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

                                   FORM 10-QSB

              [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2003
                                                 -------------

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

              For the transition period___________from to__________

                        Commission file number 000-24498
                                               ---------

                       DIAMOND HILL INVESTMENT GROUP, INC
                       ----------------------------------
                 (Name of small business issuer in its charter)

                Ohio                                  65-0190407
                ------------------------------------------------------
                (State or other jurisdiction of       (I.R.S. Employer
                incorporation or organization)        Identification No.)

          375 North Front Street, Suite 300, Columbus, Ohio      43215
          ------------------------------------------------------------
          (Address of principal executive offices)          (Zip Code)

                    Issuer's telephone number (614) 255-3333
                                              --------------

State the number of shares outstanding of each of the issuer's classes of common
equity, as of July 31, 2003: Common Stock: 1,519,467 shares

Transitional Small Business Disclosure Format (check one): Yes [ ]  No [X]

                                       1
<PAGE>
              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

                                                                            PAGE
                                                                            ----

Part I: FINANCIAL INFORMATION                                               3-21

     Item 1.   Financial  Statements:                                       3-15

               Consolidated  Statements of Financial                           4
               Condition as of June 30, 2003  (unaudited)

               Consolidated Statements of Operations for the                   5
               Six Months and Three Months Ended
               June 30, 2003 and 2002 (unaudited)

               Consolidated Statements of Cash Flow                            6
               for the Six Months Ended June 30, 2003 and 2002
               (unaudited)

               Notes to the Consolidated Financial Statements               7-15

     Item 2.   Management's Discussion and Analysis or                     16-21
               Plan of Operation

     Item 3.   Controls and Procedures                                        21

Part II: OTHER INFORMATION                                                 21-22

     Item 1.   Legal Proceedings                                              21

     Item 2.   Changes in Securities                                          21

     Item 3.   Defaults Upon Senior Securities                                21

     Item 4.   Submission of Matters to a Vote of Security Holders            22

     Item 5.   Other Information                                              22

     Item 6.   Exhibits and Reports on Form 8-K                               22

Signatures                                                                    23

Certifications for Quarterly Report on Form 10-QSB                         24-25

                                       2
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

PART I    FINANCIAL INFORMATION

ITEM 1:   FINANCIAL STATEMENTS

The  accompanying  consolidated  financial  statements,  which should be read in
conjunction with the  consolidated  financial  statements and footnotes  thereto
included  in the  Company's  Annual  Report on Form  10-KSB  for the year  ended
December 31, 2002,  are  unaudited,  but have been prepared in  accordance  with
generally  accepted  accounting  principles for interim  financial  information.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the  opinion  of  management,  all  adjustments  (consisting  only of  normal
recurring  adjustments)  considered  necessary for a fair presentation have been
included.

Operating  results for the six months and three  months  ended June 30, 2003 are
not  necessarily  indicative  of the results that may be expected for the entire
fiscal year ending December 31, 2003

                                       3
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                               As of June 30, 2003

                                    UNAUDITED
                                    ---------

                                     ASSETS
Cash                                                               $     32,434
Investment portfolio (note 3 and 4):
     Mutual fund shares and limited partnership
          interests                                                   2,700,486
     Not readily marketable equity securities,
          at estimated fair value                                        17,058
     Accounts receivable:
       Investment products                                               98,842
     Property and equipment, net of accumulated
          depreciation of $117,089                                      145,945
     Deposits and other                                                 138,286
                                                                   ------------

          Total assets                                             $  3,133,051
                                                                   ============

                                   LIABILITIES

Accounts payable                                                   $      1,810

Accrued expenses                                                        167,833
                                                                   ------------

          Total liabilities                                             169,643
                                                                   ------------

                              SHAREHOLDERS' EQUITY

Common stock: (note 5)
     No par value, 7,000,000 shares authorized,
          1,827,972 shares issued and 1,409,467
          shares outstanding                                         10,027,613
      Treasury stock, at cost (418,505 shares)                       (2,394,510)
      Deferred compensation                                              (7,770)
Accumulated deficit                                                  (4,661,925)
                                                                   ------------

     Total shareholders' equity                                       2,963,408
                                                                   ------------

     Total liabilities and shareholders' equity                    $  3,133,051
                                                                   ============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       4
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
   For the Six Months and Three Months Ended June 30, 2003 and June 30, 2002

                                    UNAUDITED
                                    ---------
<TABLE>
<CAPTION>

                                                     6 MONTHS ENDED                    3 MONTHS ENDED
                                                     --------------                    --------------
                                                JUN 2003         JUN 2002         JUN 2003         JUN 2002
                                              ------------     ------------     ------------     ------------
<S>                                           <C>              <C>              <C>              <C>
INVESTMENT MANAGEMENT FEES:
     Mutual funds                             $    189,561     $    189,468     $    101,564     $    106,543
     Managed accounts                              253,291          120,360          146,505           70,636
     Private Partnership                            24,807            5,962           12,552            4,588
                                              ------------     ------------     ------------     ------------

          Total investment management fees         467,659          315,790          260,621          181,767

OPERATING EXPENSES:
     Salaries, benefits and payroll taxes          768,299          750,276          389,402          366,878
     Legal and audit                                39,636          100,816           29,393           40,850
     General and administrative                    218,069          206,575           86,168           70,698
     Sales and marketing                            82,549           91,407           50,714           36,065
                                              ------------     ------------     ------------     ------------

          Total operating expenses               1,108,553        1,149,074          555,677          514,491
                                              ------------     ------------     ------------     ------------

     Mutual fund administration, net (Note 7)     (160,660)        (134,561)         (97,860)         (64,068)

     Mutual fund distribution, net (Note 8)        (55,639)         (65,831)         (23,100)         (45,906)

     Broker-dealer activity, net (Note 9)          (13,270)         (73,021)          (6,633)         (67,072)
                                              ------------     ------------     ------------     ------------

NET OPERATING INCOME (LOSS)                       (870,463)      (1,106,697)        (422,649)        (509,770)
                                              ------------     ------------     ------------     ------------

     Investment return, net of interest
     expense                                       185,281          201,294          240,839         (136,812)
                                              ------------     ------------     ------------     ------------

INCOME (LOSS) BEFORE TAXES                        (685,182)        (905,403)        (181,810)        (646,582)
                                              ------------     ------------     ------------     ------------

     Income Tax Provision (Credit)                      --               --               --               --
                                              ------------     ------------     ------------     ------------

NET INCOME (LOSS)                             $   (685,182)    $   (905,403)    $   (181,810)    $   (646,582)
                                              ============     ============     ============     ============

     Basic Earnings (Loss) Per Share          $      (0.49)    $      (0.63)    $      (0.13)    $      (0.45)
                                              ============     ============     ============     ============

     Diluted Earnings (Loss) Per Share        $      (0.49)    $      (0.63)    $      (0.13)    $      (0.45)
                                              ============     ============     ============     ============
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       5
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 2003 and 2002

                                    UNAUDITED
                                    ---------
<TABLE>
<CAPTION>
                                                                    2003             2002
                                                                ------------     ------------
<S>                                                             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                          $   (685,182)    $   (905,403)
     Adjustments to reconcile net income (loss)
       to net cash provided by (used in) operating activities:
     Depreciation and amortization                                    19,205           29,829
     Amortization of deferred compensation                             7,404           13,083
     Unrealized (gain) loss                                         (230,147)         (31,213)
     (Increase) decrease in certain assets:
        Investment portfolio                                         303,085          135,734
        Accounts receivable:
          Investment products                                         (8,983)         (13,643)
          Other                                                          118          (11,088)
          Refundable income taxes                                         --          414,251
       Deposits and other                                             20,402          (47,101)
     Increase (decrease) in certain liabilities-
        Accounts payable to broker-dealers and other                   1,810)          15,410
        Accrued expenses and other                                   (88,363)        (286,816)
                                                                ------------     ------------
          Net cash used in operating activities                     (660,651)        (686,957)
                                                                ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                                   --         (113,523)
     Proceeds from sale of property and equipment                         --               --
                                                                ------------     ------------
          Net cash used in investing activities                           --         (113,523)
                                                                ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Exercise of stock options                                         3,910               --
     Purchase of treasury stock                                           --         (225,200)
                                                                ------------     ------------
          Net cash provided (used) in financing activities             3,910         (225,200)
                                                                ------------     ------------

NET DECREASE IN CASH                                                (656,741)      (1,025,680)

CASH, BEGINNING OF PERIOD                                            689,175        1,174,026
                                                                ------------     ------------

CASH, END OF PERIOD                                             $     32,434     $    148,346
                                                                ============     ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

     Cash paid during the period for:
     Interest                                                   $        364     $         --
     Income taxes                                                         --               --
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       6
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

Note 1    ORGANIZATION AND NATURE OF BUSINESS
          -----------------------------------

Diamond  Hill  Investment  Group,  Inc.  (the  Company)  is an Ohio  corporation
incorporated in May 2002, previously a Florida corporation since April 1990. The
Company has two subsidiary operating companies.

Diamond Hill Capital Management,  Inc. (DHCM), an Ohio corporation,  is a wholly
owned subsidiary of the Company and a registered investment advisor. DHCM is the
investment  adviser to the Diamond Hill Focus Fund, Diamond Hill Small Cap Fund,
Diamond  Hill Large Cap Fund,  Diamond  Hill Short  Term Fixed  Income  Fund and
Diamond Hill  Strategic  Income Fund,  open-end  mutual funds,  which are each a
series in the Diamond Hill Funds trust.  DHCM is also the investment  adviser to
the Diamond  Hill  Investment  Partners,  L.P. and offers  advisory  services to
institutional and individual investors.

Diamond Hill  Securities,  Inc.  (DHS), an Ohio  corporation,  is a wholly owned
subsidiary of DHCM and a NASD registered  broker-dealer.  DHS is registered with
the  Securities and Exchange  Commission and the securities  commissions of nine
states (including Ohio) and the District of Columbia. DHS trades securities on a
fully-disclosed  basis and clears customer  transactions through an unaffiliated
broker-dealer  that  also  maintains  the  customer  accounts.  DHS  is  also  a
registered  investment advisor and offers advisory services to institutional and
individual  investors.  DHS is the investment adviser to the Diamond Hill Bank &
Financial Fund, which is a series in the Diamond Hill Funds trust.

Note 2    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          ------------------------------------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the reported  amounts of assets and liabilities and the reported  amounts
of revenues and expenses for the periods. Actual results could differ from those
estimates.  The following is a summary of the Company's  significant  accounting
policies:

Principles of Consolidation
---------------------------

The accompanying consolidated financial statements include the operations of the
Company, DHCM and DHS. All material inter-company transactions and balances have
been eliminated in consolidation.

Cash
----

The Company has defined  cash as demand  deposits,  certificate  of deposits and
money market accounts. The Company maintains its cash in seven accounts with two
financial institutions.

Accounts Receivable
-------------------

Accounts  receivable  are  recorded  when they are due and are  presented in the
statement of financial  condition net of any  allowance  for doubtful  accounts.
Accounts   receivable   are  written  off  when  they  are   determined   to  be
uncollectible. Any allowance for doubtful accounts is estimated on the Company's
historical  losses,  existing  conditions  in the  industry,  and the  financial
stability  of  those  individuals  that owe the  receivable.  No  allowance  for
doubtful accounts was deemed necessary at June 30, 2003.

Valuation of Investment Portfolio
---------------------------------

Securities  and  related  options  traded on  national  securities  markets  and
securities  not  traded  on  national  securities  markets,   but  with  readily
ascertainable  market values, are valued at market value. Other securities,  for
which  market  quotations  are not  readily  available,  due to  infrequency  of
transactions,  are  valued  at fair  value as  determined  in good  faith by the
management of the Company. Realized and unrealized gains and losses are included
in investment profits and losses.

                                       7
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

Note 2    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
          ------------------------------------------------------

Limited Partnership Interests
-----------------------------

DHCM is the managing  member of Diamond Hill General  Partner,  LLC, the General
Partner of Diamond Hill Investment Partners,  L.P. (DHIP), a limited partnership
whose underlying assets consist of marketable  securities.  DHCM's investment in
DHIP is accounted for using the equity  method,  under which DHCM's share of the
net earnings or losses of the  partnership  is reflected in income as earned and
distributions  received  are  reflected as  reductions  of the  investment.  The
Company is actively seeking additional  unaffiliated investors for DHIP. Several
board members, officers and employees of the Company are members in Diamond Hill
General Partner,  LLC. The capital of Diamond Hill General  Partner,  LLC is not
subject to a management fee or an incentive fee.

Property and Equipment
----------------------

Property  and  equipment,  consisting  of  computer  equipment,  furniture,  and
fixtures,  is carried at cost less  accumulated  depreciation.  Depreciation  is
calculated using the straight-line  method over estimated lives of five to seven
years.

Reclassifications
-----------------

The  consolidated  statement of  operations  for the six months and three months
ended June 30, 2002, has been reclassified to conform to the presentation of the
consolidated  statement of operations  for the six months and three months ended
June 30,  2003.  These  reclassifications  have had no effect  on the  operating
results for the six months and three months ended June 30, 2002.

Revenues
--------

Securities  transactions  and  commissions  are  accounted for on the trade date
basis.  Dividend income is recorded on the ex-dividend  date and interest income
is accrued as earned.  Realized  gains and losses from sales of  securities  are
determined utilizing the first-in, first-out method (FIFO).

Earnings Per Share
------------------

Basic and diluted  earnings  per common share are  computed in  accordance  with
Statement of Financial  Accounting  Standards  No. 128,  "Earnings per Share." A
reconciliation of the numerators and denominators used in these  calculations is
shown below:

For the six months ended June 30, 2003:

                                    Numerator       Denominator        Amount
                                  -------------    -------------   -------------
  Basic Earnings                  $   (685,182)       1,409,417       $   (0.49)

  Diluted Earnings                $   (685,182)       1,409,417       $   (0.49)

For the six months ended June 30, 2002:

                                    Numerator       Denominator        Amount
                                  -------------    -------------   -------------
  Basic Earnings                  $   (905,403)       1,438,933       $   (0.63)

  Diluted Earnings                $   (905,403)       1,438,933       $   (0.63)

                                       8
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

Note 2    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
          ------------------------------------------------------

Earnings Per Share (Continued)
------------------

For the three months ended June 30, 2003:

                                    Numerator       Denominator        Amount
                                  -------------    -------------   -------------
  Basic Earnings                  $   (181,810)       1,409,467       $   (0.13)

  Diluted Earnings                $   (181,810)       1,409,467       $   (0.13)

For the three months ended June 30, 2002:

                                    Numerator       Denominator        Amount
                                  -------------    -------------   -------------
  Basic Earnings                  $   (646,582)       1,424,081       $   (0.45)

  Diluted Earnings                $   (646,582)       1,424,081       $   (0.45)

Stock  options and warrants  have not been  included in the  denominator  of the
diluted  per-share  computations  because the effect of their inclusion would be
anti-dilutive.

Fair Value of Financial Instruments
-----------------------------------

Substantially  all of the Company's  financial  instruments  are carried at fair
value  or  amounts   approximating  fair  value.   Assets,   including  accounts
receivable,  notes and interest  receivable and securities  owned are carried at
amounts that approximate fair value. Similarly, liabilities,  including accounts
payable and accrued expenses are carried at amounts approximating fair value.

Note 3    INVESTMENT PORTFOLIO
          --------------------

Investment  portfolio  balances,  which  consist  of  securities  classified  as
trading, are comprised of the following at June 30, 2003:

<TABLE>
<CAPTION>
                                                                   Unrealized      Unrealized
                                     Market           Cost            Gains          Losses
                                  ------------    ------------    ------------    ------------
<S>                               <C>             <C>             <C>             <C>
Mutual fund shares and limited
partnership interest              $  2,700,486    $  2,441,042    $    259,444    $         --

Not readily marketable equity
securities                              17,058         201,200             900        (185,042)
                                  ------------    ------------    ------------    ------------
Total                             $  2,717,544    $  2,642,242    $    260,344    $   (185,042)
                                  ============    ============    ============    ============
</TABLE>

DHCM is the managing  member of the General  Partner of Diamond Hill  Investment
Partners,   L.P.,  whose  underlying  assets  consist  primarily  of  marketable
securities.   The  General  Partner  is  contingently  liable  for  all  of  the
partnership's liabilities.

                                       9
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

Note 3    INVESTMENT PORTFOLIO (Continued)
          --------------------------------

Summary financial information, including the Company's carrying value and income
from this  partnership  at June 30,  2003 and 2002 and for the six  months  then
ended, is as follows:

                                                        2003            2002
                                                   -------------    ------------
Total assets                                        $ 17,136,922    $ 11,023,300
Total liabilities                                      6,134,977       2,686,256
Net assets                                            11,001,945       8,337,044
Net fair market value of earnings                        675,862         274,459

DHCM's carrying value                                  1,183,528       3,256,679
DHCM's income                                             73,819         192,244

DHCM's income from this partnership includes its pro-rata capital allocation and
its share of an incentive  allocation  from the limited  partners.  In addition,
DHCM earns an  administrative  fee payable  quarterly at the rate of .25% of the
value of the limited partners' capital accounts.

Note 4    LINE OF CREDIT
          --------------

The Company  obtained a line of credit loan with a maximum  principal  amount of
$325,000 on August 28, 2002 at an annual percentage  interest rate of prime plus
0.50%,  which is currently  4.50%. The balance due on the line of credit loan at
June 30, 2003 was zero ($0).  A portion of the  Company's  investment  portfolio
secures this loan.  The line of credit loan is due to mature on August 28, 2003,
at which time management intends to renew the line.

Note 5    CAPITAL STOCK
          -------------

Common Stock
------------

The Company has only one class of securities, Common Stock.

Treasury Stock
--------------

On July 17, 2000,  the Company  announced a program to  repurchase up to 400,000
shares  of  its  Common  Stock  through  open  market  purchases  and  privately
negotiated  transactions.  From July 17, 2000 through  December  31,  2001,  the
Company purchased 281,597 shares of its Common Stock for $1,716,407. For the six
months and three months ended June 30, 2002, the Company purchased 56,300 shares
and 14,000  shares of its Common Stock for  $225,200 and $56,000,  respectively.
For the six months and three  months  ended June 30,  2003,  the Company did not
purchase any of its shares of Common Stock. As of June 30, 2003, the Company has
purchased 352,897 shares for $2,009,107  pursuant to the aforementioned  400,000
share repurchase program. The Company's total Treasury Stock share balance as of
June 30, 2003 is 418,505.

Authorization of Preferred Stock
--------------------------------

The  Company's  Articles of  Incorporation  authorize  the issuance of 1,000,000
shares of "blank  check"  preferred  stock  with such  designations,  rights and
preferences,  as may be determined  from time to time by the Company's  Board of
Directors. The Board of Directors is empowered, without shareholder approval, to
issue preferred stock with dividend,  liquidation,  conversion, voting, or other
rights,  which could adversely  affect the voting or other rights of the holders
of the  Common  Stock.  There  were no  shares  of  preferred  stock  issued  or
outstanding at June 30, 2003.

                                       10
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003
Note 6    OPERATING LEASES
          ----------------

The Company leases office space under an operating lease agreement effective May
1, 2002,  which  terminates  on May 31, 2005.  Total lease  expenses for the six
months  and  three  months  ended  June  30,  2003  were  $60,000  and  $30,000,
respectively. The future minimum lease payments under the operating lease are as
follows:

                  Year Ended                    Amount
               -----------------            --------------

                     2003                       120,000
                     2004                       120,000
                     2005                        50,000

Note 7    MUTUAL FUND ADMINISTRATION
          --------------------------

DHCM  has an  administrative,  fund  accounting  and  transfer  agency  services
agreement  with Diamond Hill Funds,  an Ohio  business  trust,  under which DHCM
performs certain  services for each series of the trust.  These services include
mutual  fund  administration,  accounting,  transfer  agency  and other  related
functions.  For performing these services,  each series of the trust compensates
DHCM a fee at an annual  rate of 0.45%  times  each  series'  average  daily net
assets.  DHCM  collected  $101,941  and $89,909  for mutual fund  administration
revenue for the six months ended June 30, 2003 and 2002,  respectively;  and for
the three  months  ended June 30,  2003 and 2002,  DHCM  collected  $52,881  and
$49,300 for administration revenue,  respectively.  In fulfilling its role under
this agreement, DHCM has engaged several third-party providers, and the cost for
their services are paid by DHCM. Mutual fund administration  expense for the six
months ended June 30, 2003 and 2002 was $262,601 and $224,470, respectively, and
for the three months  ended June 30, 2003 and 2002 was  $150,741  and  $113,368,
respectively.

Note 8    MUTUAL FUND DISTRIBUTION
          ------------------------

DHS is the principal underwriter for Diamond Hill Funds, an Ohio business trust,
and may pay  third-party  financial  institutions a fee for  distribution or for
performing  certain  servicing  functions  for  mutual  fund  shareholders.  For
performing  distribution  functions,  DHS collects  front-end and back-end sales
loads,  ranging  from 1.00% to 5.75% and/or  underwriting  fees of 0.50% on fund
investments.  DHS also collects  12b-1 fees at an annual rate ranging from 0.25%
to 1.00% times each series' average daily net assets.  Mutual fund  distribution
revenue for the six months ended June 30, 2003 and 2002 was $62,307 and $54,539,
respectively;  and for the  three  months  ended  June 30,  2003 and  2002,  DHS
collected  $33,404 and $32,185 for distribution  revenue.  DHS also pays for the
production of marketing  materials used in the  distribution of the Diamond Hill
Funds.  Mutual fund distribution  expense for the six months ended June 30, 2003
and 2002 was $117,946 and $120,370, respectively, and for the three months ended
June 30, 2003 and 2002 was $56,504 and $78,091, respectively.

Note 9    BROKER-DEALER ACTIVITY
          ----------------------

DHS is a  registered  full-service  broker-dealer  transacting  security  trades
through its clearing broker under a correspondent  agreement. For the six months
ended  June 30,  2003 and 2002,  broker-dealer  activity  expenses,  principally
clearing   charges  and   regulatory   fees,   totaled   $32,605  and  $106,908,
respectively,  and for the three  months  ended June 30,  2003 and 2002  totaled
$10,335 and  $60,898,  respectively.  DHS earns  commissions  and  service  fees
related to business transacted through its clearing broker, along with gains and
losses from market-making activities. Broker-dealer activity revenue for the six
months ended June 30, 2003 and 2002 was $19,335 and $33,887,  respectively.  For
the three months ended June 30, 2003 and 2002,  broker-dealer activity generated
$3,702 in revenue and lost $6,174, respectively. This revenue loss in the second
quarter of 2002 was the result of $18,763 in market making losses.

                                       11
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

Note 10   EMPLOYEE INCENTIVE PLANS
          ------------------------

Incentive Compensation Plan
---------------------------
All  full-time  employees  of the Company are  eligible  to  participate  in the
Diamond Hill  Investment  Group Incentive  Compensation  Plan. The Plan provides
that a bonus fund will be  established  in an amount equal to 20% of the pre-tax
realized profits of the Company in excess of a 15% pre-tax return on equity. The
amount of the bonus fund is  calculated  each  fiscal  quarter  on a  cumulative
basis.  The  allocation  of the bonus fund is to be made by the President of the
Company.  The  Company  did not incur any  expense  under the Plan for the three
months and six months ended June 30, 2003 and 2002.

Stock Option Plan
-----------------
The Company has a Non-Qualified  and Incentive Stock Option Plan that authorizes
the grant of options to purchase an aggregate of 500,000 shares of the Company's
Common Stock.  The Plan  provides  that the Board of  Directors,  or a committee
appointed by the Board,  may grant options and otherwise  administer  the Option
Plan. The exercise price of each incentive stock option or  non-qualified  stock
option must be at least 100% of the fair market value of the Common Stock at the
date of grant,  and no such  option may be  exercisable  for more than ten years
after the date of grant.  However,  the exercise price of each  incentive  stock
option  granted  to any  shareholder  possessing  more than 10% of the  combined
voting power of all classes of capital stock of the Company on the date of grant
must not be less than 110% of the fair  market  value on that date,  and no such
option may be exercisable more than five years after the date of grant.

During the three months ended June 30, 2003,  options to purchase  20,000 shares
of Common Stock were issued to employees at an exercise price of $4.50,  vesting
immediately.  Additionally,  options to purchase  100,000 shares of Common Stock
were issued to  employees at an exercise  price of $4.50,  vesting 20% each year
over five years. All of the options have ten-year terms.

The  Company  applies  Accounting   Principles  Board  Opinion  25  and  related
Interpretations  (APB 25) in accounting for stock options and warrants issued to
employees and Directors.  Accordingly,  compensation cost is recognized based on
the intrinsic value of the stock options or warrants.

Had  compensation  cost  for  all  of  the  Company's  stock-based  awards  been
determined in accordance with FAS 123, the Company's net income and earnings per
share would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED                SIX MONTHS ENDED
                                                                   JUNE 30                          JUNE 30
                                                        --------------------------        --------------------------
                                                           2003             2002             2003             2002
                                                        ---------        ---------        ---------        ---------
<S>                                                     <C>              <C>              <C>              <C>
Net income, as reported                                 (181,810)        (646,582)        (685,182)        (905,403)

Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects               (76,594)        (129,803)        (130,762)        (281,232)

Pro forma net income                                    (258,404)        (776,385)        (815,944)      (1,186,635)

Earnings per share:

Basic - as reported                                        (0.13)           (0.45)           (0.49)           (0.63)
Basic - pro forma                                          (0.18)           (0.55)           (0.58)           (0.82)

Diluted - as reported                                      (0.13)           (0.45)           (0.49)           (0.63)
Diluted - pro forma                                        (0.18)           (0.55)           (0.58)           (0.82)
</TABLE>

                                       12
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

Note 10   EMPLOYEE INCENTIVE PLANS (Continued)
          ------------------------

Stock Option Plan (Continued)
-----------------
To make the  computations  of pro forma results under FAS 123, the fair value of
each option  grant is  estimated  on the date of grant  using the  Black-Scholes
option-pricing  model  with  the  following  weighted-average   assumptions:  no
dividend  yield for all years and  expected  lives of ten  years.  For the three
months  ended June 30, 2003,  the average  expected  volatility  is 27%, and the
average  assumed  risk-free  interest  rate is 1.06%.  The options and  warrants
granted  under  these plans are not  registered  and,  accordingly,  there is no
quoted market price.

A summary of the status of the Company's  stock option and warrants  plans as of
June 30,  2003 and June 30,  2002 and  changes  during the six months  ending on
those dates is presented below:

<TABLE>
<CAPTION>
                                            Options                         Warrants
                                 -----------------------------    -----------------------------
                                                    Exercise                         Exercise
                                     Shares           Price          Shares            Price
                                 ------------     ------------    ------------     ------------
<S>                                   <C>         <C>                  <C>         <C>
Outstanding December 31, 2001         186,902     $     17.245         280,400     $     12.895
Granted                                    --               --              --               --
Expired unexercised                   (10,700)          23.601              --               --
Forfeited                             (10,300)          12.419              --               --
                                 ------------                     ------------
Outstanding June 30, 2002             165,902           17.124         280,400           12.895
                                 ============                     ============

Exercisable June 30, 2002              85,742     $     26.876         200,400     $     14.852
                                 ============                     ============

Outstanding December 31, 2002         165,902     $     17.124         280,400     $     12.895
Granted                               120,000            4.500              --               --
Exercised                               1,000            3.910              --               --
Expired unexercised                   (11,510)          28.983              --               --
Forfeited                             (25,190)          15.468         (40,000)           8.000
                                 ------------                     ------------
Outstanding June 30, 2003             248,202           10.693         240,400           13.712
                                 ============                     ============

Exercisable June 30, 2003             102,202     $     19.023         200,400     $     14.852
                                 ============                     ============
</TABLE>
                                       13
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

Note 10   EMPLOYEE INCENTIVE PLANS (Continued)
          ------------------------

Stock Option Plan (Continued)
-----------------
The  following  table  summarizes  information  about  fixed  stock  options and
warrants outstanding at June 30, 2003:

                                           Options                  Warrants
                                      -----------------        -----------------
Range of exercise prices                   $     73.750           $     73.750
Number outstanding                               16,202                 14,000
Weighted-average remaining
Contractual life in years                         4.859                  4.859
Weighted-average exercise price            $     73.750           $     73.750
Number exercisable                               16,202                 14,000


Range of exercise prices              $ 7.95 - $ 14.375        $ 22.20 - $ 22.50
Number outstanding                               46,000                 16,400
Weighted-average remaining
Contractual life in years                         4.060                  5.861
Weighted-average exercise price            $     12.029           $     22.495
Number exercisable                               42,000                 16,400


Range of exercise prices                $ 5.25 - $ 8.45        $ 8.00 - $ 14.375
Number outstanding                               66,000                210,000
Weighted-average remaining
Contractual life in years                         7.950                  6.294
Weighted-average exercise price            $      5.541           $      9.024
Number exercisable                               24,000                170,000


Range of exercise prices                   $       4.50
Number outstanding                              120,000
Weighted-average remaining
Contractual life in years                         9.917
Weighted-average exercise price            $      4.500
Number exercisable                               20,000

                                       14
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

Note 11   REGULATORY REQUIREMENTS
          -----------------------

DHS is subject to the uniform net capital  rule of the  Securities  and Exchange
Commission   (Rule  15c3-1),   which  requires  that  the  ratio  of  "aggregate
indebtedness" to "net capital" not exceed 15 to 1 (as those terms are defined by
the Rule).  DHS had net capital of $124,521  as of June 30,  2003,  which was in
excess of its required  minimum net capital of $100,000.  The ratio of aggregate
indebtedness  to net  capital  was  1.21 to 1 as of June 30,  2003.  DHS is also
subject to  regulations  of the District of Columbia and nine states in which it
is registered as a licensed broker-dealer.

DHCM and DHS are registered investment advisers and subject to regulation by the
SEC pursuant to the Investment Advisors Act of 1940.

Note 12   CONCENTRATIONS   OF  CREDIT  RISK  AND  FINANCIAL   INSTRUMENTS   WITH
          ----------------------------------------------------------------------
          OFF-BALANCE SHEET RISK
          ----------------------

DHS, under a  correspondent  agreement with its clearing  broker,  has agreed to
indemnify  the clearing  broker from damages or losses  resulting  from customer
transactions.  The Company is,  therefore,  exposed to off-balance sheet risk of
loss in the event that customers are unable to fulfill contractual  obligations.
The Company manages this risk by requiring  customers to have sufficient cash in
their account before a buy order is executed and to have the subject  securities
in their account  before a sell order is executed.  The Company has not incurred
any losses from customers unable to fulfill contractual obligations.

In the normal course of business,  the Company periodically sells securities not
yet  purchased  (short  sales)  for its own  account  and  writes  options.  The
establishment  of short  positions and option  contracts  exposes the Company to
off-balance sheet market risks in the event prices change, as the Company may be
obligated to cover such  positions at a loss. At June 30, 2003,  the Company had
no short security  positions,  had not written any option  contracts and did not
own any options.  The Company did not  experience  any credit  losses due to the
failure of any  counterparties  to perform  during the six months ended June 30,
2003.  Senior  management of the Company is  responsible  for reviewing  trading
positions,  exposures,  profits  and  losses,  trading  strategies  and  hedging
strategies on a daily basis.

Note 13   SUBSEQUENT EVENT
          ----------------

On July 22, 2003,  the Company sold 110,000 shares of Common Stock from Treasury
Stock to company  directors,  officers and employees through a private placement
at $4.50 per share.  Treasury Stock will be reduced by an average price of $5.72
per share for this transaction.

                                       15
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

ITEM 2:   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward-looking Statements
--------------------------

Throughout  this  discussion,  the Company may make  forward-looking  statements
relating  to such  matters  as  anticipated  operating  results,  prospects  for
achieving  the  critical  threshold of assets  under  management,  technological
developments,  economic trends (including interest rates and market volatility),
expected  transactions and  acquisitions and similar matters.  While the Company
believes that the  assumptions  underlying  its  forward-looking  statements are
reasonable, any of the assumptions could prove to be inaccurate and accordingly,
the actual results and  experiences of the Company could differ  materially from
the anticipated  results or other  expectations  expressed by the Company in its
forward-looking  statements.  Factors  that could cause such  actual  results or
experiences to differ from results discussed in the  forward-looking  statements
include,  but are not  limited  to:  the  adverse  effect  from a decline in the
securities  markets; a decline in the performance of the Company's  products;  a
general  downturn in the economy;  changes in government  policy and regulation;
changes in the Company's ability to attract or retain key employees;  unforeseen
costs and other  effects  related  to legal  proceedings  or  investigations  of
governmental and self-regulatory organizations;  and other risks identified from
time-to-time in the Company's other public documents on file with the SEC.

General
-------

With the change in executive  management in May of 2000, the Company shifted its
emphasis from its  traditional  investment  related  activities  through its DHS
subsidiary,  to the investment  advisory  services of its DHCM subsidiary.  DHCM
manages  portfolios of stocks  representing  interests in entities  operating in
various  economic  sectors,  as  opposed to a  portfolio  of bank  stocks  only.
Staffing  and  costs  associated  with  this  shift  and the  various  marketing
initiatives at DHCM negatively  impacted the Company in 2002 and may continue in
2003.  Management believes that this process was necessary in order to achieve a
critical  threshold  of assets under  management  to support  operations  in the
future.  However,  there can be no  assurance  that the Company  will be able to
achieve the  critical  threshold of assets under  management  to support  future
operations.

Assets Under Management
-----------------------

As of June 30, 2003,  assets under  management  totaled  $164.9  million,  a 49%
increase from December 31, 2002.  Assets under management grew by 89% as of June
30, 2003 in  comparison  to June 30,  2002.  Asset growth for the six months and
year ended June 30, 2003 is not  necessarily  indicative of the results that may
be expected for the entire fiscal year ended  December 31, 2003. The table below
provides a summary of assets under management:

                                     6/30/2003      12/31/2002       6/30/2002
                                   ------------    ------------    ------------
Individually Managed Account       $ 96,740,603    $ 58,297,957    $ 38,346,453
Mutual Funds                         57,181,080      44,819,496      43,815,028
Alternative Investment               11,001,945       7,210,934       8,337,044
                                   ------------    ------------    ------------
  Total Assets Under Management    $164,923,628    $110,328,387    $ 90,498,525

Three months ended June 30, 2003 compared to Three Months ended June 30, 2002
-----------------------------------------------------------------------------

Investment  management  revenues  for the  three  months  ended  June  30,  2003
increased  to $260,621  compared to $181,767 for the three months ended June 30,
2002, a 43%  increase.  This  increase  results  primarily  from the increase in
assets under management from which the Company derives its revenues.

The  Company  increased  its  investment  management  fees from two of its three
investment  products - managed  accounts and a private  investment  partnership,
Diamond Hill  Investment  Partners,  L.P.  ("DHIP") - , with fees from the third
product,  mutual funds,  essentially  flat. Fees from mutual funds for the three
months ended June 30, 2003 and 2002,  were $101,564 and $106,543,  respectively.
Fees from managed  accounts  posted the largest  dollar  increase over the three
months  ended June 30,  2002,  with at dollar  increase  of  $75,869,  or a 107%
increase. Investment management fees collected from the DHIP improved the most,

                                       16
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

relatively,  over the three months ended June 30, 2002. These fees grew by 174%,
increasing from $4,588 to 12,552.  In conjunction  with the shift in emphasis to
the  investment  advisory  services  of DHCM,  a program has been  initiated  to
attempt to gather new assets under  management at DHCM.  Assets under management
increased to  $164,923,628  as of June 30, 2003, a 27% increase  since March 31,
2003.  However,  there  can be no  assurance  that the  Company  will be able to
achieve the critical  threshold of assets  under  management  at DHCM to support
future operations.

Operating  expenses  for the three  months  ended  June 30,  2003  increased  to
$555,677  compared to  $514,491  for the three  months  ended June 30,  2002,  a
increase of 8%.  Salaries,  benefits and payroll taxes  increased to $389,402 in
2003 from $366,878 in 2002, an increase of 6%. This increase reflects  personnel
changes.  Legal and audit expense  dropped to $29,393 from $40,850 for the three
months  ended June 30, 2003 versus the three  months  ended June 30, 2002, a 28%
decrease.  Since there are no current plans for major administrative projects or
new products, management expects legal and audit professional expense to drop in
2003 as  compared to 2002.  General and  administrative  expenses  increased  to
$86,168 in 2003 compared to $70,698 in 2002,  an increase of 22%,  primarily due
to the rise in investment  research  expenses to support  additional  investment
staff.  Sales and  marketing  expense for the three  months  ended June 30, 2003
increased  by 41% to $50,714  from  $36,065 for the three  months ended June 30,
2002. This increase is due to the rise in expenditures  related to promoting the
Company's    products   and   developing    relationships    with   distribution
intermediaries.

Mutual fund administration,  which is administrative  services fees collected in
connection  with the  Company's  mutual  fund  products  net of all mutual  fund
administrative  expenses  paid by the Company,  increased  from a net expense of
$64,068 for the three months ended June 30, 2002 to $97,860 for the three months
ended June 30, 2003, a 53% increase.  Administrative fees collected and expenses
paid both  increased  for the three  months ended June 30, 2003 versus the three
months ended June 30,  2002.  However,  the expenses  increased at a larger rate
than revenues,  causing the net expense to increase. This increase is due to the
fact that the Company  administered  six mutual  funds in 2003  compared to four
funds  for the same  time  period  in 2002.  DHCM  has an  administrative,  fund
accounting and transfer agency  services  agreement with the Diamond Hill Funds,
where  DHCM  performs  certain  services  for each  series of the  trust.  These
services  include mutual fund  administration,  accounting,  transfer agency and
other related  functions.  For performing these  administrative  services,  each
series of the trust compensates DHCM a fee at an annual rate of 0.45% times each
series' average daily net assets.  DHCM collected $52,881 and $49,300 for mutual
fund  administration  revenue for the three months ended June 30, 2003 and 2002,
respectively.  In  fulfilling  its role under this  agreement,  DHCM has engaged
several third-party  providers and the cost for their services are paid by DHCM.
Mutual fund administration  expense for the three months ended June 30, 2003 and
2002 were $150,741 and $113,368,  respectively.  As assets under management grow
in the mutual fund  products,  the Company  expects fees  collected to increase,
while the Company expects expenses paid to remain steady; therefore, causing the
net mutual fund administration expense to decrease.

Mutual  fund  distribution,   which  includes  distribution  fees  collected  in
connection  with sales of the  Company's  mutual  funds net of all  mutual  fund
distribution expenses paid by the Company, decreased to a net expense of $23,100
for the three months ended June 30, 2003 from $45,906 for the three months ended
June 30, 2002, a 50% improvement. Mutual fund distribution fees increased, while
distribution  expenses  decreased  during the three  months  ended June 30, 2003
versus the three months ended June 30, 2002. For performing  these  distribution
functions,  DHS collects front-end and back-end sales loads,  ranging from 5.75%
to  1.00%  and/or  underwriting  fees of  0.50%  on fund  investments.  DHS also
collects  12b-1 fees at an annual  rate  ranging  from 0.25% to 1.00% times each
series' average daily net assets. Mutual fund distribution revenue for the three
months ended June 30, 2003 and 2002 was $33,404 and $32,185,  respectively.  DHS
is the principal underwriter for Diamond Hill Funds, an Ohio business trust, and
may  pay  third-party  financial  institutions  a fee  for  distribution  or for
performing certain servicing  functions for mutual fund  shareholders.  DHS also
pays for the production of marketing  materials used in the  distribution of the
Diamond Hill Funds. Mutual fund distribution  expense for the three months ended
June 30, 2003 and 2002 was $56,504 and  $78,091,  respectively.  As assets under
management grow in the mutual fund products,  the Company expects fees collected
to  increase,  while  the  Company  expects  expenses  paid  to  remain  steady;
therefore, causing the net mutual fund distribution expense to decrease.

                                       17
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

Broker-dealer  activity,   which  is  revenue  from  security  transactions  and
market-making  activity  net  of  broker-dealer  expenses  which  are  comprised
principally of clearing costs and regulatory fees, decreased to a net expense of
6,633 for the three months ended June 30, 2003 from $67,072 for the three months
ended  June  30,  2002,  a 90%  improvement.  DHS is a  registered  full-service
broker-dealer  transacts  security  trades  through its clearing  broker under a
correspondent  agreement.  For the three  months  ended June 30,  2003 and 2002,
broker-dealer  activity  expenses were $10,335 and $60,898,  respectively.  This
decrease is largely due to the reduction in overhead and commission expense from
reduced  activity.  DHS earns  commissions  and service fees related to business
transacted  through  its  clearing  broker,  along with  gains and  losses  from
market-making activities. Broker-dealer activity generated revenue of $3,702 for
the three  months ended June 30, 2003 and lost $6,174 for the three months ended
June 30, 2002. This revenue loss in the second quarter of 2002 was the result of
$18,763 in market making  losses.  In  conjunction  with the Company's  shift in
emphasis from its traditional  investment related activities through DHS, to the
investment  advisory services of DHCM, broker dealer activities through DHS have
declined.  It is expected  for 2003,  that this level of expense in 2002 will be
maintained or will increase.

The  Company's  net  operating  loss  decreased to $422,649 for the three months
ended June 30, 2003 from  $509,770  for the three  months ended June 30, 2002, a
17% improvement.

Investment return, net of interest expense,  increased to a gain of $240,839 for
the three  months  ended  June 30,  2003 from a loss of  $136,812  for the three
months  ended June 30,  2002,  a 276%  increase.  This  investment  gain results
primarily  from  increases  in  market  values  of  investments  in the  limited
partnership interest. Management is unable to predict how future fluctuations in
market  values  will  impact  the   performance  of  the  Company's   investment
portfolios.  Dividend  income  increased by a multiple of 6.5 to $16,343 for the
three months  ended June 30, 2003  compared to $2,513 for the three months ended
June 30,  2002.  In 2003,  dividend  income may  increase  versus 2002 since the
Company  reallocated  approximately $1.5 million of its investments from DHIP to
the  Company's  fixed income  funds,  which pay monthly  dividends,  yielding an
anticipated  average of six percent  (6%).  Even though the Company  reduced its
equity  market  exposure,  due to this large  swing in the  market  value of its
portfolio  investments,  the Company's  net loss  decreased by 72% for the three
months ended June 30, 2003 compared to the same time period for 2002.

Six months ended June 30, 2003 compared to Six Months ended June 30, 2002
-------------------------------------------------------------------------

Investment  management revenues for the six months ended June 30, 2003 increased
to $467,659  compared to $315,790  for the six months ended June 30, 2002, a 48%
increase.  This  increase  results  primarily  from the increase in assets under
management from which the Company derives its revenues.

The  Company  increased  its  investment  management  fees from all three of its
investment  products:  mutual funds,  managed accounts and a private  investment
partnership,  Diamond Hill Investment Partners,  L.P. ("DHIP"). Fees from mutual
funds were up slightly, for the six months ended June 30, 2003, from $189,561 to
$189,468. Fees from managed accounts posted the largest dollar increase over the
six months ended June 30, 2002, with at dollar  increase of $132,931,  or a 110%
increase.  Investment management fees collected from the DHIP improved the most,
relatively,  over the six  months  ended  June 30,  2002.  These  fees grew by a
multiple of four,  increasing  from $5,962 to 24,807.  In  conjunction  with the
shift in emphasis to the  investment  advisory  services of DHCM,  a program has
been initiated to attempt to gather new assets under management at DHCM.  Assets
under  management  increased to $164,923,628 as of June 30, 2003, a 49% increase
since  December 31, 2002.  However,  there can be no assurance  that the Company
will be able to achieve the critical  threshold of assets  under  management  at
DHCM to support future operations.

Operating  expenses  for the  six  months  ended  June  30,  2003  decreased  to
$1,108,553  compared to  $1,149,074  for the six months  ended June 30,  2002, a
decrease of 4%.  Salaries,  benefits and payroll taxes  increased to $768,299 in
2003 from $750,276 in 2002, an increase of 2%. This increase reflects  personnel
changes.  Legal and audit  expense  dropped to $39,636 from $100,816 for the six
months  ended June 30, 2003  versus the six months  ended June 30,  2002,  a 61%
decrease.  Since there are no current plans for major administrative projects or
new products, management expects legal and audit professional expense to drop in
2003 as  compared to 2002.  General and  administrative  expenses  increased  to
$218,069 in 2003  compared to  $206,575  in 2002,  an increase of 6%.  Sales and
marketing expense for the six months ended

                                       18
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

June 30, 2003  decreased by 10% to $82,549 from $91,407 for the six months ended
June 30, 2002.  However,  sales and marketing costs may increase in 2003, due to
increased   expenditures   related  to  promoting  the  Company's  products  and
developing relationships with distribution intermediaries.

Mutual fund administration,  which is administrative  services fees collected in
connection  with the  Company's  mutual  fund  products  net of all mutual  fund
administrative  expenses  paid by the Company,  increased  from a net expense of
$134,561  for the six months  ended June 30, 2002 to $160,660 for the six months
ended June 30, 2003, a 19%  increase.  Both  administrative  fees  collected and
expenses  paid  increased  for the six months ended June 30, 2003 versus the six
months  ended June 30, 2002.  This  increase is due to the fact that the Company
administered  six mutual funds in 2003  compared to four funds for the same time
period in 2002. DHCM has an administrative,  fund accounting and transfer agency
services  agreement  with the Diamond Hill Funds,  where DHCM  performs  certain
services  for each  series of the trust.  These  services  include  mutual  fund
administration,  accounting,  transfer agency and other related  functions.  For
performing these administrative  services,  each series of the trust compensates
DHCM a fee at an annual  rate of 0.45%  times  each  series'  average  daily net
assets.  DHCM  collected  $101,941  and $89,909  for mutual fund  administration
revenue  for the six  months  ended  June 30,  2003 and 2002,  respectively.  In
fulfilling its role under this agreement,  DHCM has engaged several  third-party
providers  and the cost  for  their  services  are  paid by  DHCM.  Mutual  fund
administration  expense  for the six  months  ended  June 30,  2003 and 2002 was
$262,601 and  $224,470,  respectively.  As assets under  management  grow in the
mutual fund products, the Company expects fees collected to increase,  while the
Company  expects  expenses  paid to remain  steady;  therefore,  causing the net
mutual fund administration expense to continue to decrease.

Mutual  fund  distribution,   which  includes  distribution  fees  collected  in
connection  with sales of the  Company's  mutual  funds net of all  mutual  fund
distribution expenses paid by the Company, decreased to a net expense of $55,639
for the six months  ended June 30, 2003 from  $65,831  for the six months  ended
June 30, 2002, a 15% improvement. Mutual fund distribution fees increased, while
distribution  expense  was  reduced  during the six months  ended June 30,  2003
versus the six months ended June 30, 2002.  For  performing  these  distribution
functions,  DHS collects front-end and back-end sales loads,  ranging from 5.75%
to  1.00%  and/or  underwriting  fees of  0.50%  on fund  investments.  DHS also
collects  12b-1 fees at an annual  rate  ranging  from 0.25% to 1.00% times each
series' average daily net assets.  Mutual fund distribution  revenue for the six
months ended June 30, 2003 and 2002 were $62,307 and $54,539,  respectively. DHS
is the principal underwriter for Diamond Hill Funds, an Ohio business trust, and
may  pay  third-party  financial  institutions  a fee  for  distribution  or for
performing certain servicing  functions for mutual fund  shareholders.  DHS also
pays for the production of marketing  materials used in the  distribution of the
Diamond Hill Funds.  Mutual fund  distribution  expense for the six months ended
June 30, 2003 and 2002 were $117,946 and $120,370, respectively. As assets under
management grow in the mutual fund products,  the Company expects fees collected
to  increase,  while  the  Company  expects  expenses  paid  to  remain  steady;
therefore, causing the net mutual fund distribution expense to decrease.

Broker-dealer  activity,   which  is  revenue  from  security  transactions  and
market-making  activity  net  of  broker-dealer  expenses  which  are  comprised
principally of clearing costs and regulatory fees, decreased to a net expense of
13,270 for the six months  ended June 30,  2003 from  $73,021 for the six months
ended  June  30,  2002,  a 82%  improvement.  DHS is a  registered  full-service
broker-dealer  transacts  security  trades  through its clearing  broker under a
correspondent  agreement.  For the six  months  ended  June 30,  2003 and  2002,
broker-dealer  activity expenses were $32,605 and $106,908,  respectively.  This
decrease is largely due to the reduction in overhead and commission expense from
reduced  activity.  DHS earns  commissions  and service fees related to business
transacted  through  its  clearing  broker,  along with  gains and  losses  from
market-making  activities.  Broker-dealer  activity  revenue  for the six months
ended  June 30,  2003 and 2002  were  $19,335  and  $33,887,  respectively.  The
decrease in revenue is  primarily  due the  reduction in  commissions  received,
which  decreased  by 63% to  $17,490  for the six  months  ended  June 30,  2003
compared to $46,832 for the six months ended June 30, 2002. In conjunction  with
the  Company's  shift  in  emphasis  from  its  traditional  investment  related
activities  through DHS, to the  investment  advisory  services of DHCM,  broker
dealer activities through DHS have declined.  It is expected for 2003, that this
level of expense in 2002 will be maintained or will increase.

                                       19
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

The Company's net operating  loss decreased to $870,463 for the six months ended
June 30, 2003 from  $1,106,697  for the six months  ended June 30,  2002,  a 21%
improvement.

Investment return, net of interest expense,  decreased to a gain of $185,281 for
the six months  ended June 30, 2003 from a gain of  $201,294  for the six months
ended June 30, 2003, an 8% decrease. This investment gain results primarily from
increases in market values of investments in the limited  partnership  interest.
Management  is unable to predict how future  fluctuations  in market values will
impact the performance of the Company's investment  portfolios.  Dividend income
increased a multiple of three to $46,288 for the six months  ended June 30, 2003
compared to $14,090 for the six months  ended June 30, 2002.  In 2003,  dividend
income may increase versus 2002 since the Company reallocated approximately $1.5
million of its investments from DHIP to the Company's fixed income funds,  which
pay monthly dividends, yielding an anticipated average of six percent (6%). Even
though the Company reduced its equity market  exposure,  due to this large swing
in the  market  value  of its  portfolio  investments,  the  Company's  net loss
decreased  by 24% for the six months  ended June 30,  2003  compared to the same
time period for 2002.

Liquidity and Capital Resources
-------------------------------

Almost  100%  of the  Company's  investment  portfolio  is  readily  marketable.
Investments in securities traded on national  securities  markets and securities
not traded on national securities markets, but with readily ascertainable market
values,  are  valued  at  market  value.  Other  securities,  for  which  market
quotations are not readily  available,  due to infrequency of transactions,  are
valued at fair value as  determined  in good faith by management of the Company.
While management employs objective criteria to ascertain these values,  there is
no  independent  benchmark  by which the values  assigned by  management  can be
judged. Accordingly, the value of these securities may be overstated.

By the end of 2002, the Company reallocated its investment  portfolio to provide
more  liquidity  and  reduce  its  equity  exposure.  In doing so,  the  Company
transferred $2 million out of its investment in the limited  partnership,  DHIP,
and invested  approximately  $1.5 million into the Company's fixed income mutual
funds and used the remaining to pay-off the Company's line of credit and provide
short-term  liquidity  for current  operating  expenses.  Subsequent to June 30,
2003,  the Company  sold  110,000  shares of the  Company's  Common Stock to its
directors,  officers  and  employees  through a private  placement at a price of
$4.50, thereby increasing the liquidity and capital resources by $495,000.

DHS, under a  correspondent  agreement with its clearing  broker,  has agreed to
indemnify the clearing  broker from damages or losses  resulting from customers'
transactions.  The Company is,  therefore,  exposed to off-balance sheet risk of
loss in the event that customers are unable to fulfill contractual  obligations.
The Company manages this risk by requiring  customers to have sufficient cash in
their account before a buy order is executed and to have the subject  securities
in their account  before a sell order is executed.  The Company has not incurred
any losses from customers being unable to fulfill contractual obligations.

In the normal course of business, the Company may sell securities it has not yet
purchased  (short  sales)  for  its own  account,  and may  write  options.  The
establishment  of short  positions and option  contracts  exposes the Company to
off-balance sheet market risks in the event prices change, as the Company may be
obligated to cover such positions at a loss.

At June 30, 2003, the Company had no short security  positions,  had not written
any  option  contracts,  and  did  not  own any  options.  The  Company  did not
experience  any credit  losses  due to the  failure  of any  counter  parties to
perform  during the six months ended June 30,  2003.  Senior  management  of the
Company is responsible for reviewing trading positions,  exposures,  profits and
losses, trading strategies and hedging strategies on a daily basis.

As of June 30, 2003, the Company had working capital of approximately $2,700,000
compared to  $2,900,000 at March 31, 2003 and compared to $3,300,000 at December
31, 2002.  The decrease is due to operating  activities,  which includes the net
loss  during the six and three  months  ended  June 30,  2003.  Working  capital
includes cash,  securities owned and accounts and notes  receivable,  net of all
liabilities. The Company has no long-term debt.

                                       20
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

The Company's net cash balance decreased by $656,741 during the six months ended
June 30, 2003. Net cash used by operating  activities was $660,651.  The primary
use of cash flow was the net loss of  $685,182.  No cash was used for  investing
activities  during the six  months  ended June 30,  2003.  Financing  activities
provided $3,910 of cash during the six months ended June 30, 2003, entirely from
the exercise of options of Company common stock by a former employee.

The  Company's net cash balance  decreased by  $1,025,680  during the six months
ended June 30, 2002.  Net cash used by operating  activities  was $686,957.  The
primary use of cash flow was the net loss of $905,403. Investing activities used
$113,523  during the six months  ended June 30, 2002 for  furnishings  and a new
phone  system for the new office  space the Company  began  leasing in May 2002.
Financing  activities used $225,200 of cash during the six months ended June 30,
2002, entirely from the purchase of Company common stock.

Investment  management  fees  primarily  fund  the  operations  of the  Company.
Management believes that the Company's existing  resources,  including available
cash and cash  provided by operating  activities,  will be sufficient to satisfy
its  working  capital  requirements  in  the  foreseeable  future.  However,  no
assurance can be given that additional funds will not be required. To the extent
that returns on investments are less than  anticipated,  or expenses are greater
than  anticipated,  the  Company  may be  required  to  reduce  its  activities,
liquidate the investment portfolio or seek additional  financing.  Further, this
additional  financing  may not be available on acceptable  terms,  if at all. No
significant capital expenditures are expected in the foreseeable future.

Impact of Inflation and Other Factors
-------------------------------------

The Company's operations have not been significantly affected by inflation.  The
Company's  investment   portfolios  of  equity  securities,   primarily  in  the
community-banking  sector, are carried at current market values.  Therefore, the
Company's  profitability is affected by general economic and market  conditions,
the volume of  securities  trading  and  fluctuations  in  interest  rates.  The
Company's  business  is also  subject to  government  regulation  and changes in
legal,  accounting,  tax and other  compliance  requirements.  Changes  in these
regulations may have a significant effect on the Company's operations.

ITEM 3:   CONTROLS AND PROCEDURES

Our Chief  Executive  Officer and Chief  Financial  Officer have  evaluated  the
effectiveness  of our  disclosure  controls and  procedures (as defined in Rules
13a-14(c)  and  15d-14(c)  under the  Exchange  Act) as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation Date"). Based
on such  evaluation,  such officers have  concluded  that, as of the  Evaluation
Date, our disclosure controls and procedures are effective.

There have been no  significant  changes in our  internal  controls  or in other
factors that could significantly affect such controls since the Evaluation Date.

PART II:  OTHER INFORMATION

ITEM 1:   LEGAL PROCEEDINGS - None

ITEM 2:   CHANGES IN SECURITIES - None

ITEM 3:   DEFAULTS UPON SENIOR SECURITIES - None

                                       21
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

ITEM 4:   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None

The annual meeting of the  shareholders  of the Company was held on May 15, 2003
at the Company's  office. A majority of the Company's voting shares were present
at the meeting, either by person or by proxy.

At such meeting, the shareholders elected the following  individuals to serve on
the Board of Directors for a one year term.

NAME                                   VOTES FOR                VOTES WITHHELD
----                                   ---------                --------------
R.H. Dillon                            1,257,398                    30,140
Dr. Roger D. Blackwell                 1,257,118                    30,420
David P. Lauer                         1,257,098                    30,440
James G. Mathias                       1,257,418                    30,120
David R. Meuse                         1,257,418                    30,120
William G. Perkins                     1,257,098                    30,440
Diane D. Reynolds                      1,257,098                    30,440

ITEM 5:   OTHER INFORMATION - None

ITEM 6:   EXHIBITS AND REPORTS ON FORM 8-K

(a)  Index of Exhibits

       *3.1    Amended and Restated Articles of Incorporation of the Company.
       *3.2    Code of Regulations of the Company.
     **10.1    Diamond Hill Investment Group (fka Heartland) Incentive
               Compensation Plan.
    ***10.2    1993 Non-Qualified and Incentive Stock Option Plan.
   ****10.3    Synovus Securities,  Inc.,  Sub-Advisory Agreement with the
               Diamond Hill Capital Management,  Inc. dated January 30, 2001.
     **10.4    Employment Agreement between the Company and
               Roderick H. Dillon, Jr. dated May 11, 2000.
     **10.5    Employment Agreement between the Company and James F. Laird
               dated October 24, 2001.
       99.1    Certification of Chief Executive Officer Pursuant to Section 906
               of the Sarbanes-Oxley Act of 2002.
       99.2    Certification of Chief Financial Officer Pursuant to Section 906
               of the Sarbanes-Oxley Act of 2002.

     * Filed with the  Securities  and Exchange  Commission as an exhibit to the
     Company's  Form  8-K  filed  on May 8,  2002  and  incorporated  herein  by
     reference.

     ** Filed with the Securities  and Exchange  Commission as an exhibit to the
     Company's  Form 10-KSB filed on March 28, 2003 and  incorporated  herein by
     reference.

     *** Filed with the Securities and Exchange  Commission as an exhibit to the
     Company's Proxy Statement filed on July 21, 1998 and incorporated herein by
     reference.

     **** Filed with the Securities and Exchange Commission as an exhibit to the
     Company's  Form 10-KSB  filed on March 1, 2001 and  incorporated  herein by
     reference.

(b)  Reports on Form 8-K

     A Form 8-K was filed on May 19, 2003 to report the  Company's  earnings for
     the three months ended March 31, 2003.

                                       22
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized:

DIAMOND HILL INVESTMENT GROUP, INC.

Signature                Title                                   Date
--------------------------------------------------------------------------------

/s/ R. H. Dillon         President and Director                  August 14, 2003
----------------
R. H. Dillon

/s/ James F. Laird       Chief Financial Officer                 August 14, 2003
------------------
James F. Laird

                                       23
<PAGE>

                CERTIFICATION FOR QUARTERLY REPORT ON FORM 10-QSB

I, R.H. Dillon, certify that:

1.   I have  reviewed  this  quarterly  report on Form  10-QSB of  Diamond  Hill
Investment Group, 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  circumstances  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
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.   The  registrant'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 the registrant and have:

a)   designed such  disclosure  controls and  procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
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  of the registrant's  disclosure  controls and
procedures  as of a date  within  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;

5.   The registrant's other certifying  officers and I have disclosed,  based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  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  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant'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 the registrant's internal controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
quarterly 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.

Date: August 14, 2003                   /s/ R. H. Dillon
                                        ----------------
                                        R.H. Dillon
                                        Chief Executive Officer

                                       24
<PAGE>

                CERTIFICATION FOR QUARTERLY REPORT ON FORM 10-QSB

I, James F. Laird, certify that:

1.   I have  reviewed  this  quarterly  report on Form  10-QSB of  Diamond  Hill
Investment Group, 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  circumstances  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
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.   The  registrant'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 the registrant and have:

a)   designed such  disclosure  controls and  procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
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  of the registrant's  disclosure  controls and
procedures  as of a date  within  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;

5.   The registrant's other certifying  officers and I have disclosed,  based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  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  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant'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 the registrant's internal controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
quarterly 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.

Date: August 14, 2003                   /s/ James F. Laird
                                        ------------------
                                        James F. Laird
                                        Chief Financial Officer

                                       25
<PAGE>