<PAGE>



             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 QUARTER ENDED OCTOBER 31, 1999

                                    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
                 October 31, 1999 and July 31, 1999 (Unaudited)
                                 (In thousands)

                                     ASSETS
                                                 October 31       July 31
                                                 ----------       -------
Investments in Debt Securities:
   Mortgage-Backed Securities
     available for sale                            $  2,528       $  2,715
   Participating Insured Mortgage Loans
     available for sale                              17,958         17,930
                                                   --------       --------
                                                     20,486         20,645

Cash and cash equivalents                             1,548          1,420
Interest and other receivables                          143            145
Deferred expenses, net                                  133            177
                                                   --------       --------
                                                   $ 22,310       $ 22,387
                                                   ========       ========


                        LIABILITIES AND PARTNERS' CAPITAL

Accounts payable - affiliates                      $     26       $     25
Accounts payable and accrued expenses                    36             39
Partners' capital                                    22,248         22,323
                                                   --------       --------
                                                   $ 22,310       $ 22,387
                                                   ========       ========


















                             See accompanying notes.


<PAGE>


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

                  STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
        For the three months ended October 31, 1999 and 1998 (Unaudited)
                      (In thousands, except per Unit data)

                                                     Three Months Ended
                                                          October 31,
                                                  ------------------------
                                                    1999             1998
                                                    ----             ----

Revenues:
   Interest income - Debt Securities              $   418          $   442
   Interest income - Money Market                      20               26
                                                  -------          -------
                                                      438              468

Expenses:
   Management fees                                     45               49
   General and administrative                          38               43
   Amortization expense                                44               44
                                                  -------          -------
                                                      127              136
                                                  -------          -------

Net income                                            311              332

Other comprehensive income (loss):
   Unrealized holding gains and (losses)
    on debt securities                                 64             (249)
                                                  -------          -------


Comprehensive income                              $   375          $    83
                                                  =======          =======


Net income per Unit of Depositary Receipt         $  0.56          $  0.60
                                                  =======          =======

Cash distributions per Unit of
  Depositary Receipt                              $  0.81          $  0.86
                                                  =======          =======

      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 CHANGES IN PARTNERS' CAPITAL (DEFICIT)
        For the three months ended October 31, 1999 and 1998 (Unaudited)
                                 (In thousands)

                                                            Corporate Limited
                                                  General      Partner and
                                                  Partner      Unitholders
                                                  -------      -----------

Balance at July 31, 1998                          $   (4)      $ 24,764

Comprehensive income:
    Net income                                         3            329
    Net unrealized holding losses
       on debt securities                              -           (249)
                                                  ------       --------
                                                       3             80

Cash distributions                                    (4)          (474)
                                                  ------       --------

Balance at October 31, 1998                       $   (5)      $ 24,370
                                                  ======       ========

Balance at July 31, 1999                          $   (6)      $ 22,329

Comprehensive income:
    Net income                                         3            308
    Net unrealized holding gain
       on debt securities                              -             64
                                                  ------       --------
                                                       3            372

Cash distributions                                    (4)          (446)
                                                  ------       --------

Balance at October 31, 1999                       $   (7)      $ 22,255
                                                  ======       ========











                             See accompanying notes.


<PAGE>


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

                            STATEMENTS OF CASH FLOWS
              For the three months ended October 31, 1999 and 1998
          Increase (Decrease) in Cash and Cash Equivalents (Unaudited)
                                 (In thousands)

                                                        1999        1998
                                                        ----        ----
Cash flows from operating activities:
  Net income                                          $  311       $  332
  Adjustments to reconcile net income to
   net cash provided by operating activities:
   Amortization expense                                   44           44
   Amortization of discount/premium on debt
     securities                                           16           19
   Changes in assets and liabilities:
     Interest and other receivables                        2            3
     Accounts payable - affiliates                         1            -
     Accounts payable and accrued expenses                (3)         (10)
                                                      ------       ------
      Total adjustments                                   60           56
                                                      ------       ------
      Net cash provided by operating activities          371          388
                                                      ------       ------

Cash flows from investing activities:
  Principal collections on Mortgage-Backed
     Securities                                          183          326
  Principal collections on Participating Insured
    Mortgage Loans                                        24           22
                                                      ------       ------
      Net cash provided by investing activities          207          348
                                                      ------       ------

Cash flows from financing activities:
  Distributions to Unitholders and partners             (450)        (478)
                                                      ------       ------

Net increase in cash and cash equivalents                128          258

Cash and cash equivalents, beginning of period         1,420        1,702
                                                      ------       ------
Cash and cash equivalents, end of period              $1,548       $1,960
                                                      ======       ======








                             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, 1999. 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 October  31,  1999 and July 31,  1999 and  revenues  and
expenses for each of the  three-month  periods  ended October 31, 1999 and 1998.
Actual results could differ from the estimates and assumptions used.

     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 in the near term. The current strength of the national real
estate  market  and the  favorable  interest  rate  environment  for the sale or
refinancing  of  multi-family  apartment  properties  make  the  prospect  of  a
prepayment  transaction a potentially attractive option for the property owners.
During fiscal year 1999, the Partnership  continued to have discussions with the
owners of the Emerald Cove Apartments and the Quarter Mill Apartments  about the
possibility  of a prepayment of their loans before the end of calendar year 1999
or in early calendar year 2000.  While, to date, the discussions with the owners
have not led to an agreement for the prepayment of the participating  loans, the
Partnership  continues to have discussions with the owner of Emerald Cove. While
the Partnership cannot require either of the owners to prepay their loans in the
near term, the Partnership  could possibly sell one or both of the participating
loans and some or all of the non-participating mortgage-backed security pools on
the secondary market. 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.  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  4% to 2% of  the  outstanding  loan  balances
depending on the date of the prepayment. 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.  With respect to the
Quarter Mill  investment,  subsequent  to the quarter ended October 31, 1999 the
Partnership  engaged the services of a nationally  recognized mortgage brokerage
firm to market the participating loan for sale. Initial marketing materials have
been  distributed  to over 100  buyers  of these  types  of  investments  in the
secondary market.  All offers are due by January 15, 2000 and a sale is expected
to close shortly  thereafter  if the offers equal or exceed a specified  minimum
price.  Regardless of whether the Partnership decides to pursue secondary market
sales  of  its  debt  securities  or  chooses  to  pursue   prepayments  of  the
participating  loans,  a liquidation  of the  Partnership  will not be completed
until the first quarter of calendar  year 2000 at the earliest.  There can be no
assurances,  however,  that the  disposition of the remaining  investments and a
liquidation of the Partnership will be completed within this time frame.

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

      At  October   31,  1999  and  July  31,   1999,   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):
<PAGE>

<TABLE>
<CAPTION>

                                     October 31, 1999                        July 31, 1999
                         --------------------------------        ---------------------------------
                         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       $   965     $   900    $   897          $ 1,056      $   986    $   982

    9.0% GNMA Pool            70          66         69               78           76         79

    8.0% GNMA Pool         1,386       1,356      1,388            1,469        1,437      1,480

    7.5% GNMA Pool           107         106        105              112          112        111
                         -------     -------    -------          -------      -------    -------
                         $ 2,528     $ 2,428    $ 2,459          $ 2,715      $ 2,611    $ 2,652
                         =======     =======    =======          =======      =======    =======
</TABLE>

      The  Partnership's  investments  in MBS are  carried  at fair  value as of
October  31,  1999 and July 31,  1999.  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 October 31, 1999 and July 31, 1999 are comprised of the following
(in thousands):
<TABLE>
<CAPTION>

                                                 October 31, 1999                    July 31, 1999
                                             -----------------------           -------------------------
    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%      $  7,226    $  7,084              $  7,236      $  7,094
    279119          Emerald Cove   8.75%        10,732      10,485                10,694        10,504
                                              --------    --------              --------      --------
                                              $ 17,958    $ 17,569              $ 17,930      $ 17,598
                                              ========    ========              ========      ========
</TABLE>


      The Partnership's  investments in Participating Insured Mortgage Loans are
carried at fair value as of October 31, 1999 and July 31, 1999.  Investments  in
Participating  Insured  Mortgage  Loans,  for which quoted market prices are not
available, are valued by a 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:
<PAGE>

      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 $53,553 are due through maturity,
on October 15,  2031.  Scheduled  principal  repayments  of  $232,820  have been
received through October 31, 1999.

      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  $81,141 are due
through maturity, on August 15, 2031. Scheduled principal repayments of $313,278
have been received through October 31, 1999.

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 $45,000
and $49,000 for the three months ended October 31, 1999 and 1998,  respectively.
Included in these two amounts is $7,000 and $9,000,  respectively,  representing
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 both October
31, 1999 and July 31, 1999  consist of  management  fees  payable to the General
Partner and its affiliates.

      Included in general and administrative expenses for the three months ended
October  31, 1999 and 1998 is $25,000 and  $24,000,  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 the three-month
period  ended  October  31,  1999 and 1998 is $1,000 and  $2,000,  respectively,
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, 1999 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 in the near term. The current strength of the national real
estate  market  and the  favorable  interest  rate  environment  for the sale or
refinancing  of  multi-family  apartment  properties  make  the  prospect  of  a
prepayment  transaction a potentially attractive option for the property owners.
During fiscal year 1999, the Partnership  continued to have discussions with the
owners of the Emerald Cove Apartments and the Quarter Mill Apartments  about the
possibility  of a prepayment of their loans before the end of calendar year 1999
or in early calendar year 2000.  While, to date, the discussions with the owners
have not led to an agreement for the prepayment of the participating  loans, the
Partnership  continues to have discussions with the owner of Emerald Cove. While
the Partnership cannot require either of the owners to prepay their loans in the
near term, the Partnership  could possibly sell one or both of the participating
loans and some or all of the non-participating mortgage-backed security pools on
the secondary market. 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.  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  4% to 2% of  the  outstanding  loan  balances
depending on the date of the prepayment. 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.  With respect to the
Quarter Mill  investment,  subsequent  to the quarter ended October 31, 1999 the
Partnership  engaged the services of a nationally  recognized mortgage brokerage
firm to market the participating loan for sale. Initial marketing materials have
been  distributed  to over 100  buyers  of these  types  of  investments  in the
secondary market.  All offers are due by January 15, 2000 and a sale is expected
to close shortly  thereafter  if the offers equal or exceed a specified  minimum
price.  Regardless of whether the Partnership decides to pursue secondary market
sales  of  its  debt  securities  or  chooses  to  pursue   prepayments  of  the
participating  loans,  a liquidation  of the  Partnership  will not be completed
until the first quarter of calendar  year 2000 at the earliest.  There can be no
assurances,  however,  that the  disposition of the remaining  investments and a
liquidation of the Partnership will be completed within this time frame.

      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 slightly above both the
aggregate  face  value  and  amortized  cost,  which  includes  any  unamortized
discounts or premiums.  As of October 31, 1999, the  Partnership's two remaining
Participating  Insured Mortgage Loans, which carry coupon interest rates of 8.5%
and 8.75%, also had estimated market values slightly above their face values due
to a variety of factors,  including  the  participation  features.  Increases in
market  interest rates reduced the fair market values of both the  participating
loans and the  non-participating  MBS during fiscal 1999.  Further  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  Insured Mortgage 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.  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,  had 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 and fiscal 1999,  however,  actual  principal
prepayment  levels were higher than  projected  resulting in an increase in cash
flows from investing  activities.  As a result,  the Partnership  made a special
capital distribution of excess cash totaling  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.  During  fiscal 1999 a special  distribution  of $25.00 per  original
$1,000  investment  was paid to unit  holders of record as of January 31,  1999.
This special capital distribution, which was made on March 15, 1999 and totalled
approximately   $1,379,000,   represented  Partnership  reserves  that  exceeded
expected future requirements.  Distributions are expected to continue to be made
at a rate of 6.5% per annum on remaining invested capital throughout fiscal year
2000.  Since  the  Partnership  expects  to be  liquidated  in  the  near  term,
management  does  not  currently  plan  to  make  any  further  special  capital
distributions of excess cash reserves until the  Partnership's  investments have
been sold or prepaid.

      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  90% for the quarter  ended  October 31,  1999,
unchanged  from the quarter ended July 31, 1999.  This average  occupancy  level
still compares  favorably to the average for the  properties  which compete with
Emerald Cove in the local market. When necessary, the property's leasing team is
matching  the rental  concessions  offered by competing  apartment  communities.
These rental  concessions  range from $600 to $800,  depending on the  apartment
unit  type,  for  those  tenants  signing a one year  lease.  There are four new
apartment  communities with a total of 1,246 units under construction in Emerald
Cove's  overall  market.  While  these  properties  are not  expected to compete
directly,  the  property's  leasing  team  continues  to monitor  their  leasing
progress.  Prepayment of the Partnership's  Emerald Cove  Participating  Insured
Mortgage Loan was  restricted  through March 1998 and then requires a prepayment
penalty  which  declines  ratably,  from 5% to 2%, from April 1998 through April
2002.  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. During the quarter ended July 31, 1998, the owner of the
Emerald Cove Apartments approached the Partnership regarding a prepayment of the
participating  mortgage  loan as part of a potential  sale of the  Emerald  Cove
property.  However, during the first quarter of fiscal 1999, the Partnership was
informed that the potential  buyer and the owner were not able to agree on final
terms and that a sale would not occur. As previously reported,  the owner of the
Emerald Cove  Apartments  has  initiated  discussions  of  prepayment on several
occasions over the past five years, but none of those  discussions have resulted
in a prepayment  transaction.  As a result,  as noted above,  the Partnership is
presently  reviewing other potential  disposition  options for its Participating
Insured Mortgage Loan investments.

      The Quarter Mill  Apartments  continued its strong  operating  performance
during the quarter ended October 31, 1999,  with an average  occupancy  level of
98%,  which  compared  with 97% for the  quarter  ended July 31,  1999.  Because
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.  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 1999, 1998 and 1997, the
Partnership received approximately $27,000,  $54,000 and $49,000,  respectively,
representing its 30% share of the surplus cash, as defined.  Construction of 484
new apartment  units were completed in the  property's  local market area during
the past year and 236 new apartment  units are under  construction.  While these
property are not expected to compete directly,  the property's  leasing teams is
closely  monitoring  their  leasing  progress.  The Quarter  Mill  Participating
Insured  Mortgage  Loan became open to  prepayment  in May 1996 with a specified
prepayment penalty which declines ratably, from 10% to 2%, from May 1996 through
May 2001.  During fiscal 1998 and 1999, the Partnership and the owner of Quarter
Mill engaged in very preliminary  discussions  concerning a potential prepayment
of the Participating Insured Mortgage Loan. However, to date no formal proposals
to prepay the loan have been received from the owner of Quarter Mill.
<PAGE>

      At October 31, 1999,  the  Partnership  had cash and cash  equivalents  of
approximately $1,548,000. Such amounts will be utilized for distributions to the
Unitholders 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.  As noted above,  the
Partnership expects to be liquidated in the near term. Notwithstanding this, the
Partnership  believes  that  it has  made  all  necessary  modifications  to its
existing  systems  to make them year 2000  compliant  and does not  expect  that
additional costs associated with year 2000 compliance,  if any, will be material
to the Partnership's results of operations or financial position.

Results of Operations
Three Months Ended October 31, 1999
-----------------------------------

      The Partnership reported net income of $311,000 for the three months ended
October 31,  1999,  as compared to net income of $332,000 for the same period in
the prior year. This decrease in net income for the first quarter of fiscal 2000
resulted from a decrease in total revenues of $30,000 which was partially offset
by a decrease in total  expenses  of $9,000.  The  decrease in revenues  was the
result of a $24,000  decline  in  interest  income  from debt  securities  and a
decrease of $6,000 in money  market  interest  income.  The decrease in interest
income from debt securities resulted from a reduction 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. The decrease in money market  interest  income  resulted
from a decrease in the average outstanding balance of the Partnership's invested
cash  reserves  compared to the same period in the prior year as a result of the
special  distribution  of  excess  reserves  which  was made in March  1999,  as
discussed  further  above.  The  decrease in total  expenses was the result of a
$5,000 decline in general and administrative  expenses and a $4,000 reduction in
management fee expense.  General and  administrative  expenses decreased for the
current  three-month  period  primarily  due to a reduction in certain  required
professional services.  Management fee expense declined due to a decrease in the
outstanding balances of the debt securities upon which such fees are based.




<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:   December 10, 1999     By: /s/ Walter V. Arnold
                                  --------------------
                                  Walter V. Arnold
                                  Senior Vice President and
                                  Chief Financial Officer