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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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Sub-item 77B
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, 1998,
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 Cash Reserves 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 controls. Generally, controls 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 controls
include the safeguarding of assets against unauthorized acquisition, use or
disposition.
Because of inherent limitations in internal control, error or fraud 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 one or
more of the internal control components does not reduce to a relatively low
level the risk that misstatements caused by error or fraud 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 and its operation, including procedures for
safeguarding securities that we consider to be material weaknesses as defined
above as of September 30, 1998.
This report is intended solely for the information and use of management, the
Board of Trustees of Gradison-McDonald Cash Reserves Trust and the
Securities and Exchange Commission.
/S/Arthur Andersen LLP
Cincinnati, Ohio,
October 23, 1998
