UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                     ----------------------------------

                                    FORM 10-Q

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

               FOR THE QUARTERLY PERIOD ENDED  APRIL 30, 1998
                                               --------------

                                       OR

        |_|  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

           For the transition period from ______ to _________ .

                         Commission File Number: 0-18076

              PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
              -----------------------------------------------
           (Exact name of registrant as specified in its charter)

            Delaware                                        04-3038480
--------------------------------------------------------------------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification  No.)

265 Franklin Street, Boston, Massachusetts                       02110
--------------------------------------------------------------------------------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code  (617) 439-8118
                                                    --------------

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 |_|

<PAGE>

              PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.

                              BALANCE SHEETS
               April 30, 1998 and July 31, 1997 (Unaudited)
                              (In thousands)

                                  ASSETS
                                                          April 30    July 31
                                                          --------    -------
Investments in Debt Securities (at market value):
   Mortgage-Backed Securities available for sale          $  4,692    $  5,379
   Participating Insured Mortgage Loans available
     for sale                                               18,420      18,586
                                                          --------    --------
                                                            23,112      23,965

Cash and cash equivalents                                    1,224       1,310
Interest receivable                                            159         165
Deferred expenses, net                                         399         531
                                                          --------    --------
                                                          $ 24,894    $ 25,971
                                                          ========    ========

                        LIABILITIES AND PARTNERS' CAPITAL

Accounts payable - affiliates                             $     28    $     29
Accounts payable and accrued expenses                           40          39
Partners' capital                                           24,826      25,903
                                                          --------    --------
                                                          $ 24,894    $ 25,971
                                                          ========    ========

              STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
          For the nine months ended April 30, 1998 and 1997 (Unaudited)
                                 (In thousands)
                                                                 Corporate
                                                                 Limited
                                                    General      Partner and
                                                    Partner      Unitholders
                                                    -------      -----------

Balance at July 31, 1996                            $     1       $ 29,161
Net unrealized holding losses on debt securities          -            (81)
Cash distributions                                      (14)        (4,652)
Net income                                               13          1,279
                                                    -------       --------
Balance at April 30, 1997                           $     -       $ 25,707
                                                    =======       ========

Balance at July 31, 1997                            $    (2)      $ 25,905
Net unrealized holding losses on debt securities          -            (77)
Cash distributions                                      (12)        (2,014)
Net income                                               10          1,016
                                                    -------       --------
Balance at April 30, 1998                           $    (4)      $ 24,830
                                                    =======       ========

                             See accompanying notes.


<PAGE>
<TABLE>
                 PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.

                              STATEMENTS OF INCOME
     For the three and nine months ended April 30, 1998 and 1997 (Unaudited)
                      (In thousands, except per Unit data)
<CAPTION>
                                             Three Months Ended      Nine Months Ended
                                                  April 30,              April 30,
                                             ------------------      ------------------
                                             1998        1997        1998        1997
                                             ----        ----        ----        ----
<S>                                          <C>        <C>          <C>         <C>  

Revenues:
   Interest income - Debt Securities        $  465      $  497      $1,410       $1,506
   Interest income - Money Market               17          31          58          131
                                            ------      ------      ------       ------
                                               482         528       1,468        1,637

Expenses:
   Management fees                              50          53         152          161
   General and administrative                   46          36         158          121
   Amortization expense                         43          21         132           63
                                            ------      ------      ------       ------
                                               139         110         442          345
                                            ------      ------      ------       ------
Net income                                  $  343      $  418      $1,026       $1,292
                                            =======     =======     ======       ======

Net income per Unit of Depositary
   Receipt                                  $ 0.61      $ 0.75      $ 1.84       $ 2.32
                                            ======      ======      ======       ======

Cash distributions per Unit of
   Depositary Receipt                       $ 1.88      $ 5.94      $ 3.65       $ 8.43
                                            ======      ======      ======       ======
</TABLE>


      The above net income and cash distributions per Unit of Depositary Receipt
are based upon the 551,604 Units outstanding for each period.












                             See accompanying notes.


<PAGE>


                 PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.

                            STATEMENTS OF CASH FLOWS
                For the nine months ended April 30, 1998 and 1997
          Increase (Decrease) in Cash and Cash Equivalents (Unaudited)
                                 (In thousands)

                                                        1998        1997
                                                        ----        ----
Cash flows from operating activities:
  Net income                                       $   1,026   $   1,292
  Adjustments to reconcile net income to
   net cash provided by operating activities:
   Amortization expense                                  132          63
   Amortization of discount/premium on debt
      securities                                          46          13
   Changes in assets and liabilities:
     Interest receivable                                   6           4
     Accounts payable - affiliates                        (1)         (1)
     Accounts payable and accrued expenses                 1         (16)
                                                   ---------   ---------
      Total adjustments                                  184          63
                                                   ---------   ---------
      Net cash provided by operating activities        1,210       1,355
                                                   ---------   ---------

Cash flows from investing activities:
  Principal collections on Mortgage-Backed 
     Securities                                          668         678
  Principal collections on Participating Insured
    Mortgage Loans                                        62          57
                                                   ---------   ---------
      Net cash provided by investing activities          730         735
                                                   ---------   ---------

Cash flows from financing activities:
  Distributions to Unitholders and partners           (2,026)     (4,666)
                                                   ---------   ---------

Net decrease in cash and cash equivalents                (86)     (2,576)

Cash and cash equivalents, beginning of period         1,310       3,637
                                                   ---------   ---------

Cash and cash equivalents, end of period           $   1,224   $   1,061
                                                   =========   =========




                             See accompanying notes.


<PAGE>


              PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
                          Notes to Financial Statements
                                   (Unaudited)


1.  General
    ------

      The accompanying financial statements,  footnotes and discussion should be
read in conjunction with the financial statements and footnotes contained in the
Partnership's  Annual Report for the year ended July 31, 1997. In the opinion of
management, the accompanying financial statements,  which have not been audited,
reflect all adjustments  necessary to present fairly the results for the interim
period. All of the accounting  adjustments reflected in the accompanying interim
financial statements are of a normal recurring nature.

      The  accompanying  financial  statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting  principles
which  requires  management to make  estimates and  assumptions  that affect the
reported amounts of assets and liabilities and disclosures of contingent  assets
and liabilities as of April 30, 1998 and July 31, 1997 and revenues and expenses
for each of the three- and  nine-month  periods  ended  April 30, 1998 and 1997.
Actual results could differ from the estimates and assumptions used.

2.  Mortgage-Backed Securities
    --------------------------

      At   April   30,   1998  and  July  31,   1997,   the   Partnership   held
non-participating  mortgage-backed securities ("MBS") backed by single-family or
multi-family  mortgage loans issued or originated in connection with the housing
programs  of  the  Government  National  Mortgage  Association   ("GNMA"),   and
guaranteed by GNMA, as follows (in thousands):
<TABLE>
<CAPTION>


                                April 30, 1998                 July 31, 1997
                       ----------------------------    -----------------------------
                       Estimated                       Estimated
                       Market    Face     Amortized    Market     Face      Amortized
     Description       Value     Value    Cost         Value      Value     Cost
     -----------       -----     -----    ---------    -----      -----     ---------
     <S>               <C>       <C>      <C>          <C>        <C>       <C>

    9.5% GNMA Pool     $ 1,558   $ 1,440  $ 1,430     $ 1,799     $ 1,664   $ 1,652

    9.0% GNMA Pool         193       189      196         268         260       270

    8.0% GNMA Pool       2,679     2,570    2,667       3,016       2,907     3,037

    7.5% GNMA Pool         262       254      253         296         290       287
                       -------   -------  -------     -------     -------   -------
                       $ 4,692   $ 4,453  $ 4,546     $ 5,379     $ 5,121   $ 5,246
                       =======   =======  =======     =======     =======   =======
</TABLE>

      The Partnership's investments in MBS are carried at fair value as of April
30, 1998 and July 31, 1997. Investments in MBS are valued based on quoted market
prices.  The  amortized  cost  of the  MBS  represents  the  face  value  of the
securities net of unamortized premium or discount. Beginning in fiscal 1998, the
premiums and discounts  are being  amortized on a  straight-line  basis over the
expected remaining holding periods of the investments,  of three years. Prior to
fiscal 1998,  the premium and discounts  were being  amortized  over an original
estimated holding period of fifteen years.  Investments in non-participating MBS
were limited to no more than 30% of the  original net offering  proceeds per the
terms of the Partnership's offering prospectus.

      The 9.5% MBS,  which were  purchased  at a discount on December  14, 1988,
carry a coupon  interest rate of 9.5% per annum and include loans with scheduled
maturities  between  June  2009 and  December  2009.  The 9.0% MBS,  which  were
purchased  at a premium on November 16, 1989,  carry a coupon  interest  rate of
9.0% per annum and include loans with scheduled maturities between June 2001 and
September  2002.  The 8.0% MBS,  which were  purchased  at a premium on July 30,
1992,  carry a coupon  interest  rate of 8.0% per annum and  include  loans with
scheduled  maturities  in June 2022.  The 7.5% MBS,  which were  purchased  at a
discount on October 30, 1992,  carry a coupon  interest  rate of 7.50% per annum
and include loans with scheduled maturities in March 2022. The loans included in
these GNMA pool programs may be prepaid, without penalty, at any time.

3.  Investments in Participating Insured Mortgage Loans
    ---------------------------------------------------

      Participating   Insured   Mortgage   Loans  secured  by  GNMA   securities
outstanding  at April 30, 1998 and July 31, 1997 are  comprised of the following
(in thousands):
<PAGE>
<TABLE>
<CAPTION>


                                               April 30, 1998           July 31, 1997
                                          ----------------------   -----------------------
    GNMA                                  Estimated                Estimated
    Certificate                 Interest  Market      Amortized    Market        Amortized
    Number      Property        Rate      Value       Cost         Value         Cost
    ------      --------        ----      -----       ---------    -----         ---------
   <S>          <C>             <C>      <C>          <C>          <C>           <C>

    279985      Quarter Mill    8.50%    $  7,409     $  7,141     $  7,417      $  7,166
    279119      Emerald Cove    8.75%      11,011       10,594       11,169        10,645
                                         --------     --------     --------      --------
                                         $ 18,420     $ 17,735     $ 18,586      $ 17,811
                                         ========     ========     ========      ========
</TABLE>

      The Partnership's  investments in Participating Insured Mortgage Loans are
carried at fair value as of April 30,  1998 and July 31,  1997.  Investments  in
Participating  Insured  Mortgage  Loans,  for which quoted market prices are not
available,  are valued by an independent  pricing  service which  determines the
valuations  based on a comparison of recent  market  trades of  securities  with
similar  characteristics.  Because of the inherent  uncertainty  of  valuations,
estimated  values,  as reflected  herein,  may differ from the values that would
have been used had a ready market for the securities  existed.  Descriptions  of
the  properties  financed  by the  Partnership's  loans and the loan  agreements
themselves are summarized below:

      Quarter Mill Apartments
      -----------------------

      The  Partnership  acquired  a  Participating  Insured  Mortgage  Loan with
respect to a 266-unit apartment complex known as Quarter Mill Apartments located
in Richmond,  Virginia (the "Virginia  Project").  Construction  of the Virginia
Project was completed in November of 1990. Initial closing of this Participating
Insured Mortgage loan took place on August 2, 1989. The project owner is Amurcon
Corporation.  The Base Component of this Participating  Insured Mortgage Loan is
coinsured by FHA and  represented by GNMA  Securities with an initial face value
of $7,316,600,  which GNMA Securities bore interest at the rate of 10.25% during
construction  of the Virginia  Project and 8.50%  thereafter.  Effective  May 1,
1991, the  construction  loan was converted to a permanent loan with a principal
balance of  $6,525,000.  On June 21,  1991 an  additional  $791,600  was funded,
completing  the  Partnership's  investment of  $7,316,600.  Monthly  payments of
principal and interest totalling approximately $53,533 are due through maturity,
on October 15,  2031.  Scheduled  principal  repayments  of  $175,985  have been
received through April 30, 1998.

      Emerald Cove Apartments
      -----------------------

      The  Partnership  acquired  a  Participating  Insured  Mortgage  Loan with
respect to a 276-unit  apartment  complex  known as Emerald Cove  Apartments  in
Charlotte,  North Carolina (the "North  Carolina  Project").  Initial closing of
this  Participating  Insured  Mortgage Loan took place on October 16, 1989.  The
project  owners are Ronald Curry and Ralph  Abercia.  The Base Component of this
Participating  Insured Mortgage Loan is coinsured by FHA and represented by GNMA
Securities  with an initial  face value of  $10,783,900  at closing,  which GNMA
Securities bore interest at the rate of 10.25% during  construction of the North
Carolina  Project and 8.75%  thereafter.  During  fiscal 1992,  the  Partnership
funded its remaining  commitment on the investment of  approximately  $1,184,000
and,  effective May 1, 1992,  the  investment  was converted to a permanent loan
with a  principal  balance of  $10,776,500.  The  Partnership  paid a premium of
$107,840 to the GNMA issuer to obtain the original  loan  commitment  due to the
fact that the permanent  loan interest  rate was higher than  comparable  market
rates at the time of the initial closing.  Prior to fiscal 1998, the premium had
been amortized on the straight-line  method over a 15-year  amortization period.
Beginning in fiscal 1998, the amortization  rate has been increased to reflect a
reduction in the expected  remaining  holding period of the investment.  Monthly
payments of  principal  and  interest  totalling  approximately  $81,114 are due
through maturity, on August 15, 2031. Scheduled principal repayments of $232,748
have been received through April 30, 1998.
<PAGE>

4.  Related Party Transactions
    --------------------------

      Management  fees earned by the  General  Partner  and its  affiliates  for
services  rendered  in  managing  the  business  of the  Partnership  aggregated
$152,000  and  $161,000  for the nine  months  ended  April  30,  1998 and 1997,
respectively.  Of these amounts,  $25,000 and $29,000,  respectively,  represent
additional   asset  management  fees  paid  to  PWPI  which  are  based  on  the
Partnership's  cash  distributions of operating  income, as discussed further in
the Partnership's Annual Report. Accounts payable - affiliates at April 30, 1998
and July 31, 1997 consists of $28,000 and $29,000,  respectively,  of management
fees payable to the General Partner and its affiliates.

      Included in general and administrative  expenses for the nine months ended
April 30,  1998 and 1997 is  $70,000  and  $72,000,  respectively,  representing
reimbursements  to an affiliate  of the General  Partner for  providing  certain
financial, accounting and investor communication services to the Partnership.

      Also included  in  general  and  administrative  expenses  for both of the
nine-month  periods ended April 30, 1998 and 1997 is $4,000,  representing  fees
earned by an affiliate,  Mitchell Hutchins  Institutional  Investors,  Inc., for
managing the Partnership's cash assets.



<PAGE>

                 PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information Relating to Forward-Looking Statements
--------------------------------------------------

      The following  discussion of financial condition includes  forward-looking
statements  which  reflect  management's  current  views with  respect to future
events and  financial  performance  of the  Partnership.  These  forward-looking
statements  are  subject to certain  risks and  uncertainties,  including  those
identified  in Item 7 of the  Partnership's  Annual  Report on Form 10-K for the
year ended July 31, 1997 under the heading  "Certain  Factors  Affecting  Future
Operating  Results",  which could cause actual results to differ materially from
historical  results  or  those  anticipated.  The  words  "believe",   "expect",
"anticipate,"  and  similar  expressions  identify  forward-looking  statements.
Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements,  which were made based on facts and conditions as they existed as of
the date of this report.  The  Partnership  undertakes no obligation to publicly
update or revise  any  forward-looking  statements,  whether  as a result of new
information, future events or otherwise.

Liquidity and Capital Resources
-------------------------------

      The Partnership is currently  analyzing potential  disposition  strategies
for its remaining  investments.  As part of these  efforts,  the  Partnership is
evaluating the current  economic  benefits it would receive if the owners of the
Emerald Cove  Apartments  and the Quarter Mill  Apartments  were to prepay their
participating  loans within the next 2 to 3 years.  As discussed  further below,
the owner of the Emerald Cove  Apartments has recently  informed the Partnership
that the property is being actively  marketed for sale. The current  strength of
the national  real estate  market for the sale or  refinancing  of  multi-family
apartment  properties  has  increased  the  likelihood  of  one or  both  of the
Partnership's  participating  loans  being  prepaid in the near term.  While the
Partnership  cannot  require  either of the owners to prepay  their  loans,  the
Partnership could possibly sell one or both of the participating  loans and some
or  all of the  non-participating  mortgage-backed  securities  pools.  In  this
regard,  a key  consideration  is the  strength of the buying  markets for these
types  of  investments.  Also,  as  part of any  sale  of its two  participating
mortgage  loans,  the  Partnership  would  expect to receive  fair value for its
entitlement  to  participate  in  potential  cash  flow  increases  and  capital
appreciation  from  each  property  as well as for its  entitlement  to  receive
prepayment  penalties if either of the  participating  loans were prepaid by the
property owners. The prepayment penalties would apply if the participating loans
were prepaid  before June 2001 for its Quarter Mill  investment and May 2002 for
its Emerald Cove investment.  As discussed further below, as of the present date
the  amounts of the  prepayment  penalties  which  could be  received on the two
remaining  participating  loans  range  from  6% to 2% of the  outstanding  loan
balances depending on the date of the prepayment.

      The Partnership's non-participating MBS have coupon interest rates ranging
from 7.5% to 9.5%.  Based on current market interest rate levels,  the aggregate
market value of these securities at the present time is above both the aggregate
face value and  amortized  cost,  which  includes any  unamortized  discounts or
premiums.  As of April 30, 1998, the Partnership's  two remaining  participating
loans, which carry coupon interest rates of 8.5% and 8.75%, had estimated market
values  which were  higher  than their face  values due to a variety of factors,
including the participation features.  Increases in market interest rates and/or
deterioration  in general real estate  market  conditions in the near term could
cause the aggregate market value of the participating loans and the portfolio of
non-participating  MBS  investments  to fall below face value  and/or  amortized
cost.  In the event that such  circumstances  were to occur,  management  is not
prohibited  from  selling any security at a loss and may do so if it is believed
that such a sale would be in the best interests of the Partnership.

      As previously reported,  generally low market interest rates have prompted
a high level of refinancing  activity over the past several years,  resulting in
significant prepayments on the Partnership's  non-participating  mortgage-backed
securities.  Such  prepayments  had the  effect of  reducing  the  Partnership's
investment  income and cash flows from  operating  activities and increasing the
outstanding  balance of the  Partnership's  cash  reserves.  Since it was deemed
unlikely  that  there  would be a default  on either  of the  Partnership's  two
remaining  multi-family  participating  loans,  and since the  current  rates of
return available on non-participating  mortgage-backed  security investments did
not warrant reinvestment by the Partnership,  management concluded during fiscal
1997 that it would be in the best  interests  of the  Unitholders  to return the
portion of the  Partnership's  cash  reserves  which  exceeded  expected  future
requirements. Consequently, the Partnership distributed $2,600,000 of its excess
reserves,  or $47.13 per original $1,000 investment,  in a special  distribution
made on March  14,  1997.  Regular  quarterly  distributions  are  comprised  of
investment  income  and  return of  capital  which  results  from the  scheduled
amortization  of mortgage  principal  on all of the debt  securities  as well as
principal   prepayments   from  the   non-participating   GNMA   mortgage-backed
securities.  Such principal  prepayments are unpredictable  and, as noted above,
have been high during recent years but declined during fiscal 1997, resulting in
a reduction in cash flows from  investing  activities.  Based on this decline in
the rate of principal  prepayments and the  expectation  that this decline would
continue  in the future,  the  Partnership  had  reduced  the regular  quarterly
distribution  rate effective for the payment made on June 13, 1997 for the third
quarter of fiscal 1997. The  distribution  rate declined from 8.25% per annum to
6.5%. During fiscal 1998, however,  actual principal prepayment levels have been
higher than  projected.  As a result,  the  Partnership  made a special  capital
distribution  of excess cash  totalling  approximately  $552,000,  or $10.00 per
original  $1,000  investment,  to  the  Limited  Partners  on  March  13,  1998,
concurrent with the regular quarterly  distribution for the period ended January
31,  1998.  Distributions  are expected to continue to be made at a rate of 6.5%
per annum on remaining  invested  capital for the balance of calendar year 1998,
and the  Partnership's  cash reserve levels will be reviewed again in early 1999
to determine whether another special capital distribution could be made in March
1999.

      The Partnership's two remaining  Participating  Insured Mortgage Loans are
secured by the Emerald Cove and Quarter Mill apartment complexes.  The occupancy
level at  Emerald  Cove  averaged  95% for the  quarter  ended  April 30,  1998,
compared  to 96% for the  second  quarter  of  fiscal  1998 and 91% for the same
period in the prior year. As discussed further in the Annual Report,  due to the
increased  competition  during  fiscal  1997  in the  overall  Charlotte,  North
Carolina  market from new rental units,  the use of rental  concessions had been
necessary at Emerald Cove to maintain the property's occupancy levels.  However,
because  the  property's   occupancy  has  increased  during  fiscal  1998,  the
property's leasing team has discontinued  offering rental concessions on renewal
leases.  The property's  rental rates and occupancy levels remain  comparable to
those of directly competitive properties in the local market.  Prepayment of the
Partnership's  Emerald Cove  Participating  Insured Mortgage Loan was restricted
through  March  1997 and then  requires  a  prepayment  penalty  which  declines
ratably,  from 5% to 2%, over a period of four years.  During the quarter  ended
April 30, 1998 the Emerald Cove owner informed the Partnership that the property
was being actively marketed for sale and asked that the Partnership  specify the
terms  upon  which  it  would  accept  prepayment  of  the  participating  loan.
Subsequent to the quarter-end,  the Partnership  formally responded to the owner
that it would accept  prepayment  in accordance  with the existing  terms of the
loan. Although the owner of Emerald Cove has initiated discussions of prepayment
on  several  occasions  over  the  past  several  years,  no  viable  prepayment
transaction has materialized  from such discussions.  As a result,  there are no
assurances  that these most  recent  prepayment  discussions  will result in the
successful consummation of a sale transaction.

      The Quarter Mill  Apartments  continued its strong  operating  performance
during the third quarter of fiscal 1998, with an average occupancy level of 98%,
unchanged from the second quarter of 1998 and the same period in the prior year.
Because the Quarter Mill  Apartments  participates in the Low Income Housing Tax
Credit  Program,  its rental rates are based on the  metropolitan  area's median
family  income,  rather than on market rent levels.  Average rental rates on new
leases  being  signed  are up 3.75%  from one year ago.  A strong  local  rental
market, combined with below market rental rates at Quarter Mill, has resulted in
consistently high occupancy levels at the property. Property operations continue
to generate  small amounts of excess cash flow, a portion of which is payable to
the Partnership as Contingent  Interest.  During fiscal 1998, 1997 and 1996, the
Partnership received approximately $54,000,  $49,000 and $46,000,  respectively,
representing  its 30% share of the surplus  cash,  as defined.  The Quarter Mill
Participating  Insured  Mortgage Loan became open to prepayment in February 1996
with a specified prepayment penalty which declines ratably, from 10% to 2%, over
a period of five years.  To date,  no formal  proposals  to prepay the loan have
been received from the owner of Quarter Mill.

      At April  30,  1998,  the  Partnership  had cash and cash  equivalents  of
approximately $1,224,000. Such amounts will be utilized for distributions to the
Unitholders,   as  discussed   further  above,   and  for  the  working  capital
requirements   of  the   Partnership.   The  source  of  future   liquidity  and
distributions  to the Unitholders is expected to be primarily  through  interest
income and principal  repayments  from the  Partnership's  mortgage  securities,
money-market interest income from invested cash reserves, and to a lesser extent
from  Contingent  Interest from  Participating  Insured  Mortgage  Loans and Net
Project  Residuals from the sale or refinancing of the properties  securing such
investments.

Results of Operations
Three Months Ended April 30, 1998
---------------------------------

      The Partnership reported net income of $343,000 for the three months ended
April 30, 1998, as compared to net income of $418,000 for the same period in the
prior  year.  This  decline in net income for the third  quarter of fiscal  1998
resulted  from a decline in total  revenues  of $46,000 and an increase in total
expenses of $29,000.  The decline in  revenues  can be  attributed  to a $32,000
decrease in interest  income from debt  securities  and a $14,000  reduction  in
money  market  interest  income.  The  decrease  in  interest  income  from debt
securities resulted partly from a decline in the average  outstanding  principal
balances of Participating  Insured Mortgage Loans and  non-participating MBS due
to  scheduled  principal   amortization  on  all  of  the  debt  securities  and
prepayments on the MBS. In addition, an acceleration in the amortization rate of
the net purchase  premiums on the Partnership's  debt securities  contributed to
the reduction in interest income for the current three-month period. The decline
in  money  market  interest  income  resulted  from a  decline  in  the  average
outstanding  balance of the  Partnership's  invested  cash  reserves  due to the
special  distribution  of excess cash reserves in the amount of $552,000 made on
March 13, 1998, as discussed  further  above.  The increase in total expenses is
attributable  to an  increase  in general  and  administrative  expenses  and an
increase in amortization expense.  General and administrative expenses increased
largely due to the timing of certain recurring professional services as compared
to the prior year. Amortization expense increased as a result of an acceleration
in the amortization rate of the Partnership's  deferred  expenses.  Beginning in
fiscal  1998,  the  Partnership  reduced  the  expected  holding  period  of its
remaining  investments,  which resulted in higher non-cash  amortization charges
for the current three-month period.

Nine Months Ended April 30, 1998
--------------------------------

     Net income for the nine months ended April 30, 1998  decreased by $266,000,
when compared to the same period in the prior year, due to a $169,000 decline in
total  revenues and a $97,000  increase in operating  expenses.  The decrease in
revenues can be  attributed  to a $96,000  decline in interest  income from debt
securities and a $73,000 reduction in money market interest income.  The decline
in interest income from debt securities  resulted partly from a reduction in the
average  outstanding  principal  balances of such  investments  due to scheduled
principal amortization on all of the debt securities and prepayments on the MBS.
In  addition,  an  acceleration  in the  amortization  rate of the net  purchase
premiums on the  Partnership's  debt securities  contributed to the reduction in
interest income for the current  nine-month  period. The decline in money market
interest income for the current  nine-month  period is attributable to a decline
in the average outstanding  balance of the Partnership's  invested cash reserves
due to the  special  distributions  of excess  cash  reserves  in the amounts of
$2,600,000 and $552,000 made on March 14, 1997 and March 13, 1998, respectively,
as discussed further above. The increase in total expenses is attributable to an
increase in amortization  expense and an increase in general and  administrative
expenses.   Amortization  expense  increased  by  $69,000  as  a  result  of  an
acceleration in the amortization rate of the Partnership's  deferred expenses in
fiscal 1998, as discussed  further above.  General and  administrative  expenses
increased by $37,000 primarily due to increases in the costs of certain required
professional services for the current nine-month period.



<PAGE>



                                     PART II
                                Other Information



Item 1. through 5.    NONE

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits:        NONE

(b) Reports on Form 8-K:

     No reports on Form 8-K have been filed by the registrant during the quarter
for which this report is filed.



<PAGE>








              PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.


                                SIGNATURES


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


                          PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.



                             By: FIRST INSURED MORTGAGE PARTNERS, INC.
                                 -------------------------------------
                                 Managing General Partner





Date: June 9, 1998            By:   /s/ Walter V. Arnold
                                    --------------------
                                    Walter V. Arnold
                                    Senior Vice President and
                                    Chief Financial Officer