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

March 7, 2011


AQR Funds	Annual Report	December 2010	133
AQR Funds	Annual Report	December 2010	133


Other Federal Tax Information (Unaudited)

For the year ended December 31, 2010, certain dividends paid by the Funds may be subject to a maximum tax of 15% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Funds intend to designate the maximum allowable as taxed at the 15% rate. The following represents the percentage of ordinary income distributions treated as qualifying dividends:


FUND	PERCENTAGE
AQR Global Equity Fund		50.38	%
AQR International Equity Fund		57.08	%
AQR Diversified Arbitrage Fund		22.42	%
AQR Momentum Fund		94.74	%
AQR Small Cap Momentum Fund		15.89	%
AQR International Momentum Fund		100.00	%

For the taxable year ended December 31, 2010, the following percentages of income dividends paid by the Fund qualify for the 70% dividends received deductions available to corporations:


FUND	PERCENTAGE
AQR Diversified Arbitrage Fund		13.97	%
AQR Global Equity Fund		14.24	%
AQR Momentum Fund		25.87	%
AQR Small Cap Momentum Fund		11.41	%

The Funds designate the following amounts, or the maximum allowable under the Internal Revenue Code, as long term capital gain distributions qualifying for the maximum 15% income tax rate for individuals:


FUND	TOTAL
AQR Global Equity Fund	$	2,022,493
AQR Managed Futures Strategy Fund	$	7,656,480
AQR Momentum Fund	$	12,799
AQR Small Cap Momentum Fund	$	29,957

Certain Funds have derived net income from sources within foreign countries. As of December 31, 2010, the foreign source income for each Fund was as follows:


FUND	TOTAL		PER SHARE
AQR International Equity Fund	$	11,701,142	$	0.2847
AQR International Momentum Fund	$	727,083	$	0.1677

Certain Funds intend to elect to pass through to shareholders the income tax credit for taxes paid to foreign countries. As of December 31, 2010, the foreign tax credit for each Fund was as follows:


FUND	TOTAL		PER SHARE
AQR International Equity Fund	$	855,622	$	0.0208
AQR International Momentum Fund	$	57,020	$	0.0131


AQR Funds	Annual Report	December 2010	134
AQR Funds	Annual Report	December 2010	134

Fund Expense Examples (Unaudited)

December 31, 2010

As a shareholder of the Trust, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period as indicated below.

Actual Expenses

The table below provides information about actual account values and actual expenses. You may use the 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 under the heading entitled “Expenses Paid for the Period Ended 12/31/10” to estimate the expenses you paid on your account during this period. Each Fund will indirectly bear its pro rata share of the expenses incurred by the underlying investments in which the Fund invests. These expenses are not included in the table.

Hypothetical Example for Comparison Purposes

The table below also provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed annual rate of return of 5% before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a Fund and other funds by comparing this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The Fund will indirectly bear its pro rata share of the expenses incurred by the underlying investments in which the Fund invests. These expenses are not included in the table.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the hypothetical example is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.


	BEGINNING ACCOUNT DATE VALUE		ENDING ACCOUNT VALUE 12/31/10	ANNUALIZED EXPENSE RATIO FOR THE PERIOD	EXPENSES PAID FOR THE PERIOD ENDING 12/31/10
AQR Global Equity Fund
Class I (1)
Actual Return		$1,000.00	$1,137.22	0.79%	$4.26
Hypothetical Return		$1,000.00	$1,046.02	0.79%	$4.07
Class N (1)
Actual Return		$1,000.00	$1,133.21	1.10%	$5.43
Hypothetical Return		$1,000.00	$1,044.91	1.10%	$5.21
Class Y (1)
Actual Return		$1,000.00	$1,142.88	0.50%	$2.70
Hypothetical Return		$1,000.00	$1,047.48	0.50%	$2.58
AQR International Equity Fund
Class I
Actual Return		$1,000.00	$1,099.46	0.90%	$4.76
Hypothetical Return		$1,000.00	$1,045.46	0.90%	$4.64
Class N
Actual Return		$1,000.00	$1,097.70	1.25%	$6.61
Hypothetical Return		$1,000.00	$1,043.70	1.25%	$6.44
Class Y
Actual Return		$1,000.00	$1,105.63	0.55%	$2.92
Hypothetical Return		$1,000.00	$1,047.23	0.55%	$2.84


AQR Funds	Annual Report	December 2010	135
AQR Funds	Annual Report	December 2010	135


	BEGINNING ACCOUNT DATE VALUE		ENDING ACCOUNT VALUE 12/31/10	ANNUALIZED EXPENSE RATIO FOR THE PERIOD	EXPENSES PAID FOR THE PERIOD ENDING 12/31/10
AQR Diversified Arbitrage Fund
Class I
Actual Return		$1,000.00	$1,041.05	1.20%	$6.17
Hypothetical Return		$1,000.00	$1,043.95	1.20%	$6.18
Class N
Actual Return		$1,000.00	$1,036.74	1.50%	$7.70
Hypothetical Return		$1,000.00	$1,042.44	1.50%	$7.72
AQR Managed Futures Strategy Fund
Class I (2)		1/6/10
Actual Return		$1,000.00	$1,047.80	1.25%	$6.45
Hypothetical Return		$1,000.00	$1,043.70	1.25%	$6.44
Class N (2)		1/6/10
Actual Return		$1,000.00	$1,043.64	1.50%	$7.73
Hypothetical Return		$1,000.00	$1,042.44	1.50%	$7.72
AQR Risk Parity Fund
Class I (3)		9/30/10
Actual Return		$1,000.00	$1,036.38	0.95%	$2.46(a)
Hypothetical Return		$1,000.00	$1,047.58	0.95%	$2.48
Class N (3)		9/30/10
Actual Return		$1,000.00	$1,034.74	1.20%	$3.11(a)
Hypothetical Return		$1,000.00	$1,046.94	1.20%	$3.13
AQR Momentum Fund
Class L
Actual Return		$1,000.00	$1,183.53	0.49%	$2.70
Hypothetical Return		$1,000.00	$1,047.53	0.49%	$2.53
AQR Small Cap Momentum Fund
Class I
Actual Return		$1,000.00	$1,273.62	0.65%	$3.73
Hypothetical Return		$1,000.00	$1,046.72	0.65%	$3.35
AQR International Momentum Fund
Class I
Actual Return		$1,000.00	$1,137.82	0.65%	$3.50
Hypothetical Return		$1,000.00	$1,046.72	0.65%	$3.35

(1)	Commencement of operations was December 31, 2009.

(2)	Commencement of operations was January 6, 2010.

(3)	Commencement of operations was September 30, 2010.

(a)	Expenses are calculated using each Class’ annualized expense ratio, multipled by the average account value for the period, multipled by 93/365 (to reflect the period since commencement of operations).

Expenses are calculated using each Class’ annualized expense ratio, multipled by the average account value for the period, multipled by 184/365 (to reflect the one-half year period unless stated otherwise).


AQR Funds	Annual Report	December 2010	136
AQR Funds	Annual Report	December 2010	136


Trustees and Officers (Unaudited)			December 31, 2010

The overall management of the business and affairs of the Funds is vested with the Board of Trustees. The Board of Trustees consists of four individuals (each, a “Trustee”), three of whom are not “interested persons” of the Trust as defined in the Investment Company Act (the “Disinterested Trustees”). The Trustees are responsible for the oversight of the operations of the Trust and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Board of Trustees approves all significant agreements between the Trust and persons or companies furnishing services to it, including the Trust’s agreements with its investment advisers, investment sub-advisers, administrator, custodian and transfer agent. The management of each Fund’s day-to-day operations is delegated to its officers, the Adviser, the Sub-Adviser (in the case of AQR Diversified Arbitrage Fund) and the Funds’ administrator, subject always to the investment objectives and policies of each of the Funds and to general supervision of the Board of Trustees. The Disinterested Trustees have retained independent legal counsel to assist them in connection with their duties.

Listed in the chart below is basic information regarding the Trustees and officers of the Trust. The address of each officer and Trustee is 2 Greenwich Plaza, Third Floor, Greenwich CT 06830.

NAME AND YEAR OF BIRTH

CURRENT
POSITION WITH
THE TRUST,
TERM OF
OFFICE¹AND
LENGTH OF
TIME SERVED

PRINCIPAL OCCUPATION(S)
DURING PAST 5 YEARS

NUMBER
OF FUNDS
IN FUND
COMPLEX
OVERSEEN
BY TRUSTEE

OTHER
PRESENT OR
PAST
DIRECTORSHIPS
HELD BY
TRUSTEE (DURING
THE PAST 5 YEARS)

Disinterested Trustees²

Timothy K. Armour, 1948

Chairman of the
Board since
2010 and Trustee,
since 2008

Interim Chief Executive Officer of
Janus Capital Group (2009 to
2010); Managing Director,
Morningstar Inc. (2000 to 2008).

Janus Capital
Group; AARP
Services, Inc.

ETF Securities

Steven Grenadier, 1964

Trustee,
since 2008

Professor of Finance, Stanford
University (since 1992).

Nicholas
Applegate
Institutional
Funds

L. Joe Moravy, 1950

Trustee,
since 2008

Managing Director, Financial
Scholars Group (since 2010)
(consulting firm); Managing
Director, LJM Advisory (2008-
2010) (consulting firm); Partner,
Ernst & Young LLP (2002 to
2008).

N/A

Interested Trustee³

David Kabiller, 1963

Trustee,
since 2010

Founding Principal, AQR Capital
Management, LLC (since 1998)

N/A

Officers

Marco Hanig, 1958

Chief Executive
Officer, since
2009; President,
since 2008

Vice President, AQR Capital
Management, LLC (since 2008);
prior thereto, Principal, William
Blair & Company, L.L.C. (1999 to
2007).

Abdon Bolivar, 1965

Chief Compliance
Officer, since
2008

Chief Compliance Officer, AQR
Capital Management, LLC (since
2002)


AQR Funds	Annual Report	December 2010	137
AQR Funds	Annual Report	December 2010	137


Trustees and Officers (Unaudited)			December 31, 2010


NAME AND YEAR OF BIRTH	CURRENT POSITION WITH THE TRUST, TERM OF OFFICE¹AND LENGTH OF TIME SERVED	PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS	NUMBER OF FUNDS IN FUND COMPLEX OVERSEEN BY TRUSTEE	OTHER PRESENT OR PAST DIRECTORSHIPS HELD BY TRUSTEE (DURING THE PAST 5 YEARS)

Nir Messafi, 1975	Chief Financial Officer, since 2010; Vice President, since 2009; Treasurer 2009 to 2010	Vice President, AQR Capital Management, LLC (since 2003).

Aaron Masek, 1974	Vice President and Treasurer, since 2010	Vice President, AQR Capital Management, LLC (since 2010); prior thereto Audit Manager, Cohen Fund Audit Services, Ltd. (2008 to 2009); prior thereto Senior Vice President, Citi Fund Services Ohio, Inc. (1996 - 2008).

Bradley Asness, 1969	Vice President and Chief Legal Officer, since 2009	Principal and Chief Legal Officer, AQR Capital Management, LLC (since 1998).

Brendan R. Kalb, 1975	Executive Vice President, since 2009; Secretary, since 2008	Vice President and General Counsel, AQR Capital Management, LLC (since 2004).

Nicole DonVito, 1979	Vice President, since 2009	Vice President, AQR Capital Management, LLC (since 2007), prior thereto, Associate, Schulte Roth & Zabel LLP (2006 to 2007); prior thereto, Associate Dewey & LeBoeuf LLP (2004 to 2006).

Michael Kalansky, 1979	Assistant Treasurer	Associate, AQR Capital Management, LLC (since 2010); prior thereto Senior Accountant, KBC Financial Products (2008 to 2009); prior thereto Manager of Accounting, Citi Property Investors (2005 to 2008).

(1)	Each Trustee serves until the election and qualification of a successor, or until death, resignation or removal as provided in the Trust’s Declaration of Trust.

(2)	A Disinterested Trustee is any Trustee that is not an “interested person” of the Trust within the meaning of Section 2(a)(19) of the 1940 Act.

(3)	An Interested Trustee is a Trustee that is an “interested person” of the Trust within the meaning of Section 2(a)(19) of the 1940 Act. Mr. Kabiller is an interested person of the Trust because of his position with the Adviser.


AQR Funds	Annual Report	December 2010	138
AQR Funds	Annual Report	December 2010	138


Board Approval of Investment Management Agreement (Unaudited)


AQR Risk Parity Fund

The Board of Trustees (the “Board,” and the members of which are referred to as “Board Members”) of the AQR Funds (the “Trust”) met in person on June 9-10, 2010 to consider the approval of the investment management agreement (the “Management Agreement”) between the Trust, on behalf of the AQR Risk Parity Fund (the “Fund”), and AQR Capital Management, LLC (“AQR” of the “Adviser”). In accordance with Section 15(c) of the Investment Company Act of 1940. as amended (the “1940 Act”), the Board requested, reviewed, and considered materials furnished by AQR relevant to the Board’s consideration of whether to approve the Management Agreement. These materials included (a) memoranda and materials prepared by AQR, describing personnel and services to be provided to the Fund; (b) performance information for strategies and model portfolios relevant to consideration of the Management Agreement; (c) information independently compiled and prepared by Lipper, Inc. (“Lipper”) relating to the proposed Fund fees and expenses; (d) a discussion of AQR’s financial statements; and (e) a discussion of the AQR compliance program and its regulatory exam histories.

At the in-person meeting held on June 9-10, 2010, the Board, including the Board Members who are not “interested persons” as defined in the 1940 Act (the “Independent Board Members”), unanimously approved the Management Agreement for an initial two-year term. The Board considered all factors it believed relevant with respect to the Fund, including, among other factors: (a) the nature, extent and quality of the services to be provided by AQR; (b) the investment performance of AQR portfolio management; (c) the advisory fee and the cost of the services and profits to be realized by AQR from the relationship with the Fund; (d) economies of scale; and (e) other factors.

The Board also considered other matters it deemed important to the approval process, such as services related to the valuation and pricing of Fund portfolio holdings, direct and indirect benefits to AQR and its affiliates from their relationship with the Fund and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board did not identify any particular information as controlling, and each Board Member may have attributed different weights to the various items considered.

The following is a summary of the Board’s discussion and views regarding the factors it considered in evaluating the Management Agreement:

The nature, extent and quality of the services to be provided by AQR. The Board Members reviewed the services that AQR would provide to the Fund under the Management Agreement. The Board considered the size and experience of AQR’s staff. Its use of technology, and the Fund’s investment objective, strategy and process. The Board reviewed the overall qualifications of AQR as an investment adviser. In connection with the investment advisory services to be provided to the Fund, the Board Members took into account detailed discussions they had with officers of AQR regarding the management of the Fund’s investments in accordance with the Fund’s stated investment objective and policies and the types of transactions that would be entered into on behalf of the Fund. During these discussions, the Board Members asked detailed questions of, and received answers from, the officers of AQR regarding the formulation and proposed implementation of the Fund’s investment strategy its efficacy and potential risks. The Board considered information about how portfolio managers are compensated by AQR.

In addition to the investment advisory services to be provided to the Fund, the Board Members considered that AQR also will provide shareholder and administrative services, oversight of Fund accounting, marketing services, assistance in meeting legal and regulatory requirements and other services necessary for the operation of the Fund. In particular, the Board of Trustees reviewed the compliance and administrative services to be provided to the Fund by AQR.

Finally, the Independent Board Members had an opportunity to meet outside the presence of management in executive session separately with counsel to discuss and consider the Management Agreement. Based on the presentations at the June 9-10, 2010 Board meeting, the Board of Trustees concluded that the services to be provided to the Fund by AQR pursuant to the Management Agreement were likely to be of a high quality and would benefit the Fund.

Investment Performance of AQR Portfolio Management. Because the Fund is newly formed, the Board did not consider the investment performance of the Fund. The Board based its review of AQR’s performance primarily on the experience of AQR in managing other registered investment companies and private funds, noting that other funds AQR manages might have investment objectives, policies or restrictions different from those of the Fund. The Board reviewed performance information for strategies and model portfolios similar to that of the Fund. The Board also considered the experience, resources and strengths of AQR and its affiliates with respect to the investment strategies proposed for the Fund. Based on these factors, the Board Members determined that AQR would be an appropriate investment adviser for the Fund.


AQR Funds	Annual Report	December 2010	139
AQR Funds	Annual Report	December 2010	139


Board Approval of Investment Advisory Agreements (Unaudited)

The Management Fee and the Cost of the Services and Profits to be Realized by AQR from the Relationship with the Fund. The Board, including the Independent Board Members, received and reviewed information regarding the management fee to be paid by the Fund to AQR pursuant to the Management Agreement. The Board examined this information in order to determine the reasonableness of the fees in light of the nature and quality of services to be provided to the Fund.

To assist in this analysis, the Board received a report independently prepared by Lipper. The report showed comparative fee information for the Fund’s expense group and expense universe, including expense comparisons of contractual management fees and actual total operating expenses. The Board was advised that the advisory fees will be below the median of comparable funds. The Board noted that breakpoints are part of the Fund’s proposed advisory fee rate and that the proposed advisory fee rate would decrease as the Fund increases in size.

The Board also received and reviewed information regarding the profitability of the Adviser with respect to Fund-related activities. The Board also took into consideration the Adviser’s profits from the management of other private accounts. The Board reviewed the Adviser’s methodology of determining profitability. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Adviser, the types of funds managed, expense allocations and business mix, and therefore comparability of profitability is somewhat limited.

The Board reviewed the Adviser’s unaudited financial statements. The purpose of the review was to help the Independent Board Members determine whether the firm has the necessary resources to continue to provide high quality services to the Funds and attract and retain high quality employees.

The Board concluded that the management fee is reasonable.

Economies of Scale. Because the Fund is newly formed and had not commenced operations as of June 9-10, 2010, and the eventual aggregate amount of Fund assets was uncertain, AQR was not able to provide the Board members with specific information concerning the extent to which economies of scale would be realized as the Fund grows and whether fee levels would reflect such economies of scale, if any. The Board noted that the Fund does have breakpoints in its management fee that would allow investors to benefit directly in the form of lower fees as fund assets grow. The Board also considered that the funds in the AQR fund complex share some common resources and, as a result, an increase in the overall size of the complex could permit each fund to incur lower expenses than it would otherwise as a stand-alone entity. The Board also considered the Adviser’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations.

Other Factors. The Board also took into account other ancillary or “fall-out” benefits that the Adviser or its affiliates may derive from its relationship with the Fund, both tangible and intangible. The Board also received information regarding the Adviser’s brokerage and soft dollar practices. The Board considered that the Adviser is responsible for decisions to buy and sell securities for the Funds, selection of broker-dealers and best execution, and aggregation and allocation of trade orders among the firms various advisory clients. The Board noted that the Adviser does not presently intend to make use of soft dollars to acquire third-party research.

Conclusion. Counsel advised the Board concerning the statutory and regulatory requirements for approval and disclosure of investment advisory agreements. No single factor was determinative to the decision of the Board. Based on the foregoing and such other matters as were deemed relevant, all of the Board Members, including all of the Independent Board Members, concluded that the proposed advisory fee rate and projected total expense ratio are reasonable in relation to the services to be provided by AQR to the Fund, as well as the costs to be incurred and benefits to be gained by AQR in providing such services, including the investment advisory and administrative components. The Board also found the proposed investment advisory fee to be reasonable in comparison to the fees charged by advisers to other comparable funds of similar, actual or anticipated size. As a result, all of the Board Members, including the Independent Board Members, approved the Management Agreement. The Independent Board Members were represented by counsel who assisted them in their deliberations.


AQR Funds	Annual Report	December 2010	140
AQR Funds	Annual Report	December 2010	140

Investment Advisor

AQR Capital Management, LLC

Two Greenwich Plaza, 3rd Floor

Greenwich, CT 06830

Sub-Adviser

CNH Partners, LLC

Two Greenwich Plaza, 1st Floor,

Greenwich, CT 06830

Transfer Agent

ALPS Fund Services, Inc.

1290 Broadway, Suite 1100

Denver, CO 80203

Custodian

JPMorgan Chase Bank, N.A.

4 Metro Tech Center

Brooklyn, NY 11245

Distributor

ALPS Distributors, Inc.

1290 Broadway, Suite 1100

Denver, CO 80203

Administrator

J.P. Morgan Investor Services Co.

70 Fargo Street

Boston, MA 02210

Independent Registered Public Accounting Firm

PricewaterhouseCoopers, LLP

300 Madison Avenue

New York, NY 10017

You may obtain a description of the AQR Funds proxy voting, policies, procedures and information regarding how each Fund voted proxies relating to portfolio securities during the 12-month period ending June 30th of each year (available by August 31st of that year) without charge, upon request, by calling 1-866-290-2688 or visiting the funds website www.aqrfunds.com, or by accessing the SEC’s website at www.SEC.Gov. Such reports may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 202-942-8090.

The Fund files complete schedules of the portfolio holdings with the SEC for the first and third quarters on Form N-Q. The Form N-Q is available without charge, upon request, by calling 1-800-SEC-0330, or by accessing the SEC’s website, at www.SEC.Gov. It may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC.

This report has been prepared for shareholders and may be distributed to others only if preceded or accompanied by an effective prospectus, which includes information regarding the Funds’ objectives and polices, experienced of its management, marketability of shares and other information.

LOGO

AQR FUNDS

P.O. Box 2248

Denver, CO 80201-2248

1-866-290-2688

www.aqrfunds.com

Item 2. Code of Ethics.

a).

As of the end of the period, December 31, 2010, the Registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code of ethics is included as Exhibit 12 (a)(1).

b).	Not Applicable.

c).	There has been no amendment to the Registrant’s Code of Ethics during the fiscal year ending December 31, 2010 (“Reporting Period”).

d).	Registrant granted no waivers from the provisions of its Code of Ethics during the Reporting Period.

e).	Not Applicable.

f).

Attached.

Item 3. Audit Committee Financial Expert.

a).

The Registrant’s Board of Trustees has determined that its Audit Committee has one “audit committee financial expert”, as that term is defined under Items 3(b) and 3(c), serving on its Audit Committee. Mr. L. Joe Moravy, the Registrant’s audit committee financial expert, is “independent”, as that term is defined under Item 3(a)(2).

Item 4. Principal Accountant Fees and Services.

Aggregate fees for professional services rendered for the AQR Funds by PricewaterhouseCoopers LLP for the years ended December 31, 2009 and December 31, 2010 were:


	2009		2010
Audit Fees (a)	$	175,000	$	311,000
Audit Related Fees (b)		0	$	55,000
Tax Fees (c)	$	42,500	$	73,000
All Other Fees (d)		0		0
Total:	$	217,500	$	439,000

(a)

Audit Fees: These fees relate to professional services rendered by PricewaterhouseCoopers LLP for the audits of the Registrant’s annual financial statements or services normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements. These services include the audits of the financial statements of the Registrant, issuance of consents and assistance with review of documents filed with the SEC.

(b)

Audit Related Fees: These fees relate to assurance and related services by PricewaterhouseCoopers LLP that are reasonably related to the performance of audit services in connection with December 31, 2009 and December 31, 2010 annual financial statements. The audit related services provided by PricewaterhouseCoopers LLP include the procedures related to the service provider conversion for 7 funds and procedures related to the AQR Global Equity Fund conversion from a privately held fund to a registered investment company.

(c)

Tax Fees: These fees relate to professional services rendered by PricewaterhouseCoopers LLP for tax compliance, tax advice and tax planning. The tax services provided by PricewaterhouseCoopers LLP related to the review of the Registrant’s federal and state income tax returns and excise tax calculations.

(d)	All Other Fees: These fees relate to products and services provided by PricewaterhouseCoopers LLP other than those reported under “Audit Fees,” “Audit-Related Fees,” and “Tax Fees” above.

(e)	Audit Committee Pre-approval Policies and Procedures:

(i)

Per Rule 2-01(c)(7)(A) and the charter of the Registrant’s Audit Committee, the Audit Committee approves and recommends the principal accountant for the Registrant, pre-approves (i) the principal accountant’s provision of all audit and permissible non-audit services to the Registrant (including the fees and other compensation to be paid to the principal accountant), and (ii) the principal accountant’s provision of any permissible non-audit services to the Registrant’s investment adviser (the “Adviser”), sub-adviser or any entity controlling, controlled by, or under common control with any investment adviser or sub-adviser, if the engagement relates directly to the operations of the financial reporting of the Trust.

(ii)

100% of services described in each of Items 4(b) through (d) were approved by the Audit Committee pursuant to paragraph (c)(7)(A) of Rule 2-01 of Regulation S-X.

(f)	Less than 50% of the hours expended on the principal accountant’s engagement to audit Registrant’s financial statements were attributed to work performed by persons other than the accountant’s full-time, permanent employees.

(g)

Disclose the aggregate non-audit fees billed by the Registrant’s accountant for services rendered to the Registrant, and rendered to the Registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant for the fiscal years ended December 31, 2009 and December 31, 2010: $665,500 and $691,773.

(h)	Not Applicable.

Item 5. Audit Committee of Listed Registrants.

(a)

The Registrant is an issuer as defined in Section 10A-3 of the Securities Exchange Act of 1934 and has a separately-designated standing Audit Committee in accordance with Section 3(a)(58)(A) of such Act. All of the Board’s independent Trustees, Timothy K. Armour, Steven Grenadier and L. Joe Moravy, are members of Audit Committee.

(b)	Not Applicable.

Item 6. Investments

(a)	Schedule is included as part of the report to shareholders filed under Item 1 of this Form.

(b)	The Registrant made no divestments of securities in accordance with Section 13(c) of the Investment Company Act of 1940.

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 & 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 those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the Registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b)	There have not been any changes in registrant’s control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered

by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s control over financial reporting. Certain enhancements to controls and procedures are being made to ensure timely financial statement preparation and review.

Item 12. Exhibits.

(a)(1)

The code of ethics that is the subject of the disclosure required by Item 2 is attached hereto.

(a)(2)

Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

(a)(3)

Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act – Not Applicable.

(b)	Certification required by Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto.

SIGNATURES

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

AQR Funds

By: /S/ Marco Hanig

Marco Hanig,

Principal Executive Officer

March 7, 2011

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

By: /S/ Marco Hanig

Marco Hanig,

Principal Executive Officer

Date: March 7, 2011

By: /S/ Nir Messafi

Nir Messafi,

Principal Financial Officer

Date: March 7, 2011

AQR Funds N-CSRCertified annual shareholder report (management investment company)