Portfolio Guidelines

The Fund generally invests at least 80% of its assets in investment grade3 and rated below-investment grade (high yield) corporate bonds, and will typically maintain an effective duration of less than five.

Top Ten Issues
As Of November 30, 2019

Nationstar Mortgage/Capital Corp.
6.50% 07/01/2021
Welltec A/S
9.50% 12/01/2022
Cimpress N.V.
7.0% 06/15/2026
Credit Acceptance Corp.
6.125% 02/15/2021
Credit Acceptance Corp.
7.375% 03/15/2023
Cogent Communications, Inc.
5.625% 04/15/2021
Energen Corp.
7.125% 02/15/2028
Nathan's Famous, Inc.
6.625% 11/01/2025
Mueller Industries, Inc.
6.0% 03/01/2027
Popular, Inc.
6.125% 09/14/2023
Total As % Of Net Assets 27.3%

Sector Allocation
As Of December 31, 2019

Corporate Credit Fund ICE BofA
U.S. Corporate
& High Yield Index
Corporate Bonds 82.1% 100.0%
Financial Services 14.6 2.8
Energy 9.9 11.6
Retail 8.5 3.4
Basic Industry 8.0 5.4
Healthcare 5.7 9.5
Media 5.2 4.4
Services 4.4 1.8
Consumer Goods 4.4 5.8
Telecom 4.1 5.2
Capital Goods 3.9 4.8
Real Estate 2.9 2.5
Insurance 2.7 3.6
Leisure 2.5 1.1
Automotive 2.2 2.5
Banking 2.0 19.0
Technology & Electronics 1.0 7.1
Transportation 0.1 2.2
Utility 0.0 7.5
Cash & Other1 17.9 0.0

Credit Quality2 As Of December 31, 2019

Investment Grade3 25.9%
BB 29.3
B 33.6
CCC & Lower 2.7
Not Rated 8.6

The value of fixed-income securities varies inversely with interest rates; as interest rates rise, the market value of fixed-income securities will decline. Lower quality debt securities involve greater risk of default or price changes due to potential changes in the issuer’s credit quality.

Risk statistics are relative to the ICE BofA U.S. Corporate & High Yield Index.

Fund holdings, sector allocations, and portfolio statistics subject to change without notice.

The ICE BofA U.S. Corporate & High Yield Index is comprised of U.S. dollar denominated investment grade and below investment grade corporate debt publicly issued in the U.S. domestic market. This index does not incur fees and expenses (which would lower the return) and is not available for direct investment.

Source ICE Data Indices, LLC (“ICE Data”), is used with permission. ICE Data, its affiliates and their respective third party suppliers disclaim any and all warranties and representations, express and/or implied, including any warranties of merchantability or fitness for a particular purpose or use, including the indices, index data and any data included in, related to, or derived therefrom. Neither ICE Data, its affiliates or their respective third party providers shall not be subject to any damages or liability with respect to the adequacy, accuracy, timeliness or completeness of the indices or the index data or any component thereof, and the indices and index data and all components thereof are provided on an “as is” basis and your use is at your own risk. ICE Data, its affiliates and their respective third party suppliers do not sponsor, endorse, or recommend Diamond Hill Capital Management, Inc., or any of its products or services.

Analytics provided by The Yield Book® Software.

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

2 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”.

3 Investment Grade is a Bond Quality Rating of AAA, AA, A or BBB.

4 Effective duration measures the interest rate risk of the Fund. It is an estimate of the approximate percentage change in the Fund’s net asset value resulting from a one percentage point change in interest rates.

5 Weighted average maturity measures the weighted average of all maturities of the bonds in the portfolio, computed by weighting each maturity date by the market value of the security. Interest rate fluctuations have a greater impact on the price per share of funds holding bonds with longer average lives.

6 Yield to Worst is calculated based on call structures of the underlying securities and represents the least favorable yield to the bond holder.

As of 12/31/19 there were 3 gold rated, 7 silver rated, 15 bronze rated, 21 neutral rated, 2 negative rated and 195 not rated funds in the U.S. High Yield Bond category. Morningstar Analyst ratings relative to the Morningstar Category are based on the cheapest share class for each fund as defined by Morningstar. The cheapest share class does not necessarily equate to the highest rated share class.

The Morningstar Analyst Rating™ is not a credit or risk rating. It is a subjective evaluation performed by Morningstar’s manager research group, which consists of various Morningstar, Inc. subsidiaries (“Manager Research Group”). In the United States, that subsidiary is Morningstar Research Services LLC, which is registered with and governed by the U.S. Securities and Exchange Commission. The Manager Research Group evaluates funds based on five key pillars, which are process, performance, people, parent, and price. The Manager Research Group uses this five pillar evaluation to determine how they believe funds are likely to perform relative to a benchmark, or in the case of exchange-traded funds and index mutual funds, a relevant peer group, over the long term on a risk-adjusted basis. They consider quantitative and qualitative factors in their research, and the weight of each pillar may vary. 

The Analyst Rating scale is Gold, Silver, Bronze, Neutral, and Negative. A Morningstar Analyst Rating of Gold, Silver, or Bronze reflects the Manager Research Group’s conviction in a fund’s prospects for outperformance. Analyst Ratings ultimately reflect the Manager Research Group’s overall assessment, are overseen by an Analyst Rating Committee, and are continuously monitored and reevaluated at least every 14 months. For more detailed information about Morningstar’s Analyst Rating, including its methodology, please go to global.morningstar.com/managerdisclosures/.

The Morningstar Analyst Rating (i) should not be used as the sole basis in evaluating a fund, (ii) involves unknown risks and uncertainties which may cause Analyst expectations not to occur or to differ significantly from what they expected, and (iii) should not be considered an offer or solicitation to buy or sell the fund.

The Overall Morningstar Rating™ is based on 616 high yield bond funds as of 12/31/19. The Fund’s Class I rating was 5 stars among 616, 5 stars among 539, and 4 stars among 339 high yield bond funds for the 3-, 5-, and 10-year periods ended 12/31/19, respectively.

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

The Morningstar Broad Fee Level data point compares the fund's net expense ratio to the net expense ratio of all the other funds within its Morningstar Category.

© 2020 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

7 Risk Statistic Definitions: Standard Deviation measures the volatility of the Fund’s returns. Sharpe Ratio uses the Fund’s standard deviation and average excess return over the risk-free rate to determine reward per unit of risk. Statistics for periods less than one year are not annualized. Risk statistics are relative to the ICE BofA U.S. Corporate & High Yield Index.

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