We present a theory of carrier-induced ferromagnetism in diluted magnetic semiconductors ( III1-xMnxV) which allows for arbitrary itinerant-carrier spin polarization and dynamic correlations. Both ingredients are essential in identifying the system's elementary excitations and describing their properties. We find a branch of collective modes, in addition to the spin waves and Stoner continuum which occur in metallic ferromagnets, and predict that the low-temperature spin stiffness is independent of the strength of the exchange coupling between magnetic ions and itinerant carriers. We discuss the temperature dependence of the magnetization and the heat capacity.