-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sd128Ur5cuuL4VnxBu9iqYPLH/TxvHdXCyW5rL34a8RqFYCQkQeiXBTeL4JwMQkj cimwT1CymLG1agB4SKwNTw== 0001058926-00-000002.txt : 20000403 0001058926-00-000002.hdr.sgml : 20000403 ACCESSION NUMBER: 0001058926-00-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RURAL ELECTRIC COOPERATIVE GRANTOR TRUST KEPCO SERIES 1997 CENTRAL INDEX KEY: 0001058926 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS BUSINESS CREDIT INSTITUTION [6159] STATE OF INCORPORATION: DC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 333-25029-01 FILM NUMBER: 590354 BUSINESS ADDRESS: STREET 1: 2201 COOPERATIVE WAY CITY: HERNDON STATE: VA ZIP: 20171 BUSINESS PHONE: 7037096700 MAIL ADDRESS: STREET 1: 2201 COOPERATIVE WAY CITY: HERNDON STATE: VA ZIP: 20171 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________ FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 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) Applied For (36-7233686) 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, 1999 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. 2 Part IV Item 14. Exhibits and Financial Statement Schedules and Reports On Form 8-K 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, 1999 and 1998 Statement of Income and Expenses for the Year Ended December 31, 1999, 1998 and 1997 Statement of Cash Flows for the Year Ended December 31, 1999, 1998 and 1997 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]). 3 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]). 27 Financial Data Schedule. 99 Morgan Guaranty Trust Company of New York (Swap Counterparty) Financial Information. b) Forms 8-K dated December 20, 1999 and June 20, 1999. Semi-annual Reports to Certificateholders dated December 20, 1999 and June 20, 1999. 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 31st day of March, 2000. RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997 By: NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION as Servicer By: /s/ Sheldon C. Petersen Governor and Chief Executive Officer 4 RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997 Exhibit Index Exhibit Number Description of Exhibit 27 Financial Data Schedule. 99 Morgan Guaranty Trust Company of New York (Swap Counterparty) Financial Information. 5 RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997 FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999, 1998 AND 1997 TOGETHER WITH AUDITORS' REPORT 6 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, 1999 and 1998, and the related statements of income and expenses and cash flows for each of the three years in the period ended December 31, 1999. 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, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31,1999, in conformity with accounting principles generally accepted in the United States. Vienna, VA March 17, 2000 7 RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997 STATEMENTS OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 1999 AND 1998 1999 1998 ASSETS Interest receivable - KEPCO $ 303,361 $ 345,096 Interest receivable - Swap provider 309,169 261,092 Notes receivable 55,290,000 56,390,000 Total Assets $55,902,530 $56,996,188 LIABILITIES Interest payable-Grantor Trust Certificates $ 309,169 $ 261,092 Servicer fees payable 3,714 4,225 Swap provider interest payable 299,647 340,871 Rural Electric Cooperative GrantorTrust Certificates 55,290,000 56,390,000 Total Liabilities $55,902,530 $56,996,188 The accompanying notes are an integral part of these financial statements. 8 RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997 STATEMENTS OF INCOME AND EXPENSES FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 and 1997 1999 1998 1997 INCOME: Interest on note receivable $4,277,913 $4,364,794 $170,668 Interest on swap agreement 3,008,729 3,264,892 135,026 Total Income 7,286,642 7,629,686 305,694 EXPENSES: Interest to certificate holders 3,008,729 3,264,892 135,026 Interest to swap provider 4,225,544 4,311,347 168,593 Servicer fees 52,369 53,447 2,075 Total Expenses 7,286,642 7,629,686 305,694 Net Income $ - $ - $ - The accompanying notes are an integral part of these financial statements. 9
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 1999 1998 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Interest received on note receivable $ 4,307,748 $ 4,190,366 $ - Interest received on swap agreement 2,960,652 3,138,826 - Interest paid to certificate holders (2,960,652) (3,138,826) - Interest paid to swap provider (4,255,014) (4,139,069) - Fees paid to servicer (52,734) (51,297) - Net cash provided by operating activities - - - CASH FLOWS FROM INVESTING ACTIVITIES: Principal payment to certificate holders (1,100,000) (1,000,000) - Principal payment on note receivable 1,100,000 1,000,000 - Net cash provided by investing activities - - - NET CHANGE IN CASH - - - CASH, beginning of year - - - CASH, end of year $ - $ - $ - ACCRUAL TO CASH BASIS RECONCILIATION: Accrual basis income $ - $ - $ - Change in accrual accounts: Increase in interest receivable (6,342) (300,494) (305,694) Increase in interest payable 48,077 126,066 135,026 (Decrease)/increase in swap provider interest payable (41,224) 172,278 168,593 (Decrease)/Increase in servicer fees payable (511) 2,150 2,075 Total change in accrual accounts - - - Net cash provided by operating activities $ - $ - $ - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest expense $4,255,014 $4,139,069 $ -
The accompanying notes are an integral part of these financial statements. 10 RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997 NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998 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 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 an interest rate swap agreement (the "Swap Agreement"). The counterparty to the Swap Agreement is Morgan Guaranty Trust Company of New York ("Morgan"). 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 Certificate holders. 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 1997 Notes and the 1997 Certificates. The Swap Agreement terminates in 2017, but is subject to early termination upon the early redemption of the Certificates. Derivative Financial Instruments The KEPCO Trust is neither a dealer nor a trader in derivative financial instruments. The Trust uses interest rate and currency exchange agreements to manage its interest rate risk. The Trust accounts for these agreements on an accrual basis. The Trust does not value the interest rate exchange agreements on its balance sheet, but values the underlying hedged debt at cost. The Trust does not recognize a gain or loss on these agreements, but includes the difference between the interest rate paid and interest rate received in the 11 overall cost of funding. No agreement to which the Trust was a party has been terminated early. In the event that an agreement were terminated early, the Trust would record the fee paid or received due to the early termination as part of the overall cost of funding. 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." The statement establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires that all derivatives be recognized as an asset or liability in the statement of financial position and recorded at fair value. The statement was originally effective for all fiscal years beginning after June 15, 1999. The FASB has amended the statement to be effective for all fiscal years beginning after June 15, 2000. The Trust will be required to implement this statement as of June 1, 2001. The Trust has not yet determined the impact of implementing this statement on its overall financial position. Grantor Trust Certificates Principal payments on the Certificates began in 1998 and will extend over a period of twenty years. The principal payments over the next 5 years and thereafter are as follows: 2000 $ 1,200,000 2001 1,400,000 2002 1,350,000 2003 1,700,000 2004 1,900,000 Thereafter 47,740,000 Total $55,290,000 The Certificates are subject to redemption at any time at the remaining principal amount plus accrued interest. The principal payments received on the note receivable 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 certificate holders 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 receivable, 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. 12 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 and recognition of conversion fees occurs over the life of the loan. 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 Statement of Financial Accounting Standards 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, 1999 and 1998 along with other valuation methodologies which are summarized below. Below is a summary of significant methodologies used in estimating fair value amounts and a schedule of fair values at December 31, 1999 and 1998. 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 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, 1999 and 1998 are as follows: 13
1999 1998 Carrying Fair Carrying Fair Value Value Value Value Assets: Interest receivable $ 612,530 $ 612,530 $ 606,188 $ 606,188 Note receivable 55,290,000 56,120,421 56,390,000 $64,323,332 Liabilities: Interest payable - Grantor Trust Certificates 309,169 309,169 261,092 $ 261,092 Servicer fees payable 3,714 3,714 4,225 4,225 Swap provider interest payable 299,647 299,647 340,871 340,871 Rural Electric Cooperative Grantor Trust Certificates 55,290,000 55,290,000 56,390,000 $56,390,000 Off-Balance Sheet Instruments: Swap Agreements - $ (621,081) - $(7,932,544)
14 EX-27 2
5 This schedule contains summary financial information extracted from the December 31, 1999, Form 10-K and is qualified in its entirety by reference to such financial statements. 1000 12-MOS DEC-31-1999 DEC-31-1999 0 0 55,902,530 0 0 1,812,530 0 0 55,902,530 1,812,530 0 0 0 0 54,090,000 55,902,530 0 7,286,642 0 0 52,369 0 7,234,273 0 0 0 0 0 0 0 0 0
EX-99 3 Exhibit 99. MORGAN GUARANTY TRUST COMPANY OF NEW YORK Morgan Guaranty Trust Company of New York (herein, "Morgan Guaranty") is a wholly owned subsidiary and the principal asset of J.P. Morgan & Co. Incorporated ("J.P. Morgan"), a Delaware corporation whose principal office is located in New York, New York. Morgan Guaranty is a commercial bank offering a wide range of banking services to its customers both domestically and internationally. Its business is subject to examination and regulation by Federal and New York State banking authorities. Morgan Guaranty currently has a long-term credit rating of "AA" from S&P and "Aa3" from Moody's. 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 is in accordance with generally accepted accounting principles, except for the Income statement data for the twelve months ended December 31, 1999, 1998, 1997, 1996 and 1995. Such data was prepared on a regulatory basis and substantially complies with generally accepted accounting principles.
December 31, (Dollars in millions) 1999 1998 1997 1996 1995 Balance Sheet Data(1) Trading Account Assets $ 84,786 $ 90,770 $ 89,345 $ 72,899 $ 55,373 Total Loans $ 26,352 $ 25,346 $ 31,396 $ 27,943 $ 23,319 Total Assets $ 167,666 $ 175,246 $ 196,418 $ 164,813 $ 135,713 Total Deposits $ 47,716 $ 56,221 $ 60,743 $ 53,074 $ 47,074 Total Liabilities $ 157,071 $ 164,768 $ 185,985 $ 154,922 $ 126,728 Allowance for Credit Losses $ 405 $ 595 $ 730 $ 1,115 $ 1,129 Stockholder's Equity $ 10,595 $ 10,478 $ 10,433 $ 9,891 $ 8,985
Year Ended December 31, (Dollars in millions) 1999 1998 1997 1996 1995 Income Statement Data(1) Net Interest Revenue $ - $ - $ 1,550 $ 1,807 $ 2,139 Provision for Credit Losses $ (175) $ 100 $ (8) $ (1) $ (10) Net Interest Revenue After Provision for Credit Losses $ 1,817 $ 1,279 $ 1,558 $ 1,808 $ 2,149 Non-Interest Revenue $ 4,673 $ 3,552 $ 3,721 $ 3,110 $ 2,312 Operating Expenses $ 3,952 $ 4,154 $ 3,728 $ 3,121 $ 2,886 Income before Income Taxes, Extraordinary Items, and Cumulative Effect of Change in Accounting Method $ 2,538 $ 677 $ 1,551 $ 1,797 $ 1,575 Income Taxes $ 950 $ 296 $ 554 $ 599 $ 569 Income before Extraordinary Items and Cumulative Effect of Change in Accounting Method $ 1,588 $ 381 $ 997 $ 1,198 $ 1,006 Extraordinary Items and Cumulative Effect of Change in Accounting Method $ - $ - $ - $ - $ - Net Income $ 1,588 $ 381 $ 997 $ 1,198 $ 1,006
______________________ 1 Prior period balances were restated to reflect the merger of J.P. Morgan Delaware with Morgan Guaranty Trust Company of New York effective June 1996. 2 Prepared on a regulatory basis. The consolidated statement of condition of Morgan Guaranty as of December 31, 1999, is set forth on page 63 of Exhibit 13 to Form 10-K dated March 8, 2000, as filed by J.P. Morgan with the Securities and Exchange Commission. Morgan Guaranty will provide without charge to each person to whom this 10-K is delivered, on the request of any such person, a copy of the Form 10-K referred to above 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: Morgan Guaranty Trust Company of New York, 60 Wall Street, New York, New York 10260-0060, Attention: Office of the Secretary. Telephone requests may be directed to (212) 648-3380. 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, of 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 28th day of March, 2000. RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) 1997 By: NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION as Servicer By: /s/ Sheldon C. Petersen Governor and Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----