UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 333-25029

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997

(Exact name of registrant as specified in its charter)

NEW YORK

(State or other jurisdiction of incorporation or organization)

(36-7233686)

(I.R.S. Employer Identification Number)

2201 Cooperative Way, Herndon, VA 20171-3025

(Address of principal executive offices)

(Registrant's telephone number, including area code, is 703-709-6700)

Securities Registered pursuant to Section 12(b) of the Act: 

None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes X No __

The Registrant has no common or voting stock.

DOCUMENTS INCORPORATED BY REFERENCE:

None.

Part I
Item 3.	Legal Proceedings
		None.
Item 4.	Submission of Matters to a Vote of Security Holders
		None.
Part II
Item 5.	Market for the Registrant's Common Equity and Related Stockholder Matters
	a)	There is no established trading market for the certificates representing ownership of the beneficial interest in the Trust.
	b)	As of December 31, 2001 there was one record holder of certificates representing ownership of the beneficial interest in the Trust.
Item 8.	Financial Statements and Supplementary Data
		See attached audited financial statements.
Item 9.	Disagreements on Accounting and Financial Disclosure
		None.
Part III
Item 13.	Certain Relationships and Related Transactions
		None.

Part IV
Item 14.	Exhibits and Financial Statement Schedules and Reports on Form 8-K
	a)	The following documents are filed as part of this report:
	1.	Financial Statements
		Report of Independent Public Accountants
		Statement of Assets and Liabilities as of December 31, 2001 and 2000
		Statement of Income and Expenses for the Year Ended December 31, 2001, 2000 and 1999
		Statement of Changes in Equity for the Year Ended December 31, 2001
		Statement of Cash Flows for the Year Ended December 31, 2001, 2000 and 1999
		Notes to Financial Statements
	2.	Financial Statement Schedules are omitted because they are inapplicable.
	3.	Exhibits
		Exhibit
		Number	Description of Exhibit
		4.1	Form of Trust Agreement, including the form of Rural Electric Cooperative Grantor Trust Certificate (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-1 [No. 333-25029]).
		4.2	First Amendment to Trust Agreement (incorporated by reference to Exhibit 4.2 to Registration Statement on Form S-1 [No. 333-25029]).
		10.1	Loan Agreement dated as of February 15, 1988 between CFC and the Cooperative (including form of Note and Guarantee) (incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-1 [No. 33-16789 filed on August 27, 1987]).
		10.2	First Amendment to Loan Agreement (incorporated by reference to Exhibit 10.2 to Registration Statement on Form S-1 [No. 333-25029]).
		10.3	Loan Guarantee and Servicing Agreement, dated as of February 15, 1988, among the Administrator of the RUS, the Cooperative, the Servicer, the Lender and the Trustee (incorporated by reference to Exhibit 10.2 to Registration Statement on Form S-1 [No. 33-16789 filed on August 27, 1987]).
		10.4	First Amendment to Loan Guarantee and Servicing Agreement (incorporated by reference to Exhibit 10.4 to Registration Statement on Form S-1 [No. 333-25029]).
		10.5	Remarketing Agreement (incorporated by reference to Exhibit 10.5 to Registration Statement on Form S-1 [No. 333-25029]).
		10.6	Swap Agreement (incorporated by reference to Exhibit 10.6 to Registration Statement on Form S-1 [No. 333-25029]).
		10.7	Liquidity Protection (incorporated by reference to Exhibit 10.7 to Registration Statement on Form S-1 [No. 333-25029]).
		10.8	Form of Standby Certificate Purchase Agreement (incorporated by reference to Exhibit 10.8 to Registration Statement on Form S-1 [No. 333-25029]).
		99	J. P. Morgan Chase Bank (successor to Morgan Guaranty Trust Company of New York) (Swap Counterparty) Financial Information.
		99.1	Representation Letter from Arthur Andersen LLP
	b)	Forms 8-K dated December 20, 2001 and June 20, 2001.
		Semi-annual Reports to Certificateholders dated December 20, 2001 and June 20, 2001.

Supplemental information to be furnished with reports filed pursuant to Section 15(d) of the Act by Registrants which have not registered securities pursuant to Section 12 of the Act.

No annual report, proxy statement, form of proxy or other proxy soliciting material has been sent to Certificateholders, and the Registrant does not presently contemplate sending any such material subsequent to the filing of this report.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth of Virginia on the 1st day of April 2002.
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997
By:	NATIONAL RURAL UTILITIES COOPERATIVE
	FINANCE CORPORATION as Servicer
	By:	/s/ Sheldon C. Petersen
		Sheldon C. Petersen, Governor and
		Chief Executive Officer

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997
Exhibit Index
Exhibit
Number	Description of Exhibit
99	J. P. Morgan Chase Bank (successor to Morgan Guaranty Trust Company of New York) (Swap Counterparty) Financial Information.

RURAL ELECTRIC COOPERATIVE GRANTOR

TRUST (KEPCO) SERIES 1997

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2001 AND 2000

TOGETHER WITH AUDITORS' REPORT

Report of Independent Public Accountants

To the Trustee of

Rural Electric Cooperative Grantor Trust

(KEPCO) SERIES 1997, and

To the Board of Directors of

National Rural Utilities Cooperative

Finance Corporation

We have audited the accompanying statements of assets and liabilities of Rural Electric Cooperative Grantor Trust (KEPCO) SERIES 1997 (the "Trust") as of December 31, 2001 and 2000,  the related statements of income and expenses and cash flows for each of the three years in the period ended December 31, 2001, and the statement of changes in equity for the year ended December 31, 2001. These financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Rural Electric Cooperative Grantor Trust (KEPCO) SERIES 1997 as of December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

As explained in Note 1 to the financial statements, effective January 1, 2001, the Trust changed its method of accounting for derivative instruments and hedging activities.

Vienna, Virginia

March 27, 2002

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997
STATEMENTS OF ASSETS AND LIABILITIES
AS OF DECEMBER 31, 2001 AND 2000
ASSETS		2001			2000
Interest receivable -KEPCO	$	303,464		$	319,606
Interest receivable - Swap provider		80,502			262,468
Note receivable		52,690,000			54,090,000
Total assets	$	53,073,966		$	54,672,074
LIABILITIES & EQUITY
Interest payable-Grantor Trust Certificates	$	80,502		$	262,468
Servicer fees payable		3,715			3,913
Swap provider interest payable		299,749			315,693
Rural Electric Cooperative Grantor Trust Certificates		52,690,000			54,090,000
SFAS 133 liability		7,372,416			-
Total liabilities		60,446,382			54,672,074
Equity
Retained deficit		(11,880,733	)		-
Accumulated other comprehensive income		4,508,317			-
Total equity		(7,372,416	)		-
Total liabilities & equity	$	53,073,966		$	54,672,074
The accompanying notes are an integral part of these financial statements.

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997
STATEMENTS OF INCOME AND EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
		2001			2000		1999
INTEREST INCOME:
Interest on note receivable	$	4,104,490		$	4,193,291	$	4,277,913
Interest on swap agreement		2,182,800			3,584,361		3,008,729
Total Income		6,287,290			7,777,652		7,286,642
COST OF FUNDS:
Interest to certificate holders		2,182,800			3,584,361		3,008,729
Interest to swap provider		4,054,244			4,141,958		4,225,544
Servicer fees		50,246			51,333		52,369
Total expenses		6,287,290			7,777,652		7,286,642
Operating income		-			-		-
SFAS 133 adjustment		(11,880,733	)		-		-
Net loss	$	(11,880,733	)	$	-	$	-
The accompanying notes are an integral part of these financial statements.

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997

STATEMENT OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

	Accumulated
	Other
Retained	Comprehensive	Total
Deficit	Income	Equity

Balance as of 12/31/00	$	-		$	-		$	-
Other Comprehensive Income:
										Comprehensive
Cumulative change in										Income
accounting principle		-			4,628,105			4,628,105		$	4,628,105
Amortization		-			(119,788	)		(119,788	)		(119,788	)
Net loss		(11,880,733	)		-			(11,880,733	)		(11,880,733	)
Balance as of 12/31/01	$	(11,880,733	)	$	4,508,317		$	(7,372,416	)	$	(7,372,416	)

      The accompanying notes are an integral part of these financial statements.

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
		2001			2000			1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(11,880,733	)	$	-		$	-
Change in accrual accounts:
Decrease/(Increase) in interest receivable		198,108			30,456			(6,342	)
Increase in SFAS 133 liability		11,880,733
(Decrease)/Increase in interest payable		(181,966	)		(46,701	)		48,077
(Decrease)/Increase in swap provider interest payable		(15,944	)		16,046			(41,224	)
Increase/(Decrease) in servicer fees payable		(198	)		199			(511	)
Total change in accrual accounts		11,880,733			-			-
Net cash provided by operating activities	$	-		$	-		$	-
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:		-			-			-
Cash paid during the year for interest expense		4,070,188		$	4,125,912		$	4,255,014
The accompanying notes are an integral part of these financial statements.

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001 AND 2000
1.	ORGANIZATION AND OPERATIONS
	Rural Electric Cooperative Grantor Trust (KEPCO) SERIES 1997 (the "Trust") was formed under a Trust Agreement dated December 20, 1996 among National Rural Utilities Cooperative Finance Corporation ("CFC"), Kansas Electric Power Cooperative, Inc. (the "Cooperative") and Bank One, formerly The First National Bank of Chicago (the "Trustee"). The assets of the Trust consist of lender loan notes (the "1997 Note") bearing interest at 7.597% and maturing in 2017. In addition, the Trust also holds certain rights under an interest rate swap agreement (the "Swap Agreement").
	Rural Electric Cooperative Grantor Trust (KEPCO) Trusts K-1 and K-2 were created on February 15, 1988 resulting from a refinancing of loans from the Federal Financing Bank ("FFB") which were guaranteed by the Rural Electrification Administration, as predecessor in intent to the Rural Utilities Service ("RUS"). The FFB loans were refinanced through CFC and in exchange the Cooperative executed lender loan notes (the "Notes") to CFC. CFC then deposited the Notes into separate Trusts. In turn, the Trusts issued to CFC, as depositor of the Trusts, two certificates: Rural Electric Cooperative Grantor Trust (KEPCO) 9.23% Certificates, due 2002 and Rural Electric Cooperative Grantor Trust (KEPCO) 9.73% Certificates, due 2017 (the "Certificates") in the amounts of $11,075,000 and $51,340,000, respectively. The Certificates were not subject to full redemption prior to December 15, 1997. On December 18, 1997, the Notes were refinanced, the outstanding Certificates were redeemed, and Trusts K-1 and K-2 were terminated. The Notes in the outstanding principal amount of $57,390,000 were then deposited into the Trust. The Trust issued Certificates of beneficial interest (the "Series 1997 Certificates") which bear interest at a variable rate, mature in 2017 and are guaranteed by RUS.
	In order to mitigate the interest rate risk inherent in the Trust, which held a fixed rate asset (the 1997 Note) and a variable rate obligation, the Cooperative assigned to the Trust certain rights under the Swap Agreement. The counterparty to the Swap Agreement is J. P. Morgan Chase Bank ("Morgan") (successor to Morgan Guaranty Trust Company of New York). Pursuant to the Swap Agreement, the Trust pays to Morgan a fixed rate of interest on the outstanding notional amount, and Morgan pays the Trust a variable rate of interest on the outstanding notional amount. The structure is designed such that the interest amounts paid by the Cooperative to the Trust are the same amounts paid to Morgan, pursuant to the Swap Agreement, plus the amounts payable to CFC, as servicer. The amounts Morgan pays to the Trust under the Swap Agreement are the same amounts as the interest payable by the Trust to the Certificateholders.
	The notional amount of the Swap Agreement (which is not included on the Trust's Statements of Assets and Liabilities) was established at $57,390,000 and declines in amount over time such that the outstanding notional amount is always equal to the outstanding balance of the Series 1997 Notes and the Series 1997 Certificates. The Swap Agreement terminates in 2017, but is subject to early termination upon the early redemption of the Certificates.
	Derivative Financial Instruments
	In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities. In June 199, the FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities -Deferral of the Effective Date of SFAS No. 133. In June 2000, the FASB issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities -an amendment of SFAS No. 133. These statements establish accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. The statements require that changes in the derivative's fair value be recognized currently in earnings unless specific accounting criteria are met and the hedge is considered to be highly effective. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in earnings or be recorded in other comprehensive income, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. The statement is effective for all fiscal years beginning after June 15, 2000. The Trust implemented this statement as of January 1, 2001.
	On January 1, 2001, as a transition adjustment, the Trust recorded an asset of $4,628,105 with a corresponding credit to other comprehensive income to place the interest rate exchange agreement on the balance sheet at fair value. The interest rate exchange agreement was not designated as a hedge on January 1, 2001, thus all changes in its fair value subsequent to January 1, 2001 were recorded through earnings. At December 31, 2001, to record the changes in fair value during the year, the Trust recorded a liability of $7,372,416, a loss of $11,880,733 and had a comprehensive income balance of $4,508,317. The loss of $11,880,733 includes the amortization of $119,788 of the transition adjustment. A total of $115,510 will be amortized over the next twelve months. The transition adjustment will be amortized over the life of the interest rate exchange agreement, which matures on December 4, 2017.
	There is no tax impact associated with the SFAS No. 133 entries. The Trust is a pass-through and does not earn any income or generate any cashflow. In the event that the interest rate exchange agreement is broken, KEPCO is required to reimburse the Trust for any cost associated with such event. Thus the Trust will not generate any income, loss or cashflow even if the interest rate agreement were to be broken.
	Grantor Trust Certificates
	Principal payments on the Certificates began in 1998 and extend over a period of twenty years. The principal payments over the next 5 years and thereafter are as follows:
		2002	$  1,350,000
		2003	1,700,000
		2004	1,900,000
		2005	2,100,000
		2006	2,300,000
		Thereafter	43,340,000
		Total	$52,690,000

The Certificates are subject to redemption at any time at the remaining principal amount plus accrued interest. The principal payments received on the Note from the Cooperative coincide with the payments due to the certificate holders.

Each Certificate represents an undivided fractional interest in the Trust. CFC is the depositor of the Trust and acts as servicer of the Note.

	Because of the structure of the refinancing, the credit behind the Series 1997 Certificates will be bifurcated. First, Series 1997 certificate holders will look to the guarantee provided by the United States of America for payment of principal, which will continue to be distributed to Series 1997 certificate holders each December 15. Second, Series 1997 certificateholders will look to the credit of Morgan with regard to the variable rate payments of interest to be made monthly on the Series 1997 Certificates. If Morgan fails to make any variable rate payments when due and the Swap Agreement terminates without replacement of an alternate swap agreement, amounts received by the Trustee representing fixed interest rate payments under the Note, will become payable to the Series 1997 certificate holders. CFC's servicer fee will continue to be paid by the cooperative.
2.	TAX STATUS OF THE TRUST
	Vinson & Elkins, Counsel to the Cooperative, has advised CFC with respect to the Trust that, in its opinion, (i) the Trust will not be classified as an association taxable as a corporation, but will be classified as a grantor trust and (ii) each certificate holder will be treated for Federal income tax purposes as the owner of an undivided fractional interest in each of the assets held by the Trust.
	It is expected that the Trust will not have any liability for Federal or state income taxes for the current or future years.
3.	INTEREST AND SERVICER FEE ACCOUNTING
	The Trust records interest income as it is earned and accrues interest expense and servicer fees as they are incurred. Servicer fees represent 9.3 basis points of the outstanding principal balance of the Certificates and the Note.
4.	FAIR VALUE OF FINANCIAL INSTRUMENTS
	Use of Estimates
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reported period. The estimates involve judgments with respect to, among other things, various future factors which are difficult to predict and are beyond the control of the Trust. With regards to the fair values below, actual amounts could differ from these estimates.
	The following disclosure of the estimated fair value of financial instruments is made in accordance with SFAS No. 107, "Disclosure about Fair Value of Financial Instruments." Whenever possible, the estimated fair value amounts have been determined using quoted market information as of December 31, 2001 and 2000 along with other valuation methodologies. Below is a summary of significant methodologies used in estimating fair value amounts and a schedule of fair values at December 31, 2001 and 2000.
	The carrying amounts reported for interest receivable, interest payable, and servicer fees payable approximate fair values due to the short-term maturity of these instruments.

Note Receivable

Fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Rural Electric Cooperative Grantor Trust Certificates

The trust certificates pay a variable rate of interest that is reset weekly, and as such are considered to be carried at fair value.

Swap Agreement

The fair market value is estimated as the amount the Trust would pay to terminate the Swap Agreement, taking into account the current market rate of interest.

The carrying and estimated fair values of the Trust's financial instruments as of December 31, 2001and 2000 are as follows:
	2001						2000
	Carrying			Fair			Carrying		Fair
	Value			Value			Value		Value
Assets:
Interest receivable	$	383,966		$	383,966		$	582,074	$	582,074
Note receivable		52,690,000			56,503,030			54,090,000		59,721,548
Liabilities:
Interest payable - Grantor
Trust Certificates	$	80,502		$	80,502		$	262,468	$	262,468
Servicer fees payable		3,715			3,715			3,913		3,913
Swap provider interest payable		299,749			299,749			315,693		315,693
Rural Electric Cooperative
Grantor Trust Certificates		52,690,000			52,690,000			54,090,000		54,090,000
Swap Agreement	$	(7,372,416	)	$	(7,372,416	)	$	-	$	4,628,105

Exhibit 99.

 J. P. Morgan Chase Bank (successor swap counterparty to Morgan Guaranty Trust Company of New York) financial information for the year ended December 31, 2001 was not available at the time of filing. Presented here is information for the latest 5-year periods available ended December 31, 2000.

MORGAN GUARANTY TRUST COMPANY OF NEW YORK

As of December 31, 2000, Morgan Guaranty Trust Company of New York ("Morgan Guaranty") was a wholly owned bank subsidiary of J.P. Morgan Chase & Co. ("the Corporation"), a Delaware corporation whose principal office is located in New York, New York. Morgan Guaranty was a commercial bank offering a wide range of banking services to its customers both domestically and internationally. Its business was subject to examination and regulation by Federal and New York State banking authorities.

On November 10, 2001, Morgan Guaranty Trust Company of New York merged with The Chase Manhattan Bank. Upon consummation of the merger, The Chase Manhattan Bank changed its name to JPMorgan Chase Bank.

The following table (on the next page) sets forth certain summarized financial information of Morgan Guaranty as of the dates and for the periods indicated. The information presented for the years ended December 31, 2000, 1999, 1998, 1997 and 1996 is in accordance with generally accepted accounting principles.

	December 31,
(Dollars in millions)	2000	1999		1998	1997	1996
Balance Sheet Data
Trading Assets	$  99,613	$  84,786		$   90,770	$  88,995	$   72,549
Total Loans	$  24,635	$  26,352		$   25,346	$  31,396	$   27,943
Total Assets	$185,762	$167,666		$ 175,246	$196,418	$ 164,813
Total Deposits	$  39,493	$  47,716		$  56,221	$  60,743	$  53,074
Total Liabilities	$174,824	$157,071		$164,768	$185,985	$154,922
Allowance for
Credit Losses	$       370	$      405		$       595	$      730	$       765
Stockholder's Equity	$  10,938	$ 10,595		$  10,478	$ 10,433	$    9,891
	Year Ended December 31,
(Dollars in millions)	2000	1999		1998	1997	1996
Income Statement Data
Net Interest Revenue	$    2,140	$   1,642		$   1,786	$  2,109	$    1,808
Provision for Credit Losses	$         50	$     (175	)	$      110	$          -	$            -
Net Interest Revenue After
Provision for Credit Losses	$    2,090	$   1,817		$   1,676	$  2,109	$    1,808
Noninterest Revenue	$    4,988	$   4,253		$   2,813	$  2,808	$    3,110
Noninterest Expense	$    4,287	$   3,532		$   3,812	$  3,366	$    3,121
Income before Income Taxes	$    2,791	$   2,538		$      677	$  1,551	$    1,797
Income Taxes	$    1,160	$      950		$     296	$     554	$       599
Net Income	$    1,631	$   1,588		$     381	$     997	$    1,198

Morgan Guaranty will provide without charge a copy of the J.P. Morgan Chase & Co. Form 10-K for the fiscal year ended December 31, 2000 and a copy of the most recent quarterly Consolidated Reports of Condition and Income of Morgan Guaranty filed with the Board of Governors of the Federal Reserve System, with exhibits omitted. Written requests should be directed to: Office of the Secretary, J.P. Morgan Chase & Co., 270 Park Avenue, New York, New York 10017.

The information set forth above relates to and has been obtained from Morgan Guaranty Trust Company of New York. The delivery of this 10-K shall not create any implication that there has been no change in the affairs of Morgan Guaranty Trust Company of New York since the date hereof, or that the information contained herein or referred to above is correct as of any time subsequent to its date.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the County of Fairfax, Commonwealth of Virginia on the 1st day of April 2002.

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) 1997
By:	NATIONAL RURAL UTILITIES COOPERATIVE
	FINANCE CORPORATION as Servicer
	By:	/s/ Sheldon C. Petersen
		Sheldon C. Petersen, Governor and
		Chief Executive Officer

Exhibit 99.1

April 1, 2002

United States Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

Re:  Financial Statements Audited by Arthur Andersen, LLP

National Rural Utilities Cooperative Finance Corporation ("CFC"), as servicer is filing the Rural Electric Cooperative Grantor Trust (KEPCO) Series 1997 (Comm. File No. 333-25029) Annual Report on Form 10-K today with financial statements audited by Arthur Andersen LLP ("Andersen"). In accordance with Temporary Note 3T to Article 3 of Regulation S-X, this letter confirms that the CFC has received certain required representations from Andersen in a letter dated March 28, 2002.

Andersen has represented to CFC that the audit was subject to Andersen's quality control system for the U.S. accounting and auditing practice to provide reasonable assurance that the engagement was conducted in compliance with professional standards. Andersen further represented that there was appropriate continuity of Andersen personnel working on the audit and availability of national office consultation. Andersen represented that the availability of personnel at foreign affiliates of Andersen was not relevant to this audit.

Very truly yours,

/s/   Angelo Salera

Angelo Salera

Acting Chief Financial Officer