<PAGE>
                       
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549
                                FORM 10-Q
      
      
    [X]    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30,     
           1997,
      
                                    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 Nos.: 33-67202
      
      
                      FUND AMERICA INVESTORS CORPORATION II        
             (Exact name of registrant as specified in its charter)
      
      
             Delaware                                 84-1218906       
      (State or other jurisdiction of             (I.R.S. Employer
      incorporation or organization)          identification number)
      
      
                                        
     6400 S. Fiddler's Green Circle, Suite 1200B, Englewood, Colorado 80111 
                    (Address of principal executive offices)
      
      
       Registrant's telephone number including area code: (303) 290-6025
      
      
      
      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 issuer's
  classes of common stock as of August 14, 1997 -- 349,000 shares
      


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                    FUND AMERICA INVESTORS CORPORATION II
                             FORM 10-Q FOR THE
                       SIX MONTHS ENDED JUNE 30, 1997
      
      
                                    INDEX
      
       
      
      PART I.  FINANCIAL INFORMATION                            PAGE NO.   
      
           Item 1.   Financial Statements                          3
      
           Item 2.   Management's Discussion and
                     Analysis of Financial Condition
                     and Results of Operations                     6
       
      
      PART II.  OTHER INFORMATION
      
           Item 1.   Legal Proceedings                             7
      
           Item 2.   Changes in Securities                         7
      
           Item 3.   Defaults upon Senior Securities               7
      
           Item 4.   Submission of Matters to a Vote
                     of Security Holders                           7
      
           Item 5.   Other Information                             7
      
           Item 6.   Exhibits and Reports                          7
      
           SIGNATURES                                              8
             


                                 Page 2

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<TABLE>





      PART I.  FINANCIAL INFORMATION
      
      Item 1.  Financial Statements
      
                       FUND AMERICA INVESTORS CORPORATION II
                                  BALANCE SHEETS
                                    (Unaudited)                             
   
                                         
<CAPTION>      
                                         June 30,     December 31,
                                           1997           1996      
                                         ________     ___________
    <S>                                 <C>           <C>
      Assets
        Cash                             $175,299       $190,574 
        Deferred offering costs           251,124        251,124 
        Organizational costs, net             265            583 
        Prepaid expenses                        -            163 
                                         ________       ________

           Total assets                  $426,688       $442,444 
                                         ========       ========       
      
      Liabilities - accounts payable     $  2,010       $      - 
                                         ________       ________
      
      Shareholder's equity
        Common stock, par value
        $.01 per share; 10,000 shares
        authorized; 349,000 shares
        issued and outstanding              3,490          3,490 
        Retained earnings                 421,188        438,954 
                                          _______        _______
      
          Total shareholder's equity      424,678        442,444 
                                          _______        _______
        
          Total liabilities and
           shareholder's equity          $426,688       $442,444 
                                         ========       ========  
      
      
      
                                   Page 3
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<TABLE>

            
                       FUND AMERICA INVESTORS CORPORATION II
                             Statements of Operations
                                    (Unaudited)

<CAPTION>                                                                
                                 Three months ended      Six months ended
                                      June 30,               June 30,        
                               ____________________    ___________________
                                1997           1996       1997        1996
                             ________      ________    _______    ________ 

<S>                         <C>           <C>        <C>         <C>
  Revenue                         
   Issuance fee income       $     -       $193,335   $      -    $193,335
   Interest income             1,544          1,676      3,139       1,984
                             _______       ________   ________    ________
    Total revenue              1,544        195,011      3,139     195,319
                             _______       ________   ________    ________
 
  Expenses
    Deferred offering costs        -        119,900          -     119,900
    General and administrative   654          2,493      8,587       9,459 
    Amortization of
    organization costs           159            159        318         318
    Management fees            6,000          6,000     12,000      12,000
                             _______       ________   ________    ________
    Total expenses             6,813        128,552     20,905     141,677
                             _______       ________   ________    ________

    Net income/(loss)        $(5,269)      $ 66,459   $(17,766)   $ 53,642 
                             =======       ========   ========    ========
      
      
                                    Page 4


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<TABLE>
      
                     FUND AMERICA INVESTORS CORPORATION II
                            Statements of Cash Flows
                                   (Unaudited)
      
   <CAPTION>                      
                                                    Six months ended  
                                                         June 30,           
                                                  _____________________
                                                    1997         1996 
                                                 ________      ________
  <S>                                           <C>           <C>
    Net cash flow used in
    operating activities: 
      Net loss                                  $(17,766)      $ 53,642     
   
     
    Adjustments to reconcile
    net loss to net cash flow
    from operating activities:
      Amortization deferred offering costs           163       119,900   
  Amortization of organizational costs               318           318
      Changes in operating assets
      and liabilities:
       Accounts payable                            2,010       (    94)
                                                 _______       _______
    Net cash flow provided by/(used in)
    investing activities                         (15,275)      173,766
                                                 _______       _______  
                                                                        
    Net cash provided by/(used in)                                     
    investing activities:                                               
      Reimbursements of deferred                                       
      offering costs                                   -        41,866 
      Increase in deferred offering costs              -       ( 5,826)
                                                 _______       _______
    Net cash flow provided by/(used in)
    investing activities                               -        36,040
                                                 _______       _______

    Net increase/(decrease) in cash              (15,275)      209,806
    
    Cash at beginning of period                  190,574        40,450
                                                 _______       _______

    Cash at end of period                       $175,299      $250,256
                                                ========      ========
      
      

                                   Page 5

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                       FUND AMERICA INVESTORS CORPORATION II
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)
                      Six months ended June 30, 1997 and 1996
      
  1.  Basis of Presentation
      
      Organization
      
      Fund America Investors Corporation II (the "Company") was
  incorporated in the State of Delaware on December 14, 1992 as a limited
  purpose finance corporation.  The Company was established to engage in
  the issuance and administration of Collateralized Mortgage Obligations
  which are secured by collateral and Mortgage Pass-through Certificates
  representing beneficial interests in the collateral (both are
  collectively referred to as the "Securities").  The collateral for the
  Securities may include mortgage loans or mortgage loan pass-through
  certificates which are backed by mortgage loans.  To issue the
  Securities, the Company may acquire, hold, sell or pledge the collateral,
  and typically such activities are transacted through trusts beneficially
  owned and created by the Company. 
      
       The Company may not, either directly or indirectly, through a
  beneficially owned trust, engage in any business or investment activity
  other than (i) issuing and selling the Securities; (ii) purchasing,
  owning, holding, pledging or selling the Collateral or other
  mortgage-related assets; (iii) investing and maintaining cash
  balances on an interim basis in high quality short-term securities; and
  (iv) engaging in other activities which are necessary or convenient to
  accomplish the foregoing and are incidental thereto.
    
       The Company currently has approximately $533 million registered and
  unissued Securities under its third registration statement which became
  effective March 28, 1996.  The Company will continue to seek
  opportunities to utilize these remaining Securities.
     
       Currently, the Company is in the process of filing a fourth 
  registration statement on Form S-3 with the Secrurities and Exchange
  Commission.  The filing would register additional Securities available
  for issuance.

  2. Unaudited Financial Statements
      
       In the opinion of management, the accompanying unaudited financial
  statements contain all adjustments necessary to present fairly the
  financial position of the Company at June 30, 1997, and the results of
  its operations and  cash flows for the periods ended June 30, 1997 and
  1996.
      
  Item 2.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations
      
       Liquidity and Capital Resources
      
       The Company expects to fund its ongoing operations from its cash
  balances, revenue derived from the issuance of Securities, and, if
  necessary, with borrowings from its sole shareholder.  As of June 30,
  1997, $1,000,000 was available to be borrowed from the Company's
  shareholder under a Line of Credit dated April 3, 1995.  Any borrowings
  will be subordinate and junior to any issued Securities.
      
       Results of Operations
      
       The Company reported a net loss for the six months ended June 30,
  1997 of $17,766 as compared to a net income for the six months ended June
  30, 1996 of $53,642. The primary difference in the results of operations
  between the two reporting periods is attributable to the issuance of one
  series of Securities completed in 1996.
              

                                Page 6

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    PART II. OTHER INFORMATION
      
      
      
    Item 1.  Legal Proceedings
      
             None.
      
    Item 2.  Changes in Securities
      
             None.
      
    Item 3.  Defaults Upon Senior Securities
      
             None.
      
    Item 4.  Submission of Matters to a Vote of Security Holders
      
             None.
      
    Item 5.  Other Information
      
             None.
      
    Item 6.  Exhibits and Reports on Form 8-K
      
         A.  Exhibits
      
             Exhibit 27. Financial Data Schedule
      
         B.  Form 8-K - None
      
            


                                 Page 7

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                                   SIGNATURES
      
      
      
    Pursuant to the requirements 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.
      
      
      
                                   FUND AMERICA INVESTORS CORPORATION II
                                   (Registrant)
      
      
    Date:  August 14, 1997         By: /s/ Helen M. Dickens
                                   Helen M. Dickens
                                   Vice President, Secretary/Treasurer
                                   (Duly authorized and Principal
                                   Financial Officer
      






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