FORM 10-QSB/A--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                        Quarterly or Transitional Report

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  Form 10-QSB/A

(Mark One)
[X]   QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
      EXCHANGE ACT OF 1934


                For the quarterly period ended March 31, 1999


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

                For the transition period.........to.........

                         Commission file number 0-14470

                      INVESTORS FIRST-STAGED EQUITY L.P.
      (Exact name of small business issuer as specified in its charter)


         Delaware                                               36-3310965
(State or other jurisdiction of                               (IRS Employer
incorporation or organization)                              Identification No.)

                          55 Beattie Place, PO Box 1089
                       Greenville, South Carolina 29602
                   (Address of principal executive offices)


                                 (864) 239-1000
                            Issuer's telephone number

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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>

                         PART I - FINANCIAL INFORMATION

(This document  amends the Form 10-QSB for the quarter ended March 31, 1999, due
to the reversal of the extraordinary gain on early extinguishment of debt.)

ITEM 1.   FINANCIAL STATEMENTS

a)
                       INVESTORS FIRST-STAGED EQUITY L.P.
                           CONSOLIDATED BALANCE SHEET
                        (in thousands, except unit data)
                                   (Unaudited)

                                 March 31, 1999

Assets
    Cash and cash equivalents                                       $  1,368
   Receivables and deposits                                              861
    Restricted escrows                                                   592
    Other assets                                                       1,533
    Investment properties:
      Land                                         $  8,402
      Buildings and related improvements             40,102
                                                     48,504

      Less accumulated depreciation                 (26,423)          22,081
                                                                    $ 26,435

Liabilities and Partners' Deficit
Liabilities
   Accounts payable                                                 $     37
   Accrued interest                                                      400
   Tenant security deposit liabilities                                   464
   Accrued property taxes                                                 86
   Other liabilities                                                     130
   Advances from affiliates of General Partner                           327
   Mortgage notes payable                                             42,727

Partners' Deficit
    General partner                                $   (359)
    Limited partners (16,261.152 units
      issued and outstanding)                       (17,377)         (17,736)
                                                                    $ 26,435

         See Accompanying Notes to Consolidated Financial Statements

<PAGE>

b)
                       INVESTORS FIRST-STAGED EQUITY L.P.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        (in thousands, except unit data)
                                   (Unaudited)

                                                     Three Months Ended
                                                         March 31,
                                                     1999           1998
Revenues:
  Rental income                                    $ 2,119        $ 1,978
  Other income                                          74             86
      Total revenues                                 2,193          2,064

Expenses:
  Operating                                            636            665
  General and administrative                            57             69
  Depreciation                                         474            464
  Interest                                             813            828
  Property taxes                                       110            113
      Total expenses                                 2,090          2,139

 Income (loss) before extraordinary item               103            (75)
 Extraordinary item - gain on early
    extinguishment of debt                              --             10

Net income (loss)                                  $   103        $   (65)

 Net income (loss) allocated to general
    partner (1%)                                   $     1        $    (1)
 Net income (loss) allocated to limited
    partners (99%)                                     102            (64)

                                                   $   103        $   (65)

Per limited partnership unit:
Income (loss) before extraordinary item            $  6.27        $ (4.54)
Extraordinary item                                      --            .61

Net income (loss) per limited partnership unit     $  6.27        $ (3.93)


         See Accompanying Notes to Consolidated Financial Statements

<PAGE>

c)
                       INVESTORS FIRST-STAGED EQUITY L.P.
             CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
                       (in thousands, except unit data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                         Limited
                                       Partnership    General     Limited
                                          Units       Partner     Partners       Total
Partners' deficit at
<S>         <C> <C>                       <C>        <C>         <C>          <C>
   December 31, 1998                      16,261     $   (360)   $ (17,479)   $ (17,839)

Net income for the three months
   ended March 31, 1999                       --            1          102          103

Partners' deficit at
      March 31, 1999                      16,261     $   (359)   $ (17,377)   $ (17,736)
</TABLE>


           See Accompanying Notes to Consolidated Financial Statements

<PAGE>

d)
                       INVESTORS FIRST-STAGED EQUITY L.P.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                   Three Months Ended
                                                                        March 31,

                                                                   1999         1998
Cash flows from operating activities:
<S>                                                             <C>          <C>
     Net income (loss)                                          $   103      $   (65)
     Adjustments to reconcile net income (loss) to net cash
        provided by operating activities:
        Depreciation                                                474          464
        Amortization of loan costs and leasing commissions           45           47
        Extraordinary gain on early extinguishment of debt           --          (10)
        Change in accounts:
          Receivables and deposits                                 (123)         (52)
          Other assets                                              (60)           6
          Accounts payable                                          (42)          (4)
          Accrued interest                                            8          186
          Tenant security deposit liabilities                        (4)          19
          Accrued property taxes                                     86          113
          Other liabilities                                          20          (20)

            Net cash provided by operating activities               507          684

Cash flows from investing activities:
     Property improvements and replacements                         (38)        (190)
     Net (deposits to) withdrawals from restricted escrows          (68)         375

            Net cash (used in) provided by investing activities    (106)         185

Cash flows from financing activities:
     Payment of loan costs                                           --         (106)
     Payments on mortgage notes payable                            (218)        (635)
     Advances to affiliates                                           1            1

            Net cash used in financing activities                  (217)        (740)

Net increase in cash and cash equivalents                           184          129

Cash and cash equivalents at beginning of period                  1,184        2,640

Cash and cash equivalents at end of period                      $ 1,368      $ 2,769

Supplemental disclosure of cash flow information:
     Cash paid for interest                                     $   768      $   602
</TABLE>

         See Accompanying Notes to Consolidated Financial Statements

<PAGE>

e)
                       INVESTORS FIRST-STAGED EQUITY L.P.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note A - Basis of Presentation

The  accompanying  unaudited  consolidated  financial  statements  of  Investors
First-Staged  Equity L.P. (the "Partnership" or "Registrant") have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information and with the  instructions to Form 10-QSB and Item 310(b)
of Regulation S-B.  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 MAERIL,  Inc. (the "General Partner"),
all adjustments  (consisting of normal recurring accruals)  considered necessary
for a fair  presentation  have been  included.  Operating  results for the three
month period ended March 31, 1999, are not necessarily indicative of the results
that may be expected for the fiscal year ending  December 31, 1999.  For further
information,  refer  to the  consolidated  financial  statements  and  footnotes
thereto  included  in the  Partnership's  annual  report on Form  10-KSB for the
fiscal year ended December 31, 1998.

Principles of Consolidation: The Partnership's consolidated financial statements
include the accounts of its 99.99% limited partnership  interests in Serramonte,
LP, VMS Apartments  Portfolio II and VMS  Apartments  Portfolio III. The General
Partner of the consolidated  partnership is MAERIL,  Inc.  MAERIL,  Inc., may be
removed by the Registrant; therefore, the consolidated partnership is controlled
and consolidated by the Registrant.  All significant  interpartnership  balances
have been eliminated.

Note B - Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment  Investment and Management  Company,  ("AIMCO") a publicly
traded real estate investment trust, with AIMCO being the surviving  corporation
(the "Insignia Merger").  As a result, AIMCO acquired 100% ownership interest in
the General Partner.  The General Partner does not believe that this transaction
will have a material effect on the affairs and operations of the Partnership.

Note C - Transactions with Affiliates and Related Parties

The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership  activities.
The  Partnership  Agreement  provides  for certain  payments to  affiliates  for
services and as  reimbursement  of certain  expenses  incurred by  affiliates on
behalf of the Partnership.

During the three months ended March 31, 1999 and 1998, affiliates of the General
Partner  were  entitled  to  receive  5% of  gross  receipts  from  all  of  the
Registrant's  residential properties for providing property management services.
The Registrant paid to such affiliates approximately $56,000 and $63,000 for the
three months ended March 31, 1999 and 1998,  respectively.  For the three months
ended March 31, 1998, affiliates of the General Partner were entitled to receive
varying percentages of gross receipts from the Registrant's  commercial property
for  providing  property  management  services.  The  Registrant  paid  to  such
affiliates $53,000 for the three months ended March 31, 1998.  Effective October
1, 1998 (the  effective  date of the  Insignia  Merger)  these  services for the
commercial property were provided by an unrelated party.

<PAGE>

An affiliate  of the General  Partner  received  reimbursements  of  accountable
administrative  expenses amounting to approximately  $39,000 and $37,000 for the
three months ended March 31, 1999 and 1998, respectively.

During the three months ended March 31, 1998 the Partnership  paid affiliates of
the General Partner  approximately $40,000 for loan costs which were capitalized
and are included in other assets in the accompanying Consolidated Balance Sheet.
These loan costs related to the refinancing of the investment properties.

In prior years the  Partnership was advanced funds from a former General Partner
in order to meet its existing obligations. Interest accrues on these advances at
rates agreed to by the Partnership and the former General Partner.  The interest
rates at March 31, 1999 ranged from 4.70% to 9.50%.  The unpaid balance on these
advances  at March 31,  1999 and the related  accrued  interest is $327,000  and
$138,000, respectively.

Note D - Segment Reporting

Description  of the types of products  and  services  from which the  reportable
segment derives its revenues:

The  Partnership  has  two  reportable  segments:   residential  properties  and
commercial properties.  The Partnership's  residential property segment consists
of  two  apartment  complexes  located  in  California.  The  Partnership  rents
apartment  units to tenants for terms that are typically  twelve months or less.
The commercial  property segment consists of office space located in Serramonte,
California.  This property  leases space to management,  restaurant,  and dental
enterprises at terms ranging from month to month to ten years.

Measurement of segment profit or loss:

The  Partnership  evaluates  performance  based on net  income.  The  accounting
policies  of the  reportable  segments  are the same as those  described  in the
summary of significant accounting policies in the Partnership's annual report on
Form 10-KSB for the year ended December 31, 1998.

Factors management used to identify the enterprise's reportable segment:

The  Partnership's  reportable  segments are  investment  properties  that offer
different  products  and  services.  The  reportable  segments  are each managed
separately  because they  provide  distinct  services  with  different  types of
products and customers.

Segment  information for the three months ended March 31, 1999 and 1998 is shown
in the tables below (in  thousands).  The "Other"  column  includes  Partnership
administration  related items and income and expense not allocated to reportable
segments.
<TABLE>
<CAPTION>

                  1999                   Residential  Commercial    Other    Totals
<S>                                      <C>          <C>         <C>       <C>
Rental income                            $  1,352     $    767    $   --    $ 2,119
Other income                                   63            5         6         74
Interest expense                              544          269        --        813
Depreciation                                  360          114        --        474
General and administrative expenses            --           --        57         57
Segment profit (loss)                          43          111       (51)       103
Total assets                               17,476        8,296       663     26,435
Capital expenditures                           33            5        --         38
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                  1998                   Residential  Commercial    Other     Totals
<S>                                      <C>          <C>         <C>       <C>
Rental income                            $  1,237     $    741    $   --    $  1,978
Other income                                   49            6        31          86
Interest expense                              556          272        --         828
Depreciation                                  356          108        --         464
General and administrative expenses            --           --        69          69
Gain on extraordinary items                    10           --        --          10
Segment profit (loss)                        (131)         104       (38)        (65)
Total assets                               18,231        7,989     2,394      28,614
Capital expenditures                           44          146        --         190
</TABLE>

Note E - Legal Proceedings

The Partnership is unaware of any pending or outstanding  litigation that is not
of a routine nature arising in the ordinary course of business.

<PAGE>

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

The  matters  discussed  in this Form  10-QSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions,   competitive  and  regulatory   matters,   etc.)  detailed  in  the
disclosures  contained  in this  Form  10-QSB  and the  other  filings  with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the  Registrant's  business and results of  operations,  including
forward-looking  statements  pertaining  to such  matters,  does not  take  into
account the effects of any changes to the  Registrant's  business and results of
operation.  Accordingly,  actual  results  could  differ  materially  from those
projected in the forward-looking  statements as a result of a number of factors,
including those identified herein.

The Partnership's  investment  properties consist of two apartment complexes and
one commercial  property.  The following table sets forth the average  occupancy
for these properties for the three months ended March 31, 1999 and 1998:

                                                   1999         1998

Rivercrest Village Apartments
      Sacramento, California                        90%          90%
Richardson Highlands Apartments
      Marin City, California                        99%          99%
Serramonte Plaza
      Daly City, California                         97%          95%

Results of Operations

The  Registrant's  net  income for the three  months  ended  March 31,  1999 was
approximately  $103,000 as compared to a net loss of  approximately  $65,000 for
the three months ended March 31, 1998.  The increase in net income was due to an
increase in total  revenues  and a decrease in total  expenses.  The increase in
total  revenues  was due to an increase in rental  income,  which was  primarily
attributable to the increase in average rental rates at all of the  Registrant's
investment  properties.  The increase in rental income was partially offset by a
decrease  in  other   income.   The  decrease  in  other  income  was  primarily
attributable  to a decrease in the  Registrant's  balances  in interest  bearing
accounts.

Total expenses  decreased  primarily due to a reduction in operating expense and
to  a  lesser   extent,   a  decrease  in  interest   expense  and  general  and
administrative  expense.  Operating  expense  decreased  due to a  reduction  in
insurance.  Insurance expense decreased due to the change in insurance  carriers
at the  Registrant's  investment  properties  during the fourth  quarter of 1998
which resulted in lower insurance premiums.

The decrease in general and administrative  expense is primarily attributable to
a decrease  in  professional  expenses  and  general  costs of the  Partnership.
Interest  expense  decreased due to principal  payments  made on the  properties
first mortgages.  Depreciation  expense increased  slightly for the three months
ended March 31, 1999 as compared to the comparable period.  Property tax expense
remained relatively constant for the comparable periods. Included in general and
administrative  expenses  at  both  March  31,  1999  and  1998  are  management
reimbursements  to the General Partner allowed under the Partnership  Agreement.
In addition,  costs associated with the quarterly and annual communications with
investors  and  regulatory  agencies  and  the  annual  audit  required  by  the
Partnership Agreement are also included.

As part of the ongoing  business plan of the  Partnership,  the General  Partner
monitors the rental market  environment of each of its investment  properties to
assess the feasibility of increasing rents,  maintaining or increasing occupancy
levels and protecting  the  Partnership  from increases in expenses.  As part of
this plan,  the General  Partner  attempts to protect the  Partnership  from the
burden of  inflation-related  increases  in  expenses  by  increasing  rents and
maintaining a high overall  occupancy  level.  However,  due to changing  market
conditions,  which  can  result  in the use of  rental  concessions  and  rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.

Liquidity and Capital Resources

At March 31, 1999, the Registrant had cash and cash equivalents of approximately
$1,368,000 as compared to  approximately  $2,769,000 at March 31, 1998. Cash and
cash  equivalents  increased  approximately  $184,000 for the three months ended
March  31,  1999  from  the  Registrant's  fiscal  year  end,  primarily  due to
approximately  $507,000 of cash  provided  by  operating  activities,  which was
partially offset by approximately  $217,000 of cash used in financing activities
and approximately  $106,000 of cash used in investing  activities.  Cash used in
financing  activities consisted primarily of principal payments on the mortgages
encumbering  the  Registrant's  properties.  Cash used in  investing  activities
consisted  of property  improvements  and  replacements  and net deposits to the
escrow accounts  maintained by the mortgage lender.  The Registrant  invests its
working capital reserves in money market accounts.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the  properties  to  adequately  maintain the physical
assets and other  operating needs of the Partnership and to comply with Federal,
state and local legal and regulatory requirements.  Capital improvements planned
for each of the Registrant's properties are detailed below.

Rivercrest Village Apartments

Based on a report received from an independent third party consultant  analyzing
necessary  exterior  improvements  and estimates made by the General  Partner on
interior improvements,  it is estimated that the property requires approximately
$365,000  of  capital  improvements  over the near  term.  Capital  improvements
budgeted  for, but not limited to,  approximately  $467,000 are planned for 1999
consisting  of clubhouse  renovations,  carpet  replacement  and other  interior
improvements.  As of March 31,  1999  approximately  $12,000  has been  incurred
consisting primarily of appliance and floor covering replacements.

Richardson Highlands Apartments

Based on a report received from an independent third party consultant  analyzing
necessary  exterior  improvements  and estimates made by the General  Partner on
interior improvements,  it is estimated that the property requires approximately
$213,000  of  capital  improvements  over the near  term.  Capital  improvements
budgeted  for, but not limited to,  approximately  $213,000 are planned for 1999
consisting of balcony and stairway  replacement  and repairs,  carpet,  cabinet,
countertop  and roof  replacements,  parking  lot  repairs  and  other  building
improvements.  As of March 31,  1999  approximately  $21,000  has been  incurred
consisting primarily of interior improvements and floor covering replacement.

Serramonte Plaza

Based on a report received from an independent third party consultant  analyzing
necessary  exterior  improvements  and estimates made by the General  Partner on
interior improvements,  it is estimated that the property requires approximately
$1,000,000  of capital  improvements  over the near term.  Capital  improvements
budgeted  for, but not limited to,  approximately  $423,000 are planned for 1999
consisting  of door  and  entrance  way  and  parking  lot  repairs  and  tenant
improvements.  As of March  31,  1999  approximately  $5,000  has been  incurred
consisting primarily of tenant improvements.

<PAGE>

The additional  capital  improvements will be incurred only if cash is available
from  operations  or  Partnership  reserves.  To the extent  that such  budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.

The  Registrant's  current assets are thought to be sufficient for any near-term
needs  (exclusive  of capital  improvements)  of the  Registrant.  The  mortgage
indebtedness  of  approximately  $42,727,000  matures  from  January  2000 until
January  2008,  with  balloon  payments  due at  maturity,  at  which  time  the
properties will either be refinanced and/or sold.  Agreements connected with the
second mortgages for Richardson  Highlands and Rivercrest  Village allow for the
lender to  receive  fifty  percent  of any  residual  proceeds  from the sale or
refinancing  of the  properties  after the payment of all mortgage notes payable
and other liabilities.

No cash distributions were paid during the three months ended March 31, 1999 and
1998. The  Registrant's  distribution  policy is reviewed on a quarterly  basis.
Future cash  distributions  will depend on the levels of net cash generated from
operations, the availability of cash reserves, debt refinancing, and/or property
sales.  There can be no assurance,  however,  that the Registrant  will generate
sufficient funds from operations after required capital expenditures,  to permit
distributions to its partners in 1999.

Potential Tender Offer

On October 1, 1998,  Insignia  Financial  Group,  Inc. merged into AIMCO, a real
estate investment trust,  whose Class A Common Shares are listed on the New York
Stock Exchange. As a result of such merger, AIMCO and AIMCO Properties,  L.P., a
Delaware limited partnership and the operating partnership of AIMCO ("AIMCO OP")
acquired  indirect  control of the  General  Partner.  AIMCO and its  affiliates
currently  do  not  own  any  of  the  limited  partnership   interests  in  the
Partnership.  AIMCO  is  presently  considering  whether  it will  engage  in an
exchange offer for limited partnership interests in the Partnership.  There is a
substantial  likelihood that, within a short period of time, AIMCO OP will offer
to  acquire  limited  partnership  interests  in the  Partnership  for  cash  or
preferred units or common units of limited  partnerships  interests in AIMCO OP.
While such an exchange offer is possible,  no definite plans exist as to when or
whether  to  commence  such an  exchange  offer,  or as to the terms of any such
exchange offer, and it is possible that none will occur.

A registration  statement  relating to these  securities has been filed with the
Securities  and  Exchange  Commission  but has not yet become  effective.  These
securities  may not be sold nor may offers to buy be accepted  prior to the time
the  registration  statement  becomes  effective.  This  Form  10-QSB  shall not
constitute  an offer to sell or the  solicitation  of an offer to buy nor  shall
there  be any sale of  these  securities  in any  state  in  which  such  offer,
solicitation   or  sale  would  be  unlawful  prior  to  the   registration   or
qualification under the securities laws of any such state.

Year 2000 Compliance

General  Description  of the Year 2000 Issue and the  Nature and  Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems

The Year 2000 issue is the result of computer  programs  being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent  upon the  General  Partner  and its  affiliates  for  management  and
administrative  services  ("Managing  Agent").  Any of the computer  programs or
hardware  that have  date-sensitive  software or embedded  chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a  system  failure  or  miscalculations   causing   disruptions  of  operations,
including,  among other things, a temporary  inability to process  transactions,
send invoices, or engage in similar normal business activities.

Over the past two  years,  the  Managing  Agent has  determined  that it will be
required to modify or replace  significant  portions of its software and certain
hardware so that those systems will properly  utilize dates beyond  December 31,
1999.  The  Managing  Agent  presently   believes  that  with  modifications  or
replacements of existing software and certain hardware,  the Year 2000 issue can
be mitigated.  However,  if such modifications and replacements are not made, or
not completed in time,  the Year 2000 issue could have a material  impact on the
operations of the Partnership.

The  Managing  Agent's plan to resolve  Year 2000 issues  involves  four phases:
assessment,  remediation,  testing,  and  implementation.  To date, the Managing
Agent has fully  completed its  assessment of all the  information  systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing  and  implementation  phases  on both  hardware  and  software  systems.
Assessments are continuing in regards to embedded systems. The status of each is
detailed below.

Status of Progress in Becoming Year 2000  Compliant,  Including  Timetable for
Completion of Each Remaining Phase

Computer Hardware:

During 1997 and 1998, the Managing Agent  identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998,  the  mainframe  system used by the Managing  Agent became fully
functional. In addition to the mainframe,  PC-based network servers, routers and
desktop  PCs were  analyzed  for  compliance.  The  Managing  Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
March 31, 1999, had completed approximately 75% of this effort.

The total cost to the Managing  Agent to replace the PC-based  network  servers,
routers and desktop PCs is expected to be  approximately  $1.5  million of which
$1.3 million has been incurred to date. The remaining  network  connections  and
desktop PCs are expected to be upgraded to Year 2000  compliant  systems by July
31, 1999.

Computer Software:

The  Managing  Agent  utilizes  a  combination  of  off-the-shelf,  commercially
available software programs as well as custom-written programs that are designed
to fit  specific  needs.  Both of these  types of  programs  were  studied,  and
implementation  plans  written  and  executed  with the intent of  repairing  or
replacing any non-compliant software programs.

During  1998,  the  Managing  Agent  began  converting  the  existing   property
management and rent  collection  systems to its management  properties Year 2000
compliant systems. The estimated additional costs to convert such systems at all
properties,  is  $200,000,  and the  implementation  and the testing  process is
expected to be completed by July 31, 1999.

The final software area is the office software and server operating systems. The
Managing Agent has upgraded all non-compliant office software systems on each PC
and has upgraded  80% of the server  operating  systems.  The  remaining  server
operating  systems are planned to be upgraded to be Year 2000  compliant by July
31, 1999.

Operating Equipment:

The Managing  Agent has operating  equipment,  primarily at the property  sites,
which needed to be evaluated for Year 2000  compliance.  In September  1997, the
Managing  Agent  began  taking  a  census  and  inventory  of  embedded  systems
(including  those  devices  that use time to control  systems  and  machines  at
specific  properties,  for  example  elevators,  heating,  ventilating,  and air
conditioning systems, security and alarm systems, etc.).

The  Managing  Agent has  chosen to focus its  attention  mainly  upon  security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems  and  switches,  and  sprinkler  systems.  While  this  area is the most
difficult to fully research  adequately,  management has not yet found any major
non-compliance  issues  that  put the  Managing  Agent  at risk  financially  or
operationally. The Managing Agent intends to have a third-party conduct an audit
of these systems and report their findings by July 31, 1999.

Any of the above operating  equipment that has been found to be non-compliant to
date has been  replaced  or  repaired.  To date,  these have  consisted  only of
security systems and phone systems.  As of March 31, 1999 the Managing Agent has
evaluated  approximately  86% of the  operating  equipment  for  the  Year  2000
compliance.

The total cost incurred for all  properties  managed by the Managing Agent as of
March 31, 1999 to replace or repair the operating  equipment  was  approximately
$400,000.  The  Managing  Agent  estimates  the cost to  replace  or repair  any
remaining operating equipment is approximately $325,000, which is expected to be
completed by August 30, 1999.

The  Managing  Agent  continues to have  "awareness  campaigns"  throughout  the
organization  designed to raise  awareness  and report any  possible  compliance
issues regarding operating equipment within its enterprise.

Nature and Level of  Importance  of Third  Parties  and Their  Exposure to the
Year 2000

The Managing Agent  continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness.  The Managing
Agent has banking relationships with three major financial institutions,  all of
which have indicated their compliance  efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions.  The Managing Agent's contingency plan in this regard is
to move  accounts  from any  institution  that  cannot  be  certified  Year 2000
compliant by June 1, 1999.

The  Partnership  does not rely  heavily  on any  single  vendor  for  goods and
services,  and does not have significant  suppliers and subcontractors who share
information  systems  (external  agent). To date the Partnership is not aware of
any  external  agent with a Year 2000  compliance  issue  that would  materially
impact the Partnership's results of operations, liquidity, or capital resources.
However,  the  Partnership has no means of ensuring that external agents will be
Year 2000 compliant.

The  Managing  Agent does not believe that the  inability of external  agents to
complete  their Year 2000  remediation  process in a timely  manner  will have a
material  impact on the  financial  position  or  results of  operations  of the
Partnership.  However,  the effect of  non-compliance  by external agents is not
readily determinable.

Costs to Address Year 2000

The total cost of the Year 2000  project to the  Managing  Agent is estimated at
$3.5  million  and is being  funded from  operating  cash  flows.  To date,  the
Managing Agent has incurred  approximately  $2.8 million ($0.6 million  expensed
and $2.2  million  capitalized  for new  systems and  equipment)  related to all
phases  of  the  Year  2000  project.  Of the  total  remaining  project  costs,
approximately  $0.5 million is  attributable to the purchase of new software and
operating  equipment,  which will be  capitalized.  The  remaining  $0.2 million
relates to repair of hardware and software and will be expensed as incurred. The
Partnership's portion of these costs are not material.

Risks Associated with the Year 2000

The Managing Agent believes it has an effective  program in place to resolve the
Year 2000 issue in a timely manner.  As noted above,  the Managing Agent has not
yet completed all necessary  phases of the Year 2000 program.  In the event that
the Managing Agent does not complete any additional  phases,  certain worst case
scenarios  could  occur.  The worst  case  scenarios  could  include  elevators,
security  and  heating,  ventilating  and air  conditioning  systems  that  read
incorrect  dates and operate with  incorrect  schedules  (e.g.,  elevators  will
operate  on  Monday  as if it were  Sunday).  Although  such a  change  would be
annoying to residents, it is not business critical.

<PAGE>

In  addition,  disruptions  in the economy  generally  resulting  from Year 2000
issues could also adversely  affect the  Partnership.  The Partnership  could be
subject to  litigation  for,  among  other  things,  computer  system  failures,
equipment shutdowns or failure to properly date business records.  The amount of
potential  liability  and lost revenue  cannot be  reasonably  estimated at this
time.

Contingency Plans Associated with the Year 2000

The Managing Agent has contingency  plans for certain critical  applications and
is working on such plans for others.  These  contingency  plans  involve,  among
other  actions,  manual  workarounds  and selecting new  relationships  for such
activities as banking relationships and elevator operating systems.

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            a)    Exhibits:

                  Exhibit 27, Financial Data Schedule, is filed as an exhibit to
                  this report.

            b)    Reports on Form 8-K:

                  None filed during the quarter ended March 31, 1999.

<PAGE>

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed  on its  behalf  by the  undersigned  thereunto  duly
authorized.

                                   INVESTORS FIRST-STAGED EQUITY L.P.
                                   (Registrant)

                                   By:  VMS Realty Investment II,
                                        its General Partner

                                   By:  /s/Patrick J. Foye
                                        Patrick J. Foye
                                        Executive Vice President

                                   By:  /s/Carla R. Stoner
                                        Carla R. Stoner
                                        Senior Vice President Finance and
                                        Administration

                                   Date: