<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 fiscal year ended
December 31, 1996                 Commission file number 33-4001

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


             DELAWARE                     43-1393535
____________________________________________________________________
 (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, $.01 Par Value - 1,000 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, 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 Holders......................         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..................................         6

  Item 9. Change in and Disagreements with Accountants
           on Accounting and Financial Disclosure....    15

PART III

  Item 10.Directors and Executive Officers of the
           Registrant.................................   16

  Item 11.Executive Compensation.....................   16

  Item 12.Security Ownership of Certain Beneficial Owners and
           Management................................   16

  Item 13.Certain Relationships and Related
          Transactions...............................   16

PART IV

  Item 14.Exhibits, Financial Statement Schedules and
          Reports on Form 8-K........................   17

SIGNATURES...........................................   19

INDEX TO EXHIBITS....................................   20







<PAGE>
                              PART I

Item 1.  BUSINESS

           Cornerstone Mortgage Investment Group, Inc. (the
"Company" or "Cornerstone") was incorporated in the state of
Delaware on January 9, 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 Certificates to be purchased with the proceeds of Secured
Mortgage Bonds collateralized by such Certificates.  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 Secured Mortgage Bonds and acquiring, owning, holding
and assigning Certificates 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 Bonds 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.

           Due to revisions to the Internal Revenue Code, effective
January 1, 1987, the Company no longer issues Bonds, but will
continue in operation until such time as the Bonds previously
issued are retired or mature.

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>
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)(a) of Form 10-
       K.

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

                               1996 VERSUS 1995

          Revenues for the year ended December 31, 1996 were
       $14,079, a decrease of $4,226 from the prior year.  Such
       amount consists solely of earnings from the Company's
       residual interest in its three series of Secured Mortgage
       Bonds outstanding.

          Expenses in 1996 decreased by $3,380 to $4,185 for the
       year.  The decrease was due to a decline in trustee fees.
       These fees will continue to decrease as the securities
       principal balances of the Secured Mortgage Bonds decrease.

          The result was net income of $9,894.

                                 1995 VERSUS 1994

          Revenues for the year ended December 31, 1995 were
       $18,305, a decrease of $10,886 from the prior year.  Such
       amount consists solely of earnings from the Company's
       residual interest in its three series of Secured Mortgage
       Bonds outstanding.

          Expenses in 1995 decreased  by $3,232 to $7,565 for the
       year.  The decrease was due to a decline in registration,
       filing and other fees.

          The result was net income of $10,740.

       Liquidity and Capital Adequacy

          Cornerstone currently has a deficit capital balance of
       $438,094, the majority of which is a result of previous
       years' management fees charged by EDJ to Cornerstone.

       Cornerstone relies on EDJ's ability to extend credit, and no
       circumstances currently exist which would adversely affect
       EDJ's ability to extend credit to Cornerstone.  Management
       fees are no longer being charged by EDJ to Cornerstone.






<PAGE>
Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

       Cash Flows

          Operating activities provided cash of $10,464 for the
       year ended December 31, 1996.  Cornerstone's cash was
       derived primarily from net income of $9,894 and an increase
       in the payable to Edward D. Jones & Co., L.P.

          Cash increased $14,085 from December 31, 1994 to December
       31, 1995.  Cornerstone's cash was derived from net income of
       $10,740 in 1995 and an increase in accrued expenses.















































<PAGE>
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

       Index to Financial Statements and Supplementary Financial
Data


                                                     Page No.

  Report of Independent Public Accountants.......         7

  Balance Sheet as of December 31, 1996 and 1995..        8

  Statement of Operations for the Years Ended December 31,
    1996, 1995 and 1994...........................        9

  Statement of Cash Flows for the Years Ended December 31,
    1996, 1995 and 1994...........................        10

  Statement of Changes in Stockholder's Equity for the
    Years Ended December 31, 1996, 1995 and 1994...       11

  Notes to Financial Statements....................       12

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


































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

              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Cornerstone Mortgage Investment Group, Inc.:

We have audited the accompanying balance sheet of Cornerstone
Mortgage Investment Group, Inc. (a Delaware corporation and wholly
owned subsidiary of Edward D. Jones & Co., L.P.) as of December 31,
1996 and 1995, and the related statements of operations, cash flows
and changes in stockholder's equity for each of the three years in
the period ended December 31, 1996. These financial statements are
the responsibility of the Company'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 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
Cornerstone Mortgage Investment Group, Inc. as of December 31, 1996
and 1995, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1996, 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, INC.

                              BALANCE SHEET

                    AS OF DECEMBER 31, 1996 AND 1995


                                            1996       1995
                                         __________ __________

                           ASSETS

CASH                                    $   43,762  $   33,298
                                        __________  __________

   TOTAL ASSETS                         $   43,762  $   33,298
                                        ==========  ==========

             LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:

PAYABLE TO EDWARD D. JONES & CO., L.P.  $  478,356   $ 474,786

ACCRUED EXPENSES                             3,500       6,500
                                         _________   _________

   TOTAL LIABILITIES                     $ 481,856   $ 481,286
                                         _________   _________

STOCKHOLDER'S EQUITY:

COMMON STOCK - $.01 par value, 1,000 shares
   authorized, issued and outstanding           10          10
PAID-IN CAPITAL                            300,490     300,490
RETAINED DEFICIT                          (738,594)   (748,488)
                                        __________  __________

     TOTAL STOCKHOLDER'S EQUITY           (438,094)   (447,988)
                                        __________  __________
     TOTAL LIABILITIES AND STOCKHOLDER'S
        EQUITY                          $   43,762  $   33,298
                                        ==========  ==========

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












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

           CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.

                     STATEMENT OF OPERATIONS

       FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


                              1996      1995      1994
                           _________  _________ _________

REVENUES:

   Residual interest
     in certificates       $  14,079  $  18,305  $  29,191

EXPENSES:

   Registration, filing and
     other fees                4,185      7,565     10,797
                            ________   ________    _______

INCOME BEFORE INCOME TAXES     9,894     10,740     18,394

PROVISION FOR INCOME TAXES         -          -          -
                            ________   ________    _______

NET INCOME                 $   9,894   $ 10,740   $ 18,394
                         ==============================

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



























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

             CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.

                      STATEMENT OF CASH FLOWS

        FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                                  1996      1995      1994
                               _________ _________ _________

CASH FLOWS PROVIDED (USED) BY
OPERATING ACTIVITIES:

  Net income                  $    9,894  $ 10,740  $ 18,394
  Adjustments to reconcile net
  income to net cash provided
  (used) by operating activities -
    Increase (decrease) in payable
    to Edward D. Jones & Co., L.P. 3,570       345   (44,111)
    (Decrease) increase in
      accrued expenses            (3,000)    3,000         -
                               _________ __________ _________

       Net cash provided (used)
         by operating activities  10,464    14,085   (25,717)

CASH, beginning of year           33,298    19,213    44,930
                               __________ __________ _________

CASH, end of year             $   43,762  $ 33,298  $ 19,213
                               ========== ========== =========

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

























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

            CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.

           STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY

      FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                         Common  Paid-In   Retained
                         Stock   Capital   Deficit    TOTAL
                        ________ _________ _________ _________

BALANCE, DECEMBER 31, 1993  $ 10 $ 300,490 $(777,622) $(477,122)

NET INCOME                     -         -    18,394     18,394
                        ________ _________ _________ _________

BALANCE, DECEMBER 31, 1994  $ 10 $ 300,490 $(759,228) $(458,728)

NET INCOME                     -         -    10,740     10,740
                        ________ __________ _________ _________

BALANCE, DECEMBER 31, 1995  $ 10 $ 300,490 $(748,488) $(447,988)

NET INCOME                     -         -     9,894      9,894
                        ________ ___________ ________  ________

BALANCE, DECEMBER 31, 1996  $ 10  $300,490 $(738,594) $(438,094)
                        ======== =========== ========  ========

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




























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

             CORNERSTONE MORTGAGE INVESTMENT GROUP, INC.

                     NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1996, 1995 AND 1994

1.  GENERAL

Cornerstone Mortgage Investment Group, Inc.  ("Cornerstone") is a

Delaware corporation and a wholly owned subsidiary of Edward D.

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

Cornerstone was incorporated on January 9, 1986, for the limited

purpose of issuing and selling secured mortgage bonds (the

"Bonds"), which are collateralized by Government National Mortgage

Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC)

and Federal National Mortgage Association (FNMA) Certificates

(collectively the "Certificates").  Due to revisions to the

Internal Revenue Code, effective January 1, 1987, Cornerstone no

longer issues Bonds. Cornerstone will continue operations until

such time as the Bonds previously issued are retired or mature.

2.  ISSUANCE OF BONDS

In 1986, Cornerstone issued an aggregate principal amount of

$38,875,000 of Secured Mortgage Bonds in Series 1, Series 2 and

Series 3 on a nonrecourse basis.  No affiliate of Cornerstone is

required to make future payments with respect to the Bonds.

Therefore, these transactions have been accounted for as sales, and

both the Bonds and Certificates have been eliminated from

Cornerstone's balance sheet.











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

The outstanding principal balance and remaining collateral value

relating to series issued by Cornerstone Mortgage Investment Group,

Inc. are $6,296,000 and $6,304,608, respectively, as of December

31, 1996.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a discussion of the significant accounting

policies of Cornerstone.

Basis of Accounting

Registration and offering costs are expensed as incurred.

The financial statements have been prepared under the accrual basis

of accounting which requires the use of certain estimates by

management in determining the Partnership's assets, liabilities,

revenues and expenses.

Residual Interest

Residual interest in the Certificates pledged as collateral for the

Bonds is recorded as it accrues to the benefit of, and becomes

available to, Cornerstone.

4. RELATED PARTIES

The Certificates pledged to secure the Bonds were purchased by

Cornerstone from EDJ in 1986.  EDJ purchased such certificates on

the open market and no profit was realized by EDJ on the sales to

Cornerstone.  In addition, EDJ was the sole underwriter for the

Bonds.













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

5. INCOME TAXES

Cornerstone provides income taxes currently for all items included

in the statement of operations.  The differences in the recognition

of revenues and expenses for tax and financial reporting purposes

are due to the Bonds and Certificates not being eliminated from

Cornerstone's financial statements for tax purposes.

During 1996, 1995 and 1994, Cornerstone utilized $9,894, $3,652 and

$6,254, respectively, of its net operating loss carryforward.  As

of December 31, 1996, the deferred tax asset of approximately

$123,000 related to the remaining net operating loss carryforward

was completely offset with a valuation allowance.  The remaining

net operating loss carryforwards expire through 2004 and 2005.



































<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

Statement of Operations For the Years Ended December 31, 1996, 1995
and 1994

Statement of Cash Flows For the Years Ended December 31, 1996, 1995
and 1994

Statement of Changes in Stockholder's Equity For the Years Ended
December  31, 1996, 1995 and 1994

Notes to Financial Statements

2.    Financial Statement Schedules:

          All schedules are omitted because they are not required,
          inapplicable or the information is included in the
          financial statements 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-1, as amended, File No.
          33-4001).

             Bylaws of the Company as amended (incorporated by
          reference to Exhibit 3(b) to Registration Statement on
          Form S-1, as amended, File No. 33-4001).

             Form of Management Contract between the Company and
          Edward D. Jones & Co. (incorporated by reference to
          Exhibit 10(a) to Registration Statement on Form S-1, as
          amended, File No. 33-4001).

             Indenture dated as of June 15, 1986 between the
          Company and Boatmen's Trust Company of St. Louis, as
          Trustee, relating to Secured Mortgage Bonds (incorporated
          by reference to Exhibit 4(a) to Registration Statement on
          Form S-1, as amended, File No. 33-4001).

             First Supplemental Indenture dated August 28, 1986
          (incorporated by reference to Exhibit 1 to the Current
          Report on Form 8-K, filed on September 19, 1986).





<PAGE>
Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON 
          FORM 8-K

          Second Supplemental Indenture dated September 26, 1986
          (incorporated by reference to Exhibit 1 to the Current
          Report on Form 8-K, filed on October 6, 1986).

          Third Supplemental Indenture dated October 31, 1986
          (incorporated by reference to Exhibit 1 to the Current
          Report on Form 8-K, filed on November 12, 1986).

  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 Regulations 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, 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-1, as amended, File No.
               33-4001)...............................     *

 3.2           Bylaws of the Company as amended
               (incorporated by reference to Exhibit
               3(b) to Registration Statement on
               Form S-1, as amended, File No. 33-4001)..   *

 4.1           Indenture dated as of June 15, 1986,
               between the Company and Boatmen's
               Trust Company of St. Louis,as Trustee,
               relating to Secured Mortgage Bonds
               (incorporated by reference to Exhibit 4(a)
               to Registration Statement on Form S-1,
               as amended, File No. 33-4001)............  *

 4.2           First Supplemental Indenture dated August
               28, 1986 (incorporated by reference to
               Exhibit 1 to the Current Report on Form 8-K
               filed on September 19, 1986)........      *

 4.3           Second Supplemental Indenture dated
               September 26, 1986 (incorporated by
               reference to Exhibit 1 to the Current
               Report on Form 8-K, filed on October 6,
               1986)...............................       *

 4.4           Third Supplemental Indenture dated
               October 31, 1986 (incorporated by
               reference to Exhibit 1 to the Current
               Report on Form 8-K filed on
               November 12, 1986)........               *

10.1           Form of Management Contract between
               the Company and Edward D. Jones & Co.
               (incorporated by reference to Exhibit
               10(a) to Registration Statement on
               Form S-1,as amended, File No. 33-4001)...   *

______________________

*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, 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>






                             





























































                             16<PAGE>