DHFT Diamond Hill Finl (MM)

PROXY STATEMENT

SPECIAL MEETING OF SHAREHOLDERS

February 28, 2013

This Proxy Statement is being furnished to shareholders of Diamond Hill Financial Trends Fund, Inc. (the “Fund”), in connection with the solicitation by the Fund’s Board of Directors of proxies to be used at a Special Meeting of Shareholders, and at any adjournment or postponement thereof (the “Meeting”), to be held at 325 John H. McConnell Boulevard, Suite 200, Columbus, Ohio 43215, on February 28, 2013, at 1:00 p.m. Eastern Time.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 28, 2013: The Fund will furnish, without charge, a copy of its 2011 annual report or the June 30, 2012 semi-annual report to any shareholder upon request. This Proxy Statement and our annual and semi-annual reports can be accessed on our website at http://www.diamond-hill.com/cgi-bin/mf/closed-end-fund.pl or on the Securities and Exchange Commission’s (the “SEC”) website (www.sec.gov).

This Proxy Statement is being first mailed to shareholders on or about January __, 2013. At the Meeting, shareholders will vote on the following proposal (the “Proposal”):

To approve the liquidation and dissolution of the Fund pursuant to the Plan of Liquidation.

The close of business on December 28, 2012, has been fixed as the record date (the “Record Date”) for the determination of shareholders entitled to notice of, and to vote at, the Meeting. Each shareholder is entitled to one vote for each full share and an appropriate fraction of a vote for each fractional share held. On December 28, 2012, we had 3,968,124 shares of Common Stock outstanding. The common stock is our only outstanding class of voting securities.

Shareholders who execute proxies retain the right to revoke them in person at the Meeting or by written notice received by the Secretary of the Fund at any time before the proxies are voted. Unrevoked proxies will be voted as specified on the proxy and, unless specified to the contrary, will be voted “FOR” the Proposal.

Under the Bylaws of the Fund, a quorum is constituted by the presence in person or by proxy of the record holders of at least a majority of the outstanding shares of the Fund entitled to vote at the Meeting. Abstentions will be counted for purposes of determining whether a quorum is present at the Meeting. In the event that a quorum is not present at the Meeting, the persons named as proxies may propose one or more adjournments of the Meeting to a date not more than 120 days after the original record date to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of a majority of those shares represented at the Meeting in person or by proxy.

For purposes of this vote, abstentions will be counted as shares present at the Meeting for quorum purposes but will not be (1) considered votes cast at the Meeting or (2) voted for or against any adjournment or proposal. Broker non-votes will not be counted as shares present at the Meeting for quorum purposes and will not be considered votes cast at the Meeting or voted for or against any

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adjournment or proposal. For purposes of the vote on the Proposal, abstentions and broker non-votes will have the same effect as a vote against the liquidation and dissolution of the Fund pursuant to the Plan. Broker non-votes are shares held in “street name” for which the broker indicates that instructions have not been received from the beneficial owners or other persons entitled to vote and for which the broker does not have discretionary voting authority. If the beneficial owner does not provide voting instructions, the broker can still vote the shares with respect to matters that are considered to be “routine,” but cannot vote the shares with respect to “non-routine” matters such as the Proposal.

Additional information regarding outstanding shares, voting your proxy card and attending the Meeting are included at the end of this Proxy Statement in the section entitled “Voting Information.”

The Fund is a Maryland corporation that is registered with the SEC, under the Investment Company Act of 1940, as amended (the “1940 Act”), as a closed-end management investment company. The Fund’s shares of common stock are referred to as “shares,” and the holders of the shares are “shareholders.” The Fund’s Board of Directors is referred to as the “Board,” and the directors are “Directors.”

Diamond Hill Capital Management, Inc. (“DHCM”), an Ohio corporation, whose principal business address is 325 John H. McConnell Boulevard, Suite 200, Columbus, Ohio 43215, is the Fund’s investment adviser and administrator. DHCM is a wholly-owned subsidiary of Diamond Hill Investment Group, Inc. Citi Fund Services Ohio, Inc. (“Citi Fund”), whose principal business address is 3435 Stelzer Road, Columbus, OH 43219, is the Fund’s sub-administrator and custodian. The Fund’s transfer agent and registrar is Computershare, whose principal business address is 111 Founders Plaza, East Hartford, CT 06108.

The shares of the Fund trade on the NASDAQ Stock Market, Inc. (“NASDAQ”) (ticker symbol: DHFT).

The date of this Proxy Statement is January __, 2013.

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PROPOSAL TO APPROVE THE LIQUIDATION AND DISSOLUTION OF THE FUND

The purpose of the Proposal is to approve the liquidation and dissolution of the Fund pursuant to the Plan of Liquidation.

For the reasons stated below, the Board UNANIMOUSLY RECOMMENDS A VOTE FOR THE LIQUIDATION AND DISSOLUTION OF THE FUND

Reasons For The Board’s Recommendation

Background

On November 14, 2012, the Fund held a special meeting of shareholders (the “November Meeting”) to seek a non-binding advisory vote to continue to operate the Fund as a closed-end financial services fund. At the time of the November Meeting, the Board unanimously recommended that the shareholders vote in favor of continuing to operate the Fund as a closed-end financial services Fund. The Board’s recommendation was based on its unanimous belief that, for a number of reasons set forth in the proxy statement for the November Meeting, the Fund was viable as an attractive and competitive investment alternative.

Notwithstanding the Board views and recommendation at the November Meeting, 41.3% of the Fund’s outstanding shares voted on a non-binding advisory basis against continuing to operate the Fund as a closed-end investment company, compared to only 16.9% who affirmatively voted to continue to operate the Fund as a closed end investment company and 41.8% who abstained or did not vote.

Subsequent to the November meeting, the Board and Fund management engaged in several discussions to consider and weigh the results of the non-binding advisory vote and the impact on the future of the Fund. At the time of the November Meeting, the Board indicated that a strong vote against continuing to operate as a closed-end fund would likely result in liquidation as the most appropriate alternative, thereby allowing shareholders to reinvest their proceeds in an alternative investment of their choosing.

Board Considerations and Recommendation

Liquidation of the Fund only requires the vote of a majority of the outstanding shares. As a result, the Board has concluded that the November results did in fact constitute a strong vote for liquidation since it views it as likely that the shareholders favoring liquidation would be able to obtain the additional approximately 9% of the vote needed by them to approve a liquidation. Although the Board still believes the Fund to be a viable, attractive and competitive investment alternative, it concluded that it could not ignore the strong desires of the Fund’s shareholders and that liquidation and dissolution would be advisable. In reaching its conclusion, the Board considered a variety of factors, including:

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Based on the foregoing and other relevant factors, at a meeting held on December 6, 2012, the Board determined that, under the circumstances, liquidation and dissolution of the Fund is advisable.

FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL.

Summary of Plan of Liquidation and Dissolution

The following summary does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Plan which is attached hereto as Exhibit A . Shareholders are urged to read the Plan in its entirety.

Effective Date of the Plan and Cessation of the Fund’s Activities as an Investment Company . The Plan will become effective only upon (a) its adoption and approval by the holders of at least a majority of the outstanding shares of the Fund and (b) the satisfactory resolution in the sole discretion of the Board of any and all possible claims pending against the Fund and/or its Board (the “Effective Date”). Following these two events, the Fund (i) will cease to invest its assets in accordance with its investment objective and will, as soon as reasonable and practicable after the Effective Date, complete the sale of the portfolio securities it holds in order to convert its assets to cash or cash equivalents, provided, however, that after shareholder approval of the Plan, the Board may authorize the commencement of the sale of portfolio securities, (ii) will not engage in any business activities except for the purpose of paying, satisfying, and discharging any existing debts and obligations, collecting and distributing its assets, and doing all other acts required to liquidate and wind up its business and affairs, and (iii) will dissolve in accordance with the Plan and will file Articles of Dissolution with the State of Maryland. The Fund will, nonetheless, continue to meet the source of income, asset diversification and distribution requirements applicable to regulated investment companies under the U.S. Internal Revenue Code of 1986, as amended (the “Code”), through the last day of its final taxable year ending on liquidation.

Closing of Books and Restriction on Transfer of Shares . The proportionate interests of shareholders in the assets of the Fund will be fixed on the basis of their holdings on the Effective Date, or on such later date as may be determined by the Board (the “Determination Date”). On the Determination Date, the books of the Fund will be closed. Thereafter, unless the books of the Fund are reopened because the Plan cannot be carried into effect under the laws of the State of Maryland or otherwise, the shareholders’ respective interests in the Fund’s assets will not be transferable by the negotiation of share certificates and the Fund’s shares will cease to be traded on the NASDAQ.

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Liquidation Distributions . The distribution of the Fund’s assets will be made in up to two cash payments in complete cancellation of all the outstanding shares of common stock of the Fund. The first distribution of the Fund’s assets (the “First Distribution”) is expected to consist of cash representing substantially all the assets of the Fund, less an estimated amount necessary to discharge (a) any unpaid liabilities and obligations of the Fund on the Fund’s books on the First Distribution date, and (b) any liabilities as the Board reasonably deems to exist against the assets of the Fund on the Fund’s books. The amount of the First Distribution currently is uncertain. A second distribution (the “Second Distribution”), if necessary, is anticipated to be made within 90 days after the First Distribution and will consist of cash from any assets remaining after payment of expenses, the proceeds of any sale of assets of the Fund under the Plan not sold prior to the First Distribution and any other miscellaneous income of the Fund.

Each shareholder not holding stock certificates of the Fund will receive liquidating distributions equal to the shareholder’s proportionate interest in the net assets of the Fund as of the Determination Date. Each shareholder holding stock certificates of the Fund will receive a confirmation showing the number of shares represented by such stock certificates and the total number of outstanding shares of the Fund as of the Determination Date. This confirmation will include an advice that each shareholder will be paid such shareholder’s proportionate interest in the net assets of the Fund in cash upon return of the stock certificate. Shareholders holding stock certificates should consider arranging with the Fund’s transfer agent a return of their certificates in advance of any liquidating distributions in order to facilitate payments to them. The transfer agent is [                      ]. The transfer agent can be reached by telephone at [                      ] or by e-mail at [                  ]. All shareholders will receive information concerning the sources of the liquidating distribution.

Expenses of Liquidation and Dissolution . All of the expenses incurred by the Fund in carrying out the Plan will be borne by the Fund.

Continued Operation of the Fund . The Plan provides that the Board has the authority to authorize such variations from or amendments of the provisions of the Plan (other than the terms of the liquidating distributions) at any time without shareholder approval, if the Board determines that such action would be advisable and in the best interests of the Fund and its shareholders, as may be necessary or appropriate to effect the marshalling of Fund assets and the dissolution, complete liquidation and termination of existence of the Fund, and the distribution of its net assets to shareholders in accordance with the laws of the State of Maryland, the 1940 Act, the Charter, the Bylaws of the Fund (the “Bylaws”) and the purposes to be accomplished by the Plan. If any variation or amendment appears necessary and, in the judgment of the Board, will materially and adversely affect the interests of the Fund’s shareholders, such variation or amendment will be submitted to the Fund’s shareholders for approval. In addition, the Board may abandon the liquidation and dissolution of the Fund pursuant to the Plan prior to the time Articles of Dissolution are accepted for record by the State Department of Assessments and Taxation of Maryland if the Board determines that such abandonment would be advisable and in the best interests of the Fund and its shareholders. However, it is the Board’s current intention to liquidate and dissolve the Fund as soon as practicable following the settlement of all possible claims pending against the Fund and/or the Board.

Additional Considerations

In addition to the other information contained in this Proxy Statement, you should consider the following factors in determining whether or not to vote in favor of the liquidation and dissolution of the Fund pursuant to the Plan.

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The Fund is not able to Estimate Net Proceeds to be Received by Shareholders . The actual amounts to be distributed to shareholders of the Fund upon liquidation is subject to significant uncertainties and not possible to predict at this time. The amount available for distribution to shareholders will be based, in part, on the value of the Fund’s assets at the time of liquidation and then-current market conditions; the amount of the Fund’s actual costs, expenses and liabilities to be paid in the future; the potential market impact of liquidation of portfolio securities (including the liquidation of potentially large blocks of portfolio securities) under current and developing market conditions; general business and economic conditions; and the time required to liquidate the Fund’s assets, all of which cannot be predicted with any certainty at this time.

The Fund is Not Able to Predict at this Time the Length of Time it Would Take to Complete the Liquidation and Dissolution of the Fund . Notwithstanding the approval of the majority of the outstanding shares of common stock of the Fund, any claims pending against the Fund and/or the Board must be satisfactorily resolved prior to the liquidation of the Fund’s assets. While the Board is not currently aware of any such claim, it is possible that such a claim could arise and that costs would be incurred to resolve it. If any such claim should arise, the Fund will not liquidate until such claim is satisfactorily resolved in the sole discretion of the Board. If shareholders approve the Plan, on the Effective Date, the Fund will be authorized to commence the sale and liquidation of its assets and the Fund will cease investment activity other than managing the sale of securities and the Fund’s cash levels. The Fund is unable to predict when it will complete the sale of its assets or when it will distribute the liquidation proceeds to shareholders. In effecting the liquidation and dissolution of the Fund, the Fund’s Advisor’s expects to invest the cash proceeds from the sale of portfolio securities in cash or cash equivalents, including either a demand deposit account at the Fund’s custodian or in a money market fund. However, the Fund will not be managed during the liquidation period in a manner designed to produce investment returns analogous to that which it attempted to achieve during its investment operations. Further, the market value of the Fund’s portfolio securities may decline during the liquidation period resulting in a reduction in the amounts available for ultimate liquidation distribution, and the length of the liquidation period cannot be predicted at this time as described above.

The Liquidity and Market Price of Fund Common Shares Could Decrease . As the Fund sells its assets and distributes proceeds of the liquidation to shareholders, the Fund’s market capitalization and “float” may diminish. Market interest in the Fund’s shares may also diminish. This could reduce the market demand for and liquidity of shares of the Fund’s common stock, which may adversely affect the market price of the Fund’s shares. The Fund currently intends to maintain its listing on the NASDAQ until such time as the Common Shares are no longer eligible for listing and trading. This would further decrease the market demand for and liquidity and price of the Fund’s shares.

Distribution Amounts

The Fund’s net assets on [                  ] were $[              ]. At such date, the Fund had [                  ] shares outstanding. Accordingly, on [              ], the NAV per share of the Fund was $[              ]. The NAV per share of the Fund will change before the Plan becomes effective. The amounts to be distributed to shareholders of the Fund upon liquidation will be reduced by the expenses of the Fund in connection with the liquidation and portfolio transaction costs as well as any costs incurred in resolving any claims that may arise against the Fund and/or the Board. The total amount estimated to be spent in connection with the solicitation of shareholders pursuant to this proxy statement, including the costs associated with the preparation, printing and mailing of the Proxy Statement, is approximately $[              ]. The total amount estimated to be spent in connection with the liquidation and dissolution of the Fund, excluding such proxy solicitation expenses, is approximately $[              ]. Such

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approximate amount includes estimated portfolio transaction costs (including amounts allocated for dealer markup on securities traded over the counter) of approximately $[              ] (although actual portfolio transaction costs will depend upon the composition of the portfolio and the timing of the sale of portfolio securities); estimated costs of any extension of the Directors’ and Officers’ liability insurance policy; any fees charged by state or federal agencies; transfer agent fees; legal fees and other miscellaneous costs. Actual liquidation expenses and portfolio transaction costs may vary. Any increase in such costs will be funded from the cash assets of the Fund and will reduce the amount available for distribution to shareholders.

U.S. Federal Income Tax Consequences

The following is a general discussion of certain material U.S. federal income tax considerations for shareholders who are United States persons and who are holding their stock as capital assets (generally, property held for investment) for U.S. federal income tax purposes with respect to the liquidation and dissolution of the Fund. This discussion is based on the Code, Treasury regulations, judicial authorities, published positions of the Internal Revenue Service (the “IRS”), and other applicable authorities, all as currently in effect and all of which are subject to change or differing interpretations (possibly with retroactive effect). The Fund has not sought a ruling from the IRS with respect to this liquidation and dissolution. The statements below are, therefore, not binding upon the IRS, and there can be no assurance that the IRS will concur with this summary or that the tax consequences to any shareholder upon receipt of the liquidation distributions will be as set forth below.

This discussion is for general information only and does not address all of the U.S. federal income tax considerations that may be relevant to specific shareholders in light of their particular circumstances or to shareholders subject to special treatment under U.S. federal income tax law (such as financial institutions, insurance companies, tax-exempt entities, broker-dealers, pension plans or persons that have a “functional currency” other than the U.S. dollar). This discussion does not address state, local or non-U.S. tax laws. Implementing the Plan may impose unanticipated tax consequences on shareholders and affect shareholders differently, depending on their particular tax situations independent of the Plan. Each shareholder is therefore urged to consult such shareholder’s personal tax advisor with specific reference to such shareholder’s own particular tax situation and recent changes in applicable law.

If its shareholders approve the Plan, the Fund will sell its assets and distribute the proceeds to the shareholders. The Fund anticipates that it will retain its qualification for treatment as a regulated investment company during the liquidation period and will make all required distributions so that it will not be taxed on the Fund’s net gain, if any, realized from the sale of its assets. The Fund may, if eligible, treat all or a portion of the amounts required to be distributed as having been paid out as part of the liquidation distributions.

The Fund expects to treat all or a portion of its investment company taxable income, if any, and its net capital gains, if any, required to be distributed for the taxable years ending at or prior to the dissolution date, as an income dividend or capital gain distribution, as applicable, on account of the Fund’s final taxable year as having been paid out as liquidation distributions made to the Fund’s shareholders in complete liquidation of the Fund. As described in the next paragraph, any such liquidation distributions (in lieu of an income dividend or capital gain distribution) will be treated for U.S. federal income tax purposes as having been received by Fund shareholders as consideration for a sale or exchange of their Fund stock. However, to the extent necessary, the Fund may declare, before the date of dissolution, a dividend or dividends which, together with all previous such dividends, will have the effect of distributing to the Fund’s shareholders all or a portion of such income for the taxable years ending at or prior to the dissolution date (computed without regard to any deduction for dividends paid), if any, realized in the taxable years ending at or prior to the dissolution date (after reduction for any capital loss carry-forward) and any additional amounts necessary to avoid any income or excise tax for such periods. The tax consequences to shareholders from any such dividends will be the same as is normally the case.

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A shareholder who receives liquidating distributions will be treated as having received the distribution in exchange for the shareholder’s stock in the Fund and will recognize gain or loss based on the difference between the amount received and the shareholder’s basis in the Fund stock. If a shareholder holds stock as capital assets, the gain or loss will be characterized as a capital gain or loss. If the stock has been held for more than one year, any such gain will be treated as long-term capital gain, taxable to individual shareholders at a maximum U.S. federal tax rate of 20%, and any such loss will be treated as long-term capital loss. Depending on a shareholder’s specific situation, a 3.8% Medicare tax may also be applicable to such gain. Capital gain or loss on stock held for one year or less will be treated as short-term capital gain or loss, except that any loss realized with respect to stock in the Fund held for six months or less will be treated as long-term capital loss to the extent of any capital gain dividends that were received on the stock.

Liquidating distributions to a shareholder may be subject to backup withholding. Generally, shareholders subject to backup withholding will be those for whom no taxpayer identification number is on file with the Fund, those who, to the Fund’s knowledge, have furnished an incorrect number, and those who underreport their tax liability. Certain shareholders specified in the Code may be exempt from backup withholding. The backup withholding tax is not an additional tax and may be credited against a taxpayer’s U.S. federal income tax liability.

Impact of the Plan on the Fund’s Status Under the 1940 Act

Following the Effective Date, the Fund will cease doing business as an investment company and, as soon as practicable, will apply for deregistration under the 1940 Act. It is expected that the Securities and Exchange Commission will issue an order approving the deregistration of the Fund if the Fund is no longer doing business as an investment company. Accordingly, the Plan provides for the eventual cessation of the Fund’s activities as an investment company and its deregistration under the 1940 Act, and a vote in favor of the Plan will constitute a vote in favor of such a course of action. Until the Fund’s deregistration as an investment company becomes effective, the Fund, as a registered investment company, will continue to be subject to and will comply with the 1940 Act.

Procedure For Dissolution Under Maryland Law

After the Effective Date, pursuant to the MGCL, Articles of Dissolution stating that the dissolution has been authorized will in due course be executed, acknowledged and filed with the State Department of Assessments and Taxation of Maryland, and will become effective in accordance with such law. Upon the effective date of such Articles of Dissolution, the Fund will be legally dissolved, but thereafter the Fund will continue to exist for the purpose of paying, satisfying, and discharging any existing debts or obligations, collecting and distributing its assets, and doing all other acts required to liquidate and wind up its business and affairs, but not for the purpose of continuing the business for which the Fund was organized.

Appraisal Rights

Shareholders will not be entitled to appraisal rights under Maryland law in connection with the Plan.

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Quorum and Required Vote

Under the Company’s charter, the affirmative vote of the holders of at least a majority of the outstanding shares of common stock of the Fund entitled to vote thereon is required to approve the liquidation and dissolution of the Fund pursuant to the Plan. For purposes of the vote on the Proposal, abstentions and broker non-votes will have the same effect as a vote against the liquidation and dissolution of the Fund pursuant to the Plan. The holders of a majority of the Fund’s outstanding common stock entitled to vote at the Meeting, present in person or by proxy, constitutes a quorum for the transaction of business at the Meeting. In the event that the necessary quorum to transact business or the vote required to approve the Plan is not obtained at the Meeting, the chairman of the meeting or the persons named as proxies may propose one or more adjournments of the Meeting in accordance with applicable law, to permit further solicitation of proxies with respect to such proposal. Any such adjournment with respect to a proposal will require the affirmative vote of the holders of a majority of the Fund’s shares present in person or by proxy at the Meeting and voting on that proposal. The persons named as attorneys in the enclosed proxy card will vote in favor of such adjournment those proxies which they are entitled to vote in favor of the proposal for which further solicitation of proxies is to be made. They will vote against any such adjournment those proxies required to be voted against such proposal. Votes cast by proxy or in person at the Meeting will be tabulated by the inspectors of election appointed for the Meeting. The inspectors of election, on behalf of the Fund, will determine whether or not a quorum is present at the Meeting. The inspectors of election will treat abstentions as present for purposes of determining a quorum. Because the only matter at the meeting is non-routine, shares held in street name for which voting instructions have not been received, or “broker non-votes”, will be treated as not present for purposes of a quorum.

Votes cast by proxy or in person at the Meeting will be tabulated by the inspectors of election appointed for the Meeting. The Fund expects that broker-dealer firms holding shares of the Fund in “street name” for the benefit of their customers and clients will request the instructions of such customers and clients on how to vote their shares on NASDAQ. The Fund understands that, under rules applicable to such broker-dealers, broker-dealers may not, without instructions from such customers and clients, grant authority to the proxies designated by the Fund to vote on the proposal to liquidate the Fund if no instructions have been received prior to the date specified in the broker-dealer firm’s request for voting instructions. Therefore, if beneficial owners do not provide proxy instructions or do not return a proxy card that specifies how they wish to vote on the Proposal, such action will have the same effect as a vote against Proposal.

In the event that a majority of the outstanding shares of common stock of the Fund are not voted in favor of the liquidation and dissolution of the Fund pursuant to the Plan, with the result that the liquidation and dissolution of the Fund as set forth in the Plan is not approved, the Fund will continue to exist as a registered investment company in accordance with its stated investment objective and policies. In the event the liquidation and dissolution of the Fund pursuant to the Plan is not approved, the Board presently intends to meet to consider what, if any, steps to take in the best interests of the Fund and its shareholders, including the possibility of resubmitting the liquidation and dissolution of the Fund pursuant to the Plan or another plan of liquidation and dissolution to shareholders for future consideration. Also, if the liquidation and dissolution of the Fund pursuant to the Plan is not approved by shareholders, the Board will promptly meet to consider other options to attempt to improve the Fund’s performance, reduce the Fund’s expense ratio and reduce the discount to NAV at which the Fund’s shares trade.

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