1 SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1995

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 33-14843

_________________

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (DESERET) 1988-D2
(Exact name of registrant as specified in its charter)

NEW YORK
(State or other jurisdiction of incorporation or organization)

36-6878768
(I.R.S. Employer Identification Number)

2201 Cooperative Way, Herndon, VA 22071-3025
(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:

1. Form of Trust Agreement
2. Loan Agreement
3. Loan Guarantee and Servicing Agreement

Exhibit Index located on page 13.

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 March 29, 1996 there was one 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, 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, 1995 and 1994
Statement of Income and Expenses, for the Years Ended
December 31, 1995, 1994 and 1993
Statement of Cash Flows, for the Years Ended
December 31, 1995, 1994 and 1993
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. 33-14843]).

10.1 Loan Agreement (incorporated by reference to Exhibit
10.1 to Registration Statement on Form S-1 [No. 33-
4843])

10.2 Loan Guarantee and Servicing Agreement (incorporated
by reference to Exhibit 10.2 to Registration Statement
on Form S-1 [No. 33-14843]).

b) Form 8-K dated December 20, 1995.
Semi-annual Report to Certificateholders dated December 15, 1995.

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, 1996.

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (DESERET) 1988 D-2

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 (DESERET) 1988-D2

FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995, 1994 AND 1993
TOGETHER WITH AUDITORS' REPORT

Report of Independent Public Accountants

To the Trustee of
Rural Electric Cooperative Grantor Trust
(Deseret) 1988-D2, 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 (Deseret) 1988-D2 as of December 31, 1995
and 1994, and the related statements of income and expenses and cash flows
for each of the three years in the period ended December 31, 1995. 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 generally accepted auditing
standards. Those standards require that we plan and perform an 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 (Deseret) 1988-D2 as of December 31, 1995 and 1994, and its
operations and its cash flows for the years ended December 31, 1995, 1994,
and 1993, in conformity with generally accepted accounting principles.

/s/ Arthur Andersen LLP
March 11, 1996
Washington, D. C.

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (DESERET) 1988-D2

STATEMENTS OF ASSETS AND LIABILITIES

AS OF DECEMBER 31, 1995 AND 1994

1995 1994

A S S E T S

Interest Receivable $ 1,191,767 $ 1,191,767

Note Receivable 152,895,000 152,895,000
Total Assets $154,086,767 $154,086,767

L I A B I L I T I E S

Interest Payable - Grantor Trust $ 1,159,326 $ 1,159,326
Certificates

Servicer Fees Payable 32,441 32,441

Rural Electric Cooperative
Grantor Trust Certificates 152,895,000 152,895,000

Total Liabilities $154,086,767 $154,086,767

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (DESERET) 1988-D2

STATEMENTS OF INCOME AND EXPENSES

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

1995 1994 1993

INCOME:
Interest on note receivable $15,890,224 $15,890,224 $15,890,224

EXPENSES:
Interest on grantor trust
certificates 15,457,684 15,457,684 15,457,684
Servicer fees 432,540 432,540 432,540

Total expenses $15,890,224 15,890,224 15,890,224

Net Income $ - $ - $ -

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (DESERET) 1988 - D2

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

1995 1994 1993

CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received on note receivable $15,890,224 $15,890,224 15,890,224
Interest paid to Certificateholders (15,457,684) (15,457,684) (15,457,684)
Fees paid to Servicer (432,540) (432,540) (432,540)
Net cash provided by operating activities - - -

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from principal payment on note - - -
Net cash provided by investing activities - - -

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payment to Certificateholders - - -

Net cash used in financing 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:
Decrease in interest receivable - - -
Decrease in interest payable - - -
Decrease in servicer fees payable - - -
Total change in accrual accounts - - -
Net cash provided by operating activities $ - $ - $ -

11
RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (DESERET) 1988-D2

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 AND 1993

1. ORGANIZATION AND OPERATIONS

Rural Electric Cooperative Grantor Trust (Deseret) 1988-D2 (the
"Trust") was formed under a Trust Agreement dated February 15, 1988
among National Rural Utilities Cooperative Finance Corporation
("CFC"), Deseret Generation & Transmission Co-operative, Inc. (the
"Cooperative") and The First National Bank of Chicago (the "Trustee").
On that date, CFC made a loan to the Cooperative which issued a note
(the "Note"), evidencing the borrowing to the Trust. The Trust issued
to CFC Rural Electric Cooperative Grantor Trust (Deseret) 10.11%
Certificates Due 2017 (the "Certificates") in the amount of $152,895,000.
The Certificates are solely the obligations of the Trust and are not
insured or guaranteed by CFC, the Cooperative, the Trustee, the Rural
Utilities Service ("RUS") of the United States Department of Agriculture
("USDA") nor any other governmental agency. Each Certificate represents
an undivided fractional interest in the Trust. CFC is the depositor of the
Trust and acts as Servicer of the Note. CFC filed, on behalf of the Trust,
a Registration Statement on Form S-1 (Registration No. 33-14843) which
became effective on May 4, 1988, and CFC resold the Certificates thereunder.

The assets of the Trust consist primarily of the Note which is
guaranteed (the "Guarantee") as to timely payment of principal and
interest by the United States of America, acting through the Admini-
strator of RUS. The amounts of principal and interest payments on the
Note held by the Trust are sufficient to cover the scheduled principal
and interest payments on the Certificates issued by the Trust and the
scheduled amounts of servicer fees. The General Counsel of the USDA
has issued an opinion that the Guarantee is supported by the full
faith and credit of the United States of America.

Debt service and servicer fee payments on the Note are made to the
Trustee semi-annually (June 4 and December 4) by the Cooperative or
RUS guarantor of the Note. The Trustee deposits all such receipts in
the Trust account. The Trustee is authorized by the Trust Agreement
to invest all funds in the Trust account at the direction of CFC in
certain eligible investments that mature no later than the business
day next preceding the day (June 15 and December 15) such amounts are
to be distributed to the Certificateholders and the Servicer. The
interest earned on the investments is distributed to the Cooperative.
Any funds that are not so invested must be held by the Trustee in the
Trust account. The Trustee may not reinvest any returns of principal
or investment earnings on eligible investments and the Trustee may not
sell any eligible investment prior to its maturity except, at the
direction of CFC, to preserve the value of the corpus of the Trust.

On or before five business days after each date on which payments are
made on the Certificates, the Trustee is obligated to supply the
holders of such Certificates a report provided by the Servicer, which
includes certain pertinent information as to how the payment is to be
allocated to principal, interest, servicer fees and premium, if any,
as well as the principal balance outstanding after such payment.

The fiscal year of the Trust is the calendar year. Within the pre-
scribed period of time for tax reporting purposes, after the end of
each calendar year during the term of the Trust Agreement, the Trustee
is obligated to prepare and mail to each Certificateholder of record
for the Trust, at any time during such year, a report setting forth
the information as is reasonably necessary for the preparation of such
Certificateholder's Federal income tax return.

Payments of principal on the Certificates are scheduled to be repaid
over a period of fifteen years, beginning in 2003. The principal
payment in 2003 is scheduled to be $5,200,000. The Certificates are
not subject to redemption prior to December 15, 1997. Thereafter,
such Certificates are subject to optional redemption, in whole and
with premium until 2006, upon redemption or purchase of the related
Note. The Trust Agreement will terminate after payment in full has
been made on the Certificates issued thereunder.
12

2. TAX STATUS OF THE TRUST

Milbank, Tweed, Hadley & McCloy, counsel to CFC, 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 Certificateholder 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 ten basis points of the outstanding principal balance of the
Certificates and the Note.

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial
instruments is made in accordance with FASB Statement No. 107, "Dis-
closure about Fair Value of Financial Instruments." Whenever
possible, the estimated fair value amounts have been determined using
quoted market information as of December 31, 1995, 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, 1995.

The carrying amounts reported for Interest Receivable, Interest
Payable - Grantor Trust Certificates, 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 fair value of the Certificate is estimated using quoted market prices for
similar notes over the same remaining maturities.

The carrying and estimated fair values of the Trust's financial instruments
as of December 31, 1995, are as follows:

1995
Carrying Fair
Value Value

Assets:
Interest Receivable 1,191,767 1,191,767
Note Receivable 152,895,000 322,548,280

Liabilities:
Interest Payable - Grantor Trust Certificates 1,159,326 1,159,326
Servicer Fees Payable 32,441 32,441
Rural Electric Cooperative
Grantor Trust Certificates 152,895,000 323,178,168

RURAL ELECTRIC COOPERATIVE GRANTOR TRUST (DESERET) 1988 D-2

Exhibit Index

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. 33-
14843]).

10.1 Loan Agreement (incorporated by reference to Exhibit 10.1 to
Registration Statement on Form S-1 [No. 33-14843]).

10.2 Loan Guarantee and Servicing Agreement (incorporated by reference
to Exhibit 10.2 to Registration Statement on Form S-1 [No. 33-
14843]).