THE FOLLOWING SUPPLEMENTS THE STATEMENT OF ADDITIONAL INFORMATION
OF THE GRADISON-MCDONALD OHIO TAX-FREE FUND DATED NOVEMBER 1,
1995. THE DATE OF THIS SUPPLEMENT IS SEPTEMBER 11, 1996.
GRADISON MCDONALD
OHIO
TAX FREE
INCOME FUND
March 31, 1996
The Ohio Tax Free Income Fund's goal is to provide monthly
income, consistent with preservation of capital, which is exempt
from both federal and State of Ohio income taxes. It is designed
for higher tax bracket Ohio investors who can take advantage of
the double tax-free income generated from the Fund. The Fund
offers the added benefit of the reinvestment of dividends, thus
providing the compounding of income on a tax free basis.
The Fund invests in Ohio municipal bonds issued to finance
general operating expenses of public institutions and public work
s. It also invests in "private activity" municipal bonds that
are issued to obtain funding for privately operated facilities.
In order to gain favorable yield spreads, the Fund may invest up
to 20% of its assets in securities that are subject to the
alternative minimum tax ("AMT") for certain investors.
Symbol: GMOTX
Chart:
Value of $1,000 Since Inception
Graph:
The value of a $1,000 investment made in the fund at inception
with all dividend and capital gain distributions reinvested.
9/18/92 12/31/92 12/31/93 12/31/94 12/31/95 3/1/96
Inception
Date
(Approximate Plot Points)
$1,000 $1,010 $1,150 $1,100 $1,250 $1,246
The performance quoted above does not include the effect of the
maximum 2% sales charge which would reduce the performance shown.
The performance quoted above and below represents past
performance. The performance below includes the effect of the
maximum 2% sales charge. The investment return and principal
value of an investment in the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than
the original cost. Total return includes changes in share value
and reinvestment of all distributions. Past performance does not
ensure future results.
NET ASSETS AND QUALITY RATING
The information below is as of March 31, 1996, and is subject to
change in the future.
Pie Chart:
$ 72 Million Money Markets 6%
Not Rated 9%
BB 7%
A 15%
AA 10%
AAA 53%
Net Assets as of 3/31/96
AVERAGE ANNUAL TOTAL RETURN
Periods Ended 3/31/96
For Shares Purchased
at Net Asset Value + 10.16% + 5.15% + 8.51%
For Shares Purchased at Full
2% Sales Charge + 7.99% + 4.44% + 8.25%
1 Year 3 Years Since
Inception
(9/18/92)
WEIGHTED AVERAGE MATURITY
Chart:
18.8 Years Weighted Average Maturity
5 10 15 20 25 30
Years
The maturity of the Fund's portfolio is as of March 31, 1996, and
is subject to change. The net asset value of the Fund will
fluctuate more than the value of a fixed income fund with a
shorter term maturity.
PORTFOLIO MANAGER PROFILES
[Photo]: Stephen C. Dilbone, CFA
First Vice President
Gradison McDonald Asset Management
With more than thirteen years investment experience, Steve
Dilbone not only carries responsibility for managing the Ohio Tax
Free Income Fund portfolio, but is also portfolio manager of the
Gradison McDonald Intermediate Municipal Income Fund. Steve's
additional responsibilities include overseeing all fixed income
investments in the mutual fund group and in individually managed
Gradison McDonald Asset Management accounts.
Prior to joining Gradison McDonald in 1990, Steve spent seven
years with Merrill Lynch, most recently as Vice President of
Municipal Markets in Chicago. A Certified Financial Analyst,
Steve holds a B.S. degree in Finance from Miami University and an
M.B.A. in Finance from the University of Chicago.
PROFILE OF GRADISON MCDONALD FAMILY OF FUNDS
Less Potential Risk More Potential Risk
Less Potential Reward [Double sided Arrow] More Potential Reward
Money Govern Intermed Ohio Establi Growth Opportunity Inter
Market ment iate Tax shed and Value natio
Funds Income Municipal Free Vale Income Fund nal
Fund Income Fund Fund Fund Fund
GRADISON MCDONALD ASSET MANAGEMENT COMBINES THE EXTENSIVE
INVESTMENT EXPERIENCE OF GRADISON & COMPANY, FOUNDED IN 1925,
WITH MCDONALD & COMPANY WHICH WAS FOUNDED IN 1924. THE TWO FIRMS
MERGED IN 1991. AS REGISTERED INVESTMENT ADVISERS SINCE 1974 AND
MUTUAL FUND ADVISERS SINCE 1976, GRADISON MCDONALD CURRENTLY
MANAGES IN EXCESS OF $3 BILLION IN MUTUAL FUND AND INDIVIDUALLY
MANAGED ASSETS.
A prospectus for the Ohio Tax Free Income Fund or any other
Gradison McDonald Fund may be obtained by calling (513) 579-5700
or (800) 869-5999. The prospectus contains more complete
information. Read it carefully before you invest. Capital
gains, if any, will be taxable.
McDonald & Company Securities, Inc. - Distributor
