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, 2000

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, 2000 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
	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, 2000 and 1999
		Statement of Income and Expenses for the Year Ended December 31, 2000, 1999 and 1998
		Statement of Cash Flows for the Year Ended December 31, 2000, 1999 and 1998
		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	Morgan Guaranty Trust Company of New York (Swap Counterparty) Financial Information.
	b)	Forms 8-K dated December 20, 2000 and June 20, 2000.
		Semi-annual Reports to Certificateholders dated December 20, 2000 and June 20, 2000.

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 29th day of March, 2001.

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	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, 2000 AND 1999

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 statement of assets and liabilities of Rural Electric Cooperative Grantor Trust (KEPCO) SERIES 1997 (the "Trust") as of December 31, 2000 and 1999, and the related statements of income and expenses and cash flows for each of the three years ended December 31, 2000. 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, 2000 and 1999, and the results of its operations and its cash flows for each of the three years ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.

Vienna, Virginia

March 9, 2001

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (KEPCO) SERIES 1997

STATEMENTS OF ASSETS AND LIABILITIES

AS OF DECEMBER 31, 2000 AND 1999

ASSETS	2000	1999
Interest receivable - KEPCO	$              319,606	$              303,361
Interest receivable - Swap provider	262,468	309,169
Notes receivable	54,090 ,000	55,290 ,000
Total Assets	$         54,672,074	$        55,902,530
LIABILITIES	2000	1999
Interest payable-Grantor Trust Certificates	$              262,468	$              309,169
Swap provider interest payable	3,913	3,714
Servicer fees payable	315,693	299,647
Rural Electric Cooperative Grantor Trust Certificates	54,090 ,000	55,290 ,000
Total Liabilities	$        54,672,074	$        55,902,530
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, 2000, 1999 AND 1998

	2000	1999	1998
INCOME:
Interest on note receivable	$       4,193,291	$       4,277,913	$       4,364,794
Interest on swap agreement	3,584,361	3,008,729	3,264,892
Total Income	7,777,652	7,286,642	7,629,686
EXPENSES:
Interest to certificate holders	3,584,361	3,008,729	3,264,892
Interest to swap provider	4,141,958	4,225,544	4,311,347
Servicer fees	51,333	52,369	53,447
Total Expenses	7,777,652	7,286,642	7,629,686
N et Income	$                       -	$                      -	$                      -
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, 2000, 1999 AND 1998

	2000	1999	1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received on note receivable	$      4,177,046	$       4,307,748	$       4,190,366
Interest received on swap agreement	3, 631,062	2,960,652	3,138,826
Interest paid to certificateholders	(3,631,062)	( 2,960,652 )	( 3,138,826 )
Interest paid to swap providers	(4,125,912)	(4,255,014)	(4,139,069)
Fees paid to servicer	( 51,134 )	( 52,734 )	( 51,297 )
Net cash provided by operating activities	-	-	-
CASH FLOWS FROM INVESTING ACTIVITIES:
Principal payment to certificateholders	( 1,200,000)	( 1,100,000 )	( 1,000,000)
Principal payment on note receivable	1,200,000	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)/Decrease in interest receivable	30,456	(6,342)	(300,494)
(Decrease)/Increase in interest payable	(46,701)	48,077	126,066
(Decrease)/Increase in swap provider interest payable	16,046	(41,224)	172,278
Increase/(Decrease) in servicer fees payable	199	(511)	2,150
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, 125,912	$     4, 255,014	$     4, 139,069
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, 2000 AND 1999

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 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 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

The KEPCO Trust is neither a dealer nor a trader in derivative financial instruments. The Trust uses interest rate 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 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 implement this statement effective January 1, 2001. The company has determined that the interest rate swap is an effective cashflow hedge under SFAS No. 133. The implementation of this statement requires the Trust to record the swap at its fair value, with a corresponding entry to other comprehensive income.  In future periods, changes in the fair value will be recorded as an adjustment to the value of the swap on the balance sheet with a corresponding entry to other comprehensive income. Any ineffectiveness, which is not expected to be material, would be recorded in the income statement.  In accordance with the transition provision of SFAS No. 133, the company recorded a cumulative effect type transition adjustment of  $4,628,105 in earnings to recognize at fair value the interest rate swap as a cashflow hedge.

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:

 

2001	$ 1,400,000
2002	1,350,000
2003	1,700,000
2004	1,900,000
2005	2,100,000
Thereafter	45,640,000
Total	$54,090,000

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 certificateholders.

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, 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, "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, 2000 and 1999 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, 2000 and 1999.

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 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, 2000 and 1999 are as follows:

 

	2000				1999
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Interest receivable		$      582,074		$      582,074		$     612,530		$    612,530
Note receivable		54,090,000		59,721,548		55,290,000		56,120,421
Liabilities:
Interest payable - Grantor
Trust Certificates		262,468		262,468		309,169		309,169
Servicer fees payable		3,913		3,913		3,714		3,714
Swap provider interest payable		315,693		315,693		299,647		299,647
Rural Electric Cooperative
Grantor Trust Certificates		54,090,000		54,090,000		55,290,000		55,290,000
Off-Balance Sheet Instruments:
Swap Agreements		-		4,628,105		-		(621,081)