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 APRIL 30, 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
                  April 30, 1999 and July 31, 1998 (Unaudited)
                                 (In thousands)

                                     ASSETS
                                                   April 30       July 31
                                                   --------       -------
Investments in Debt Securities:
   Mortgage-Backed Securities available
      for sale                                     $  3,056       $  4,178
   Participating Insured Mortgage Loans
      available for sale                             18,253         18,447
                                                   --------       --------
                                                     21,309         22,625

Cash and cash equivalents                             1,185          1,702
Interest and other receivables                          146            156
Deferred expenses, net                                  222            354
                                                   --------       --------
                                                   $ 22,862       $ 24,837
                                                   ========       ========


                        LIABILITIES AND PARTNERS' CAPITAL

Accounts payable - affiliates                      $     27       $     27
Accounts payable and accrued expenses                    43             50
Partners' capital                                    22,792         24,760
                                                   --------       --------
                                                   $ 22,862       $ 24,837
                                                   ========       ========


















                             See accompanying notes.


<PAGE>


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

                  STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
     For the three and nine months ended April 30, 1999 and 1998 (Unaudited)
                      (In thousands, except per Unit data)

                                     Three Months Ended      Nine Months Ended
                                         April 30,               April 30,
                                     ------------------      -----------------
                                      1999        1998         1999      1998
                                      ----        ----         ----      ----

Revenues:
   Interest income -
     Debt Securities                $   430     $   465      $ 1,315    $ 1,410
   Interest income -
     Money Market                        21          17           74         58
                                    -------     -------      -------    -------
                                        451         482        1,389      1,468

Expenses:
   Management fees                       47          50          143        152
   General and administrative            61          46          152        158
   Amortization expense                  43          43          132        132
                                    -------     -------      -------    -------
                                        151         139          427        442
                                    -------     -------      -------    -------

Net income                              300         343          962      1,026

Other comprehensive income (loss):
   Unrealized holding losses
    on debt securities                   (2)       (245)        (122)       (77)
                                    -------     -------      -------    -------


Comprehensive income                $   298     $    98      $   840    $   949
                                    =======     =======      =======    =======


Net income per Unit of
  Depositary Receipt                $  0.54     $  0.61      $  1.73    $  1.84
                                    =======     =======      =======    =======

Cash distributions per Unit of
  Depositary Receipt                $  3.35     $  1.88      $  5.07    $  3.65
                                    =======     =======      =======    =======

      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 nine months ended April 30, 1999 and 1998 (Unaudited)
                                 (In thousands)

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

Balance at July 31, 1997                        $   (2)      $ 25,905

Comprehensive income:
    Net income                                      10          1,016
    Net unrealized holding losses
      on debt securities                             -            (77)
                                                ------       --------
                                                    10            939

Cash distributions                                 (12)        (2,014)
                                                ------       --------

Balance at April 30, 1998                       $   (4)      $ 24,830
                                                ======       ========

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

Comprehensive income:
    Net income                                      10            952
    Net unrealized holding losses
      on debt securities                             -           (122)
                                                ------       --------
                                                    10            830

Cash distributions                                 (12)        (2,796)
                                                ------       --------

Balance at April 30, 1999                       $   (6)      $ 22,798
                                                ======       ========











                             See accompanying notes.


<PAGE>


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

                            STATEMENTS OF CASH FLOWS
                For the nine months ended April 30, 1999 and 1998
          Increase (Decrease) in Cash and Cash Equivalents (Unaudited)
                                 (In thousands)

                                                        1999        1998
                                                        ----        ----
Cash flows from operating activities:
  Net income                                          $  962     $ 1,026
  Adjustments to reconcile net income to
   net cash provided by operating activities:
   Amortization expense                                  132         132
   Amortization of discount/premium on debt
     securities                                           46          46
   Changes in assets and liabilities:
     Interest and other receivables                       10           6
     Accounts payable - affiliates                         -          (1)
     Accounts payable and accrued expenses                (7)          1
                                                      ------     -------
      Total adjustments                                  181         184
                                                      ------     -------
      Net cash provided by operating activities        1,143       1,210
                                                      ------     -------

Cash flows from investing activities:
  Principal collections on Mortgage-Backed
    Securities                                         1,080         668
  Principal collections on Participating Insured
    Mortgage Loans                                        68          62
                                                      ------     -------
      Net cash provided by investing activities        1,148         730
                                                      ------     -------

Cash flows from financing activities:
  Distributions to Unitholders and partners           (2,808)     (2,026)
                                                      ------     -------

Net decrease in cash and cash equivalents               (517)        (86)

Cash and cash equivalents, beginning of period         1,702       1,310
                                                      ------     -------

Cash and cash equivalents, end of period              $1,185     $ 1,224
                                                      ======     =======








                             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, 1998. 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, 1999 and July 31, 1998 and revenues and expenses
for each of the three and  nine-month  periods  ended  April 30,  1999 and 1998.
Actual results could differ from the estimates and assumptions used.

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

      At   April   30,   1999  and  July  31,   1998,   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, 1999                         July 31, 1998
                          --------------------------------       ----------------------------------
                          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       $ 1,152      $ 1,069    $ 1,064        $ 1,394        $ 1,294    $ 1,286

    9.0% GNMA Pool           106          100        104            178            174        181

    8.0% GNMA Pool         1,678        1,609      1,663          2,382          2,289      2,376

    7.5% GNMA Pool           120          117        116            224            218        216
                         -------      -------    -------        -------        -------    -------
                         $ 3,056      $ 2,895    $ 2,947        $ 4,178        $ 3,975    $ 4,059
                         =======      =======    =======        =======        =======    =======
</TABLE>


      The Partnership's investments in MBS are carried at fair value as of April
30, 1999 and July 31, 1998. 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.
<PAGE>

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

      Participating   Insured   Mortgage   Loans  secured  by  GNMA   securities
outstanding  at April 30, 1999 and July 31, 1998 are  comprised of the following
(in thousands):
<TABLE>
<CAPTION>


                                                      April 30, 1999                       July 31, 1998
                                                 ----------------------                ----------------------
    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%       $  7,334     $  7,104                 $  7,403    $  7,132
    279119        Emerald Cove       8.75%         10,919       10,522                   11,044      10,576
                                                 --------     --------                 --------    --------
                                                 $ 18,253     $ 17,626                 $ 18,447    $ 17,708
                                                 ========     ========                 ========    ========
</TABLE>

      The Partnership's  investments in Participating Insured Mortgage Loans are
carried at fair value as of April 30,  1999 and July 31,  1998.  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 $53,553 are due through maturity,
on October 15,  2031.  Scheduled  principal  repayments  of  $213,044  have been
received through April 30, 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 $285,223
have been received through April 30, 1999.
<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
$143,000  and  $152,000  for the nine  months  ended  April  30,  1999 and 1998,
respectively.   Included  in  these  two   amounts  is  $24,000   and   $25,000,
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  April 30,  1999 and July 31,  1998  consist  of  $27,000 of
management fees payable to the General Partner and its affiliates.

     Included in general and  administrative  expenses for the nine months ended
April 30,  1999 and 1998 is  $73,000  and  $70,000,  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, 1999 and 1998 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, 1998 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 by the end of calendar year 1999. The continued 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. In addition,
while the Partnership  cannot require either of the owners to prepay their loans
for another two to three years, 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 the  near  term.  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.  Although no assurances can be given,  it is currently  contemplated
that sales or prepayments of the  Partnership's  remaining  investments could be
completed  prior to the end of calendar year 1999. The disposition of all of the
Partnership's  investments  would be  followed  by a formal  liquidation  of the
Partnership.

      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, 1999, 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.  However,  during the first  quarter of
fiscal 1999 a  reduction  in the  liquidity  in the credit  markets  reduced the
premiums  at which  securities  comparable  to the  Partnership's  Participating
Insured Mortgage Loans were trading in the secondary market. 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.  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
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  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. Principal
prepayments through the first half of fiscal 1999 again exceeded projections. As
a result, a special capital distribution totalling approximately  $1,379,000, or
$25 per original $1,000 investment, was made on March 15, 1999 to unitholders of
record as of January 31, 1999, along with the regular quarterly distribution for
the second quarter of fiscal 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 94% for the quarter  ended April 30, 1999,  down
from 96% for the second  quarter of fiscal  1999.  As  discussed  further in the
Annual Report,  due to the increased  competition  from several newly  developed
properties in the local Charlotte,  North Carolina submarket,  the use of rental
concessions  had been  necessary  at Emerald  Cove to  maintain  the  property's
occupancy levels. However,  because the property's occupancy level stabilized in
the mid-90% range, the property's leasing team had discontinued  offering rental
concessions  on both new and  renewal  leases  during the second  half of fiscal
1998.  With the recent drop in occupancy  for the third  quarter of fiscal 1999,
the  leasing  team has  re-introduced  the use of  concessions  in an  effort to
prevent any further  declines.  The property's rental rates and occupancy levels
still compare favorably 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 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 four 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 third quarter of fiscal 1999 with an average  occupancy level of 97%,
compared  to 98% for the prior  quarter.  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 May 1996 with a specified  prepayment penalty which
declines ratably,  from 10% to 2%, from May 1996 through May 2001. During fiscal
1998, 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  proposals  to  prepay  the loan have been
received from the owner of Quarter Mill.

      At April  30,  1999,  the  Partnership  had cash and cash  equivalents  of
approximately $1,185,000. 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.

      As noted above, the Partnership  expects to be liquidated prior to the end
of calendar year 1999.  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.
<PAGE>

Results of Operations
Three Months Ended April 30, 1999
---------------------------------

      The Partnership reported net income of $300,000 for the three months ended
April 30, 1999, as compared to net income of $343,000 for the same period in the
prior year.  This  decrease  in net income for the third  quarter of fiscal 1999
resulted  from a decrease in total  revenues of $31,000 and an increase in total
expenses  of  $12,000.  The  decrease  in  revenues  was the result of a $35,000
decline in interest income from debt  securities,  which was partially offset by
an increase of $4,000 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 increase in money market  interest  income  resulted
from  an  increase  in the  average  outstanding  balance  of the  Partnership's
invested  cash  reserves  compared to the same  period in  the prior  year.  The
increase in total  expenses was the result of a $15,000  increase in general and
administrative  expenses  and a $3,000  reduction  in  management  fee  expense.
General and administrative expenses increased for the current three-month period
primarily due to additional  professional  fees incurred as part of management's
disposition strategy analysis. Management fee expense declined due to a decrease
in the outstanding balances of debt securities upon which such fees are based.

Nine Months Ended April 30, 1999
--------------------------------

     Net income for the nine months  ended April 30, 1999  decreased  by $64,000
when  compared to the same period in the prior year due to a $79,000  decline in
total  revenues,  which was  partially  offset by a  $15,000  decrease  in total
expenses.  The decrease in revenues can be  attributed  to a $95,000  decline in
interest income from debt  securities,  which was partially  offset by a $16,000
increase in money market  interest  income.  The decline in interest income from
debt securities resulted 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. The increase in money market
interest income for the current nine-month period is attributable to an increase
in the average outstanding  balance of the Partnership's  invested cash reserves
compared to the same period in the prior year.  The decline in total expenses is
attributable  to a decrease in management  fee expense of $9,000 and a reduction
in general  and  administrative  expenses  of  $6,000.  Management  fee  expense
declined due to a reduction in the outstanding  balances of debt securities upon
which such fees are based. General and administrative expenses decreased for the
current  nine-month  period  primarily  due to a reduction  in certain  required
professional services.



<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 8, 1999          By:   /s/ Walter V. Arnold
                                    --------------------
                                    Walter V. Arnold
                                    Senior Vice President and
                                    Chief Financial Officer