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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMISSION
                             Washington, D.C. 20549

                                   ----------
                                   FORM 10-Q

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

                       FOR THE QUARTER ENDED JUNE 30, 1998


                                   ----------

                         Commission File Number 1-14373

                           INSIGNIA/ESG HOLDINGS, INC.
             (Exact Name of Registrant as Specified in Its Charter)


    Delaware                                            56-2084290
 (State of Incorporation)                 (I.R.S. Employer Identification No.)


  200 Park Avenue, New York, New York                     10166
(Address of Principal Executive Offices)               (Zip Code)


                                 (212) 984-8000
              (Registrant's Telephone Number, Including Area Code)


                                   ----------

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 No X .


At September 15, 1998,  the  Registrant  had  21,395,718  shares of Common Stock
outstanding.

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<PAGE>


                           INSIGNIA/ESG HOLDINGS, INC.

                                    FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 1998


                                      INDEX


                                                                        Page
PART I - FINANCIAL INFORMATION


      Item 1.  Combined Financial Statements (unaudited)................

           Condensed Combined Statements of Income for the
              Three and Six Months Ended June, 30, 1998 and 1997 ......   2

           Condensed Combined Balance Sheets
               as of June 30, 1998 and December 31, 1997...............   3

           Condensed Combined Statements of Cash Flows
               for the Six Months Ended June 30, 1998 and 1997.........   4


           Notes to Condensed Combined Financial Statements............  5-10

Item 2.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations...............  11-14

PART II - OTHER INFORMATION

      Item 1.  Legal Proceedings......................................... 15

      Item 6.  Exhibits and Reports on Form 8-K.......................... 15

SIGNATURES  ............................................................. 16


<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

a)   Income Statement

                           INSIGNIA/ESG HOLDINGS, INC.
                     CONDENSED COMBINED STATEMENTS OF INCOME
                             (Thousands of Dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                        Three Months Ended    Six Months Ended
                                               June 30,            June 30,
                                          1998       1997      1998       1997
Revenues
<S>                                     <C>        <C>       <C>        <C>
   Real estate services                 $124,128   $59,814   $226,639   $103,974
   Interest                                  783       130      1,065        130
   Other                                      87        --         95        --
                                         124,998    59,944    227,799    104,104

Costs and expenses
   Real estate services                  110,280    51,169    200,310     89,038
   Overhead allocations from Insignia      1,782     1,650      3,528      2,943
   Interest                                  324        --        706         --
   Depreciation and amortization           5,739     3,855     10,923      7,123
                                         118,125    56,674    215,467     99,104

                                           6,873     3,270     12,332      5,000

Equity earnings (loss)                      (382)      100       (858)       157
Minority interests                           113        --        146         --

Income before income taxes                 6,604     3,370     11,620      5,157

   Provision for income taxes              2,972     1,347      5,229      2,062

Net income                              $  3,632  $  2,023   $  6,391   $  3,095

<FN>









See Notes to Condensed Combined Financial Statements.
</FN>
</TABLE>

<PAGE>

b) Balance Sheet


                           INSIGNIA/ESG HOLDINGS, INC.
                        CONDENSED COMBINED BALANCE SHEETS
                             (Thousands of Dollars)

<TABLE>
<CAPTION>
                                               June 30,         December 31,
                                                  1998             1997
                                             (Unaudited)           (Note)
Assets

<S>                                            <C>               <C>     
   Cash and cash equivalents                   $ 21,470          $  9,250
   Receivables                                  112,331            89,662
   Mortgage loans held for sale                  14,287            11,991
   Real estate interests                         40,142            19,454
   Property and equipment                        16,364            11,235
   Property management contracts                 44,506            48,614
   Costs in excess of net assets of 
     acquired businesses                        225,555           138,019
   Other assets                                  11,281             6,269
     Total assets                              $485,936          $334,494

Liabilities and Investment and Net 
Advances from Insignia
   Liabilities:
     Accounts payable                          $ 12,723          $  9,673
     Commissions payable                         54,467            51,285
     Accrued and sundry liabilities              56,400            43,811
     Notes payable                               32,427            20,891
                                                156,017           125,660

Minority interests                                  268               390

Investment and net advances from
Insignia                                        329,651           208,444
                                                -------           -------
     Total liabilities and investment 
     and net advances from Insignia            $485,936          $334,494
                                               ========          ========

<FN>




NOTE:The Balance  Sheet at December  31, 1997 has been  derived from the audited
     financial  statements at that date but does not include all the information
     and footnotes  required by generally  accepted  accounting  principles  for
     complete financial statements.



See Notes to Condensed Combined Financial Statements.
</FN>
</TABLE>

<PAGE>

c)   Statement of Cash Flows

                           INSIGNIA/ESG HOLDINGS, INC.
                   CONDENSED COMBINED STATEMENTS OF CASH FLOWS
                             (Thousands of Dollars)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                         Six Months Ended
                                                               June 30,
                                                        1998             1997
Operating Activities
<S>                                                  <C>               <C>                                      
   Net income                                        $  6,391          $ 3,095
   Adjustments to reconcile net income 
     to net cash
   Provided by operations:
     Depreciation and amortization                     10,923            7,123
     Equity loss (earnings)                               858             (157)
     Minority interests                                  (146)              --
     Foreign currency translation                           9               --
     Changes in operating assets and
     liabilities:
       Receivables                                       (254)          (9,653)
       Other assets                                    (2,611)          (1,968)
       Accounts payable and accrued
          expenses                                     (8,934)              67
       Commissions payable                                516            8,201
                                                          361            3,613
   Net cash provided by operating 
     activities                                         6,752            6,708

Investing activities
   Net additions to property and equipment             (5,258)          (2,092)
   Payments made for acquisition of businesses        (51,600)          (6,941)
   Net increase in mortgage loans held for sale        (2,296)              --
   Proceeds from Balcor property dispositions             196            1,160
   Investments in real estate                         (21,282)          (1,984)
   Distributions from real estate investments             587            1,472
   Advances made under note agreements                 (2,080)          (2,265)
   Collections on notes receivable                      1,262              752
     Net cash used in investing activities            (80,471)         ( 9,898)

Financing activities
   Payments on notes payable                             (662)              --
   Proceeds from notes payable                          1,660               --
  Investment and net advances from Insignia            84,941            8,930
     Net cash provided by financing activities         85,939            8,930
Increase in cash and cash equivalents                  12,220            5,740
Cash and cash equivalents at beginning of period        9,250               44
Cash and cash equivalents at end of period            $21,470         $  5,784
<FN>







See Notes to Condensed Combined Financial Statements.
</FN>
</TABLE>
<PAGE>

          NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)
          ------------------------------------------------------------

1.   Merger and Distribution

     On March 17, 1998, Insignia Financial Group, Inc. ("Insignia") entered into
     an Agreement and Plan of Merger (as subsequently amended and restated as of
     May 26,  1998,  the  ("Merger  Agreement") with  Apartment  Investment  and
     Management Company, a Maryland corporation ("AIMCO"), and AIMCO Properties,
     L.P., a Delaware  limited  partnership,  pursuant to which the Company will
     merge with and into AIMCO,  with AIMCO as the survivor (the "Merger").  The
     Merger was approved by the  stockholders  of Insignia on September 14, 1998
     at a Special Meeting of Stockholders.

     Prior to the  Merger,  Insignia  will spin off  certain  of its  businesses
     through a pro rata distribution (the "Distribution") to its stockholders of
     all of the outstanding  Common Stock,  par value $.01 per share  ("Holdings
     Common Stock"), of Insignia/ESG Holdings,  Inc., a Delaware corporation and
     a wholly owned subsidiary of Insignia  ("Holdings").  Holdings  consists of
     Insignia/ESG,  Inc.  ("Insignia/ESG"),  Holdings'  commercial  real  estate
     services  unit,  throughout  the U.S.,  and  including  Richard Ellis Group
     Limited  ("Richard  Ellis")  in the  United  Kingdom,  Insignia  RE GmbH in
     Germany, and the 60% owned  Insignia/CAGISA in Italy;  Insignia Residential
     Group,  Inc.,  a New York  based  cooperative  and  condominium  management
     company; Realty One, Inc., a full service residential real estate brokerage
     firm   headquartered   in  Cleveland,   Ohio;  and  other  select  holdings
     (collectively, the "Holdings Businesses").  Following the Merger, Holdings"
     will change its name to "Insignia Financial Group, Inc."

     Most of Insignia's existing liabilities, other than those directly relating
     to the Holdings Businesses, remain with Insignia post Distribution (subject
     to certain guarantees and pledges of Holdings and its subsidiaries  pending
     the completion of the Merger or refinancing thereof by Insignia).  Assuming
     the Merger is consummated,  those  liabilities will be assumed by AIMCO and
     Holdings will be released from all  guarantees,  liens and pledges in favor
     of Insignia's revolving credit facility.

     Insignia  will  effect  the  Distribution  of the  Holdings  Businesses  by
     distributing to each record holder of Insignia Common Stock as of September
     15, 1998 (the "Distribution  Record Date")  certificates  representing that
     number of whole shares of Holdings  Common Stock equal to two-thirds of the
     number  of shares of  Insignia  Common  Stock  held by such  holder.  It is
     currently  anticipated that the Distribution  will be effected on September
     21, 1998.  The Holdings  Common Stock has been  approved for listing on the
     NYSE under the symbol "IEG."

     In  connection  with the  Merger,  Holdings  will assume  certain  existing
     options and warrants to purchase  shares of Insignia  Common  Stock.  It is
     estimated that following the  distribution,  such options and warrants will
     represent  the  right to  purchase  approximately  3.86  million  shares of
     Holdings Common Stock. The precise number of shares  underlying  certain of
     such options and warrants  and the exercise  prices  thereof will depend in
     part upon the fair market  value of Holdings  Common  Stock  following  the
     Distribution,  and thus is  indeterminable  at this time.  Such options and
     warrants are in addition to the approximately 1,100,000 options to purchase
     Holdings Common Stock granted under the Holdings 1998 Stock Incentive Plan.

2.   Business of Holdings

     The Holdings  Businesses  comprise a fully  integrated real estate services
     company with operations  throughout the United States,  the United Kingdom,
     Italy and Germany.  Holdings provides property management,  leasing, tenant
     representation,  investment  sales,  asset management,  investor  services,
     consulting,  brokerage,  development  and  investment  banking  services to
     owners and users of real  estate.  In addition,  Holdings  has  substantial
     ownership of real estate,  primarily  investments in partnerships,  through
     co-investments   with   institutional   partners  and  property   held  for
     development.

3.  Basis of Presentation

     These financial statements present the combined financial position, results
     of operations  and cash flows of the Insignia  entities to be spun-off into
     Holdings as if Holdings were a separate  entity for all periods  presented.
     Insignia's  historical  cost  bases in the assets  and  liabilities  of the
     combined  entities have been reflected in these financial  statements.  The
     financial  information  in these  financial  statements is not  necessarily
     indicative of results that would have occurred had the Holdings  Businesses
     been a separate  stand-alone  entity  during the  periods  presented  or of
     future  results of Holdings.  Changes in  Investment  and Net Advances from
     Insignia represent the net income or loss of the combined entities plus the
     net change in cash transferred  between the combined  entities and Insignia
     and certain non-cash items.

     The Holdings  Businesses have utilized  Insignia's  centralized systems for
     cash management,  payroll,  employee  benefit plans,  insurance and various
     administrative  services.  As a result,  substantially all cash received by
     these  entities was deposited in and  commingled  with  Insignia's  general
     corporate  funds.  Similarly,   real  estate  services  and  administrative
     expenses,  capital expenditures and other cash requirements of the Holdings
     Businesses were paid by Insignia and charged directly or allocated to these
     entities.  The real estate  services  and  administrative  expenses,  which
     included, among other things,  investment banking,  information technology,
     legal,  finance,  accounting,  and facilities,  were allocated to Holdings.
     These allocations were  approximately $3.5 million and $2.9 million for the
     six months of 1998 and 1997, respectively.  The allocations were based upon
     detailed  analysis of the  operations of Insignia  using  various  methods,
     including   acquisition   activities,   employee  headcount  and  estimated
     management  time  devoted to the  operations  of the  Holdings  Businesses.
     Certain  assets and  liabilities  related to the operations of the Holdings
     Businesses are managed and  controlled by Insignia on a centralized  basis.
     Such assets and  liabilities  have been  allocated to Holdings based on the
     use of, or interest  in, those  assets and  liabilities.  In the opinion of
     management, the methods for allocating expenses, assets and liabilities are
     believed to be reasonable.

     The  accompanying  financial  statements of Holdings reflect periods during
     which its businesses operated as wholly-owned  subsidiaries or divisions of
     Insignia, and therefore,  did not have outstanding shares of capital stock.
     As such,  actual  earnings  per share  data is not  considered  to  provide
     meaningful information about the results of operations of Holdings.

4.  Pro Forma Earnings Per Share

     Pro forma  earnings per share data is presented  for the six month  periods
     ended June 30, 1998 and 1997,  as  Holdings  was not  publicly  held during
     these periods.  These per share amounts have been  determined  based on the
     weighted  average common shares of Insignia Common Stock,  effected for the
     two-thirds Distribution. Assumed conversions represent options and warrants
     to be assumed by  Holdings  based on the market  value of  Insignia  Common
     Stock for the periods presented,  effected for the two-thirds Distribution.
     These pro forma results reflect the  consummation of the  Distribution  and
     accordingly do not include the pro forma operations of acquired businesses.
     The  results  may not be  indicative  of the actual  results  that may have
     occurred if Holdings  had been  operating  on a  stand-alone  basis for the
     periods presented.  
<TABLE>
<CAPTION>

                                                       Six Months Ended 
                                                            June 30,
                                                    1998              1997 
                                                 (Thousands,except share data)
     Basic  
<S>                                               <C>                <C>      
     Average common shares outstanding             20,874             19,769 
     Assumed conversions                               --                 -- 
     Total                                         20,874             19,769

     Net income                                   $ 6,391            $ 3,095
                                                  -------            -------
     Per share amounts - basic                    $   .31            $   .16
                                                   ======             ======

     Diluted
     Average common shares outstanding             20,874             19,769
     Assumed conversions                            1,142                729
                                                    -----                ---
     Total                                         22,016             20,498
                                                   ======             ======

     Net income                                   $ 6,391            $ 3,095
                                                  -------            -------
     Per share amounts - diluted                  $   .29            $   .15
                                                   ======             ======
</TABLE>


5.   Reclassifications

     Certain  amounts  have  been  reclassified  to  conform  with  the  current
     presentation.  These reclassifications have no effect on net income for any
     period presented.

6.   Interim Financial Information

     The accompanying  unaudited  condensed combined  financial  statements have
     been prepared in accordance with generally accepted  accounting  principles
     for interim  financial  information and with the  instructions to Form 10-Q
     and Article 10 of Regulation S-X.  Accordingly,  they do not include all of
     the information  and footnotes  required by generally  accepted  accounting
     principles for complete financial statements. In the opinion of management,
     all  adjustments  (consisting  of  normal  recurring  accruals)  considered
     necessary for a fair presentation have been included. Operating results for
     the three  and six  month  periods  end June 30,  1998 are not  necessarily
     indicative of the results that may be expected for the year ended  December
     31,  1998.  For  further  information,  refer  to  the  combined  financial
     statements  and  footnotes  thereto  included in the exhibits to Form 10 of
     Holdings filed on August 5, 1998.

7.   Financial Accounting Standards

     In 1997, the Financial Accounting Standards Board issued Statement No. 130,
     Reporting Comprehensive Income ("Statement 130"). Statement 130 establishes
     new rules for the  reporting  and display of  comprehensive  income and its
     components.   Statement  130  requires   unrealized   gains  or  losses  on
     available-for-sale securities and foreign currency translation adjustments,
     reported  separately  in  shareholders'  equity,  to be  included  in other
     comprehensive income. Holdings adopted Statement 130 as of January 1, 1998.
     The  impact of this  adoption  on net income  and  shareholders'  equity of
     Holdings for all periods presented was immaterial.

     In 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
     Financial  Accounting  Standards No. 131,  Disclosures about Segments of an
     Enterprise and Related  Information  ("Statement  131"), which is effective
     for years  beginning  after  December 15, 1997.  Statement 131  establishes
     standards for the way that public business  enterprises  report information
     about operating  segments in annual financial  statements and requires that
     those enterprises  report selected  information about operating segments in
     interim  financial  reports.  It also  establishes  standards  for  related
     disclosures  about  products  and  services,  geographic  areas,  and major
     customers.  Statement 131 is effective for financial  statements for fiscal
     years beginning after December 15, 1997, and therefore  Holdings will adopt
     the new requirements  retroactively  in 1998.  Management has not completed
     its review of Statement 131, but does not  anticipate  that the adoption of
     this  statement  will have a  significant  effect on how  Holdings  reports
     segment  disclosures.   Holdings  currently  operates  in  principally  two
     business segments, commercial and residential services.

     In 1998, the Accounting  Standards  Executive Committee issued Statement of
     Position 98-5,  Reporting on the Costs of Start-Up Activities ("SOP 98-5"),
     which is effective  for  financial  statements  for fiscal years  beginning
     after December 15, 1998. SOP 98-5 requires costs of start-up activities and
     organization costs to be expensed as incurred.  Initial  application should
     be reported as the  cumulative  effect of a change in accounting  principle
     and  expensed  in the first  quarter in the year of  adoption.  At June 30,
     1998,  Holdings had no amounts  capitalized  as  organizational  costs that
     would be affected by the requirements of SOP 98-5.

8.   The following is a summary of Holdings'  material  contingencies as of June
     30, 1998:

     On  March  24,  1998,  certain  persons  claiming  to own  limited  partner
     interests in certain  limited  partnerships  whose  general  partners  (the
     "General Partners") are affiliates of Insignia (the "Partnerships") filed a
     purported class and derivative  action in California  Superior Court in the
     County of San Mateo against Insignia, the General Partners,  AIMCO, certain
     persons  and  entities  who  purportedly  formerly  controlled  the General
     Partners,  and additional  entities  affiliated  with  individuals  who are
     officers,  directors  and/or  principals of several of the defendants.  The
     complaint contains allegations that, among other things, (i) the defendants
     breached their fiduciary duties to the plaintiffs by selling or agreeing to
     sell their "fiduciary positions" as stockholders, officers and directors of
     the General  Partners for a profit and  retaining  said profit  rather than
     distributing  it to the  plaintiffs;  (ii) the  defendants  breached  their
     fiduciary duties by mismanaging the Partnerships and  misappropriating  the
     assets  of the  Partnerships  by (a)  manipulating  the  operations  of the
     Partnerships to depress the trading price of limited partnership units (the
     "Units") of the Partnerships;  (b) coercing and fraudulently  inducing unit
     holders to sell Units to certain of the defendants at depressed prices; and
     (c) using the voting  control  obtained by  purchasing  Units at  depressed
     prices to entrench certain of the defendants' positions of control over the
     Partnerships;  and (iii) the defendants  breached their fiduciary duties to
     the  plaintiffs by (a) selling assets of the  Partnerships  such as mailing
     lists of unit holders;  and (b) causing the General  Partners to enter into
     exclusive  arrangements with their affiliates to sell goods and services to
     the partnerships,  the unit holders and tenants of Partnership  properties.
     The  complaint  also  alleges  that the  foregoing  allegations  constitute
     violations of various  California  securities,  corporate  and  partnership
     statutes,  as well as conversion and common law fraud.  The complaint seeks
     unspecified  compensatory and punitive damages,  an injunction blocking the
     sale of  control  of the  General  Partners  to  AIMCO  and a  court  order
     directing  the  defendants  to  discharge  their  fiduciary  duties  to the
     plaintiffs.  On June 25, 1998,  Insignia,  the General Partners and certain
     other defendants served a demurrer and a motion to strike the complaint. In
     lieu of responding to defendants' demurrer and motion,  plaintiffs filed an
     amended  complaint.  Insignia  believes  the suit to be  without  merit and
     intends to defend the suit vigorously.

     In connection with the Merger Agreement, Holdings and AIMCO entered into an
     Indemnification Agreement. The Indemnification Agreement provides generally
     that following consummation of the Merger, Holdings will indemnify and hold
     harmless  AIMCO  from and  against  all  losses in  excess of $9.1  million
     resulting from (i) breaches of representations,  warranties or covenants of
     Insignia or Holdings in the Merger  Agreement,  (ii) actions taken by or on
     behalf  of  Insignia  prior to  consummation  of the  Merger  and (iii) the
     Distribution.  Holdings is also  required to  indemnify  AIMCO  against all
     losses (without regard to any dollar value  limitation)  resulting from (a)
     amounts paid or payable to employees  of Insignia  actually  paid by AIMCO,
     other  than  those  employees  AIMCO has  agreed to  retain  following  the
     consummation  of the Merger,  (b)  obligations  to third parties for goods,
     services,  taxes or indebtedness  incurred prior to the consummation of the
     Merger,  other than as agreed to by AIMCO or included in the  approximately
     $458  million  of   indebtedness   and  liabilities  of  Insignia  and  its
     subsidiaries  which  will  be  assumed  by  AIMCO  in the  Merger,  and (c)
     Insignia's ownership and operation of Holdings and the Holdings Businesses.

     The Indemnification  Agreement also provides that following consummation of
     the Merger, AIMCO will indemnify and hold harmless Holdings from all losses
     that arise out of the operation of the business of Insignia  being acquired
     by AIMCO following  consummation of the Merger and for all losses in excess
     of $9.1  million  arising  from breach of any  representation,  warranty or
     covenant of AIMCO in the Merger Agreement.

     In addition,  Holdings will  indemnify  AIMCO for taxes  resulting from the
     consummation of the Distribution to the extent that such taxes arise from a
     gain  realized on that portion of the fair market value of Holdings  Common
     Stock at the time of the Distribution which is greater than a specified per
     share amount to be determined prior to the Distribution.

     Holdings and certain subsidiaries are defendants in lawsuits arising in the
     ordinary  course of business.  Such lawsuits are primarily  insured  claims
     arising from accidents at managed properties. Claims may demand substantial
     compensatory and punitive damages.

     Management believes that the aforementioned  contingencies will be resolved
     without material loss to Holdings or its subsidiaries.

9.  Acquisitions

     Richard Ellis Group Limited

     In February 1998,  the  shareholders  of Richard Ellis accepted  Insignia's
     offer to acquire  100% of the stock of Richard  Ellis.  Richard  Ellis is a
     real estate services and investment firm located in the United Kingdom. The
     total  purchase  price was  approximately  $82.9  million,  of which  $14.7
     million is  contingent  on the future  performance  of Richard  Ellis.  The
     transaction  was  completed  on  February  26,  1998.  Insignia  funded the
     acquisition  from  borrowings on its  revolving  credit  facility,  issuing
     617,371  shares  of Class A Common  Stock of  Insignia  ("Insignia  Class A
     Common  Stock"), and  assuming  existing  stock  options  which will enable
     Richard  Ellis  employees to purchase  853,741  shares of Insignia  Class A
     Common Stock. The acquisition was accounted for as a purchase.

     Hotel Partners

     On May 11, 1998,  Insignia  announced  that it had acquired  Hotel Partners
     ("Hotel Partners"),  an international brokerage firm focused exclusively on
     the  hospitality  segment of the real estate  industry.  The total purchase
     price is  approximately  $14.2  million  with $7.0  million paid in cash at
     closing  and  potential  additional   consideration   contingent  upon  the
     performance of such unit over a five-year period. Hotel Partners,  based in
     Chicago, also has offices in New York, London, Frankfurt, Tokyo, Singapore,
     Hong Kong, Los Angeles,  Dallas, Miami,  Atlanta,  Honolulu and Boston. The
     acquisition was accounted for as a purchase.

     Jackson Cross Company

     On June 15, 1998,  Insignia  completed  the  acquisition  of Jackson  Cross
     Company ("Jackson Cross"), a prominent  commercial real estate service firm
     with  operations  primarily  in the greater  Philadelphia  area.  The total
     purchase consideration paid by Insignia for Jackson Cross was approximately
     $9.1  million,  consisting  of $8.6  million  paid in cash and  $500,000 in
     guaranteed deferred payments. Additional payments of up to $5.4 million are
     contingent on the future  performance of Jackson Cross. The acquisition was
     accounted for as a purchase.

     Other Information

     Pro Forma results of operations  for the six months ended June 30, 1998 and
     1997,  assuming  consummation  of the  Distribution  and the acquisition of
     Richard Ellis (1998), Realty One (1997) and Barnes, Morris, Pardoe & Foster
     (1997) as of January 1, 1997, is as follows (in thousands, except per share
     data):
<TABLE>
<CAPTION>

                                                   Six Months Ended
                                                       June 30,
                                              1998                 1997
                                              ----                 ----
     <S>                                   <C>                  <C>        

     Revenues                               $238,031             $197,597
     Net Income                                6,489                6,196
                                               =====                =====

     Per share amounts - 
          assuming dilution                 $    .29             $    .30
                                            ========             ========
</TABLE>


10.  Warrant Distribution

     In connection with the Distribution,  Insignia anticipates  distributing to
     record holders of the 6.5%  Convertible  Preferred  Securities  ("Preferred
     Securities")  of Insignia  Financing  I, a subsidiary  of Insignia,  on the
     Distribution  Record  Date  warrants to  purchase  approximately  1,196,000
     shares of Holdings  Common Stock (four  warrants for each $500  liquidation
     amount of Convertible Preferred Securities held by them). Each warrant will
     represent the right to purchase one share of Holdings Common Stock and will
     have an exercise price of 120% of the market value of Holdings Common Stock
     following  the  Distribution.  The term of each warrant will be five years,
     and no warrant  will be  exercisable  before two years after it is granted.
     Insignia  purchased  the warrants  from  Holdings on September 14, 1998 for
     approximately $8.5 million,  which represents the estimated  aggregate fair
     market  value  of  the  warrants.   The  value  was  determined  using  the
     Black-Scholes method, based on the following assumptions:  (i) no dividends
     are paid on Holdings Common Stock,  (ii) an exercise price equal to 120% of
     the market price,  (iii) a five-year  term,  and (iv) 30% volatility of the
     Holdings Common Stock.

     The Insignia Board will formally  declare and authorize  Insignia to effect
     the warrant  distribution if the Distribution has occurred and the Insignia
     Board determines, among other things, that (i) the conditions to the Merger
     have been satisfied and (ii) the closing of the Merger is imminent.

     Under  the  terms  of  the  Merger  Agreement  with  AIMCO,  the  Preferred
     Securities would become an obligation of AIMCO and would become convertible
     into AIMCO securities, as Insignia Financing I would become a subsidiary of
     AIMCO.  Pursuant to the trust indenture governing the Preferred Securities,
     prescribed  adjustments to the conversion price of the Preferred Securities
     would  occur  both as a result of the  Distribution  and as a result of the
     Merger.





11.  During  the six months  ended June 30,  1998,  Holdings  had the  following
     changes in the equity accounts:

     a)   Investment and net advances from Insignia totaling $114,816,000.

     b)   Net income of $6,391,000 for the six months ended June 30, 1998.



<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
------------------------------------------------------------------------------
        of Operations
        -------------

     Holdings  has three  principal  business  units -  commercial  real  estate
services,  residential  real  estate  services  and real estate  ownership.  The
commercial real estate services business is comprised of  Insignia/ESG's  United
States  operations,  Richard  Ellis in the United  Kingdom,  Insignia RE GmbH in
Germany and  Insignia/CAGISA  in Italy.  The  residential  services  business is
comprised  of a  single-family  home  brokerage  business  (Realty  One)  and  a
cooperative and condominium  apartment services business  (Insignia  Residential
Group).

     Insignia/ESG is one of the largest commercial real estate services firms in
the United States  according to January 1998 issue of Commercial  Property News.
With the  acquisition  of Richard  Ellis in the United  Kingdom,  the opening of
Insignia RE GmbH in  Germany,  and the  purchase of 60% of the capital  stock in
Insignia/CAGISA  in Italy,  Insignia/ESG  is  becoming  a global  leader in real
estate services.  The financial statements of Richard Ellis have been translated
using the following exchange rates: $1.6672 for the balance sheet as of June 30,
1998 and $1.6594 for the  statement  of income for the six months ended June 30,
1998.  These exchange rates have been determined  based on the end of the period
rate, in the case of the balance sheet, and the average rate for the period,  in
the case of the statement of income.

     Revenue  from  tenant   representation,   investment   sales,   debt/equity
placements and property  leasing,  which is a substantial  majority of Holdings'
revenue, is transactional in nature and therefore subject to changes in economic
cycles. Holdings believes that its large,  diversified client base, geographical
reach,  overall size and number of annual  transactions will minimize the impact
of changes in economic  cycles on annual revenue.  A significant  portion of the
expenses associated with the above mentioned  activities are directly correlated
to revenue.

     Holdings'  primary  objective is to increase EBITDA and  stockholder  value
through internal growth and the acquisition of select businesses.  The following
results  are  based  on the  historical  financial  statements  of the  Holdings
Businesses and include certain assumptions concerning the allocation of overhead
costs from  Insignia.  These results may not be indicative of the actual results
that may have  occurred  if the  Holdings  Businesses  had been  operating  on a
stand-alone basis for the periods presented or in the future.

Financial Condition

     Total assets  increased by  approximately  $151.4 million from December 31,
1997 to $485.9 million at June 30, 1998. The primary source of this increase was
acquisitions,  including Richard Ellis,  Hotel Partners and Jackson Cross, which
added $87 million to cost in excess of net assets of acquired  businesses.  Real
estate  interests  increased by $20.7  million.  This  increase  represents  the
continued  investment  in  co-investment   ventures  and  development  property.
Additionally,  receivables  increased by approximately  $22.7 million  primarily
representing receivables of acquired entities and strong brokerage operations of
Insignia/ESG and Realty One.

     Liabilities increased by approximately $30.4 million from December 31, 1997
to $156.0 million at June 30, 1998. This increase  reflects the issuance of debt
and assumed  liabilities  with respect to the Richard Ellis  transaction  at the
time of its  acquisition  coupled  with the impact of  brokerage  operations  as
described  above.  The  remainder of the asset growth was financed  with equity,
including net advances from Insignia resulting from the payment of Richard Ellis
purchase price and retained earnings.

Results of Operations

     Holdings  posted  increases  in  revenues  and net  income  of 109% to $125
million and 80% to $3.6 million,  respectively,  for the second  quarter of 1998
compared to the second  quarter of 1997.  The  increases for the first half were
119% to $227.8 million and 106% to $6.4 million, respectively. These high growth
percentages are  attributable  primarily to  acquisitions,  the largest of which
were  Richard  Ellis in  February  1998 and  Realty  One in  October  1997,  and
favorable real estate markets in the United States and United Kingdom.

     Holdings  uses  Net  EBITDA  as  a  primary   indicator  of  its  financial
performance. Net EBITDA represents earnings before interest, taxes, depreciation
and  amortization  from  its  service  businesses  ("EBITDA")  plus  funds  from
operations from real estate ownership ("FFO") minus financing costs,  consisting
of  interest  expense on debt.  FFO  excludes  gains on  property  sales and FFO
attributable to minority interests.

     Net EBITDA increased by 83% to $13.3 million for the second quarter of 1998
and by 96% to $24.4 million for the first half of 1998.  Increases were achieved
by each of Holding's  three  business units - commercial  services,  residential
services and real estate ownership.  A discussion of the major factors impacting
these business units follows.

Commercial Services

     The commercial  services  business,  which consists of  Insignia/ESG in the
United  States,  Richard Ellis in the United  Kingdom,  and  Insignia/CAGISA  in
Italy,  produced revenue  increases of 64% to $88 million for the second quarter
of 1998 and 81% to $166.1  million  for the first half of 1998.  The  commercial
growth was derived from both  acquisitions  and gains in revenues  from existing
domestic  offices.  The Richard  Ellis  acquisition  accounted for a 28% revenue
increase for the second quarter of 1998 and a 24% revenue increase for the first
half of  1998.  The  remainder  of the  increase  is  attributable  to  domestic
acquisitions,  additions to commission  producing staff and continued  favorable
real estate markets.

Residential Services

     The  residential  services  business,  which  consists  of  Realty  One and
Insignia Residential Group,  produced revenue increases of 490% to $36.2 million
for the second  quarter of 1998 and 393% to $60.5  million for the first half of
1998. The residential  growth  essentially can be attributed to the October 1997
acquisition of Realty One, which derives  substantially all of its revenues from
the  brokerage of single family  residential  real estate.  In addition,  Realty
One's business is traditionally  seasonal,  although the seasonality  appears to
have been tempered somewhat in 1998 by the mild winter in Northern Ohio together
with  nationwide  strength in the home sales sector.  Realty One's revenues were
$29.3  million  for the second  quarter of 1998 and $47.5  million for the first
half of 1998.

Real Estate Ownership

     Holding's  FFO from real  estate  ownership  increased  288% for the second
quarter of 1998 to  $606,000  and 212% to  $972,000  for the first half of 1998.
These increases were achieved primarily as a result of the continued strategy of
purchasing   minority  equity  interests  in  selected  real  estate  assets  in
partnership with  institutional  clients as well as operating income growth from
existing  co-investment  properties.  The co-investment  program, which controls
properties valued at more than $575 million in aggregate,  was commenced in late
1996 and  continues to  contribute  substantially  to the real estate  ownership
positions of Holdings.

     Equity earnings from real estate ownership reflected losses of $382,000 and
$858,000  for  the  quarter  and  first  half of  1998.  The  loss  is  directly
attributable  to  substantial  losses of Fresh  Meadows,  a 35% owned  apartment
property,  acquired  in December  1997.  Holdings'  share of the loss,  which is
substantially  a result of  non-cash  depreciation  charges in  accordance  with
generally accepted accounting principles, was approximately $1.2 million for the
first half of 1998. The difference  between real estate FFO and equity  earnings
consists of depreciation and gains on sale of property.

Financing Costs

     Interest  expense,  attributable  entirely to the existing  debt of Richard
Ellis and Realty One at the respective  acquisition  dates, was $324,000 for the
second quarter of 1998 and $706,000 for the first half of 1998.

Other Expenses Impacting Net Income

     The discussion of Net EBITDA above excludes  depreciation  and amortization
and income taxes.  Depreciation and  amortization  increased 49% to $5.7 million
for the second  quarter of 1998 and 53% to $10.9  million  for the first half of
1998.  Most of the  increase  relates to  amortization  of cost in excess of net
assets of acquired businesses, notably Richard Ellis and Realty One.

     Income taxes  increased both as a result of higher income and effective tax
rates in 1998.

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

     Holding's  liquidity and capital resources consist of cash on hand and cash
provided by  operations.  Net EBITDA  less  income  taxes is used to measure the
working capital  provided from  operations.  Operations by this measure produced
approximately  $19.1 million for the first half of 1998.  Holdings believes that
its cash from  operating  activities  are more than adequate to meet its working
capital and capital  replacement  needs.  However,  it is important to note that
periods of revenue growth in the leasing sector of commercial  property services
result in some portion of working  capital from  operations  being used to carry
greater receivables.  In addition, cash from operations is normally lower in the
first half of each year as a result of annual incentive payments with respect to
1997 and the seasonality of Realty One.

     Holdings  expects to procure a $150 million  revolving  credit  facility as
soon  as  possible  after  the  Distribution  for  future  working  capital  and
acquisition needs. However, negotiations in this process have not been completed
and no assurance  can be given that  Holdings  will in fact obtain an acceptable
credit  facility  in that  amount  or any  other  amount.  In  addition,  all of
Holdings'  interests  in  its  material   subsidiaries  are  pledged  to  secure
Insignia's $300 million revolving credit facility,  and any Holdings  borrowings
under a new credit facility would require a release from that obligation.

     Capital expenditure requirements are not normally extensive,  consisting of
periodic computer, furniture and fixture replacements. Most capital expenditures
are  typically  incurred in  connection  with  acquisitions  or other  personnel
additions.  Capital  expenditures  in the  first  half of  1998 of $5.3  million
consisted  primarily of costs incurred in the implementation of a new generation
of computer systems for the property  management  business,  computer  equipment
purchases of Realty One, and software costs allocated from Insignia.

     Over the second half of 1998 and into 1999, Holdings anticipates  incurring
capital  expenditures  significantly  in  excess  of  the  normal  needs  of the
business.  Holdings has plans to implement a similar new  generation of computer
systems for the cooperative and condominium  management  business,  complete the
relocation of that business  within the Midtown area of Manhattan,  relocate and
expand in Chicago and Atlanta and purchase a new generations of computer systems
for the  international  commercial  property services  businesses,  both for the
United  States and the United  Kingdom.  Realty One also  expects to  commence a
program to  substantially  upgrade its broker  productivity and target marketing
systems.  The aggregate  cost of these  planned  upgrades is  approximately  $16
million,  which  Holdings  expects to pay from  operating cash flows and cash on
hand at the time of the Distribution.

Year 2000  
---------  

     In earlier years,  certain computer  programs were written using two digits
rather than four to define the  applicable  years.  These  programs were written
without consideration of the impact of the approaching change in the century and
may experience problems handling dates beyond 1999 ("Year 2000"). These problems
could  potentially  result  in the  failure  of  computer  applications  and the
creation of erroneous  results.  In the event that necessary  modifications  and
conversions  are not completed and resolved in a timely  fashion by Holdings and
significant third parties with which Holdings conducts  business,  the Year 2000
issue  could have a material  adverse  impact on the  operations  and  financial
condition of Holdings in the future.

     Holdings has  completed an assessment on the impact of the Year 2000 issue,
including the  anticipated  impact on information  technology  ("IT") and non-IT
systems.  Holdings has determined  that it will be required to modify or replace
portions  of its  existing  software  and  computer  systems,  so that they will
function  properly  with respect to dates in the year 2000 and beyond.  Holdings
believes that with current  ongoing  changes to its computer  platform,  coupled
with  the  purchase  of  new  generations  of  computer   systems  and  software
conversions, the Year 2000 issue will not pose significant operational problems.
Holdings  anticipates all ongoing  projects to be completed in early 1999, which
is  prior  to  any  anticipated  impact  on its  operating  systems.  The  total
incremental  cost of Year 2000 compliance is expected to range from $1.5 million
to $2 million,  of which  approximately  $330,000 has been incurred as of August
31, 1998.

Other
-----

     Certain  information  contained in this  quarterly  report,  and  documents
incorporated  by reference  herein,  may constitute  forward-looking  statements
within the meaning of the Private Securities  Litigation Reform Act of 1995 (the
"Reform Act") and as such may involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
Holdings to be materially  different from any future  results,  performance,  or
achievements  expressed  or implied  by such  forward-looking  statements.  Such
information  includes,  without limitation,  statements regarding the results of
litigation, the results of the Distribution and Merger, the effects of Year 2000
issues,   Holdings"   future   financial   performance  and  estimated   capital
expenditures. Actual results will be effected by a variety of risks and factors,
including,  without  limitation,  national and local economic  conditions,  real
estate risks and financing risks. Such forward-looking  statements speak only as
of  the  date  of  this  quarterly  report.  Holdings  expressly  disclaims  any
obligation or  undertaking  to release  publicly any updates of revisions to any
forward-looking  statements  contained herein to reflect any change in Holdings'
expectations  with  regard  thereto  or any  change  in  events,  conditions  or
circumstances on which any such statement is based.


<PAGE>





                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
-------  -----------------

     See Note 8 in Notes to Condensed  Combined  Financial  Statements,  Part I,
Item 1, of Form 10-Q for June 30, 1998 for the details on outstanding issues.

Item 6.  Exhibits and Reports on Form 8-K
-------  --------------------------------

     a)  Exhibits

         27.  Financial Data Schedule for June 30, 1998.

     b)  Reports on Form 8-K

         None.


<PAGE>









                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned there unto duly authorized.



              INSIGNIA/ESG, INC.



              by: /s/Andrew L. Farkas
              --------------------------------------------------------
                  Andrew L. Farkas
                  Chairman and Chief Executive Officer




              by: /s/James A. Aston
             ----------------------------------------------------------
                  James A. Aston
                  Chief Financial Officer