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SIGNATURE RICHARD M. WACHTERMAN
TITLE SECRETARY
<TABLE> <S> <C>
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<CIK> 0000042895
<NAME> GRADISON CASH RESERVES TRUST
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To the Board of Trustees of the
Gradison-McDonald Cash Reserves Trust:
In planning and performing our audit of the financial statements
of the Gradison-McDonald Cash Reserves Trust for the year ended
September 30, 1997, we considered its internal control structure,
including procedures 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 the
internal control structure.
The management of the Gradison-McDonald Cash Reserves Trust is
responsible for establishing and maintaining an internal control
structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected
benefits and related costs of internal control structure policies
and procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss from
unauthorized use or disposition and that transactions are executed
in accordance with management's authorization and recorded
properly to permit preparation of financial statements in
conformity with generally accepted accounting principles.
Because of inherent limitations in any internal control structure,
errors or irregularities may occur and not be detected. Also,
projection of any evaluation of the structure 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 the internal control structure would not
necessarily disclose all matters in the internal control
structure 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 the specific internal control structure
elements 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 the internal control structure, including
procedures for safeguarding securities that we consider to be
material weaknesses as defined above as of September 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,
October 24, 1997
