U.S. Securities and Exchange Commission
Washington, D.C.    20549



Gentlemen,


     We are transmitting herewith Form 10-KSB for the year ended Decemder 31,
2002 for Diversified Realty, Inc.



                           Diversified Realty, Inc.


                          S/D. Mellinger
                            D. Mellinger,
                            Accountant


                    	U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549
                                   FORM 10-KSB
(Mark One)
XX   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

     For the fiscal year ended December 31, 2002

     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF 1934
     For the transition period from             to

     Commission file number 0-2864

                     DIVERSIFIED REALTY, INC.
            (Name of small business issuer in its charter)

          Montana
(State or other jurisdiction                       81-0268110
of incorporation or organization)    (I.R.S. Employer Identification Number)

            128 Second Street South, Great Falls, Montana       59401
              (Address of principal executive offices)        (Zip Code)

Issuer's telephone number (406) 727-2600

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

                       $.10 Par Value Common Stock
                             (Title of class)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.  Yes XX  No

Check, if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10KSB.

State issuer's revenues for its most recent fiscal year $95,758.

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as
of a specified date within the past 60 days.  (See definition of affiliate
in Rule 12b-2 of the Exchange Act).
As of January 31, 2003, 287,934 shares held by nonaffiliates were
outstanding. The registrant's stock is not traded on any securities
exchange. To registrant's knowledge, bid and asked quotations for
registrant's stock are not reported in any newspapers nor are records kept
of any quotations by securities dealers or the National Quotation Bureau,
Inc. There exists no public market for registrant's common stock.

	             (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
5,367,675 shares $.10 par value common stock are outstanding as
of January 31, 2003.

                DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the form 10-KSB (e.g., Part I, Part II, etc.)
into which the documents are incorporated: (1) any annual report to security
holders: (2) any proxy or information statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933
("Securities Act"). The listed documents should be clearly described for
identification.

         DOCUMENTS          			       FORM 10-KSB REFERENCE

Annual Report to Shareholders for	  		Part I,   Items 1 and 2
the year ended December 31, 2002.	  		Part II,  Items 5, 6 and 7
                                   			Part III, Item 12
  	                                 		Part IV,  Item 13


Transitional Small Business Disclosure Format (check one): Yes   ; No X .

<PAGE>
                            	DIVERSIFIED REALTY, INC.

                                    	PART I


ITEM 1.	DESCRIPTION OF BUSINESS AND
ITEM 2.	DESCRIPTION OF PROPERTY

A description of the Company's business and property ownership is set forth
on Page 1 of Exhibit 13, the Annual Report to Shareholders for the year ended
December 31, 2002, which description is incorporated herein by reference.

ITEM 3.	LEGAL PROCEEDINGS

No legal proceedings presently pending by or against Diversified Realty, Inc.
are described herein as management believes that the outcome of such
litigation should not have a material adverse effect on the financial
position of the Company taken as a whole.

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of 2002.


                                 	I-1

                                  	1.
<PAGE>

                         	DIVERSIFIED  REALTY, INC.

                                	PART II


ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
ITEM 6.	MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
ITEM 7.	FINANCIAL STATEMENTS

Items 5, 6 and 7 are set forth on Page 13, Pages 1 and 2 and Pages 5 to 12,
respectively, of Exhibit 13, the Annual Report to Shareholders for the year
ended December 31, 2002, which report is incorporated herein by reference.

ITEM 8.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

There have been no disagreements concerning accounting principles or
practices or financial statement disclosures between the Company and the
Company's independent auditor during the two most recent years.


                                	II-1

                                  	2.
<PAGE>

                        	DIVERSIFIED REALTY, INC.

                               	PART III

ITEM 9.	DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following are the directors and executive officers of the Company.
All directors and officers serve as such until the 2001 annual meeting of
shareholders or until their successors are elected and qualify.

NAME, AGE, AND YEAR ELECTED DIRECTOR		      POSITION


S. M. McCann       39,    1990              Director

John Ross          49,    2001              Director

M. A. Arneson	   47,    1997              Director

R. Bruce Robson    61                       President


S. M. McCann is the president and a director of UAC, Inc., an affiliate of
the Company, and the president and a director of M Corp. M. A. Arneson is a
director of TSI, Inc. and UAC, Inc.

Family Relationships

S. M. McCann and M. A. Arneson are children of Anne Marie and Paul J.
McCann. Members of the Anne Marie and Paul J. McCann family control
a majority of the common stock of M Corp.  Anne Marie McCann and
Paul J. McCann each disclaim beneficial ownership of any shares of
stock not owned of record directly by them. Anne Marie and
Paul J. McCann do not personally own any stock of the Company.

Following are the executive officers of the Company and a description of
their principal business experience.

Name and Position      	Business Experience During Past 5 Years

R. Bruce Robson         Data Processing Manager
President               Sletten Construction Co.
                        Great Falls, Montana


S. M. McCann          	Attorney at Law, Business Owner, Investor
                        San Luis Obispo, California


Based solely on its review of reports of persons subject to Section 16 of
the Securities and Exchange Act, the Company believes that required reports
were filed in a timely manner disclosing transactions involving the
Company's common stock.

                            	III-1

                               3.
<PAGE>


                   	DIVERSIFIED REALTY, INC.




ITEM 10.	EXECUTIVE COMPENSATION

Summary Compensation Table. The following table shows the cash compensation
paid by the Company to its President and Chief Executive Officer for 2002,
2001 and 2000.

                          Summary Compensation Table

Name of individual                 Calendar             Total Cash
and Position                         Year              Compensation

R. Bruce Robson                      2002		   $ 1,000
President			     2001                  $ 1,000
	                             2000                  $  None


Paul J. McCann			     2002		      None
				     2001	 	    $44,000
				     2000		      None

M. A. Arneson			     2002		    $ 1,700
				     2001		      None
				     2000		      None


The Company has not adopted a formal plan for the compensation of directors.
During 2002 the Company paid $2,700 to the directors.

ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)	Security Ownership of Certain Beneficial Owners

Set forth below is certain information concerning persons who are known by
the Company to own beneficially more than 5% of the Company's voting shares
on January 31, 2003.


Title of Class                         $.10 Par Value
                                       Common Stock

Name and Address                       M Corp
of Beneficial Owner                    110 Second Street South
                                       Great Falls, Montana

Amount and Nature                      5,076,708 (1)
of Beneficial                          Direct
Ownership


Percent                                94.5%
of Class


(1) S. M. McCann, M. A. Arneson and other members of the Anne
Marie and Paul J. McCann family own directly or indirectly a majority of the
outstanding stock of M Corp, which company owns 5,076,708 shares (94.5%) of
the outstanding common stock of the Company. Members of the Anne Marie and
Paul J. McCann family own directly 3,033 shares (.06%) of the Company's stock.
Anne Marie and Paul J. McCann, parents of S. M. McCann and M. A. Arneson
each disclaim beneficial ownership of any shares
of stock not owned of record directly by them.  Neither Anne Marie nor Paul
J. McCann personally own any shares of stock in the Company.


                                  	III-2

                                    	4.

<PAGE>

                          	DIVERSIFIED REALTY, INC.




ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -
Continued

(b)	Security Ownership of Management

The following table sets forth as of January 31, 2003, information concerning
the beneficial ownership of the Company's common stock by each director, each
executive officer named in the Company's Summary Compensation Table and by
all directors and executive officers of the Company as a group:

                               Amount and Nature
     Name of                     of Beneficial
Beneficial Owner                   Ownership                 Percent

M. A. Arneson                          - (1)                    -

R. Bruce Robson                        -                        -

S. M. McCann                           - (1)                    -

All Directors and Officers
 as a Group                            - (1)                    -

(1)	See Note (1) Item 11(a) on preceding page.

(c)	Changes In Control

The Company knows of no contractual arrangements which may at a subsequent
date result in a change in control of the Company.

ITEM 12.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with the Company's parent company, M Corp and its other
subsidiaries, are disclosed in Note 4 of the notes to financial statements
in the Annual Report to Shareholders for the year ended December 31, 2002,
which note is incorporated herein by reference. M Corp owns approximately
94.5% of the Company's outstanding common stock.

                                	III-3

                                  	5.
<PAGE>


                       	DIVERSIFIED REALTY, INC.

                               	PART IV


ITEM 13.	EXHIBITS AND REPORTS ON FORM 8-K

(a)	Exhibits

No. 13 - Diversified Realty, Inc., Annual Report to Shareholders for the
year ended December 31, 2002, incorporated by reference in this Annual Report
on Form 10-KSB.

No. 27 - Financial Data Schedule

(b)	Reports on Form 8-K

No Current Reports on Form 8-K were filed by the Company during the three
months ended December 31, 2002.





                                   IV-1

                                     6.
<PAGE>



                            DIVERSIFIED REALTY, INC.

                                  SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



	                                         DIVERSIFIED REALTY, INC.




Date:  March 28, 2003                 	By:s/R. Bruce Robson
	                                              R. Bruce Robson, President



In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated
on March 28, 2003.



Director
						s/M. A. Arneson
                                                  M. A. Arneson

Director					s/S. M. McCann
                                                  S. M. McCann

Principal Accountant	                        s/D. Mellinger
                                                  D. Mellinger


                                     IV-2

                                       7.

<PAGE>
				CERTIFICATION


I, Paul J. McCann, certify that:

1.  I have reviewed this annual report on Form 10-KSB of
    Diversified Realty Inc.

2.  Based on my knowledge, this quarterly report does not contain any
    untrue statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the circomstances
    under which such statements were made, not misleading with respect to
    the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial
    inforamtion included in quarterly annual report, fairly present in
    all material respects the financial condition, results of operations
    and cash flows of Diversified Realty, Inc. as of, and for, the
    periods presented in this annual report.

4.  Diversified Realty, Inc.'s other certifying officers and I are responsible
    for establishing and maintaining disclosure controls and procedures (as
    defined in Exchange Act Rules 13a-14 and 15d-14) for Diversified Realty,
    Inc.  We have:

a.  designed such disclosure controls and procedures to ensure that material
        information relating to Diversified Realty, Inc. is made known to us
        by others within those entities, particularly during the period in which
        this quarterly report is being prepared.

    b.  evaluated the effectiveness Diversified Realty, Inc. disclosure controls
        and prodecures as of a date with 90 days prior to the filing date of
        this quarterly report (the "Evaluation Date"); and

    c.  presented in this quarterly report our conclusions about the
        effectiveness of the disclosure controls and procedures based on our
        evaluation as of the Evaluation Date;

					8
<PAGE>

5.  Diversified Realty, Inc.'s other certifying officers and I have disclosed,
    based on our most recent evaluation, to Diverdified Realty, Inc. auditors
    and the audit committee of Diversified Realty, Inc. board of directors
    (or persons performing the equivalent functions):

    a.  all significant deficiencies in the design or operation of internal
        controls which could adversely affect Diversified Realty, Inc.'s
        ability to record, process, summarize and report financial data, and
        I have identified for Diversified Realty, Inc.'s auditors any
        material weaknesses in internal controls; and

    b.  any fraud, whether or not material, that involves management or
        other employees who have a significant role in Diversified Realty,
        Inc.'s internal control; and

6.  Diversified Realty, Inc.'s other certifying officers and I have indicated
    in this annual report whether there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies and
    material weaknesses.

All of the above is to the best of my knowledge, especially paragragh 3
above.  I am not familiar with all SEC rules and procedures and have relied
and am relying on our staff and accountants in that regard.

    Date: March 28, 2003             s/Paul J. McCann
                                         Paul J. McCann



                                  	9

                         CERTIFICATION PURSUANT TO
                         18 U.S.C. SECTION 1350
                         AS ADOPTED UPRSUANT TO
                      SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Diversified Realty, Inc. on Form
10-KSB for the period ending December 31, 2002 as filed with the Securites
and Exchange Commission on the date hereof (the "Report"), I, Paul J. McCann,
Representative of Diversified Realty, Inc., certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Subanes-
Oxley Act of 2002, to the best of my knowledge and belief, that;

1.  The report fully compiles with the requiremtns of section 13(a) or
    15(d) of the Securities Exchange Act of 1934; and

2.  The information contained in the Report fairly presents, in all
    material respects, the financial condition and result of operations
    of Diversified Realty, Inc.

Date: March 28, 2003                s/Paul J. McCann
                                        Paul J. McCann,
                                        Representative


                                10


<PAGE>

                            DIVERSIFIED REALTY, INC.


                               	ANNUAL REPORT


                                     2002

<PAGE>

                           DIVERSIFIED REALTY, INC.

                                 ANNUAL REPORT





DESCRIPTION AND LINES OF BUSINESS


Diversified Realty, Inc. (herein referred to as "DRI" or the "Company") is a
majority-owned subsidiary of M Corp, a financial holding company.  As of
December 31, 2002, M Corp owned approximately ninety-five percent of the
outstanding common stock of the Company.

The Company is primarily engaged in the ownership and rental of real
property.

Information as of December 31, 2002, concerning the gross carrying amount of
real property, accumulated depreciation and encumbrances on a property by
property basis is presented in Note 5, Investments in Real Estate, of the
Notes to Financial Statements.



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Net Income increased $36,086, 2,357%, in 2002 as compared with 2001.
The increase in net income in 2002 compared with 2001 was due
primarily to a decrease in expenses.






                                  1

<PAGE>

                        	DIVERSIFIED REALTY, INC.

                            	ANNUAL REPORT




MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED


Dividend and interest income decreased $45,850, 63.8%, in 2002
as compared with 2001.  The decrease in dividend and interest
income in 2002 compared with 2001 was due to a decrease in rates
earned by the Company.

Total operating expenses decreased $70,241, 49.4%, in 2002 as compared
with 2001.  Salaries and payroll costs decreased $48,221, 99.11%,
in 2002 as compared with 2001 due to a decrease in the number of
employees.  Property taxes and licenses increased $2,273, 12.7%, in 2002 as
compared with 2001 due to an increase in property tax assessments.
Other expenses decreased $25,614, 41.5%, in 2002 as compared with 2001
primarily due to decreases in operating costs.

Income tax expense increased $6,300, 138.5%, in 2002 as compared with
2001 due to the increase in pre-tax income. The Company files a
consolidated federal income tax return with the Company's parent company
and other affiliates.

Transactions with the Company's parent company and its affiliates during
2002 and 2001 are disclosed in Note 4, Related Party Transactions, of the
Notes to Financial Statements.

The Company is considering acquisitions which would deplete the Company's
available cash and thus affect the liquidity of the Company.



                                    2
<PAGE>



                         	DIVERSIFIED REALTY, INC.

                            	FINANCIAL REPORT

                            	DECEMBER 31, 2002





                                	CONTENTS




                                                               	PAGE

AUDITOR'S REPORT                                                 4


FINANCIAL STATEMENTS

Balance Sheets as of December 31, 2002 and 2001                   5

Statements of Income for the Years Ended
 December 31, 2002 and 2001                                       6

Statements of Stockholders' Equity for the
 Years Ended December 31, 2002 and 2001                           7

Statements of Cash Flows for the Years
 Ended December 31, 2002 and 2001                                 8

Notes to Financial Statements	                                  9-13


OTHER INFORMATION	                                         14



                                   3

<PAGE>





                  	Report of Independent Auditors



To The Board of Directors
Diversified Realty, Inc.
Great Falls, MT  59401


We have audited the accompanying balance sheets of Diversified Realty, Inc.,
as of December 31, 2002 and 2001 and the related statements of income,
stockholders' equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsiblity is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Diversified Realty, Inc.,
as of December 31, 2002 and 2001 and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.




DWYER & KEITH, CPA's, P.C.


April 2, 2003
Great Falls, Montana

                                  4
<PAGE>
                         DIVERSIFIED REALTY, INC.

                            	BALANCE SHEETS

                        DECEMBER 31, 2002 and 2001



                                                     2002            2001

ASSETS
Current Assets
  Cash (Note 2)                                  $ 2,237,202     $ 2,225,554
  Marketable Securities				       2,832             -
  Income Tax Prepayments                              12,032          12,982
  S/T Deferred Tax Asset (Note 1 & 3)                    -             4,600
  Due From Parent Company                            114,132         117,467

          Total Current Assets                     2,366,198       2,360,603

Investments in Property, Plant and
 Equipment, at Cost (Notes 1 & 5)
  Land                                                12,761          12,761
  Buildings                                          340,815         340,815
  Furniture, Fixtures and Equipment                   66,467          65,394
                                                     420,043         418,970
     Less Accumulated Depreciation                  (231,659)       (216,314)
     Net Property, Plant and Equipment               188,384         202,656

Other Assets
  L/T Deferred Income Taxes (Notes 1 and 3)	      16,450             -

          Total Assets                           $ 2,571,032     $ 2,563,259


LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities-
  Accrued Expenses                               $    10,707     $    38,790
  S/T Deferred Income Taxes                              654             -

           Total Current Liabilities                  11,361          38,790


Stockholders' Equity
  Common Stock - $.10 Par Value,
    11,000,000 shares authorized,
    5,375,000 shares issued                          537,500         537,500

  Capital Surplus                                  1,929,408       1,929,408

  Retained Earnings (Accumulated Deficit)             93,921          59,366

  Accumulated Other Comprehensive Income (Note 1)      1,678             -

  Cost of Common Stock in Treasury
   (7,325 shares in 2002
    and 5,263 shares in 2001)                         (2,836)         (1,805)

    Total Stockholder's Equity                     2,559,671       2,524,469

Total Liabilities and
  Stockholders' Equity                           $ 2,571,032     $ 2,563,259

                     	See Notes to Financial Statements.

                                   5
<PAGE>

                          DIVERSIFIED REALTY, INC.

                           	STATEMENTS OF INCOME

               	FOR THE YEARS ENDED DECEMBER 31, 2002 and 2001



                                                      2002            2001
Income
  Rent                                           $    69,760     $    68,438
  Dividends & Interest                                25,998          71,848
  Gain on Sale of Assets                                 -            (4,103)
  Other                                                  -                30

                                                      95,758         136,213

Expenses
  Salaries and Payroll Costs                             431          48,652
  Property Taxes and Licenses                         20,113          17,840
  Depreciation                                        15,345          14,024
  Other Expenses                                      36,164          61,778

                                                      72,053         142,294

Income Before Income Taxes                            23,705          (6,081)

Income Taxes (Notes 1 and 3)                          10,850           4,550

     NET INCOME                                  $    34,555     $    (1,531)

Other Comprehensive Income Net of Taxes:
  Unrealized Holding Gains			       1,678	         -

     COMPREHENSIVE INCOME			 $    36,233     $   (1,531)

               	See Notes to Financial Statements.

                                     6
<PAGE>


                          DIVERSIFIED REALTY, INC.

                     STATEMENTS OF STOCKHOLDERS' EQUITY

                FOR THE YEARS ENDED DECEMBER 31, 2002 and 2001

<TABLE>

<S>                           <C>        <C>           <C>       <C>    	<C>         <C>
                                Common    Capital      Retained  Accum Other     Treasury
                                Stock     Surplus      Earnings  Comprehensive      Stock       Total
                                                                 Income
Balances, January 1, 2001     $537,500   $1,929,408    $ 60,897)    		$ (1,231)    $2,526,574


Net Income                                               (1,531)                  (1,531)        (1,531)

Purchase Treasury Stock                                              		    (574)          (574)

Balances, December 31, 2001   $537,500   $1,929,408    $  59,366     		$ (1,805)    $2,524,469

Net Income						  34,555                   34,555        34,555

Purchase Treasury Stock                                                 	   (1,031)       (1,031)

Net Unrealized Holding Gains					   1,678		          1,678

Balances, December 31, 2002  $537,500	$1,929,408	$93,921   $1,678	  $(2,836)   $2,559,671




</TABLE>

                        See Notes to Financial Statements.

                                      7

<PAGE>


                        	DIVERSIFIED REALTY, INC.

                        	STATEMENTS OF CASH FLOWS

             	FOR THE YEARS ENDED DECEMBER 31, 2002 and 2001


                      	INCREASE (DECREASE) IN CASH



                                                      2002           2001

CASH FLOWS FROM OPERATING ACTIVITIES:
 Cash Received From Customers                     $   70,011     $   69,068
 Cash Paid to Suppliers and Employees                (85,043)      (118,842)
 Dividends & Interest Received in Cash                25,998         71,848
 Income Taxes Paid in Cash                              (550)       (10,000)

Net Cash Provided By
 Operating Activities                                 10,416         12,074

CASH FLOWS FROM INVESTING ACTIVITIES:
 Cash Purchase of Investments                            -         (748,403)
 Cash Proceeds From Sales and  Redemptions
   of Investments                                        -          744,300
 Cash Purchase of Equipment                           (1,073)        (3,103)

Net Cash Provided By
 Investing Activities                                 (1,073)        (7,206)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Cash Purchases of Treasury Stock                     (1,030)        (574)
Net Cash Advances From (To) Parent Company            3,335        (40,600)

Net Cash (Used) By
  Financing Activities                                 2,305        (41,174)

     NET INCREASE IN CASH                             11,648        (36,306)

     CASH - BEGINNING OF YEAR                      2,225,554      2,261,860

     CASH - END OF YEAR                           $2,237,202     $2,225,554



                 	RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
	                            BY OPERATING ACTIVITIES



Net Income (Loss)                                 $   34,555     $  (1,531)

Adjustments to Reconcile Net Income to Net
 Cash Provided By Operating Activities

    Depreciation                                      15,345         14,024

    Loss on Sale of Investment                           -            4,103

    Changes in Operating Assets and Liabilities

    Increase (Decrease) in Income Tax Prepayments        950         (9,950)
    Increase in Comprehensive Income                   1,677            -
    (Increase) Decrease in Investments                (2,832)           -
    (Increase) Decrease in Deferred Tax Asset         (11,850)        (4,600)
    Increase (Decrease) in Current Liabilities        (27,429)       (10,028)

NET CASH PROVIDED BY OPERATING
 ACTIVITIES                                       $   10,416     $   12,074


                   	    See Notes to Financial Statements.

                                     8

<PAGE>

                         	DIVERSIFIED REALTY, INC.

                      	NOTES TO FINANCIAL STATEMENTS


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Nature of Operations, Risks and Uncertainties

The Company is engaged in the ownership and rental of properties located
almost exclusively within Yellowstone County, Montana. The Company's rental
operations are dependent in large part upon the economy and rental conditions
within Yellowstone County, Montana. The Company leases its properties to
lessees under non-cancelable operating leases with terms of less than one
year.

The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the reported amounts of certain types of assets, liabilities,
revenues and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Actual
results could differ from those estimates.

(b)	Depreciation

Depreciation for the various classifications of rental property, plant and
equipment is computed using the straight-line and accelerated methods over the
estimated useful lives of the assets as follows:

Buildings					15 - 27 Years
Furniture, Fixtures and Equipment	         3 - 10 Years

(c)	Income Taxes

The Company files a consolidated income tax return with its parent company.
Income taxes are allocated to the Company based upon the ratio of the
Company's pre-tax income to total consolidated pre-tax income.  The Company
follows the practice of recording deferred income taxes resulting from timing
differences between financial reporting and income tax reporting.

(d)	Policy of Cash Equivalents

For the purposes of the statement of cash flows, cash equivalents include time
deposits, certificates of deposit and money market accounts, all with original
maturities of three months or less.

(e) Comprehensive Income

Comprehensive income at December 31, 2002 amounted to $1,678, which is the
difference between the total net unrealized gain at December 31, 2002 and the
deferred income taxes applicable to the net unrealized gain.


                                       9
<PAGE>


                           DIVERSIFIED REALTY, INC.

                  NOTES TO FINANCIAL STATEMENTS - (Continued)

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -(continued)

(f) Retirement Plans

The Company adopted an employees' savings plan under Section 401(k) of the
Internal Revenue Code (the "Code") during 1998. The Company allows eligible
employees to contribute the maximum percentage of their compensation allowed
by the Code. The Company matches employee contributions in an amount equal
to fifty percent of the first six percent of the employee's compensation
up to a maximum of $1,080. Participants are at all times fully vested
in their contributions and are gradually vested in the Company's
contributions. The Company's 401(k) contributions and administrative costs
were $0 for 2002 and 2001.

(g) Reclassifications

Certain reclassifications have been made to the prior year amounts to make
them comparable to the 2001 presentation. These changes had no	impact on
previously reported results of operations or shareholders'equity.


2.CASH BALANCES

The Company maintains cash accounts with various financial institutions
and stock brokerage firms. Cash balances are insured up to $100,000 by
either the Securities Investor Protection Corporation ("SIPC") or the
Federal Deposit Insurance Corporation ("FDIC"). At December 31, 2002, cash
balances totaling $2,118,641 were uninsured by either the SIPC or the FDIC.

3.	INCOME TAXES

Income tax expense consists of the following, all currently payable:

                                                     2002           2001

U.S. Income Taxes                                $ (12,350)      $ (4,600)

State Income Taxes                                   1,500             50

                                                 $ (10,850)      $ (4,550)


                                    10
<PAGE>


                          DIVERSIFIED REALTY, INC.

                 NOTES TO FINANCIAL STATEMENTS - Continued


3.INCOME TAXES - (continued)

The income tax expense reflected in the financial statements differs from
the amounts that would normally be expected by applying the U.S. Federal
income tax rates to income before income taxes. The reasons for these
differences are as follows:

 							    2002          2001

2002 Computed "Expected" Federal Tax Expense(Benefit) $     300       $ (4,600)

2001 Estimated Federal Tax Expense Adjustment     	 (12,650)            -
  (to reflect portion of non-taxable dividend
   income in 2001)
2002 Computed "Expected" State Income Taxes		   1,500            50


                                                       $ (10,850)      $ (4,550)

4.	RELATED PARTY TRANSACTIONS


The Company owns ten of the thirty-four developed condominium units of the
Cedar Grove Condominiums located in Billings, Montana. The Company paid
assessments to the Cedar Grove Condominium Association, Inc. during 2002
and 2001 in the amounts of $32,640 and $12,540, respectively.  In addition
to the foregoing, the Company had transactions with its parent company
or subsidiaries of its parent company, as follows:

                                                         2002        2001

Net Cash Transfers To Parent                       $       -     $  33,000
Was Charged For Insurance                               (3,335)     (2,400)
Income Tax Allocation		           		   -	    42,000
Income Tax Estimate Paid on
  Behalf of Company					   -        10,000


5. COMMITMENTS AND CONTINGENCIES

The board of directors has approved the Company's participation in an
attempt to purchase a savings and loan institution.  The Company will
participate in the purchase with its parent, M Corp.  Should the
purchase take place, the liquidity of the Company will be significantly
affected.
                                  11
<PAGE>
                       DIVERSIFIED REALTY, INC.

                NOTES TO FINANCIAL STATEMENTS - Continued

6.  INVESTMENT SECURITIES

The Company adopted Statement of Financial Accounting Standards No. 115
(SFAS No. 115), "Accounting For Investments in Certain Debt and Equity
Securites: effective January 1, 1994.  In accordance with SFAS No. 115,
the Company has classified all of its current and noncurrent investments
as available for sale.  Following is a summary of the Company's
investments:

     Current Assets:
					2002		2001

     Cost			     $   --	      $  --
     Gross Unrealized Holding Gains    2,832             --

     Fair Value                      $ 2,832	      $  --

No other unrealized gains or losses are included in the Company's
statements of income for 2002 and 2001.

					12
<PAGE>


			DIVERSIFIED REALTY, INC.

                NOTES TO FINANCIAL STATEMENTS - Continued

7. INVESTMENTS IN REAL ESTATE
<TABLE>
<CAPTION>

                               GROSS AMOUNT CARRIED
                                 ON BALANCE SHEET
                 DATE          AT DECEMBER 31, 2002     ACCUMULATED     AMOUNT OF
DESCRIPTION  CONSTRUCTED    LAND   BUILDINGS   TOTAL    DEPRECIATION   ENCUMBRANCE
<S>                      <C>       <C>        <C>          <C>             <C>
Investment
 Property
 Florida         1988    $    -    $122,000   $122,000     $  54,448       $  -

Rental Units
  Montana        Var.         -     218,815    218,815       113,211          -

Miscellaneous
  Properties              12,761       -        12,761          -             -


Totals                   $12,761   $340,815   $353,576     $ 167,659       $  -
</TABLE>


Reconciliations Of Total Real Estate Carrying Value For The Two Years Ended
December 31, 2001 are as follows:

                                               2002              2001
Balance, Beginning of Year                  $353,576           $353,576
  Less Retirements                              -                  -
Balance, End of Year                        $353,576           $353,576

Reconciliations Of Accumulated Depreciation For The Two Years Ended
December 31, 2001 are as follows:

                                               2002              2001
Balance, Beginning of Year                  $153,879           $140,099
  Add Provision for Depreciation              13,780             13,780
  Less Retirements and Sales                     -                  -
Balance, End of Year                        $167,659           $153,879


                                      13

<PAGE>
                          DIVERSIFIED REALTY, INC.


                          DIRECTORS AND OFFICERS





NAME					 OCCUPATION

R. Bruce Robson                  Data Processing Manager
President                        Sletten Construction Co.
                                 Great Falls, Montana

M. A. Arneson                    Investor,
Director                         Billings, Montana

S. M. McCann			 Attorney at Law, Investor,
Director			 San Luis Obispo, California





                           MARKET INFORMATION


The common stock of Diversified Realty, Inc. is not traded on any securities
exchange, nor are records kept of any quotations by securities dealers or the
National Quotation Bureau, Inc.  To the best knowledge of the Company, bid and
asked quotations for Diversified Realty, Inc., common stock are not reported
in any newspapers.


No dividends were paid in 2002 or 2001.


There are approximately 2,196 holders of record of the Company's common stock.


A copy of the Form 10-KSB Annual Report may be obtained upon written request
to the Company.



                          DIVERSIFIED REALTY, INC.
                              P.O. Box 2249
                          110 Second Street South
                        Great Falls, MT  59403-2249

                                   14
<PAGE>