Portfolio Guidelines

The portfolio generally invests at least 80% of its assets in investment grade and below investment grade (high yield) corporate bonds, and will typically maintain an effective duration of less than five.

Top Ten Issues
As Of December 31, 2016

Popular, Inc. 7.00% 07/01/19 4.7%
Cimpress N.V. 7.00% 04/01/22 4.2
Cogent Communications Finance, Inc. 5.63% 04/15/21 3.3
MGIC Investment Corp. 5.75% 08/15/23 2.7
Alliance Data Systems Co. 5.38% 08/01/22 2.5
American Airlines 13-1 B Pass Through 5.63% 01/15/21 2.5
Century Communities, Inc. 6.88% 05/15/22 2.4
Cincinnati Bell, Inc. 7.00% 07/15/24 2.4
Kindred Healthcare, Inc. 8.75% 01/15/23 2.4
Nationstar Capital Corp. 6.50% 07/01/21 2.3
Total As % Of Net Assets 29.3%

This is presented as supplemental information.

Sector Allocation1
As Of December 31, 2016

Corporate Credit
Composite
BofA ML U.S. Corporate
& High Yield Index
Corporate Bonds 90.1% 100.0%
Basic Industry 14.0 5.6
Financial Services 12.5 2.3
Media 9.8 5.0
Healthcare 8.7 9.3
Banking 6.6 19.2
Leisure 5.9 0.9
Transportation 5.8 1.9
Telecom 5.5 5.7
Energy 5.0 12.4
Insurance 4.5 3.7
Technology & Electronics 4.0 6.8
Real Estate 3.6 2.0
Retail 2.8 3.8
Services 1.4 1.7
Utility 0.0 6.7
Consumer Goods 0.0 5.6
Capital Goods 0.0 4.8
Automotive 0.0 2.6
Cash & Other2 9.9 0.0

This is presented as supplemental information.

Portfolio Characteristics
As Of December 31, 2016

Number of Issues 79
Number of Issuers 66
Option-Adjusted Spread 390
Effective Duration 3.46
Spread Duration 3.25
Weighted Average Maturity (bonds only) 5.78
Yield to Maturity (%) 5.92
Current Yield (%) 5.73

This is presented as supplemental information.

Five-Year Risk Statistics
As Of December 31, 2016

Standard Deviation (%) 3.46
Beta (%) 0.63
Sharpe Ratio 1.98

Relative to the BofA ML U.S. Corporate & High Yield Index.

This is presented as supplemental information.

Credit Quality3
As Of December 31, 2016

Quality Rating % of Bonds Held
AAA 6.8%
AA 2.9
A 0.0
BBB 9.2
BB 26.2
B 46.4
CCC & Below 5.8
Not Rated 2.7

This is presented as supplemental information.

Duration Breakdown
As Of December 31, 2016

% of Bonds Held
Less than one 14.6%
1-3 17.0
3-5 44.5
5-7 16.6
7-10 4.5
10-20 2.7

This is presented as supplemental information.

This is presented as supplemental information.

1 BofA Merrill Lynch is licensing the BofA Merrill Lynch indices “as is,” makes no warranties regarding same, does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the BofA Merrill Lynch indices or any data included in, related to, or derived therefrom, assumes no liability in connection with their use, and does not sponsor, endorse, or recommend Diamond Hill Capital Management, Inc., or any of its products or services.

2 Cash & Other may include cash, treasuries, money market funds, collateralized debt obligations, and short duration fixed income funds.

3 Security quality ratings are derived from underlying portfolio securities by using the middle rating of Standard & Poor’s, Moody’s, and Fitch. If only two of Standard & Poor’s, Moody’s, and Fitch rates a security the higher of the two is selected. If only one of Standard & Poor’s, Moody’s, and Fitch rates a security the available rating is used. For securities that are not rated by Standard & Poor’s, Moody’s, or Fitch a rating from a secondary Nationally Recognized Statistical Rating Organization (“NRSRO”) may be used. Ratings by any agency represent an opinion only, not a recommendation to buy or sell. Securities that are not rated by any agencies are reflected as Not Rated “NR”.

As of February 28, 2016, the Strategic Income Composite was renamed the Corporate Credit Composite.

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