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SIGNATURE RICHARD M. WACHTERMAN
TITLE SECRETARY
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000815913
<NAME> GRADISON CUSTODIAN TRUST
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 181453378
<INVESTMENTS-AT-VALUE> 183556809
<RECEIVABLES> 2364076
<ASSETS-OTHER> 74377
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<SHARES-REINVESTED> 774962
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<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 208567
<OVERDIST-NET-GAINS-PRIOR> 0
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<PER-SHARE-DIVIDEND> 0.787
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</TABLE>
Sub-item 77B
To the Board of Trustees of the
Gradison Custodian Trust:
In planning and performing our audit of the financial statements of
the Gradison Custodian Trust for the year ended December 31, 1995, 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 Custodian 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. 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 December 31,
1995.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
/S/Arthur Andersen LLP
Cincinnati, Ohio,
February 2, 1996
