23
Morningstar FundInvestor
August 2
014
Morningstar Analyst Rating
04-09-14
Œ
Morningstar Pillars
Process
Performance
People
Parent
Price
¶
Positive
Positive
Positive
Positive
Neutral
Morningstar Analyst Rating
Morningstar evaluates mutual funds based on five key pillars, which
its analysts believe lead to funds that are more likely to outperform
over the long term on a risk-adjusted basis.
Analyst Rating Spectrum
Œ „ ´ˇ ¨
Pillar Spectrum
Positive
§
Negative
¶
Neutral
NAV
18.33
17.73
13.13
11.71
12.57
10.22
7.26
10.50
10.91
10.00
. .
Total Return %
3.38
41.25
15.43
-4.19
23.03
40.77
-30.01
-0.91
9.81
. . .
+/-S&P 500
-2.28
8.86
-0.57
-6.30
7.97
14.31
6.99
-6.40
-5.98
. . .
+/-Russ MV
2.86
7.79
-3.08
-2.81
-1.72
6.56
8.43
0.51
-10.41
. . .
Income Return %
0.00
0.27
0.03
0.00
0.00
0.00
0.83
0.37
0.13
. . .
Capital Return %
3.38
40.98
15.40
-4.19
23.03
40.77
-30.84
-1.28
9.68
. . .
Total Rtn % Rank Cat
70
10
65
49
40
20
12
67
97
. . .
Income $
0.00
0.03
0.00
0.00
0.00
0.00
0.09
0.04
0.01
0.00
. .
Capital Gains $
0.00
0.76
0.38
0.32
0.00
0.00
0.00
0.28
0.06
0.00
. .
Expense Ratio %
.
1.26
1.26
1.28
1.32
1.33
1.32
1.33
1.21
. . .
Income Ratio %
.
0.27
0.15
0.00
-0.17
0.17
1.11
0.54
0.49
. . .
Turnover Rate %
.
35
26
48
35
74
91
39
33
. . .
Net Assets $mil
105
61
19
17
17
9
8
11
10
. . .
Performance
07-31-14
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Total
2010
2011
2012
2013
2014
6.65 -6.88 10.54 12.07 23.03
5.89 -0.23 -19.05 12.03 -4.19
10.76 -5.47
6.04 3.98 15.43
16.45 3.99
6.92 9.09 41.25
2.03 5.36
. . .
Trailing
Total
+/-
+/- Russ %Rank Growth of
Return% S&P 500
MV
Cat
$10,000
3 Mo
6 Mo
1 Yr
3 Yr Avg
5 Yr Avg
10 Yr Avg
15 Yr Avg
2.00 -1.02
1.31
42 10,200
6.57 -2.87
3.69
72 10,657
14.06 -2.88
2.43
63 11,406
16.29 -0.55
1.72
37 15,726
18.39 1.60
0.53
32 23,258
. . . . .
. . . . .
Tax Analysis
Tax-Adj Rtn% %Rank Cat Tax-Cost Rat %Rank Cat
3 Yr (estimated)
5 Yr (estimated)
10 Yr (estimated)
13.44
61
0.77
48
16.64
48
0.46
37
. . . .
Potential Capital Gain Exposure: 15% of assets
Rating and Risk
Time Load-Adj
Morningstar
Morningstar
Morningstar
Period Return % Rtn vs Cat
Risk vs Cat
Risk-Adj Rating
1 Yr
8.36
3 Yr
14.31
Avg
Avg
5 Yr
17.18
Avg
-Avg
10 Yr
. . . .
Incept
8.56
Other Measures
Standard Index
Best Fit Index
S&P 500
Mstar Mid Value
Alpha
-2.7
-2.8
Beta
1.16
1.02
R-Squared
89
96
Standard Deviation
14.95
Mean
16.29
Sharpe Ratio
1.08
Morningstar’s Take
by Janet Yang, CFA 04-09-14
With its capable team and proven manager, Diamond
Hill Small-Mid Cap has soundly earned Morningstar’s
highest regard.
Lead portfolio manager Chris Welch already had a
long record of impressively executing the classic value
investing process that characterizes all of Diamond
Hill’s offerings: From the fund’s December 2005
inception through March 2014, its annualized 9.8%
return outpaced the typical mid-cap value fund by 173
basis points and the Russell 2500 Value Index by 157
basis points. That record helped the fund to earn and
retain a Morningstar Analyst Rating of Silver since its
first rating in 2012. Numerous meetings and
conversations over the years with Welch and the rest
of the research team at Diamond Hill have helped to
further solidify their reputation, giving Morningstar the
added confidence to upgrade the fund’s rating to Gold.
Much of the fund’s appeal comes from the
philosophy that unifies the firm, which focuses on
using fundamental research to determine companies’
intrinsic values, and then buying those firms when their
stock prices fall below those values. Staying true to
this straightforward premise has meant that even as
the firm’s analyst ranks grew from zero at its 2000
founding (then as now, the portfolio managers also
acted as analysts) to roughly two dozen analysts and
associates today, investors benefited from the team’s
sole attention to its particular brand of investing;
analysts haven’t had to, say, augment their research
for growth-style managers, which sometimes occurs
at firms offering more varied strategies.
Given that focus, investors should expect this fund
to shine in down markets rather than up ones; strong
stock-picking helped 2013 to be an exception to the
rule, when the fund’s 41.6% gain allowed it to
outperform 90% of all mid-cap value funds. However,
with an overall record that beats the Russell 2500
Value Index less than half of the time in rising
markets, last year was more of a pleasant anomaly.
Investors prepared for the fund’s more-regular
performance pattern should continue to be well served
here.
Address:
Diamond Hill Funds
Columbus, OH 43215
888-226-5595
Web Address:
Inception:
12-30-05
Advisor:
Diamond Hill Capital Management Inc
Subadvisor:
None
NTF Plans:
DATALynx NTF, Fidelity Instl-NTF
Minimum Purchase:
$2500
Add: $100 IRA: $2500
Min Auto Inv Plan:
$2500
Add: $100
Sales Fees:
5.00%L,
Management Fee:
0.75%, 0.25%A
Actual Fees:
Mgt:0.75% Dist:0.25%
Expense Projections:
3Yr:$883
5Yr:$1162 10Yr:$1957
Income Distribution:
Annually
Data through July 31, 2014
Diamond Hill Small-Mid Cap A
Ticker
Status Yield Total Assets
Mstar Category
DHMAX Open
0.2% $480 mil
Mid-Cap Value
81% 85% 91% 82% 85% 97% 93% 92% 92%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 07-14
Historical Profile
Return
Risk
Rating
Average
Below Avg
Neutral
Investment Style
Equity
Stock %
Manager Change
Partial Manager Change
Growth of $10,000
Investment Values of
Fund
Investment Values of
S&P 500
Performance Quartile
(within Category)
History
10.0
5.0
13.0
16.6
21.4
Portfolio Analysis
06-30-14
Share change since 05-14 Total Stocks:61 Sector
PE Tot Ret% % Assets
State Street Instl Liqui
. . .
7.98
Willis Group Holdings PL
Finan Svs 18.8 -7.72 4.90
Cimarex Energy Co
Energy
19.4 32.80 3.84
Hub Group Inc Class A
Industrl
25.8 15.80 3.35
Boston Scientific Inc
Hlth care 46.7 6.32 2.92
Brown & Brown Inc
Finan Svs 21.0 -1.31 2.68
Dover Corp
Industrl
15.8 8.03 2.65
Flowers Foods Inc
Cnsmr Def 22.5 -10.00 2.45
Juniper Networks Inc
Technology 26.0 4.30 2.29
Molson Coors Brewing Co
Cnsmr Def 17.8 21.59 2.25
B&G Foods Inc
Cnsmr Def 22.1 -15.22 2.09
Jarden Corp
Cnsmr Cyc 36.8 -8.88 2.08
Steiner Leisure Ltd
Cnsmr Cyc 13.4 -18.87 2.01
Endurance Specialty Hold
Finan Svs
8.0 -8.69 2.01
Staples Inc
Cnsmr Cyc 12.0 -25.55 1.98
iStar Financial Inc
Real Est
.
0.77 1.95
Energizer Holdings Inc
Cnsmr Def 19.1 6.95 1.93
Popular Inc
Finan Svs
4.1 11.03 1.86
Whiting Petroleum Corp
Energy
26.3 43.03 1.82
Post Holdings Inc
Cnsmr Def
.
-8.83 1.82
Current Investment Style
Market Cap %
Giant
0.0
Large
7.4
Mid
59.9
Small
25.2
Micro
7.5
Avg $mil:
4,710
Value Blnd Growth
Large Mid Small
Value Measures
Rel Category
Price/Earnings
Price/Book
Price/Sales
Price/Cash Flow
Dividend Yield %
13.62
1.65
1.21
7.32
1.74
0.97
1.02
1.32
1.13
0.83
Growth Measures
% Rel Category
Long-Term Erngs
Book Value
Sales
Cash Flow
Historical Erngs
10.01
6.43
7.40
10.87
15.11
1.01
1.47
2.21
2.01
2.49
Profitability
% Rel Category
Return on Equity
Return on Assets
Net Margin
10.47
3.75
10.23
0.84
0.83
1.08
Sector
Weightings
% of
Stocks
Rel
S&P 500 High
3 Year
Low
Cyclical 41.47 1.44
BasicMat 0.00 0.00
. .
CnsmrCyc 8.47 0.99 8 5
FinanSvs 27.99 1.79 28 21
Real Est 5.01 3.43 6 1
Sensitive 30.20 0.69
CommSrvs 0.00 0.00
. .
Energy 10.33 0.97 16 9
Industrl 14.60 1.28 23 15
Technlgy 5.27 0.30 6 3
Defensive28.32 1.03
CnsmrDef13.52 1.11 14 13
Hlthcare 11.67 0.99 16 11
Utilities 3.13 0.87 3 2
h
r
t
y
u
j
i
o
p
a
k
s
d
f
Composition - Net
(% of Stock)
Cash
8.0
Stocks 92.0
Bonds 0.0
Other
0.0
Foreign 3.8
©
2014Morningstar, Inc.All rights reserved. The information herein isnot representedorwarranted to be accurate, correct, complete or
timely. Pastperformance isnoguarantee of future results.Access updated reports at
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mfb.morningstar.com.
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