<PAGE> PAGE 1
000 B000000 06/30/97
000 C000000 0000888850
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 GRADISON-MC DONALD MUNICIPAL CUSTODIAN TRUST
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001 C000000 5135795076
002 A000000 580 WALNUT STREET
002 B000000 CINCINNATI
002 C000000 OH
002 D010000 45202
002 D020000 3198
003 000000 N
004 000000 N
005 000000 N
006 000000 N
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007 C010100 1
007 C020100 GRADISON OHIO TAX FREE INCOME FUND
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007 C010300 3
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007 C010800 8
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008 A00AA01 MCDONALD & COMPANY SECURITIES, INC.
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008 C00AA01 801-11037
008 D01AA01 CINCINNATI
008 D02AA01 OH
008 D03AA01 45202
008 D04AA01 3198
011 A00AA01 MCDONALD & CO SECURITIES, INC.
011 B00AA01 8-30177
011 C01AA01 CINCINNATI
011 C02AA01 OH
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011 C04AA01 3198
012 A00AA01 MCDONALD & COMPANY SECURITIES INC.
012 B00AA01 84-01399
012 C01AA01 CINCINNATI
<PAGE> PAGE 2
012 C02AA01 OH
012 C03AA01 45202
013 A00AA01 ARTHUR ANDERSEN LLP
013 B01AA01 CINCINNATI
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013 B03AA01 45202
014 A00AA01 MC DONALD & COMPANY SECURITIES, INC.
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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SIGNATURE MARK A. FRIETCH
TITLE ASST TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000888850
<NAME> GRADISON-MCDONALD MUNICIPAL CUSTODIAN TRUST
<SERIES>
<NUMBER> 1
<NAME> GRADISON OHIO TAX FREE INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 75435324
<INVESTMENTS-AT-VALUE> 77529850
<RECEIVABLES> 1591612
<ASSETS-OTHER> 149913
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 79271375
<PAYABLE-FOR-SECURITIES> 3009358
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 3098899
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<NUMBER-OF-SHARES-REDEEMED> 1427931
<SHARES-REINVESTED> 223226
<NET-CHANGE-IN-ASSETS> 5610583
<ACCUMULATED-NII-PRIOR> 1560
<ACCUMULATED-GAINS-PRIOR> (1261919)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 377638
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<AVERAGE-NET-ASSETS> 75527560
<PER-SHARE-NAV-BEGIN> 12.899
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</TABLE>
Sub-item 77B
To the Board of Trustees of the
Gradison-McDonald Municipal Custodian Trust:
In planning and performing our audit of the
financial statements of the Gradison-McDonald
Municipal Custodian Trust for the year ended June
30, 1997, we considered its internal control,
including control activities for safeguarding
securities, in order to determine our auditing
procedures for the purpose of expressing our
opinion on the financial statements and to comply
with the requirements of Form N-SAR, and not to
provide assurance on internal control.
The management of the Gradison-McDonald Municipal
Custodian Trust is responsible for establishing
and maintaining internal control. In fulfilling
this responsibility, estimates and judgments by
management are required to assess the expected
benefits and related costs of control activities.
Generally, control activities that are relevant to
an audit pertain to the entity's objective of
preparing financial statements for external
purposes that are fairly presented in conformity
with generally accepted accounting principles.
Those control activities include the safeguarding
of assets against unauthorized acquisition, use or
disposition.
Because of inherent limitations in internal
control, errors or irregularities may occur and
not be detected. Also, projection of any
evaluation of internal control to future periods
is subject to the risk that it may become
inadequate because of changes in conditions or
that the effectiveness of the design and operation
may deteriorate.
Our consideration of internal control would not
necessarily disclose all matters in internal
control that might be material weaknesses under
standards established by the American Institute of
Certified Public Accountants. A material weakness
is a condition in which the design or operation of
any specific internal control components does not
reduce to a relatively low level the risk that
errors or irregularities in amounts that would be
material in relation to the financial statements
being audited may occur and not be detected within
a timely period by employees in the normal course
of performing their assigned functions. However,
we noted no matters involving internal control,
including control activities for safeguarding
securities, that we consider to be material
weaknesses as defined above as of June 30, 1997.
This report is intended solely for the information
and use of management and the Securities and
Exchange Commission.
/s/ Arthur Andersen LLP
Cincinnati, Ohio,
July 25, 1997
