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 March 31, 2004

             [ ] 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 October 31, 2003:
     Common Stock: 1,526,903 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                                              3-20

     Item 1. Financial Statements:                                          3-15

               Consolidated Statements of Financial Condition
               as of March 31, 2004 (unaudited)                                4

               Consolidated Statements of Operations for the
               Three Months Ended March 31, 2004 and 2003 (unaudited)          5

               Consolidated Statements of Cash Flow for the
               Three Months Ended March 31, 2004 and 2003 (unaudited)          6

               Notes to the Consolidated Financial Statements               7-15

     Item 2. Management's Discussion and Analysis or Plan of Operation     16-19

     Item 3. Controls and Procedures                                          20

Part II: OTHER INFORMATION                                                    20

     Item 1. Legal Proceedings                                                20

     Item 2. Changes in Securities                                            20

     Item 3. Defaults Upon Senior Securities                                  20

     Item 4. Submission of Matters to a Vote of Security Holders              20

     Item 5. Other Information                                                20

     Item 6. Exhibits and Reports on Form 8-K                                 20

Signatures                                                                    21

                                       2
<PAGE>

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, 2003, 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 three months ended March 31, 2004 are not necessarily
indicative of the results that may be expected for the entire fiscal year ending
December 31, 2004

                                       3
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                              As of March 31, 2004

                                    UNAUDITED
                                    ---------

<TABLE>
<CAPTION>
                                     ASSETS
<S>                                                                       <C>
Cash                                                                      $    161,565
Investment portfolio (note 3 and 4):
     Mutual fund shares and limited partnership interests                    2,444,078
     Not readily marketable equity securities, at estimated fair value          15,108
Accounts receivable:
     Investment products                                                       255,454
     Pending settlements and other                                                 670
     Refundable income taxes                                                    31,000
Property and equipment, net of accumulated depreciation of $145,294            120,031
Deposits and other                                                             210,829
                                                                          ------------

          Total assets                                                    $  3,238,735
                                                                          ============

                                   LIABILITIES

Accrued expenses                                                               116,767
                                                                          ------------

          Total liabilities                                                    116,767
                                                                          ------------

                              SHAREHOLDERS' EQUITY

Common stock: (note 5)
     No par value, 7,000,000 shares authorized,
          1,827,972 shares issued and 1,526,903 shares outstanding          10,034,555
     Treasury stock, at cost (301,069 shares)                               (1,722,591)
     Deferred compensation                                                      (1,826)
Accumulated deficit                                                         (5,188,170)
                                                                          ------------

          Total shareholders' equity                                         3,121,968
                                                                          ------------

          Total liabilities and shareholders' equity                      $  3,238,735
                                                                          ============
</TABLE>

                 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 Three Months Ended March 31, 2004 and March 31, 2003

                                    UNAUDITED
                                    ---------

                                                      2004             2003
                                                  ------------     ------------

INVESTMENT MANAGEMENT FEES:
 Mutual funds                                     $    189,838     $     87,997
 Managed accounts                                      244,052          106,786
 Private Partnership                                    32,169           12,255
                                                  ------------     ------------

  Total investment management fees                     466,059          207,038
                                                  ------------     ------------

OPERATING EXPENSES:
 Salaries, benefits and payroll taxes                  423,466          378,897
 Legal and audit                                        32,898           10,243
 General and administrative                             95,122          131,901
 Sales and marketing                                    40,616           31,835
                                                  ------------     ------------

  Total operating expenses                             592,102          552,876
                                                  ------------     ------------

OTHER OPERATING ACTIVITIES:
Mutual fund administration, net (note 7)               (29,829)         (62,800)

Mutual fund distribution, net (note 8)                 (26,040)         (32,539)

Broker-dealer, net (note 9)                                511           (6,637)
                                                  ------------     ------------

NET OPERATING INCOME (LOSS)                           (181,401)        (447,814)
                                                  ------------     ------------

Investment return, net of interest expense             101,179          (55,558)
                                                  ------------     ------------

INCOME (LOSS) BEFORE TAXES                             (80,222)        (503,372)
                                                  ------------     ------------

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

NET INCOME (LOSS)                                 $    (80,222)    $   (503,372)
                                                  ============     ============

Basic Earnings (Loss) Per Share                   $      (0.05)    $      (0.36)
                                                  ============     ============

Diluted Earnings (Loss) Per Share                 $      (0.05)    $      (0.36)
                                                  ============     ============

                 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 Three Months Ended March 31, 2004 and 2003

                                    UNAUDITED
                                    ---------

<TABLE>
<CAPTION>
                                                                      2003             2002
                                                                  ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                               <C>              <C>
    Net income (loss)                                             $    (80,222)    $   (503,372)
    Adjustments to reconcile net income (loss)
       to net cash provided by (used in) operating activities:
    Depreciation and amortization                                        9,633            9,602
    Amortization of deferred compensation                                1,918            4,141
    Unrealized (gain) loss                                             (67,668)          24,384
    (Increase) decrease in certain assets:
       Investment portfolio                                            340,815          (55,577)
       Accounts receivable:
          Investment products                                          (82,384)           5,443
          Pending settlements and other                                   (441)             118
          Refundable income taxes                                      (31,000)              --
       Deposits and other                                               16,537           26,724
    Increase (decrease) in certain liabilities-
       Accounts payable to broker-dealers and other                     (1,589)             416
       Accrued expenses and other                                      (20,478)         (46,090)
                                                                  ------------     ------------
          Net cash provided by (used in) operating activities           85,121         (534,211)
                                                                  ------------     ------------

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

CASH FLOWS FROM FINANCING ACTIVITIES:
    Exercise of stock options                                               --            3,910
    Sale of treasury stock                                              25,459               --
                                                                  ------------     ------------
          Net cash provided by (used in) financing activities           25,459            3,910
                                                                  ------------     ------------

NET INCREASE (DECREASE) IN CASH                                        110,580         (530,301)

CASH, BEGINNING OF PERIOD                                               50,985          689,175
                                                                  ------------     ------------

CASH, END OF PERIOD                                               $    161,565     $    158,874
                                                                  ============     ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

    Cash paid during the period for:
    Interest                                                      $        728     $         --
    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
                                 March 31, 2004

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 adviser. DHCM is the
investment adviser to the Diamond Hill Small Cap Fund, Diamond Hill Large Cap
Fund, Diamond Hill Focus Long-Short Fund, Diamond Hill Bank & Financial 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 six
states (including Ohio). 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 adviser and
offers advisory services to institutional and individual investors. The Company
is in the process of transitioning DHS services to third party broker-dealers
and its advisory business to DHCM. This transition is expected to be complete by
June 30, 2004 and to have no material impact to the Company's financial
statements.

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 September 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

                                       7
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2004

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.

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.

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 three months ended March 31, 2004:

                          Numerator       Denominator        Amount
                         ------------     ------------    ------------

     Basic Earnings      $    (80,222)       1,525,460    $      (0.05)

     Diluted Earnings    $    (80,222)       1,525,460    $      (0.05)

For the three months ended March 31, 2003:

                          Numerator       Denominator        Amount
                         ------------     ------------    ------------
     Basic Earnings      $   (503,372)       1,409,367    $      (0.36)

     Diluted Earnings    $   (503,372)       1,409,367    $      (0.36)

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.

                                       8
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2004

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 March 31, 2004:

<TABLE>
<CAPTION>
                                                                 Unrealized    Unrealized
                                       Market         Cost          Gains        Losses
                                     ----------    ----------    ----------    ----------
<S>                                  <C>           <C>           <C>           <C>
     Mutual fund shares and
     limited partnership interest    $2,444,078    $1,949,443    $  494,839    $     (204)

     Not readily marketable
     equity securities                   15,108       195,125            --      (180,017)
                                     ----------    ----------    ----------    ----------

     Total                           $2,459,186    $2,144,568    $  494,839    $ (180,221)
                                     ==========    ==========    ==========    ==========
</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.

Summary financial information, including the Company's carrying value and income
from this partnership at March 31, 2004 and 2003 and for the nine months then
ended, is as follows:

                                              2004            2003
                                          ------------    ------------

     Total assets                         $ 24,996,194    $ 13,051,107
     Total liabilities                      11,556,902       4,924,134
     Net assets                             13,439,292       8,126,973
     Net fair market value of earnings         616,566        (899,110)

     DHCM's carrying value                   1,431,972       1,000,589
     DHCM's income                              80,162        (109,119)
     Year to Date Incentive Fee                 11,640              --

DHCM's income from this partnership includes its pro-rata capital allocation.
The incentive allocation from the limited partners is accrued quarterly and paid
semi-annually. 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 renewed its line of credit loan with a maximum principal amount of
$325,000 on August 28, 2003 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
March 31, 2004 was zero ($0). The Company has pledged $390,000 of its fixed
income mutual fund investments to secure this line. The line of credit loan is
due to mature on August 28, 2004, at which time management intends to renew the
line.

                                       9
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2004

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
year ended December 31, 2002, the Company purchased 71,300 shares of its Common
Stock for $292,700. For the three months ended March 31, 2004, the Company did
not purchase any of its shares of Common Stock. As of December 31, 2003, the
Company has purchased 352,897 shares for $2,009,107 pursuant to the
aforementioned 400,000 share repurchase program. During the three months ended
March 31, 2004, the Company issued 2,904 shares out of Treasury Stock to fund
the Company match portion of the Company's 401(k) retirement plan. The shares
were issued at an average price of $8.77 per share, and Treasury Stock was
reduced by an average cost of $5.72 per share. The Company's total Treasury
Stock share balance as of March 31, 2004 is 301,069.

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 March 31, 2004.

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 three
months ended March 31, 2004 were $30,000. The future minimum lease payments
under the operating lease are as follows:

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

                        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 $119,085and $49,060 for mutual fund administration
revenue for the three months ended March 31, 2004 and 2003, 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 March 31, 2004 and 2003 was
$148,914 and $111,860, respectively.

                                       10
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2004

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 0.25% to 5.75% or underwriting fees of 0.25% to 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 March 31, 2004 and 2003, DHS
collected $78,951 and $28,903 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 three months ended March 31,
2004 and 2003 was $104,991 and $61,442, respectively.

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

DHS is a registered full-service broker-dealer transacting security trades
through its clearing broker under a correspondent agreement. For the three
months ended March 31, 2004 and 2003, broker-dealer activity expenses,
principally clearing charges and regulatory fees, totaled $5,919 and $22,270,
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 three months
ended March 31, 2004 and 2003 was $6,430 and $15,633, respectively. The Company
is in the process of transitioning DHS services to third party broker-dealers
and its advisory business to DHCM. This transition is expected to be complete by
June 30, 2004 and to have no material impact to the Company's financial
statements.

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 ended March 31, 2004 and 2003.

Stock Option Plan
-----------------
The Company adopted a Non-Qualified and Incentive Stock Option Plan in 1993 that
authorized the grant of options to purchase an aggregate of 500,000 shares of
the Company's Common Stock. The Plan provided 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. This
Plan expired by its terms in November 2003. Options issued under this Plan are
not affected by the Plan's expiration. All outstanding options, reflected in the
tables following, were issued under this plan. Of the warrants shown in the
tables following, 80,400 were issued pursuant to this plan.

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.

                                       11
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2004

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

Stock Option Plan (Continued)
-----------------
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:

                                                THREE MONTHS ENDED
                                                     MARCH 31
                                           -----------------------------
                                               2004             2003
                                           ------------     ------------

Net income, as reported                         (80,222)        (503,372)

Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects                      (40,021)         (54,078)

Pro forma net income                           (120,243)        (557,450)

Earnings per share:

Basic - as reported                               (0.05)           (0.36)
Basic - pro forma                                 (0.08)           (0.40)

Diluted - as reported                             (0.05)           (0.36)
Diluted - pro forma                               (0.08)           (0.40)

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. The options and
warrants granted under these plans are not registered and, accordingly, there is
no quoted market price.

                                       12
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2004

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

Stock Option Plan (Continued)
-----------------
A summary of the status of the Company's stock option and warrants plans as of
March 31, 2004 and 2003 and changes during the three 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, 2002       165,902     $   17.245       280,400    $   12.897
Granted                                  --             --            --            --
Exercised                            (1,000)         3.910            --            --
Expired unexercised                 (11,510)        28.983            --            --
Forfeited                            (5,690)        10.651            --            --
                                 ----------                   ----------
Outstanding March 31, 2003          147,702         16.540       280,400        12.897
                                 ==========                   ==========

Exercisable March 31, 2003           87,052     $   23.478       200,400    $   14.852
                                 ==========                   ==========

Outstanding December 31, 2003       260,202     $   10.581       280,400    $   12.897
Granted                                  --             --            --            --
Exercised                                --             --            --            --
Expired unexercised                      --             --            --            --
Forfeited                                --             --            --            --
                                 ----------                   ----------
Outstanding March 31, 2004          260,202         10.581       280,400        12.897
                                 ==========                   ==========

Exercisable March 31, 2004          116,202     $   17.465       240,400    $   13.712
                                 ==========                   ==========
</TABLE>

                                       13
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2004

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

Stock Option Plan (Continued)
-----------------
The following table summarizes information about fixed stock options and
warrants outstanding at March 31, 2004:

                                        Options                 Warrants
                                   ------------------      ------------------

Exercise price                          $  73.750               $  73.750
Number outstanding                         16,202                  14,000
Weighted-average remaining
Contractual life in years                   4.117                   4.109
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                         54,000                  16,400
Weighted-average remaining
Contractual life in years                   3.604                   5.111
Weighted-average exercise price         $  11.461               $  22.495
Number exercisable                         46,000                  16,400

Range of exercise prices            $ 5.25 - $ 8.45         $ 8.00 - $ 14.375
Number outstanding                         70,000                 250,000
Weighted-average remaining
Contractual life in years                   7.254                   5.544
Weighted-average exercise price         $   5.707               $   8.860
Number exercisable                         34,000                 210,000

Exercise price                          $    4.50
Number outstanding                        120,000
Weighted-average remaining
Contractual life in years                   9.186
Weighted-average exercise price         $   4.500
Number exercisable                         20,000

                                       14
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2004

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 $152,569 as of March 31, 2004, which was in
excess of its required minimum net capital of $50,000. The ratio of aggregate
indebtedness to net capital was .21 to 1 as of March 31, 2004. DHS is also
subject to regulations of six 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 March 31, 2004, 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 nine months ended March 31,
2004. Senior management of the Company is responsible for reviewing trading
positions, exposures, profits and losses, trading strategies and hedging
strategies on a daily basis.

                                       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
-------

In May of 2000 the board of directors decided to shift the Company's business
focus from the broker dealer subsidiary (DHS) to the investment advisory
subsidiary (DHCM). DHS employed a group of individual brokers and analysts
focused on offering portfolios of community bank stocks to retail clients. In
contrast, DHCM manages funds and separate accounts comprised of equity and fixed
income securities broadly diversified by company and industry, with the
exception of the Bank & Financial Fund, which is focused on a single sector.
Furthermore, DHCM offers its services through third party financial
intermediaries such as brokers and financial planners, and direct to
institutions such as insurance companies, pensions and endowments. In order to
make this shift in business focus the Company eliminated a number of positions
from DHS and added a number of positions in DHCM to support the new emphasis.
Most of the costs associated with the business transition were incurred in 2000,
2001 and 2002. The final change anticipated under this initiative is the planned
transition of the remaining brokerage and advisory business of DHS to third
party firms and to DHCM. This transition is expected to be complete by June 30,
2004 and to have no material impact on the financial statements of the Company.
The Company believes that this process was necessary in order to achieve a
critical threshold of assets under management needed to generate sufficient
revenue to ultimately achieve profitability. Management believes that the
Company can achieve breakeven from operations if assets under management reach
somewhere between $400 - $600 million. 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 March 31, 2004, assets under management totaled $302.1 million, an 21%
increase from December 31, 2003. Assets under management grew by 133% as of
March 31, 2004 in comparison to March 31, 2003. Asset growth for the three
months and year ended March 31, 2004 is not necessarily indicative of the
results that may be expected for the entire fiscal year ended December 31, 2004.
The table below provides a summary of assets under management:

                                     3/31/2004      12/31/2003       3/31/2003
                                   ------------    ------------    ------------
Separately Managed Accounts        $173,152,284    $142,606,649    $ 78,109,054
Mutual Funds                        115,482,398      95,864,575      43,180,916
Alternative Investment               13,439,292      11,601,281       8,126,973
                                   ------------    ------------    ------------
  Total Assets Under Management    $302,073,974    $250,072,505    $129,416,943

                                       16
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

Three months ended March 31, 2004 compared to Three Months ended March 31, 2003
-------------------------------------------------------------------------------

Investment management revenues for the three months ended March 31, 2004
increased to $466,059 compared to $207,038 for the three months ended March 31,
2003, a 125% 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 for the three months ended March 31, 2004 and 2003, were $189,838 and
$87,997, respectively, a 116% increase. Fees from managed accounts posted the
largest dollar increase over the three months ended March 31, 2003, with at
dollar increase of $137,266, or a 129% increase. Investment management fees
collected from the DHIP improved by 162%, over the three months ended March 31,
2003. These fees grew from $12,255 to $32,169, which includes a $11,640
incentive allocation. 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
$302,073,974 as of March 31, 2004, a 21% increase since December 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 March 31, 2004 increased to
$592,102 compared to $378,897 for the three months ended March 31, 2003, an
increase of 7%. Salaries, benefits and payroll taxes grew by 12% to $423,466 in
2004 versus $378,897 in 2003. Legal and audit expense more than doubled to
$32,898 from $10,243 for the three months ended March 31, 2004 versus the three
months ended March 31, 2003. Since there are no current plans for major
administrative projects or new products, management expects legal and audit
professional expense to remain steady in 2004 as compared to 2003. General and
administrative expenses decreased to $95,122 in 2004 compared to $131,901 in
2003, a decrease of 28%. Sales and marketing expense for the three months ended
March 31, 2004 increased by 28% to $40,616 from $31,835 for the three months
ended March 31, 2003. This increase is due to the expenditures for consulting
services.

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, decreased from a net expense of
$62,800 for the three months ended March 31, 2003 to $29,829 for the three
months ended March 31, 2004, a 53% improvement. Administrative fees collected
and expenses paid increased for the three months ended March 31, 2004 versus the
three months ended March 31, 2003. This increase in fees is primarily due to the
increase in assets under management in the Company's mutual fund products. The
increase in expenses is primarily due to the increase in asset-based expenses.
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
$119,085 and $49,060 for mutual fund administration revenue for the three months
ended March 31, 2004 and 2003, 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 March 31, 2004 and 2003 were $148,914 and $111,860, 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 increase
but not as quickly are fees collected; 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 $26,040
for the three months ended March 31, 2004 from $32,539 for the three months
ended March 31, 2003. Mutual fund distribution fees and expenses both increased
during the three months ended March 31, 2004 versus the three months ended March
31, 2003. For performing these distribution functions, DHS collects front-end
and back-end sales loads, ranging from 0.25% to 5.75% or underwriting fees of
0.25% to

                                       17
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

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 March 31, 2004 and 2003 was
$78,951 and $28,903, respectively. This increase in fees is primarily due to the
increase in sales of the Company's mutual fund products. 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 March 31,
2004 and 2003 was $104,991 and $61,442, respectively. This increase is the
result of increased sales of the mutual fund shares in 2004 versus 2003, in
which DHS finances the commissions paid. 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 or increase; therefore, causing
the net mutual fund distribution expense to remain steady or increase.

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 revenue of
$511 for the three months ended March 31, 2004 from a net expense of $6,637 for
the three months ended March 31, 2003, a 108% improvement. DHS is a registered
full-service broker-dealer and transacts security trades through its clearing
broker under a correspondent agreement. For the three months ended March 31,
2004 and 2003, broker-dealer activity expenses were $5,919 and $22,270,
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 $6,430 for the three months ended March 31, 2004 and $15,633 for the three
months ended March 31, 2003. 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. The Company is in the process of transitioning DHS services to third
party broker-dealers and its advisory business to DHCM. This transition is
expected to be complete by June 30, 2004 and to have no material impact to the
Company's financial statements.

The Company's net operating loss decreased to $181,401 for the three months
ended March 31, 2004 from $447,814 for the three months ended March 31, 2003, a
59% improvement.

Investment return, net of interest expense, increased to a gain of $101,179 for
the three months ended March 31, 2004 from a loss of $55,558 for the three
months ended March 31, 2003. This investment gain results primarily from
increases in market values of investments in the limited partnership interest
and the Company's mutual funds. Management is unable to predict how future
fluctuations in market values will impact the performance of the Company's
investment portfolios. Dividend income decreased by a 50% to $14,909 for the
three months ended March 31, 2004 compared to $29,945 for the three months ended
March 31, 2003. In 2004, dividend income may decrease versus 2003 since both the
amount of portfolio investments and the yields may be lower in 2004 versus 2003.
As a result of better market returns in 2003 versus 2002, the Company's net loss
decreased by 84% for the three months ended March 31, 2004 compared to the same
time period for 2003.

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.

During the three months ended March 31, 2004, the Company liquidated $375,000 of
the Company's fixed income mutual funds. The cash from this liquidation was used
to provide short-term liquidity for current operating expenses.

                                       18
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

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 March 31, 2004, 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 three months ended March 31, 2004. 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 March 31, 2004, the Company had working capital of approximately $2.8
million compared to $2.8 million at December 31, 2003 and compared to 2.9
million at March 31, 2003. The increase during the three months ended September
30, 2003 is primarily due to the financing activities, which includes the
private placement that occurred on July 22, 2003. The decrease during the nine
months ended September 30, 2003 is primarily due to the operating and financing
activities, which include the net loss and the private placement, respectively.
Working capital includes cash, securities owned and accounts and notes
receivable, net of all liabilities. The Company has no long-term debt.

The Company's net cash balance increased by $110,580 during the three months
ended March 31, 2004. Net cash provided by operating activities was $85,121. The
primary source cash flow was the decrease in the Company's investment portfolio
of $340,815. Financing activities provided $25,459 of cash during the three
months ended March 31, 2004, from using Treasury Stock to fund the match portion
of the Company's 401(k) plan.

The Company's net cash balance decreased by $530,301 during the three months
ended March 31, 2003. Net cash used by operating activities was $534,211. The
primary use of cash flow was the net loss of $503,372. Financing activities
provided $3,910 of cash during the three months ended March 31, 2003, from the
exercise Company stock options.

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 and fixed income securities, 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.

                                       19
<PAGE>

ITEM 3:   CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have evaluated
the effectiveness of the Company's 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

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

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.
 *****10.6     Form of Subscription Agreement for Common Shares of Diamond Hill
               Investment Group, Inc. executed by subscribers as part of the
               private placement referenced in Part II, Item 2 of this Form
               10-QSB.
      31.1     Certification of Chief Executive Officer required by Rule
               13a-14(a) or Rule 15d-14(a).
      31.2     Certification of Chief Financial Officer required by Rule
               13a-14(a) or Rule 15d-14(a).
      32.1     Certification of Chief Executive Officer and Chief Financial
               Officer required by Rule 13a-14(b) or Rule 15(d)-14(b) and
               Section 1350 of Chapter 63 of Title 18 of the United States Code
               (18 U.S.C. 1350).

     * 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.
     ***** Filed with the Securities and Exchange Commission as an exhibit to
     the Company's Form 10-QSB filed on November 14, 2003 and incorporated
     herein by reference.

(b)  Reports on Form 8-K

     A Form 8-K was filed on March 30, 2004 to report the Company's earnings for
     the year ended December 31, 2003.

                                       20
<PAGE>

                                   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          May 14, 2004
--------------------------
R. H. Dillon

/s/ James F. Laird                 Chief Financial Officer         May 14, 2004
--------------------------
James F. Laird

                                       21
<PAGE>