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

                                   FORM 10-QSB

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

                  For the quarterly period ended June 30, 2002
                                                 -------------

                        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
                                              --------------

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of July 31, 2002:

     Common Stock: 1,408,466 shares

Transitional Small Business Disclosure Format (check one):

     Yes [X]   No [ ]

<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

                                      INDEX
                                      -----
                                                                            PAGE
                                                                            ----
Part I Financial Information:                                                  3

     Item 1.   Consolidated Statements of Financial Condition As of
               June 30, 2002 (unaudited) and December 31, 2001 (audited)       4

               Consolidated Statements of Operations For the Six Months
               and Three Months Ended June 30, 2002 and 2001 (unaudited)       5

               Consolidated Statements of Changes in Shareholders'
               Equity For the Six Months Ended June 30, 2002 (unaudited)       6

               Consolidated Statements of Cash Flows for the Six Months
               Ended June 30, 2002 and 2001 (unaudited)                        7

               Notes to Consolidated Financial Statements                   8-13

     Item 2.   Management's Discussion and Analysis of Financial
               Condition and Results of Operations                         14-20

Part II Other Information:                                                 21-22

     Item 1.   Legal Proceedings

     Item 2.   Change in Securities

     Item 3.   Defaults Upon Senior Securities

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

     Item 5.   Other Information

     Item 6.   Exhibits and Reports on Form 8-K

Signatures                                                                    23

                                       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, 2001, are unaudited (except for
          the December 31, 2001  consolidated  balance sheet,  which was derived
          from the  Company's  audited  financial  statements),  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 and the six months ended June 30, 2002
          are not necessarily indicative of the results that may be expected for
          the entire fiscal year ending December 31, 2002.

                                       3
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                    As of June 30, 2002 and December 31, 2001

<TABLE>
<CAPTION>
                                                                           UNAUDITED         AUDITED
                                                                            06/30/02         12/31/01
                                                                          ------------     ------------

                                     ASSETS
                                     ------
<S>                                                                       <C>              <C>
Cash                                                                      $    148,346     $  1,174,026
Investment portfolio:
     Mutual fund shares and limited partnership interests                    4,177,422        4,372,394
     Marketable equity securities, at market value                             410,396          241,710
     Not readily marketable equity securities, at estimated fair value         238,421          316,656
Accounts receivable:
     Affiliates                                                                 70,611           56,968
     Pending settlements and other                                              45,310           34,222
     Refundable income taxes                                                        --          414,251
Property and equipment, net of accumulated depreciation of                     223,430          139,737
     $237,706 and $207,877, respectively
Deposits and other                                                             160,885          113,783
                                                                          ------------     ------------

          Total assets                                                    $  5,474,821     $  6,863,747
                                                                          ============     ============

                                   LIABILITIES
                                   -----------

Accounts payable to broker-dealers and other                              $     15,410     $         --
Accrued expenses                                                               204,951          491,767
                                                                          ------------     ------------

          Total liabilities                                                    220,361          491,767
                                                                          ------------     ------------

                              SHAREHOLDERS' EQUITY
                              --------------------

Common stock: (note 3)
     No par value, 7,000,000 shares authorized,
          1,821,972 shares issued and 1,423,466 shares outstanding          10,023,703       10,023,703
     Treasury stock, at cost
          (398,506 shares and 342,206 shares, respectively)                 (2,327,010)      (2,101,810)
     Deferred compensation                                                     (23,710)         (36,793)
Accumulated deficit                                                         (2,418,523)      (1,513,120)
                                                                          ------------     ------------

          Total shareholders' equity                                         5,254,460        6,371,980
                                                                          ------------     ------------

          Total liabilities and shareholders' equity                      $  5,474,821     $  6,863,747
                                                                          ============     ============
</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 OPEARTIONS
               For The Six Months and Three Months Ended June 30,
                                  2002 and 2001

                                    UNAUDITED
                                    ---------

<TABLE>
<CAPTION>
                                                6 MONTHS ENDED                    3 MONTHS ENDED
                                         -----------------------------     -----------------------------
                                           JUN 2002         JUN 2001         JUN 2002         JUN 2001
                                         -----------------------------     -----------------------------
OPERATING REVENUES:
<S>                                      <C>              <C>              <C>              <C>
 Management fees and commissions         $    507,070     $    583,378     $    273,900     $    276,737
 Market making gains and (losses)             (17,627)          91,977          (18,763)          16,923
                                         -----------------------------     -----------------------------

  Total operating revenues                    489,443          675,355          255,137          293,660
                                         -----------------------------     -----------------------------

OPERATING EXPENSES:
 Salaries, benefits and payroll taxes         750,276          902,137          366,878          463,290
 Brokers' commission                           64,037           43,508           35,469            9,561
 Professional fees                            448,700          333,982          217,549          194,933
 General and administrative                   337,808          532,770          146,952          285,784
                                         -----------------------------     -----------------------------

  Total operating expenses                  1,600,821        1,812,397          766,848          953,568
                                         -----------------------------     -----------------------------

OPERATING INCOME (LOSS)                    (1,111,378)      (1,137,042)        (511,711)        (659,908)
                                         -----------------------------     -----------------------------

OTHER REVENUE AND EXPENSES:
 Investment gains and (losses)                167,016          950,414         (159,408)         441,172
 Dividend income                               14,090          117,166            2,513           44,081
 Interest and other income                     24,869            5,799           22,024              801
 Interest expense                                  --             (407)              --              (74)
                                         -----------------------------     -----------------------------

  Total other revenue and expenses            205,975        1,072,972         (134,871)         485,980
                                         -----------------------------     -----------------------------

LOSS BEFORE TAXES                            (905,403)         (64,070)        (646,582)        (173,928)

 Income tax provision (credit)                     --               --               --               --
                                         -----------------------------     -----------------------------

NET INCOME (LOSS)                        $   (905,403)    $    (64,070)    $   (646,582)    $   (173,928)
                                         =============================     =============================

 BASIC EARNINGS (LOSS) PER SHARE         $      (0.63)    $      (0.04)    $      (0.45)    $      (0.10)
                                         =============================     =============================

 DILUTED EARNINGS (LOSS) PER SHARE       $      (0.63)    $      (0.04)    $      (0.45)    $      (0.10)
                                         =============================     =============================
</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 CHANGE IN SHAREHOLDERS' EQUITY
                     For the Six Months Ended June 30, 2002

                                    UNAUDITED
                                    ---------

<TABLE>
<CAPTION>
                                              Treasury         Deferred         Retained
                               Common           Stock        Compensation       Earnings           Total
                            ------------    ------------     ------------     ------------     ------------
<C>                         <C>             <C>              <C>              <C>              <C>
Balance at December 31,
2001                        $ 10,023,703    ($ 2,101,810)    ($    36,793)    ($ 1,513,120)    $  6,371,980

Amortization of deferred
compensation                          --              --           13,083               --           13,083

Purchase of treasury
stock                                 --        (225,200)              --               --         (225,200)

Net loss                              --              --               --         (905,403)        (905,403)
                            ------------    ------------     ------------     ------------     ------------

Balance at June 30, 2002    $ 10,023,703    ($ 2,327,010)    ($    23,710)    ($ 2,418,523)    $  5,254,460
                            ============    ============     ============     ============     ============
</TABLE>

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

                                       6
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 2002 and 2001

                                    UNAUDITED
                                    ---------

<TABLE>
<CAPTION>
                                                                    2002             2001
                                                                ------------     ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                             <C>              <C>
     Net income (loss)                                          $   (905,403)    $    (64,070)
     Adjustments to reconcile net income (loss)
     to net cash provided by (used in) operating activities:
         Depreciation and amortization                                29,829           29,643
         Bad debt expense (recovery)                                      --          (14,025)
         Amortization of deferred compensation                        13,083           22,933
         Unrealized (gain) loss                                      (31,213)      (1,042,391)
         (Increase) decrease in certain assets-
            Investment portfolio                                     135,734          641,410
            Mortgage participation notes                                  --          223,500
            Accounts receivable                                      (13,643)              --
            Other accounts receivable                                (11,088)           7,824
            Refundable income taxes                                  414,251           96,966
            Other assets                                             (47,101)          40,150
         Increase (decrease) in certain liabilities-

            Securities sold not yet purchased                             --           13,974
            Accounts payable to broker-dealers and other              15,410           (1,698)
            Accrued expenses and other                              (286,816)          22,055
                                                                ------------     ------------
                Net cash used in operating activities               (686,957)         (23,729)
                                                                ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                             (113,523)        (117,044)
                                                                ------------     ------------
                Net cash used in investing activities               (113,523)        (117,044)
                                                                ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Purchase of treasury stock                                     (225,200)      (1,018,149)
     Advances to affiliates                                               --          (27,829)
                                                                ------------     ------------
                Net cash used in financing activities               (225,200)      (1,045,978)
                                                                ------------     ------------

NET INCREASE (DECREASE) IN CASH                                   (1,025,680)      (1,186,751)

CASH, BEGINNING OF PERIOD                                          1,174,026        3,443,228
                                                                ------------     ------------

CASH, END OF PERIOD                                             $    148,346     $  2,256,477
                                                                ============     ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the period for:
         Interest                                               $         --     $        406
         Income taxes                                                     --               --
</TABLE>

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

                                       7
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


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

          Diamond  Hill  Investment   Group,  Inc.  (the  Company)  is  an  Ohio
          corporation   incorporated  in  May  2002  and  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  advisor to the  Diamond  Hill Focus
          Fund,  Diamond  Hill Small Cap Fund,  Diamond  Hill Large Cap Fund and
          Diamond Hill Short Term Fixed Income Fund,  open-end mutual funds, and
          Diamond  Hill  Investment  Partners,  L.P.  DHCM also 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  eleven  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  advisor to the Diamond
          Hill Bank & Financial  Fund,  formerly  The Banc Stock Group Fund,  an
          open-end mutual fund.

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:

          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 and, if
          successful, seeks to reduce DHCM's percentage ownership significantly.

                                       8
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


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

          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:

<TABLE>
<CAPTION>
          For six months ending June 30, 2002:

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

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

          For six months ending June 30, 2001:
                                              Numerator            Denominator           Amount
                                              ---------            -----------           ------
               Basic Earnings                 $ (64,070)           1,681,997             $(0.04)

               Diluted Earnings                 (64,070)           1,681,997              (0.04)

          For three months ending June 30, 2002:
                                              Numerator            Denominator           Amount
                                              ---------            -----------           ------
               Basic Earnings                 $(646,582)           1,424,081             $(0.45)

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

          For three months ending June 30, 2001:
                                              Numerator            Denominator           Amount
                                              ---------            -----------           ------
               Basic Earnings                 $(173,928)           1,640,829             $(0.10)

               Diluted Earnings                (173,928)           1,640,829              (0.10)
</TABLE>

          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,  mortgage participation notes, 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.

                                       9
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


Note 3    CAPITAL STOCK
          -------------

          Stock Split
          -----------

          Effective  September 26, 2001, the Company completed a 1 for 5 reverse
          stock split of its common stock. Share amounts have been retroactively
          adjusted to reflect the split.

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

          For the year ended  December 31, 2001, the Company  purchased  261,136
          shares for  $1,553,426.  During the three months ending June 30, 2002,
          the Company purchased 14,000 shares for $56,000. During the six months
          ending  June  30,  2002,  the  Company  purchased  56,300  shares  for
          $225,200.

          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 that 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, 2002 or December 31, 2001.

Note 4    TRADING PORTFOLIO
          -----------------

          Investment  portfolio  balances of as June 30, 2002,  are comprised of
          the following:

<TABLE>
<CAPTION>
                                                                UNREALIZED    UNREALIZED
                                      MARKET         COST         GAINS         LOSSES
                                    ----------    ----------    ----------    ----------
<S>                                 <C>           <C>           <C>           <C>
          Mutual fund shares and
          limited partnership
          interest                  $4,177,422    $3,922,532    $  299,739    $  (44,849)

          Marketable equity
          securities                   410,396       475,188         6,655       (71,447)

          Not readily marketable
          equity securities            238,421       342,464         1,094      (105,137)
                                    ----------    ----------    ----------    ----------
          TOTAL                     $4,826,239    $4,740,184    $  307,488    $ (221,433)
                                    ==========    ==========    ==========    ==========
</TABLE>

                                       10
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


Note 4    TRADING PORTFOLIO (Continued)
          -----------------

          Investment  portfolio  balances of as December 31, 2001, are comprised
          of the following:

<TABLE>
<CAPTION>
                                                                UNREALIZED    UNREALIZED
                                      MARKET         COST         GAINS         LOSSES
                                    ----------    ----------    ----------    ----------
<S>                                 <C>           <C>           <C>           <C>
          Mutual fund shares and
          limited partnership
          interest                  $4,372,394    $4,171,975    $  200,419    $       --

          Marketable equity
          securities                   241,710       290,948            --       (49,238)

          Not readily marketable
          equity securities            316,656       412,994        11,825      (108,163)
                                    ----------    ----------    ----------    ----------
          TOTAL                     $4,930,760    $4,875,917    $  212,244    $ (157,401)
                                    ==========    ==========    ==========    ==========
</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 June 30, 2002 and 2001,  and for
          the six months then ended, is as follows:

                                                   2002            2001
                                               ------------    ------------
          Total Assets                         $ 10,788,822    $  2,714,712
          Total Liabilities                       2,451,778         375,902
          Net Assets                              8,337,044       2,338,810
          Net fair market value of earnings         274,459         215,547

          DHCM's carrying value                $  3,256,679    $  1,135,591
          DHCM's income                             192,244         135,552

          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.

                                       11
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


Note  5   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,  DHS is a market maker for a limited
          number of  community  bank  stocks  and  quotes bid and ask prices for
          those  stocks.  In the event of  sudden  price  movements,  DHS may be
          required to honor a quote at an undesirable  price.  DHS controls this
          risk by monitoring markets closely and updating quotes as required and
          generally limits its quotes to 100 or 200 shares of a given security.

          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,  2002,  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  either the
          three months or six months ended June 30, 2002.  Senior  management of
          the Company is responsible for reviewing trading positions, exposures,
          profits and losses, trading and hedging strategies on a daily basis.

          The Company's  significant industry  concentration,  primarily through
          the  operations  of DHS,  which  arises  within its  normal  course of
          business   activities,   is  with  financial   institutions  for  bank
          securities transactions.

                                       12
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


Note 6    OPERATING LEASE
          ---------------

          The Company  leases office space under an operating  lease.  Under the
          previous  operating  lease,  which  expired  July  2002,  total  lease
          expenses were  approximately  $133,000 for the year ended December 31,
          2001. The Company entered into a new lease agreement  effective May 1,
          2002,  which  terminates  on May 31, 2005.  The future  minimum  lease
          payments under the new lease are as follows:

                 YEAR ENDED           AMOUNT
                 ----------         ----------
                    2002            $   50,000
                    2003               120,000
                    2004               120,000
                    2005                50,000

Note  7   SUBSEQUENT EVENT
          ----------------

          Along with the expiration of the Company's  former operating lease for
          office  space,  certain  fixed  assets  will be disposed of during the
          third quarter.  Estimated  depreciation  expense associated with these
          fixed assets is approximately $40,000.

                                       13
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


Item 2.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS

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

          Throughout  this  discussion,  the  Company  may make  forward-looking
          statements relating to such matters as anticipated  operating results,
          prospects  for   achieving  a  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;  and  unforeseen  costs and other effects  related to legal
          proceedings or  investigations  of  governmental  and  self-regulatory
          organizations.  Once again,  the  following  discussion  and  analysis
          should  be  read  in  conjunction  with  the  consolidated   financial
          statements and notes  included in the Company's  report on Form 10-KSB
          for the year ended December 31, 2001.

          BUSINESS OVERVIEW

          Diamond Hill Investment  Group, Inc. (the Company) was incorporated in
          Ohio in May 2002. Previously, the Company had been incorporated in the
          state  of  Florida  since  April  1990.  Through  its  two  subsidiary
          operating companies,  Diamond Hill Capital Management, Inc. (DHCM) and
          Diamond Hill  Securities,  Inc. (DHS),  the Company offers  investment
          advisory  services  through  its mutual  funds,  individually  managed
          accounts and alternative  investments.  The Company's  clients include
          individual  investors,  corporations,  public  entities,  Taft-Hartley
          plans and endowments.

          DHCM, an Ohio corporation, is a wholly owned subsidiary of the Company
          and a registered investment advisor. DHCM serves as investment advisor
          to the  following  open-end  mutual  funds:  Diamond  Hill Focus Fund,
          Diamond  Hill Small Cap Fund,  Diamond Hill Large Cap Fund and Diamond
          Hill Short Term Fixed Income Fund. DHCM is also the investment advisor
          to advisory accounts for institutional and individual investors and to
          Diamond Hill Investment Partners, L.P.

          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

                                       14
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


          Commission and the securities  commissions of eleven 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 a registered  investment  advisor and is the investment advisor
          to advisory accounts for institutional and individual  investors.  DHS
          serves as the investment  advisor to the Diamond Hill Bank & Financial
          Fund, formerly The Banc Stock Group Fund, an open-end mutual fund.

          In May of 2000, with the change in executive  management,  the Company
          shifted  its  emphasis  from  its   traditional   investment   related
          activities  through its DHS  subsidiary,  to the  investment  advisory
          services of its DHCM subsidiary. Staffing, other costs associated with
          this shift and various marketing  initiatives have negatively impacted
          the  Company  in  2002.  Management  believes  that  this  process  is
          necessary  in order to achieve a critical  threshold  of assets  under
          management to support operations in the future.  However, there can be
          no  assurance  the  Company  will  be  able to  achieve  the  critical
          threshold of assets under management to support future operations.

          ASSETS UNDER MANAGEMENT

          For the six months  ending  June 30,  2002,  assets  under  management
          totaled $92,349,944, a 32% increase from December 31, 2001. During the
          three months ended June 30, 2002,  assets under  management  increased
          10%.  Asset  growth for the six months and three months ended June 30,
          2002  are  not  necessarily  indicative  of the  results  that  may be
          expected for the entire  fiscal year ending  December  31,  2002.  The
          table below provides a summary of assets under management:

<TABLE>
<CAPTION>
                                            6/30/2002       3/31/2002       12/31/2001
                                           ------------    ------------    ------------
<S>                                        <C>             <C>             <C>
          Individually Managed Accounts    $ 40,195,872    $ 37,025,013    $ 28,809,342
          Mutual Funds                       43,817,028      40,899,194      35,943,939
          Alternative Investments             8,337,044       6,309,852       5,375,657
                                           ------------    ------------    ------------
          Total Assets Under Management    $ 92,349,944    $ 84,234,059    $ 70,128,938
</TABLE>

          RESULTS FROM OPERATIONS

          Three months  ended June 30, 2002  compared to Three months ended June
          ----------------------------------------------------------------------
          30, 2001
          --------

          As shown on the attached Consolidated Statements of Operations,  total
          operating  revenue  for the  three  months  ended  June  30,  2002 was
          $255,137,  a 13%  decline  from the three  months  ended June 30, 2001
          operating  revenue of $293,660.  Losses from market making  activities
          were the main cause of the decline.

                                       15
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


          The Company generated  management fees and commissions of $273,900 for
          the three  months  ended June 30, 2002  compared  to $276,660  for the
          three  months  ended June 30,  2001,  a decrease  of 1%. For the three
          months ended June 30, 2002,  the Company had a loss from market making
          activities of $18,763, a 211% decrease from the market making gains of
          $16,923 for the three  months ended June 30,  2001.  This  decrease is
          largely due to the decreased emphasis on market making activities. The
          trading  portfolios  of the  Company  and its  subsidiaries  have been
          reduced  significantly  by  liquidation,  and  management is unable to
          predict  how future  fluctuations  in market  values  will  impact the
          performance of the Company's remaining trading portfolios.

          Operating  expenses for the three months ended June 30, 2002 decreased
          20% from $953,568 for the three months ended June 30, 2001 to $766,848
          for the three months ended June 30, 2002. Generally,  the decrease was
          due to a drop in  salaries,  benefits,  payroll  taxes and general and
          administrative fees. Salaries, benefits and payroll taxes decreased to
          $366,878 for the three  months  ended June 30, 2002 from  $463,290 for
          the three months ended June 30, 2001, a decrease of 21%. This decrease
          reflects  changes in personnel.  General and  administrative  expenses
          decreased  49%, from $285,784 to $146,952,  for the three months ended
          June  30,  2001  and  for  the  three  months  ended  June  30,  2002,
          respectively.  This  resulted  from  decreases in a number of expenses
          including marketing and brokerage expenses. However, broker commission
          expense increased from $9,561 for the three months ended June 30, 2001
          to $35,469 for the three months  ended June 30,  2002,  an increase of
          271%. The increase in broker commission is a result of increased sales
          of the Company's  open-end  mutual funds.  Due to expenses  related to
          special  corporate  projects  and  new  products,   professional  fees
          increased  12% to $217,549  for the three  months  ended June 30, 2002
          compared to $194,933 for the three months ended June 30, 2001.

          Other  expenses  for the three  months  ended  June 30,  2002  totaled
          $134,871, a 128% decrease from other revenue of $485,980 for the three
          months  ended June 30,  2001.  Investment  losses  and lower  dividend
          income were the primary  causes for the  decrease.  Investment  losses
          totaled $159,408 for the three months ended June 30, 2002, compared to
          investment gains of $441,172 for the three months ended June 30, 2001,
          a decrease of 136%.  Investment losses were the result of decreases in
          market  values of the  Company's  trading  portfolio,  which  includes
          mutual fund and limited partnership investments.  Management is unable
          to predict how future  fluctuations  in market  values will impact the
          performance  of  the  Company's  trading  and  investment  portfolios.
          Dividend  income  declined for the three months ended June 30, 2002 to
          $2,513 compared to $44,081, a decrease of 94%. The decline in dividend
          income was due to a significant  reduction in the Company's  portfolio
          of bank stocks (many of which pay  dividends) and lower interest rates
          on money market  balances.  Interest and other income  increased  from
          $801 for the three months ended June 30, 2001 to $22,024 for the three
          months  ended  June 30,  2002.  This  increase  was  solely due to the
          interest earned on the Company's tax refund.

                                       16
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


          Six months  ended June 30, 2002  compared to Six months ended June 30,
          ----------------------------------------------------------------------
          2001
          ----

          Total  operating  revenues  for the six  months  ended  June 30,  2002
          decreased to $489,443  from $675,355 for the six months ended June 30,
          2001,  a 28%  decrease.  Market  making gains were $91,977 for the six
          months ended June 30, 2001  compared to a loss of $17,627 for the same
          period  of time in  2002.  Management  fees  and  commissions  totaled
          $507,070 for the six months  ended June 30, 2002  compared to $583,378
          for the six months  ended June 30,  2001,  a decrease of 13%.  Part of
          this  decrease  is due to changes  in  personnel  and other  shifts in
          corporate  emphasis that resulted in a large client  terminating their
          account effective June 30, 2001. This account, with the State of Ohio,
          represented   assets  under   management  that  produced   $99,927  in
          management  fees in the six months ended June 30, 2001. In conjunction
          with the  shift  in  corporate  emphasis  to the  investment  advisory
          services of DHCM,  a program was  initiated to gather new assets under
          management  at  DHCM.  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, 2002 decreased to
          $1,600,821  compared to  $1,812,397  for the six months ended June 30,
          2001, a decrease of 12%.  Generally,  the decrease is due to a drop in
          salaries and general and administrative fees.  Salaries,  benefits and
          payroll taxes  decreased to $750,276 for the six months ended June 30,
          2002 from  $902,137 for the six months ended June 30, 2001, a decrease
          of 17%. This decrease is primarily due to changes in personnel. Broker
          commission  expense  increased  from  $43,508 for the six months ended
          June 30, 2001 to $64,037 for the six months  ended June 30,  2002,  an
          increase  of 47%.  The  increase in broker  commission  is a result of
          increased  sales  of  the  Company's  open-end  mutual  funds.  Due to
          expenses  related  to special  corporate  projects  and new  products,
          professional  fees  increased 34% to $448,700 for the six months ended
          June 30, 2002  compared to $333,982  for the six months ended June 30,
          2001.

          Other revenue for the six months ended June 30, 2002  decreased 81% to
          $205,975 from  $1,072,972  for the six months ended June 30, 2001. The
          decrease resulted  primarily from decreases in revenue from investment
          gains and dividend income.  Investment gains were $950,414 for the six
          months  ended June 30, 2001  compared  to $167,016  for the six months
          ended June 30, 2002,  resulting in an 82% decrease.  Investment losses
          were the result of decreases in market values of the Company's trading
          portfolio,   which  includes  mutual  fund  and  limited   partnership
          investments.  Management is unable to predict how future  fluctuations
          in market values will impact the performance of the Company's  trading
          and investment portfolios.  In addition,  dividend income declined for
          the six months ended June 30, 2002 to $14,090 compared to $117,166 for
          six months ended June 30,  2001,  a decrease of 88%.  This is due to a
          significant  reduction in the Company's portfolio of bank stocks (many
          of which pay  dividends)  and  lower  interest  rates on money  market
          balances.  Interest and other income increased from $5,799 for the six
          months ended June

                                       17
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


          30,  2001 to $24,869  for the six months  ended  June 30,  2002.  This
          increase was primarily due to the interest earned on the Company's tax
          refund.

          LIQUIDITY AND CAPITAL RESOURCES

          As a result of a net loss of $646,582 for the three months ending June
          30, 2002,  the Company's  cash balance  decreased 93% to $148,346.  As
          shown on the attached Consolidated  Statements of Financial Condition,
          the Company's overall working capital for the three months ending June
          30, 2002 was approximately $5,000,000. As of December 31, 2001 working
          capital was approximately $6,100,000.

          Net cash used in operating  activities  increased from $23,729 for the
          six months  ended June 30, 2001 to $686,957  for the six months  ended
          June  30,  2002.  The  primary  cause  for this  increase  was the net
          operating loss. A tax refund of $414,251  partially  offset the impact
          of the net operating  loss. Net cash used in operating  activities for
          the six months ended June 30, 2001 of $23,729 primarily  resulted from
          an unrealized  gain of $1,042,391  that was offset by decreases in the
          Company's investment portfolio and mortgage participation notes.

                                                  JUNE 2002      JUNE 2001
                                                 ----------     ----------
          Cash Flow From Operating Activities      (686,957)       (23,729)
          Cash Flow From Investing Activities      (113,523)      (117,044)
          Cash Flow From Financing Activities      (225,200)    (1,045,978)
                                                 ----------     ----------
          Net Increase (Decrease) in Cash        (1,025,680)    (1,186,751)
          Cash Beginning of Period                1,174,026      3,443,228
          Cash, Ending of Period                    148,346      2,256,477

          Net cash used in  investing  activities  for the six months ended June
          30, 2002 and for the six months  ended June 30, 2001 was  $113,523 and
          $117, 044,  respectively.  The purchase of office  equipment and other
          property and equipment were the primary uses of these funds.

          Net cash used in  financing  activities  for the six months ended June
          30, 2002 and for the six months  ended June 30, 2001 was  $225,200 and
          $1,045,978,  respectively.  These  funds were used  primarily  for the
          purchase of Company common stock.

          Approximately  95% of  the  Company's  trading  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.
          The  remaining 5% of the value of the Company's  trading  portfolio is
          comprised  of small  capitalization  bank  stocks,  which  are  thinly
          traded,  and  there  can be no  assurance  that  active  markets  will
          develop.  The  failure of such  markets to  develop  could  negatively
          affect  the  Company's  operations  and  financial  condition.   Other
          securities, for which market quotations are not readily available, due
          to infrequency of transactions,

                                       18
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


          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.

          Primarily  investment  management  fees and  revenue  from the trading
          portfolio 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  trading  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.

          LEGAL PROCEEDINGS (COMMITMENTS AND CONTINGENCIES)

          In the normal  course of business,  the Company may be named or become
          involved  in  various   inquiries,   administrative   proceedings  and
          litigation.  While any  proceeding  or  litigation  has the element of
          uncertainty, the Company does not believe there are currently any such
          proceedings  that will have a  material  impact  on its  results  from
          operations or financial condition.

          As  stated  in  Note 5 of this  filing,  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.

          Please refer to Note 5 of this filing for further discussion regarding
          the  Company's  risk exposure  from market  making  activities,  short
          selling, option contracts, and a significant industry concentration in
          bank and financial institutions.

          IMPACT ON INFLATION AND OTHER FACTORS

          The  Company's  operations  have not been  significantly  affected  by
          inflation.  The Company's  trading  portfolios  of equity  securities,
          primarily  in the  community-banking  sector,  are  carried at current
          market  values.  Therefore,  general  economic and market  conditions,
          including volatility in the banking

                                       19
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


          sector,  the volume of securities trading and fluctuations in interest
          rates, affect the Company's profitability.

          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.

                                       20
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

                                     PART II

                                OTHER INFORMATION
                                -----------------

Item 1.   Legal Proceedings

          None

Item 2.   Change in Securities

          None

Item 3.   Defaults Upon Senior Securities

          None

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

          The annual meeting of the  shareholders of the Company was held on May
          2, 2002 at the Company's  office.  A majority of the Company's  voting
          shares were present at the meeting, either in person or by proxy.

          At such meeting, the shareholders:

          1.   Elected  the  following  individuals  to  serve  on the  Board of
               Directors. Their terms will expire as indicated.

<TABLE>
<CAPTION>
               NAME                        TERM EXPIRES      VOTES FOR    VOTES WITHHELD
               ----                        ------------      ---------    --------------
<S>                                            <C>           <C>              <C>
               Dr. Roger D. Blackwell          2005          1,372,537         1,643
               Diane D. Reynolds               2005          1,358,909        15,271
               R.H. Dillon                     2003          1,372,427         1,753
</TABLE>

               However,  the  approval of the change in the  Company's  state of
               incorporation  discussed in item 2 immediately  below resulted in
               the Company's Board of Directors being comprised of the following
               nine  members,  all  elected for  one-year  terms:  Dr.  James G.
               Mathias,  David R.  Meuse,  Diane D.  Reynolds,  David P.  Lauer,
               William G. Perkins,  R.H.  Dillon,  Larry A. Beres,  Dr. Roger D.
               Blackwell and Richard Desich

          2.   Approved  a   proposal   to  change   the   Company's   state  of
               incorporation from Florida to Ohio.

                    Votes For:        836,919
                    Votes Against:     12,860
                    Votes Withheld:    21,312

Item 5.   Other Information

          None

                                       21
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


Item 6.   Exhibits and Reports on Form 8-K

          a)   Index of Exhibits:

               *2.1  Agreement  and  Plan of  Merger  dated  May 2,  2002 by and
                     between Diamond Hill Investment Group, Inc. and DHO, Inc.

               *2.2  Amended  and  Restated  Articles  of  Incorporation  of the
                     Company.

               *2.3  Code of Regulations of the Company

               **2.4 Definitive Proxy Statement filed March 19, 2002

               99.1  Certification  Pursuant to Title 18,  United  States  Code,
                     Section  1350,  as Adopted  Pursuant  to Section 906 of the
                     Sarbanes-Oxley Act of 2002

               99.2  Certification  Pursuant to Title 18,  United  States  Code,
                     Section  1350,  as Adopted  Pursuant  to Section 906 of the
                     Sarbanes-Oxley Act of 2002

          b)   Reports on Form 8-K:

               A Form  8-K was  filed on May 8,  2002 to  report  the  Company's
               reincorporation under the laws of the state of Ohio. Prior to May
               2002, the Company was incorporated under the laws of the state of
               Florida.

* 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  on March 19,  2002 and
incorporated herein by reference.

                                       22
<PAGE>

              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES


                                   SIGNATURES

In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed below by the  following  persons on behalf of the  registrant  and in the
capacities and on the dates indicated.

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

/S/ R. H. Dillon             President and Director              August 1, 2002
---------------------
R. H. Dillon

/S/ James F. Laird           Chief Financial Officer             August 1, 2002
---------------------
James F. Laird

                                       23
<PAGE>