CORNERSTONE MORTGAGE INVESTMENT GROUP II INC
10-K, 1997-03-26
ASSET-BACKED SECURITIES
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<PAGE>
                 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 year ended December 31, 1996 

Commission file number 33-11459

            CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
____________________________________________________________________
(Exact name of registrant as specified in its Articles of
Incorporation)

             DELAWARE                             43-1432378
___________________________________________________________________
 (State or other jurisdiction of             (IRS Employer
  incorporation or organization)              Identification No.)

    201 Progress Parkway
    Maryland Heights, Missouri                          63043
___________________________________________________________________
(Address and principal executive office)                (Zip Code)

Registrant's telephone number, including area code  (314) 515-2000
                                            ________________________

Securities registered pursuant to Section 12(b) of the Act:  None.

Securities registered pursuant to Section 12(g) 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
                                                   ____        ____

 Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of filing date:

                COMMON STOCK, $1.00 Par Value - 500 Shares

  The Registrant meets the conditions set forth in General
Instruction J(1)(a) and (b) of Form 10-K and is therefore filing
this form with the reduced disclosure format.







<PAGE>
              CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.

TABLE OF CONTENTS

PART I                                                 Page

  Item 1. Business...............................         3

  Item 2. Properties.............................         3

  Item 3. Legal Proceedings......................         3

  Item 4. Submission of Matters to a Vote
           of Security Holder....................         3

PART II

  Item 5. Market for the Registrant's Common Equity and
           Related Stockholder Matters...........         4

  Item 6. Selected Financial Data................         4

  Item 7. Management's Discussion and Analysis of
           Financial Condition and Results of
            Operations...........................         4

  Item 8. Financial Statements and Supplementary
           Data..................................         5

  Item 9. Change in and Disagreements with Accountants
           on Accounting and Financial Disclosure...     10

PART III

  Item 10.Directors and Executive Officers of the
           Registrant................................    11

  Item 11.Executive Compensation....................     11

  Item 12.Security Ownership of Certain Beneficial Owners and
           Management...............................     11

  Item 13.Certain Relationships and Related
           Transactions..............................    11

PART IV

Item 14.Exhibits, Financial Statement Schedules and
        Reports on Form 8-K..........................    12

SIGNATURES...........................................    13

INDEX TO EXHIBITS....................................    14







<PAGE>
                                PART I
Item 1.  BUSINESS

          Cornerstone Mortgage Investment Group II, Inc. (the"Company") was 
incorporated in the state of Delaware on December22, 1986, as a 
wholly owned, limited purpose subsidiary of Edward
D. Jones  & Co., L.P. ("EDJ"), a Missouri limited partnership.

           The Company was organized for the purpose of investing
in collateral to be purchased with the proceeds of Mortgage-Backed
Securities collateralized by such collateral.  EDJ organized the
Company and currently owns all the issued and outstanding capital
stock of the Company.  The Company does not intend to engage in any
business or investment activities other than issuing and selling
Mortgage-Backed Securities and acquiring, owning, holding and
assigning collateral and investing cash balances on an interim
basis in high quality, short-term securities some or all of which
may be purchased from or through EDJ.  Article 3 of the Company's
Certificate of Incorporation limits the Company's business and
investment activities to the above purposes and to any activities
incidental and necessary or convenient for such purposes.  Article
7 of the Company's Certificate of Incorporation prohibits the
Company, without the consent of the trustee under any indenture
pursuant to which Mortgage-Backed Securities are issued, from (1)
dissolving or liquidating, in whole or in part; (2) merging or
consolidating with another corporation other than a corporation
wholly owned, directly or indirectly, by EDJ or (3) amending
Articles 3 or 7 of the Company's Certificate of Incorporation.

Item 2.  PROPERTIES

           The Company has no physical properties appropriate for
description herein.

Item 3.  LEGAL PROCEEDINGS

           The Company is not a party to any material pending legal
proceedings.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

           Omitted pursuant to General Instruction J(2)(c) of Form 10-K. 



















<PAGE>
                                PART II

Item 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS

          As of filing date, all outstanding shares of the

          Company's common stock are owned by EDJ and are not traded

          on any stock exchange or in the over-the-counter market.

Item 6.   SELECTED FINANCIAL DATA

          Omitted pursuant to General Instruction J(2)(c) of Form 10-
          K.

Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

          Cornerstone II has not issued Mortgage-Backed Securities

          since 1991.  Cornerstone II's operations are directed toward

          maintenance of outstanding issues.




































<PAGE>
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       Index to Financial Statements and Supplementary Financial
       Data

                                                     Page No.

  Report of Independent Public Accountants........      6

  Balance Sheet as of December 31, 1996 and 1995..      7

  Notes to Balance Sheet..........................      8

All schedules are omitted because they are not required,
inapplicable or the information is included in the balance sheet or
notes thereto.












































<PAGE>
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)

              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Cornerstone Mortgage Investment Group II, Inc.:

We have audited the accompanying balance sheet of Cornerstone
Mortgage Investment Group II, Inc. (a Delaware corporation and
wholly owned subsidiary of Edward D. Jones & Co., L.P.) as of
December 31, 1996 and 1995. This financial statement is the
responsibility of the Company's management.  Our responsibility is
to express an opinion on this financial statement based on our
audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
balance sheet is free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet.  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 balance sheet referred to above presents
fairly, in all material respects, the financial position of
Cornerstone Mortgage Investment Group II, Inc. as of December 31,
1996 and 1995,  in conformity with generally accepted accounting
principles.

                               ARTHUR ANDERSEN LLP

St. Louis, Missouri,
February 21, 1997

























<PAGE>
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)

              CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.

                            BALANCE SHEET

                  AS OF DECEMBER 31, 1996 AND 1995

                                            1996       1995
                                         __________  __________

                              ASSETS

CASH                                       $   500   $   500
                                         ==========  ==========

                        STOCKHOLDER'S EQUITY

COMMON STOCK - $1.00 par value, 150,000
  shares authorized,500 issued and
    outstanding                            $   500   $   500
                                         ==========  ==========

                The accompanying notes are an integral
                     part of this balance sheet.



































<PAGE>
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)

            CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.

                       NOTES TO BALANCE SHEET

                     DECEMBER 31, 1996 AND 1995

1.  GENERAL

Cornerstone Mortgage Investment Group II, Inc. (``Cornerstone II'')

is a Delaware corporation and a wholly owned subsidiary of Edward

D. Jones & Co., L.P. ("EDJ''), a Missouri limited partnership.

Cornerstone II was incorporated on December 22, 1986, for the

limited purpose of structuring and selling mortgage-backed

securities (the ''Certificates''), which are backed by Government

National Mortgage Association (GNMA), Federal Home Loan Mortgage

Corporation (FHLMC) and Federal National Mortgage Association

(FNMA) Securities (collectively the ``Collateral'').

All costs related to the organization of Cornerstone II have been

absorbed by EDJ.  In addition, EDJ has paid all offering expenses

and assumed all future revenues and expenses in connection with

prior security transactions.  Due to the absence of revenue or

expense generating transactions, no income statement is presented.

The balance of stockholder's equity consists solely of common stock

issued on December 30, 1986; therefore, no statement of

stockholder's equity is presented.  All funds were obtained from

capital transactions.  Therefore, no statement of cash flows is

presented.

2.  SECURITY TRANSACTIONS

Cornerstone II last offered mortgage-backed securities in 1991; no

securities were issued during 1996, 1995 or 1994.







<PAGE>
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)

Since Cornerstone II has surrendered control of the future economic

benefit in the collateral, these transactions have been accounted

for as sales and both the Certificates and the Collateral have been

eliminated from Cornerstone II's balance sheet.

The outstanding principal balance and remaining collateral value

relating to series issued by Cornerstone Mortgage Investment Group

II, Inc. are $99,014,500 and $99,431,599 as of December 31, 1996.













































<PAGE>
Item 9.   CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE

     There was no change of accountants or disagreement with
accountants on any matter of accounting principles or financial
disclosure.






















































<PAGE>
                              PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

       Omitted pursuant to General Instruction J(2)(c) of Form 10-
       K.

Item 11.  EXECUTIVE COMPENSATION

       Omitted pursuant to General Instruction J(2)(c) of Form 10-
       K.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

       Omitted pursuant to General Instruction J(2)(c) of Form 10-
       K.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

       Omitted pursuant to General Instruction J(2)(c) of Form 10-
       K.






































<PAGE>
                               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

          Balance Sheet as of December 31, 1996 and 1995

          Notes to Balance Sheet

      2.  Financial Statement Schedules:

             All schedules are omitted because they are not
          required, inapplicable, or the information is included in
          the balance sheet or notes thereto.

      3.  Exhibits:

             Certificate of Incorporation of the Company, as
          amended (incorporated by reference to Exhibit 3(a) to
          Registration Statement on Form S-11, as amended, File No.
          33-11459).

             Bylaws of the Company as amended (incorporated by
          reference to Exhibit 3(b) to Registration Statement on
          Form S-11, as amended, File No. 33-11459).

             Deposit Agreement dated as of February 20, 1987,
          between the Company, as Depositor, and Boatmen's Trust
          Company of St. Louis, as Custodian (incorporated by
          reference to Exhibit 2 to the Current Report on Form 8-K
          filed on March 6, 1987).

             Trust Agreement dated as of February 20, 1987, between
          the Company, as Depositor, and Boatmen's Trust Company of
          St. Louis, as Trustee (incorporated by reference to
          Exhibit 3 to the Current Report on Form 8-K filed on
          March 6, 1987).

             Trust Agreement dated as of February 20, 1987, between
          the Company, as Depositor, and Boatmen's Trust Company of
          St. Louis, as Trustee (incorporated by reference to
          Exhibit 4 to the Current Report on Form 8-K filed on
          March 6, 1987).

  b.  No reports on Form 8-K were filed in the fourth quarter of
      1996.

  c.  Exhibits filed as part of this report are included in Item
      (14)(a)(3) above.

  d.  Financial Statement Schedules required by Regulation S-X are
       included as described in Part II Item 8 above.


<PAGE>
                                SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on this 26th day of March, 1997.

                CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
                                (Registrant)

   Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.

/s/ John C. Heisler        Chairman of the Board,
John C. Heisler            Chief Financial Officer,
                           Chief Accounting
                           Officer and Director   March 26, 1997

/s/ Philip R. Schwab       President, Chief
Philip R. Schwab           Executive Officer
                           and Director           March 26, 1997

/s/ John Beuerlein         Secretary and Director March 26, 1997
John Beuerlein


































<PAGE>
                             INDEX TO EXHIBITS
Exhibit
Number             Description of Exhibit              Page

 3.1           Certificate of Incorporation of the
               Company, as amended (incorporated by
               reference to Exhibit 3(a) to Registration
               Statement on Form S-11, as amended,
               File No.
               33-11459)..............................  *

 3.2           Bylaws of the Company as amended
               (incorporated by reference to Exhibit 3(b)
               to Registration Statement on Form S-11,
               as amended, File No. 33-11459).......... *

 4.1           Deposit Agreement dated as of February 20,
               1987, between the Company, as Depositor,
               and Boatmen's Trust Company of St. Louis,
               as Custodian (incorporated by reference
               to Exhibit 2 to the Current Report on Form
               8-K filed on March 6, 1987).............   *

 4.2           Trust Agreement dated as of February 20,
               1987, between the Company, as Depositor,
               and Boatmen's Trust Company of St. Louis,
               as Trustee (incorporated by reference to
               Exhibit 3 to the Current Report on Form
               8-K filed on March 6, 1987)..............  *

 4.3           Trust Agreement dated as of February 20,
               1987, between the Company, as Depositor,
               and Boatmen's Trust Company of St. Louis,
               as Trustee (incorporated by reference to
               Exhibit 4 to the Current Report on Form
               8-K filed on March 6, 1987)..............  *

______________________

*Incorporated by reference




















<PAGE>
                              SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on this 26th day of March, 1997.

             CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
                              (Registrant)

   Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.

________________________ Chairman of the Board,
John C. Heisler            Chief Financial Officer,
                           Chief Accounting
                           Officer and Director   March 26, 1997


________________________ President, Chief
Philip R. Schwab           Executive Officer
                           and Director           March 26, 1997


________________________ Secretary and Director   March 26, 1997
John Beuerlein
































<PAGE>









                             10<PAGE>





























































                             11<PAGE>

<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements from Cornerstone Mortgage Investment Group II, Inc. for the
year ended December 31, 1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000809767
<NAME> CORNERSTONE MORTGAGE INVESTMENT GROUP II, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-START>                             JAN-01-1996
<PERIOD-END>                               DEC-31-1996
<EXCHANGE-RATE>                                      1
<CASH>                                             500
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                   500
<PP&E>                                               0
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                     500
<CURRENT-LIABILITIES>                                0
<BONDS>                                              0
                                0
                                          0
<COMMON>                                           500
<OTHER-SE>                                           0
<TOTAL-LIABILITY-AND-EQUITY>                       500
<SALES>                                              0
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                        0
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                      0
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                                  0
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                         0
<EPS-PRIMARY>                                        0
<EPS-DILUTED>                                        0
        

</TABLE>


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