UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K405

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

      For the fiscal year ended        December 31, 1998
                                ------------------------------------------------

                                                        OR

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

     For the transition period from ______________ to_____________
     Commission file number  0-9026


                        McNEIL REAL ESTATE FUND IX, LTD.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         California                                 94-2491437
--------------------------------------------------------------------------------
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                      Identification No.)


             13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240
--------------------------------------------------------------------------------
               (Address of principal executive offices)    (Zip code)


Registrant's telephone number, including area code      (972)  448-5800
                                                   -----------------------------

Securities registered pursuant to Section 12(b) of the Act: None
----------------------------------------------------------

Securities registered pursuant to Section 12(g) of the Act: Limited partnership
                                                             units
---------------------------------------------------------- 

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,  and (2) has been subject to such filing  requirements
for the past 90 days. Yes X No
                         ---  ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

104,455  of the  registrant's  110,170  limited  partnership  units  are held by
non-affiliates  of this registrant.  The aggregate market value of units held by
non-affiliates  is not determinable  since there is no public trading market for
limited  partnership  units  and  transfers  of units  are  subject  to  certain
restrictions.

Documents Incorporated by Reference:        See Item 14, Page 40

                                TOTAL OF 46 PAGES
<PAGE>
                                     PART I

ITEM 1.  BUSINESS
-------  --------

ORGANIZATION
------------

McNeil Real Estate Fund IX, Ltd. (the  "Partnership") was organized May 1, 1978,
as a limited  partnership  under  provisions of the California  Uniform  Limited
Partnership  Act. The general partner of the Partnership is McNeil Partners L.P.
(the "General Partner"), a Delaware limited partnership,  an affiliate of Robert
A. McNeil  ("McNeil").  The  Partnership  is governed by an amended and restated
partnership  agreement  dated  November  12,  1991,  as  amended  (the  "Amended
Partnership   Agreement").   Prior  to  November  12,  1991,  Pacific  Investors
Corporation (the prior "Corporate General Partner"),  a wholly-owned  subsidiary
of Southmark Corporation ("Southmark"),  and McNeil were the general partners of
the Partnership, which was governed by an agreement of limited partnership dated
May 1, 1978 (the  "Original  Partnership  Agreement").  The  principal  place of
business for the Partnership  and the General Partner is 13760 Noel Road,  Suite
600, LB70, Dallas, Texas, 75240.

On  January  10,  1979,  a  Registration  Statement  on Form  S-11 was  declared
effective by the  Securities  and Exchange  Commission  whereby the  Partnership
offered for sale $55,000,000 of limited  partnership units ("Units").  The Units
represent equity interests in the Partnership and entitle the holders thereof to
participate in certain  allocations and  distributions of the  Partnership.  The
sale of Units closed on September 7, 1979, with 110,000 Units sold at $500 each,
or gross proceeds of $55,000,000 to the Partnership.  In addition,  the original
general  partners  purchased an additional  200 Units for $100,000.  In 1993, 30
Units were relinquished leaving 110,170 Units outstanding at December 31, 1998.

SOUTHMARK BANKRUPTCY AND ASSET PURCHASE AGREEMENT
-------------------------------------------------

On July 14, 1989,  Southmark filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. Neither the Partnership,  McNeil nor the
Corporate   General   Partner   were   included  in  the   filing.   Southmark's
reorganization  plan became  effective  August 10, 1990. Under the plan, most of
Southmark's  assets,  which  included  Southmark's  interests  in the  Corporate
General Partner, were sold or liquidated for the benefit of creditors.

In  accordance  with  Southmark's  reorganization  plan,  Southmark,  McNeil and
various of their affiliates  entered into an asset purchase agreement on October
12, 1990,  providing for, among other things,  the transfer of control to McNeil
or his affiliates of 34 limited partnerships  (including the Partnership) in the
Southmark portfolio.

On February 14,  1991,  pursuant to the asset  purchase  agreement as amended on
that date: (a) an affiliate of McNeil purchased the Corporate  General Partner's
economic  interest in the  Partnership;  (b) McNeil became the managing  general
partner of the Partnership  pursuant to an agreement with the Corporate  General
Partner  that  delegated  management  authority  to McNeil;  and (c) McNeil Real
Estate Management,  Inc. ("McREMI"), an affiliate of McNeil, acquired the assets
relating to the property management and partnership  administrative  business of
Southmark  and its  affiliates  and commenced  management  of the  Partnership's
properties  pursuant  to an  assignment  of  the  existing  property  management
agreements from the Southmark affiliates.

<PAGE>
On November 12, 1991, the limited  partners  approved a  restructuring  proposal
that  provided for (i) the  replacement  of the  Corporate  General  Partner and
McNeil with the General  Partner;  (ii) the adoption of the Amended  Partnership
Agreement,   which   substantially   altered  the  provisions  of  the  Original
Partnership   Agreement   relating   to,  among  other   things,   compensation,
reimbursement  of expenses,  and voting rights;  and (iii) the approval of a new
property management agreement with McREMI, the Partnership's property manager.

The  Amended   Partnership   Agreement  provides  for  a  Management   Incentive
Distribution  ("MID") to replace all other forms of general partner compensation
other  than  property  management  fees and  reimbursements  of  certain  costs.
Additional  Units  may be  issued  in  connection  with the  payment  of the MID
pursuant  to  the  Amended  Partnership  Agreement.  See  Item  8  -  Note  2  -
"Transactions  with  Affiliates."  For  a  discussion  of  the  methodology  for
calculating  and  distributing  MID,  see Item 13 -  Certain  Relationships  and
Related Transactions.

Settlement of Claims:

The  Partnership  filed claims with the United States  Bankruptcy  Court for the
Northern  District of Texas,  Dallas Division (the  "Bankruptcy  Court") against
Southmark for damages relating to improper  overcharges,  breach of contract and
breach of fiduciary duty. The Partnership settled these claims in 1991, and such
settlement was approved by the Bankruptcy Court.

An Order Granting  Motion to Distribute  Funds to Class 8 Claimants  dated April
14, 1995, was issued by the Bankruptcy  Court.  In accordance with the Order, in
May 1995, the Partnership  received in full satisfaction of its claims,  $53,573
in cash, and common and preferred stock in the reorganized  Southmark.  The cash
and  stock  represent  the  Partnership's  pro-rata  share of  Southmark  assets
available for Class 8 claimants.  The Partnership  sold the Southmark common and
preferred  stock in May 1995 for  $17,244  which,  when  combined  with the cash
proceeds  from  Southmark,  resulted in a gain on  settlement  of  litigation of
$70,817.

CURRENT OPERATIONS
------------------

General:

The Partnership is engaged in real estate  activities,  including the ownership,
operation  and  management  of  residential  real  estate and other real  estate
related  assets.   At  December  31,  1998,  the   Partnership   owned  thirteen
income-producing properties as described in Item 2 - Properties.

The  Partnership  does not directly  employ any personnel.  The General  Partner
conducts the business of the  Partnership  directly and through its  affiliates.
The  Partnership  is  managed  by  the  General  Partner.  The  Partnership  has
reimbursed  affiliates of the General Partner for certain  expenses  incurred by
the affiliates in connection with the management of the Partnership.  See Item 8
- Note 2 - "Transactions With Affiliates."

The business of the Partnership to date has involved only one industry  segment.
See Item 8 - Financial Statements and Supplementary Data. The Partnership has no
foreign operations. The business of the Partnership is not seasonal.




<PAGE>
Business Plan:

As previously announced, the Partnership has retained PaineWebber,  Incorporated
("PaineWebber")  as its exclusive  financial advisor to explore  alternatives to
maximize  the  value  of  the  Partnership,  including,  without  limitation,  a
transaction  in which  limited  partnership  interests  in the  Partnership  are
converted into cash. The Partnership,  through  PaineWebber,  provided financial
and other  information to interested  parties as part of an auction  process and
until early March 1999 was conducting  discussions with one bidder in an attempt
to reach a definitive  agreement  with respect to a sale  transaction.  In early
March 1999, because the Partnership had been unable to conclude negotiations for
a transaction with such bidder, the Partnership  terminated such discussions and
commenced   discussions   with  respect  to  a  sale  transaction  with  another
well-financed  bidder who had been  involved in the  original  auction  process.
During  the last full  week of  March,  the  Partnership  entered  into a 45 day
exclusivity  agreement with such party.  It is possible that the General Partner
and its  affiliates  will receive  non-cash  consideration  for their  ownership
interests in  connection  with any such  transaction.  There can be no assurance
regarding whether any such agreement will be reached nor the terms thereof.

The  Partnership  placed  Sheraton  Hills  Apartments  on the  market  for  sale
effective August 1, 1997.

Competitive Conditions:

Since the  principal  business of the  Partnership  is to own and  operate  real
estate,  the Partnership is subject to all of the risks incident to ownership of
real estate and interests  therein,  many of which relate to the  illiquidity of
this type of  investment.  These  risks  include  changes  in  general  or local
economic conditions,  changes in supply or demand for competing properties in an
area,  changes in interest rates and  availability  of permanent  mortgage funds
which  may  render  the  sale  or  refinancing   of  a  property   difficult  or
unattractive, changes in real estate and zoning laws, increases in real property
tax rates and Federal or local  economic or rent  controls.  The  illiquidity of
real estate  investments  generally  impairs the ability of the  Partnership  to
respond  promptly  to  changed  circumstances.  The  Partnership  competes  with
numerous established companies, private investors (including foreign investors),
real estate investment trusts,  limited partnerships and other entities (many of
which have greater  resources than the Partnership) in connection with the sale,
financing  and  leasing  of  properties.  The  impact  of  these  risks  on  the
Partnership,   including   losses  from   operations  and   foreclosure  of  the
Partnership's  properties,  is described in Item 7 - Management's Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations.  See  Item 2 -
Properties  for a discussion  of  competitive  conditions  at the  Partnership's
properties.

Forward-Looking Information:

Within this document,  certain  statements are made as to the expected occupancy
trends,  financial  condition,  results  of  operations,  and cash  flows of the
Partnership  for periods after  December 31, 1998.  All of these  statements are
forward-looking  statements  made pursuant to the safe harbor  provisions of the
Private  Securities  Litigation  Reform Act of 1995.  These  statements  are not
historical  and  involve  risks  and  uncertainties.  The  Partnership's  actual
occupancy trends, financial condition, results of operations, and cash flows for
future  periods may differ  materially  due to several  factors.  These  factors
include,  but are not limited to, the  Partnership's  ability to control  costs,
make necessary  capital  improvements,  negotiate  sales or  refinancings of its
properties, and respond to changing economic and competitive factors.
<PAGE>
Environmental Matters:

Environmental laws create potential liabilities that may affect property owners.
The environmental  laws of Federal and certain state  governments,  for example,
impose liability on current and certain past owners of property from which there
is a release  or threat of  release  of  hazardous  substances.  This  liability
includes costs of investigation and remediation of the hazardous  substances and
natural resource  damages.  Liability for costs of investigation and remediation
is strict and may be imposed  irrespective  of whether the property owner was at
fault,  although  there are a number of  defenses.  Both  governments  and third
parties may seek recoveries under these laws.

Third parties also may seek  recovery  under the common law for damages to their
property  or person,  against  owners of  property  from which  there has been a
release of hazardous and other substances.

The presence of  contamination  or the failure to remediate  contaminations  may
adversely  affect the owner's  ability to sell or lease real estate or to borrow
using the real estate as collateral.

Various  buildings at properties do or may contain  building  materials that are
the subject of various  regulatory  programs  intended to protect  human health.
Such building materials include,  for example,  asbestos,  lead-based paint, and
lead plumbing components.  The Company has implemented programs to deal with the
presence  of those  materials,  which  include,  as  appropriate,  reduction  of
potential  exposure  situations.  The Company does not believe that the costs of
such programs are likely to have a material adverse effect. Failure to implement
such programs can result in regulatory  violations or liability claims resulting
from alleged exposure to such materials.

In connection with the proposed sale  transaction as more fully described above,
Phase I  environmental  site  assessments  have been completed for each property
owned  by the  Partnership.  Such  environmental  assessments  performed  on the
properties  have not revealed any  environmental  liability that the Partnership
believes  would have a material  adverse effect on the  Partnership's  business,
assets,  or results of operations.  The Partnership has not been notified by any
governmental  authority  of any  non-compliance,  liability  or  other  claim in
connection with any of its properties. There can be no assurances, however, that
environmental   liabilities   have  not  developed   since  such   environmental
assessments were prepared, or that future uses or conditions (including, without
limitation,  changes in applicable  environmental laws and regulations) will not
result in imposition of environmental liability.

Other Information:

In August 1995, High River Limited  Partnership,  a Delaware limited partnership
controlled by Carl C. Icahn ("High River") made an  unsolicited  tender offer to
purchase from holders of Units up to approximately  45% of the outstanding Units
of the  Partnership  for a purchase  price of $143 per Unit. In September  1996,
High River made another  unsolicited tender offer to purchase any and all of the
outstanding  Units of the  Partnership for a purchase price of $180 per Unit. In
addition,   High  River  made  unsolicited   tender  offers  for  certain  other
partnerships controlled by the General Partner. The Partnership recommended that
the  limited  partners  reject  the  tender  offers  made  with  respect  to the
Partnership and not tender their Units.  The General Partner believes that as of
February  1,  1999,  High  River  has  purchased   approximately  14.2%  of  the
outstanding  Units  pursuant to the tender offers.  In addition,  all litigation
filed by High River,  Mr. Icahn and his affiliates in connection with the tender
offers have been dismissed without prejudice.
<PAGE>
ITEM 2.  PROPERTIES
-------  ----------

The  table  below  sets  forth  the  real  estate  investment  portfolio  of the
Partnership  at December 31, 1998.  The buildings and the land on which they are
located  are owned by the  Partnership  in fee,  subject in each case to a first
lien deed of trust as set forth more fully in Item 8 - Note 5 - "Mortgage  Notes
Payable." See also Item 8 - Note 4 - "Real Estate  Investments" and Schedule III
- "Real Estate  Investments  and  Accumulated  Depreciation."  In the opinion of
management, the properties are adequately covered by insurance.

<TABLE>
<CAPTION>
                                              Net Basis                            1998               Date
Property              Description            of Property          Debt          Property Tax        Acquired
--------              -----------          ---------------   --------------    -------------        --------
Real Estate Investments:

Berkley Hills (1)     Apartments
<S>                   <C>                  <C>               <C>               <C>                     <C> 
Madison, TN           251 units            $     1,930,102   $    3,163,101    $      82,176           6/79

Cherry Hills (2)      Apartments
Wichita, KS           348 units                  3,907,920        4,386,254           78,722           6/80

Forest Park
  Village (3)         Apartments
Columbus, OH          376 units                  3,336,937        5,925,000          194,155           12/79

Heather Square        Apartments
Dallas, TX            288 units                  3,583,673        2,983,359          187,113           10/79

Lantern Tree (4)      Apartments
Omaha, NE             110 units                  1,270,282        2,275,537           65,398           7/79

Meridian West (5)     Apartments
Puyallup, WA          181 units                  2,069,819        3,173,307           82,063           1/80

Pennbrook (6)         Apartments
Dallas, TX            216 units                  2,865,573        3,099,899          167,907           1/80

Rockborough (7)       Apartments
Addison, TX           136 units                  1,976,807        2,094,218           81,556           1/80

Rolling Hills (8)     Apartments
Louisville, KY        400 units                  3,198,082        6,650,000           78,294           9/79

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                              Net Basis                            1998               Date
Property              Description            of Property          Debt          Property Tax        Acquired
--------              -----------          ---------------   --------------    -------------        --------

Ruskin Place (9)      Apartments
<S>                   <C>                        <C>              <C>                <C>               <C>  
Lincoln, NE           270 units                  2,665,592        4,460,660          152,874           12/79

Westgate (10)         Apartments
Lansing, MI           264 units                  2,420,779        5,697,461          136,628           12/79

Williamsburg (11)     Apartments
Shreveport, LA        194 units                  2,024,194        2,577,772           81,919           12/79
                                            --------------    -------------     ------------

                                           $    31,249,760   $   46,486,568    $   1,388,805
                                            ==============    =============     ============

Asset Held for Sale:

Sheraton Hills        Apartments
Nashville, TN         272 units            $     3,140,461   $    2,702,620    $     110,889            6/79
                                            ==============    =============     ============
----------------------------
</TABLE>

Total:    Apartments  -  3,306 units

(1)        Berkley Hills  Apartments is owned by Berkley Hills  Associates which
           is wholly-owned by the Partnership and the General Partner.

(2)        Cherry  Hills  Apartments  is owned by Cherry  Hills  Fund IX Limited
           Partnership which is wholly-owned by the Partnership.

(3)        Forest   Park   Village Apartments is   owned  by Forest Park Fund IX
           Associates   Limited   Partnership   which  is  wholly-owned  by  the
           Partnership and the General Partner.

(4)        Lantern  Tree  Apartments  is owned by  Lantern  Tree Fund IX Limited
           Partnership which is wholly-owned by the Partnership.

(5)        Meridian  West  Apartments  is owned by Meridian West Fund IX Limited
           Partnership which is wholly-owned by the Partnership.

(6)        Pennbrook  Apartments  is owned by Pennbrook Fund IX Associates, L.P.
           which is wholly-owned by the Partnership and the General Partner.

(7)        Rockborough  Apartments   is   owned by  Rockborough  Fund IX Limited
           Partnership which is wholly-owned by the Partnership.

(8)        Rolling Hills Apartments is owned by Rolling Hills Fund IX Associates
           L.P.  which  is  wholly-owned  by the  Partnership  and  the  General
           Partner.


<PAGE>
(9)        Ruskin Place  Apartments  is owned by Ruskin Place Fund IX Associates
           which is wholly-owned by the Partnership and the General Partner.

(10)       Westgate Apartments (formerly known as Sherwood Forest Apartments) is
           owned by Sherwood Forest Fund IX Associates  which is wholly-owned by
           the Partnership and the General Partner.

(11)       Williamsburg  Apartments   is  owned by Williamsburg  Fund IX Limited
           Partnership which is wholly-owned by the Partnership.

The  following  table sets  forth the  properties'  occupancy  rate and rent per
square foot for each of the last five years:

<TABLE>
<CAPTION>
                                        1998           1997            1996           1995           1994
                                    -------------  -------------  --------------  -------------  ----------
Real Estate Investments:

Berkley Hills
<S>                                       <C>            <C>            <C>            <C>             <C>
   Occupancy Rate............             93%            94%            93%            98%             98%
   Rent Per Square Foot......       $    6.31       $   6.10       $   5.94        $  5.69         $  5.35

Cherry Hills
   Occupancy Rate............             89%            98%            95%            89%             89%
   Rent Per Square Foot......       $    6.45       $   6.50       $   6.21        $  5.75         $  5.80

Forest Park Village
   Occupancy Rate............             93%            90%            90%            85%             92%
   Rent Per Square Foot......       $    6.68       $   6.26       $   6.24        $  5.80         $  5.57

Heather Square
   Occupancy Rate............             96%            98%            97%            99%             99%
   Rent Per Square Foot......       $    8.24       $   7.94       $   7.60        $  7.00         $  6.61

Lantern Tree
   Occupancy Rate............             88%            91%            89%            99%             99%
   Rent Per Square Foot......       $    7.74       $   7.79       $   7.61        $  7.58         $  7.07

Meridian West
   Occupancy Rate............             97%            93%            95%            93%             90%
   Rent Per Square Foot......       $    8.05       $   7.75       $   7.39        $  7.18         $  6.99

Pennbrook
   Occupancy Rate............             98%            96%            97%            98%             94%
   Rent Per Square Foot......       $    8.86       $   8.43       $   8.12        $  7.62         $  7.23

Rockborough
   Occupancy Rate............             98%            96%            99%            97%             99%
   Rent Per Square Foot......       $    8.93       $   8.42       $   8.25        $  7.80         $  7.40

Rolling Hills
   Occupancy Rate............             93%            97%            95%            94%             97%
   Rent Per Square Foot......       $    5.06       $   4.92       $   4.81        $  4.66         $  4.33


<PAGE>
                                        1998           1997            1996           1995           1994
                                    -------------  -------------  --------------  -------------  ----------
Real Estate Investments:

Ruskin Place
   Occupancy Rate............             97%            99%            94%            97%             96%
   Rent Per Square Foot......       $    7.55       $   7.20       $   7.08        $  6.78         $  6.47

Westgate
   Occupancy Rate............             89%            92%            87%            86%             92%
   Rent Per Square Foot......       $    6.97       $   6.83       $   6.52        $  6.66         $  6.51

Williamsburg
   Occupancy Rate............             93%            93%            92%            95%             99%
   Rent Per Square Foot......       $    6.53       $   6.41       $   6.39        $  6.22         $  5.86

Asset Held for Sale:

Sheraton Hills
   Occupancy Rate............             96%            96%            90%            98%             97%
   Rent Per Square Foot......       $    6.46       $   6.26       $   5.72        $  5.53         $  5.14
</TABLE>

Occupancy rate  represents all units leased divided by the total number of units
of the  property  as of  December  31 of the given  year.  Rent per square  foot
represents all revenue,  except  interest,  derived from the property divided by
the leasable square footage of the property.

Competitive Conditions
----------------------

Real Estate Investments:

Berkley Hills Apartments
------------------------

New  construction is beginning to have an effect on Berkley Hills Apartments and
the surrounding  Nashville area. Rental specials were prevalent  throughout 1998
and are expected to continue in 1999.  Market  occupancy  rates have fallen from
the high to the mid 90's.  Berkley  Hills  works to  maintain  occupancy  levels
through resident  retention and outside marketing  programs.  Continuing capital
improvements  are necessary for Berkley Hills to remain  competitive with nearby
apartment  communities.  Most of the new  construction  is  directed  at upscale
single residents, while Berkley Hills targets middle class families and singles.

Cherry Hills Apartments
-----------------------

Cherry Hills Apartments is one of Wichita's finer apartment communities in terms
of interior and exterior appearance.  However, layoffs at local employers during
the fourth quarter of 1998,  combined with new apartment projects in the Wichita
area  are  causing  decreased  occupancy,   decreased  rental  rates,  increased
marketing  expenditures  and special  promotions  throughout the market.  Cherry
Hills year-end  occupancy  rate of 89% trails the market average of 91%.  Rental
rates, which have been higher than competitors'  rates, are being adjusted until
occupancy stabilizes.



<PAGE>
Forest Park Village Apartments
------------------------------

Forest  Park  Village   Apartments  expects  to  complete  a  five-year  capital
improvement program later this year. Exterior  renovations are largely complete,
and interior upgrades are in process. The capital program is needed to allow the
property to compete with numerous other  apartment  communities in the Northeast
Columbus  submarket.  Forest Park Village  represents  a common  property in the
submarket,  with no distinguishing  characteristics  other than basements in all
its  units.  The  submarket  is very  competitive,  and  many  of the  competing
properties have been renovated in the past few years.

Heather Square Apartments
-------------------------

Occupancy  rates at Heather  Square  Apartments  typically run 1 or 2 percentage
points above the market due to the excellent  curb appeal of the  property.  The
property also is able to command rental rates  slightly  higher than most of its
competition.  Competition is mixed in the Dallas  submarket where Heather Square
is located.  As long as the local economy remains strong, it is anticipated that
the property  will do well in  competition  with both older  properties  and new
construction  under  development.  Annual  absorption of apartment  units in the
property's  submarket has roughly  equaled newly  constructed  units in the past
three years.

Lantern Tree Apartments
-----------------------

New  apartment  construction  and  staffing  turnover  contributed  to increased
vacancy at Lantern  Tree during  1998.  However,  the  property  has a desirable
location,  close to a newly developed  business park. Lantern Tree compares well
with its competition due to spacious and attractive floor plans. A turnaround in
occupancy rates is expected at Lantern Tree as new construction is absorbed, and
a stable staff  contributes  operating  efficiencies.  The  property  appeals to
single,  upper-middle class residents. The principal competitive disadvantage of
the  property  is its  location  which  is set back  from the main  thoroughfare
reducing its drive-by visibility.

Meridian West Apartments
------------------------

The economy in Meridian West Apartments'  submarket  remains strong,  leading to
improved  operating  results at the property.  Vacancy losses  decreased in both
1997 and 1998. The property  increased base rental rates in 1997 and 1998, after
a  period  of no or very  small  increases.  The  improved  cash  flow is  being
reinvested  in the  property to improve  the  competitiveness  of the  property.
Meridian West competes primarily with better quality apartment communities,  and
thus the  Partnership  generally  expects rental and occupancy  rates lower than
local market rates.


<PAGE>
Pennbrook Apartments
--------------------

Pennbrook  Apartments' year end occupancy rate of 98% exceeds the 95% average of
the  Dallas  submarket  where  the  property  is  located.   Extensive   capital
improvements   during   1991-1993  have   positioned  the  property  to  compete
effectively for the  middle-class,  single  residents that dominate its resident
profile.  The Dallas  market is  expected to remain  strong.  For the past three
years,  new apartment  construction  has roughly equaled the number of apartment
units absorbed by the market.  New construction is generally marketed toward the
higher end of the market, and should have little effect on Pennbrook.

Rockborough Apartments
----------------------

Rockborough  Apartments  boasts  excellent  curb  appeal,  which has enabled the
property to maintain  occupancy  levels above the 96% average  occupancy for the
property's  submarket.  Rockborough  compares well to the established  apartment
communities in the area. There is new construction in the area, but rental rates
are substantially higher than the rates charged at Rockborough.  The Dallas area
economy is expected to remain strong.  Most of the new  construction in the area
will be for high-quality apartment communities, and should have little effect on
Rockborough.

Rolling Hills Apartments
------------------------

The area  surrounding  Rolling Hills Apartments  continues to experience  strong
growth. Capital improvements at Rolling Hills the past three years have upgraded
the  property  to  compete  more  effectively  with the  high-quality  apartment
communities in the immediate area.  Rolling Hills offers the largest floor plans
in the area.  The unit  interiors are being  updated to better  compete with the
newer properties in Rolling Hills' submarket.  The property's  average occupancy
rate is in line with the  Louisville  market's 93% average,  but average  rental
rates are lower than market  rates.  Rolling  Hills is a good  quality  property
competing against properties of even better quality.

Ruskin Place Apartments
-----------------------

Vinyl  residing at Ruskin Place  Apartments  has improved  the  property's  curb
appeal and  resulted  in a year-end  occupancy  rate of 97% as  compared  to the
market's 93%. Ruskin Place Apartments has steadily improved its performance over
the past  several  years  despite  competitive  pressures  from newer  apartment
properties in the Lincoln market.  The newer  properties and new construction in
progress have put upward pressure on local rental rates. Ruskin Place Apartments
has been able to offer its units at lower,  but still rising rental rates.  This
trend is expected to continue given the population increases and stable economic
conditions in the local area.


<PAGE>
Westgate Apartments
-------------------

The exterior  appearance of Westgate  Apartments is much improved as a result of
several capital  projects  completed  during 1997 and 1998.  Additional  capital
improvements  are needed at Westgate to maintain the property's  position in the
market.  The exterior and interiors of the units are dated.  Occupancy rates are
averaging four percentage  points below competing  properties,  and rental rates
are averaging approximately 85% of the average rental rates charged by competing
properties.  Nine percent of  Westgate's  units are three and four bedroom floor
plans,  which are the only three and four bedroom  units in the area.  The local
economy is doing very well,  with  unemployment at 2.6%. The property also has a
good location in a desirable school district.

Williamsburg Apartments
-----------------------

Competition from new and refurbished  apartment  communities is putting pressure
on Williamsburg  Apartments' financial performance.  Although the occupancy rate
remains  slightly  above the city-wide  average,  rental rate  increases will be
limited for the next year or two.  Improvements  in cost  controls  and resident
retention  will be key to improved  operating  results.  The property is in good
condition,  with only minor capital  improvements  needed.  The property  offers
attractive floor plans with interiors that are being upgraded with new fixtures.
Nearby  Barksdale  Air Force Base and a growing  gambling  industry  provide the
employment base for many of the property's tenants.

Asset Held for Sale:

Sheraton Hills Apartments
-------------------------

The year-end  occupancy  rate at Sheraton  Hills  Apartments  was 96%, above the
submarket's  average of 94%. The Nashville  apartment  market is overbuilt,  and
developers are planning new apartment projects for 1999. Although Sheraton Hills
will not compete directly with the new  construction,  the new construction will
tend to slow the increases in rental rates that older  properties  may expect in
coming  years.  Sheraton  Hills  will  continue  to  focus on  selected  capital
improvements  and  its  excellent  reputation  for  service  that  has  promoted
decreased  tenant turnover.  On August 1, 1997, the Partnership  placed Sheraton
Hills on the market for sale.


<PAGE>
ITEM 3.  LEGAL PROCEEDINGS
-------  -----------------

The Partnership is not party to, nor are any of the Partnership's properties the
subject of, any material pending legal proceedings, other than ordinary, routine
litigation incidental to the Partnership's business, except for the following:

James F.  Schofield,  Gerald C. Gillett,  Donna S. Gillett,  Jeffrey  Homburger,
Elizabeth Jung,  Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P.,
McNeil Investors,  Inc., McNeil Real Estate Management,  Inc., Robert A. McNeil,
Carole J. McNeil,  McNeil Pacific  Investors Fund 1972, Ltd., McNeil Real Estate
Fund IX,  Ltd.,  McNeil Real  Estate  Fund X, Ltd.,  McNeil Real Estate Fund XI,
Ltd.,  McNeil  Real Estate Fund XII,  Ltd.,  McNeil Real Estate Fund XIV,  Ltd.,
McNeil Real Estate Fund XV, Ltd.,  McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXI, L.P.,  McNeil Real Estate Fund XXII,  L.P.,  McNeil Real Estate
Fund XXIII,  L.P.,  McNeil Real Estate Fund XXIV, L.P.,  McNeil Real Estate Fund
XXV,  L.P.,  McNeil  Real Estate  Fund XXVI,  L.P.,  and McNeil Real Estate Fund
XXVII,  L.P., Hearth Hollow  Associates,  McNeil Midwest  Properties I, L.P. and
Regency North Associates,  L.P., - Superior Court of the State of California for
the  County of Los  Angeles,  Case No.  BC133799  (Class and  Derivative  Action
Complaint).

The action involves  purported  class and derivative  actions brought by limited
partners  of each  of the  limited  partnerships  that  were  named  as  nominal
defendants as listed above (the  "Partnerships").  Plaintiffs allege that McNeil
Investors, Inc., its affiliate McNeil Real Estate Management,  Inc. and three of
their senior officers and/or directors (collectively, the "Defendants") breached
their  fiduciary  duties and certain  obligations  under the respective  Amended
Partnership  Agreement.  Plaintiffs  allege that  Defendants  have rendered such
Units highly illiquid and  artificially  depressed the prices that are available
for Units on the resale market.  Plaintiffs also allege that Defendants  engaged
in a course of conduct to prevent the  acquisition  of Units by an  affiliate of
Carl  Icahn  by  disseminating  purportedly  false,  misleading  and  inadequate
information.  Plaintiffs  further allege that Defendants  acted to advance their
own personal  interests at the expense of the Partnerships'  public unit holders
by failing to sell Partnership  properties and failing to make  distributions to
unitholders.

On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint.
Plaintiffs  are suing for breach of  fiduciary  duty,  breach of contract and an
accounting,  alleging,  among other things, that the management fees paid to the
McNeil affiliates over the last six years are excessive,  that these fees should
be reduced retroactively and that the respective Amended Partnership  Agreements
governing the Partnerships are invalid.

Defendants  filed a demurrer to the  consolidated  and amended  complaint  and a
motion to strike on February 14, 1997,  seeking to dismiss the  consolidated and
amended complaint in all respects.  A hearing on Defendant's demurrer and motion
to strike  was held on May 5,  1997.  The Court  granted  Defendants'  demurrer,
dismissing  the  consolidated  and  amended  complaint  with leave to amend.  On
October  31,  1997,  the  Plaintiffs  filed a second  consolidated  and  amended
complaint. The case was stayed pending settlement discussions.  A Stipulation of
Settlement dated September 15, 1998 has been signed by the parties.  Preliminary
Court  approval was received on October 6, 1998. A hearing for Final Approval of
Settlement, initially scheduled for December 17, 1998, has been continued to May
25, 1999.



<PAGE>
Because McNeil Real Estate Fund XXIII,  L.P., Hearth Hollow  Associates,  McNeil
Midwest  Properties I, L.P. and Regency North Associates,  L.P. would be part of
the  transaction  contemplated  in the settlement  and Plaintiffs  claim that an
effort should be made to sell the McNeil Partnerships,  Plaintiffs have included
allegations with respect to McNeil Real Estate Fund XXIII,  L.P.,  Hearth Hollow
Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P.
in the third consolidated and amended complaint.

Plaintiff's  counsel  intends  to seek an  order  awarding  attorney's  fees and
reimbursements  of their  out-of-pocket  expenses.  The  amount of such award is
undeterminable  until  final  approval  is  received  from the  court.  Fees and
expenses shall be allocated amongst the Partnerships on a pro rata basis,  based
upon  tangible  asset value of each such  partnership,  less total  liabilities,
calculated in accordance with the Amended Partnership Agreements for the quarter
most recently ended.

For a discussion of the Southmark bankruptcy, see Item 1 - Business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------- ---------------------------------------------------

None.

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND
------- ------------------------------------------------------------
        RELATED SECURITY HOLDER MATTERS
        -------------------------------

(A)   There is no  established  public  trading  market for limited  partnership
      units, nor is one expected to develop.

(B)      Title of Class                       Number of Record Unit Holders
         --------------                       -----------------------------

         Limited partnership units            4,102 as of February 1, 1999

(C)   The Partnership  paid  distributions  of $2,300,008 and $2,749,992 to  the
      limited partners in 1998 and 1997,  respectively.  During the last week of
      March 1999, the Partnership distributed  approximately $749,000 to limited
      partners  of  record  as  of  March  1,  1999.  The  Partnership   accrued
      distributions  of MID of $1,164,510  and $1,137,022 for the benefit of the
      General   Partner  for  the  years  ended  December  31,  1998  and  1997,
      respectively, of which $1,518,681 remains unpaid at December 31, 1998. See
      Item  8  -  Note  2  -  "Transactions  with  Affiliates."  See  Item  7  -
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations for a discussion of the likelihood  that the  Partnership  will
      continue distributions to the limited partners.


<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
------- -----------------------

The  following  table sets forth a summary  of  certain  financial  data for the
Partnership.  This summary should be read in conjunction with the  Partnership's
financial  statements  and  notes  thereto  appearing  in  Item  8  -  Financial
Statements and Supplementary Data.

<TABLE>
<CAPTION>
Statements of                                                          Years Ended December 31,
Operations                                  1998             1997             1996             1995              1994
------------------                     ------------      ------------     ------------      ------------     ------------
<S>                                    <C>               <C>              <C>               <C>             <C>          
Rental revenue ...................     $ 20,638,884      $ 19,947,518     $ 19,732,110      $ 19,123,434     $ 18,202,306
Total revenue ....................       20,818,593        20,616,269       19,964,950        19,567,182       18,642,220
Net income (loss) before
  extraordinary items ............          483,203           977,262         (293,982)         (328,996)        (387,787)
Extraordinary items ..............         (405,235)               --               --                --               --
Net income (loss) ................           77,968           977,262         (293,982)         (328,996)        (387,787)

Net income (loss) per limited
  partnership unit:
Net income (loss) before
  extraordinary items ............     $       4.17      $       2.46     $     (13.21)     $      (9.19)    $      (9.21)
Extraordinary items ..............            (3.50)               --               --                --               --
                                       ------------      ------------     ------------      ------------      ------------
Net income (loss) ................     $        .67      $       2.46     $     (13.21)     $      (9.19)    $      (9.21)
                                       ============      ============     ============      ============      ============

Distributions per limited
  partnership unit: ..............     $      20.88      $      24.96     $         --      $         --     $         --
                                       ============      ============     ============      ============      ============

                                                                           December 31,
Balance Sheets                             1998              1997             1996              1995             1994
--------------                         ------------      ------------     ------------      ------------     ------------

Real estate investments, net...        $ 31,249,760      $ 33,419,436     $ 38,308,605      $ 42,434,162     $ 42,830,552
Asset held for sale............           3,140,461         3,009,553               --                --               --
Total assets...................          41,373,306        44,051,144       47,650,109        49,970,886       51,749,891
Mortgage notes payable, net....          49,189,188        49,745,307       50,600,006        51,390,822       52,098,952
Partners' deficit..............         (12,124,605)       (8,738,055)      (5,828,303)       (4,440,760)      (3,001,001)

</TABLE>
See Item 7 -  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations.  The  Partnership  sold Westridge  Apartments on July 30,
1996.


<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-------  ----------------------------------------------------------- 
         AND RESULTS OF OPERATIONS
         -------------------------

FINANCIAL CONDITION
-------------------

The  Partnership  was formed to  acquire,  operate and  ultimately  dispose of a
portfolio  of  income-producing  real  properties.  At  the  end  of  1998,  the
Partnership  owned  thirteen  apartment  properties.  All of  the  Partnership's
properties are subject to mortgage notes.

RESULTS OF OPERATIONS
---------------------

1998 compared to 1997

Revenues:

Rental revenue increased  $691,366 or 3.5% in 1998 as compared to rental revenue
earned  in  1997.  Rental  revenue  increased  at 11  of  the  Partnership's  13
properties.  All of the  Partnership's  properties  increased  base rental rates
during 1998.  The  increased  base rental rates were  complemented  by increased
average  occupancy  rates  at  Forest  Park  Village   Apartments,   Rockborough
Apartments,  Pennbrook  Apartments  and  Ruskin  Place  Apartments.  These  four
properties  increased  their total rental revenue by 7.0%,  6.1%, 5.1% and 4.9%,
respectively.  Average vacancy and other rental losses were unchanged at Berkley
Hills  Apartments and Meridian West  Apartments.  These two properties  reported
increased rental revenue of 3.6% and 3.8%,  respectively.  Increased base rental
rates were  partially  offset by increased  vacancy and other  rental  losses at
Heather Square Apartments, Rolling Hills Apartments,  Sheraton Hills Apartments,
Westgate Apartments and Williamsburg Apartments.  These five properties reported
increased  rental  revenue of 3.7%,  2.9%,  3.2%,  2.0% and 2.0%,  respectively.
Increased base rental rates were more than offset by increased vacancy and other
losses at  Cherry  Hills  Apartments  and  Lantern  Tree  Apartments.  These two
properties reported 0.7% and 0.6% decreases, respectively, in net rental revenue
for the year.

Interest  revenue  decreased  7.5% due to a decrease in the  average  balance of
Partnership cash and cash equivalents invested in interest-bearing accounts.

The  Partnership  reported a one-time  gain on  involuntary  conversion  in 1997
relating to a fire at Sheraton  Hills  Apartments.  No such gain was reported in
1998.

Expenses:

Partnership  expenses  increased  $696,383  or 3.5% in 1998 as compared to 1997.
Most expense  items were  comparable  in 1998 to amounts  reported in 1997.  The
Partnership  reported significant  increases in personnel expenses,  general and
administrative  expenses,  and  general  and  administrative  expenses  paid  to
affiliates.


<PAGE>
Personnel  expenses increased $294,846 or 12.2% in 1998 as compared to 1997. The
Partnership  increased  wage and salary  rates and  benefits  in order to retain
property  personnel in a competitive job market.  The increases were reported by
all of the Partnership's  properties,  but were especially noticeable at Rolling
Hills Apartments,  Pennbrook  Apartments,  Westgate  Apartments and Williamsburg
Apartments. Increased personnel costs at these four properties exceeded 14%.

General and administrative  expenses increased $612,466 to $778,596 in 1998. The
increase was attributable to costs incurred to explore  alternatives to maximize
the value of the Partnership (see Liquidity and Capital Resources).

General and administrative expenses paid to affiliates increased $41,034 or 9.0%
in 1998 as compared to 1997.  Costs associated with investor  relation  services
were  charged to general  and  administrative  during  1997.  Investor  relation
services,  beginning in 1998,  are now provided by an affiliate,  which accounts
for the increase in general and administrative expenses paid to affiliates.

The Partnership incurred a $405,235  extraordinary loss in 1998. The Partnership
refinanced  the Rolling Hills  mortgage note during 1998.  Unamortized  deferred
borrowing  costs  associated  with the prior mortgage note amounted to $405,235.
The  Partnership  wrote off the unamortized  costs when the  Partnership  closed
escrow on the new Rolling Hills mortgage note.

1997 compared to 1996

Revenues:

Rental  revenue  increased  $215,408 or 1.1% in 1997 compared to rental  revenue
achieved in 1996.  Excluding rental revenue from Westridge  Apartments,  sold by
the Partnership on July 30, 1996, rental revenue  increased  $613,921 or 3.1% in
1997 compared to 1996.  Rental revenues  increased at 11 of the Partnership's 13
remaining  properties.  Rental  revenue was  unchanged  at Forest  Park  Village
Apartments  and  Williamsburg  Apartments  as the increases in base rental rates
were matched by comparable  increases in vacancy losses. Of the Partnership's 11
other  properties,  10 increased base rental rates an average of 3.5%.  Meridian
West Apartments did not increase base rental rates,  but rental revenue improved
as vacancy losses  decreased by 19.1%.  Improving  occupancy  rates also boosted
rental revenue at Cherry Hills Apartments, Lantern Tree Apartments, and Westgate
Apartments.

In 1997,  the  Partnership  incurred a gain on involuntary  conversion  totaling
$474,376  relating to a fire that destroyed  twelve  apartment units at Sheraton
Hills Apartments. No such gains were recorded in 1996.

Expenses:

Partnership  expenses  decreased  $619,925  or 3.1% in 1997  compared  to  1996.
However,  after  excluding  both the loss on sale of  Westridge  Apartments  and
expenses  associated  with operations at Westridge  Apartments  before its sale,
expenses  remained  virtually  unchanged in 1997 compared to 1996.  Decreases in
general and administrative expenses and general and administrative expenses paid
to affiliates were partially offset by increased property taxes.

Excluding  Westridge  Apartments  for 1996,  property  taxes for 1997  increased
$114,337 or 8.3% over property taxes for 1996. The increase was due to increases
assessed  valuation and tax rates in Dallas  County,  Texas,  where three of the
Partnership's properties are located.


<PAGE>
General and  administrative  expenses decreased $172,168 or 51%. The decrease is
attributable  to  costs  relating  to  the  evaluation  and   dissemination   of
information  with regards to an unsolicited  tender offer in 1996. No such costs
were incurred in 1997.  Decreased  tender offer costs were  partially  offset by
investor services expenses that were paid to a non-affiliate vendor beginning in
1997.  Prior to 1997,  investor  services  were  provided by an affiliate of the
General  Partner,  and the  related  expenses  were  reported  with  general and
administrative expenses paid to affiliates.

General and  administrative  expenses  paid to affiliates  decreased  $83,821 or
15.6%.  Such  expenses are  generally  charged based on the number of properties
under  management.  The sale of Westridge  Apartments  during  1996,  as well as
decreased expenses incurred by the affiliates,  both contributed to the decrease
in expenses paid to affiliates. Also contributing to the decrease in general and
administrative  expenses paid to affiliates was the reclassification of investor
services  expenses to general and  administrative  expenses as  discussed in the
preceding paragraph.

Due to the sale of  Westridge  Apartments  on July  30,  1996,  the  Partnership
recognized a $220,157 loss on sale of real estate in 1996.  No  properties  were
disposed of during 1997.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

During the three year period  ended  December 31, 1998,  the  Partnership's  net
income  totaled  $761,248.  During the same three year period,  the  Partnership
generated $14,217,621 of cash flow from operating  activities.  Cash provided by
operating  activities  increased $459,526 or 9.5% in 1998 as compared to 1997. A
9.2%  increase in cash paid to suppliers  was more than offset by an increase in
cash received from tenants and decreases in interest  paid,  property taxes paid
and escrowed, and cash paid to affiliates.

The  Partnership  continued to invest in capital  improvements at its properties
during 1998. The Partnership  invested $1,841,522 in capital improvements during
1998.  These  expenditures  are  necessary  to  allow  the  Partnership's  aging
properties  to maintain  their appeal to current and  prospective  tenants.  The
Partnership  has budgeted an additional  $1,601,000 for capital  improvements in
1999.

The Partnership refinanced the Forest Park Village mortgage note and the Rolling
Hills mortgage note during 1998.  Proceeds from the  refinancings  were minimal,
only  $198,107.  Most of the  proceeds  from the  refinancings  were used to pay
deferred  borrowing costs  associated with the new borrowings.  The refinancings
reduced the  interest  rates on the two  mortgage  notes from 9.13% to 6.97% for
Forest Park Village, and from 9.25% to 7.00% for Rolling Hills. However, the new
interest  rates are variable rates based on the London  Interbank  Offered Rate.
The  Partnership  also  modified and extended the Sheraton  Hills  mortgage note
during 1998.  The interest rate on the modified note was changed from a variable
rate to a fixed rate of 6.90%. The Partnership's  next maturing mortgage note is
the Pennbrook mortgage note, which matures in February 2000. The General Partner
has begun exploring financing alternatives for the Pennbrook mortgage note.







<PAGE>
Short-term liquidity:

At  December  31,  1998,  the  Partnership  held  cash and cash  equivalents  of
$3,166,577,  a decrease  of $164,259  from the  balance at the end of 1997.  The
General Partner anticipates that cash generated from operations during 1999 will
be sufficient to fund the  partnership's  operating  expenses,  budgeted capital
improvements, and monthly debt service requirements.  Cash reserves are adequate
for anticipated operations during 1999.

Though reduced in scope from amounts incurred in previous years, the Partnership
will  continue  to  invest  substantial  sums in  capital  improvements  for the
Partnership's  properties.  The Partnership has budgeted  $1,601,000 for capital
improvements for 1999. The General Partner  believes these capital  improvements
are necessary to allow the  Partnership  to increase its rental  revenues in the
competitive  markets  in  which  the  Partnership's  properties  operate.  These
expenditures  also allow the Partnership to reduce future repair and maintenance
expenses from amounts that would otherwise be incurred.

Long-term liquidity:

For the long term,  property operations will remain the primary source of funds.
In this regard,  the General Partner expects that the approximately $6.3 million
of capital improvements made by the Partnership during the past three years will
yield improved cash flow from property operations in 1999.

While the present outlook for the Partnership's  liquidity is favorable,  market
conditions may change and property  operations can  deteriorate.  In that event,
the Partnership  would require other sources of working  capital.  No such other
sources have been  identified,  and the Partnership has no established  lines of
credit.  Other possible actions to resolve working capital  deficiencies include
refinancing or  renegotiating  terms of existing loans,  deferring major capital
expenditures on Partnership properties except where improvements are expected to
enhance the  competitiveness  or marketability  of the properties,  or arranging
working capital support from affiliates.  No affiliate support has been required
in the past,  and there is no assurance  that support from  affiliates  would be
provided in the future,  since  neither the General  Partner nor any  affiliates
have any obligation in this regard.

As previously announced, the Partnership has retained PaineWebber,  Incorporated
("PaineWebber")  as its exclusive  financial advisor to explore  alternatives to
maximize  the  value  of  the  Partnership,  including,  without  limitation,  a
transaction  in which  limited  partnership  interests  in the  Partnership  are
converted into cash. The Partnership,  through  PaineWebber,  provided financial
and other  information to interested  parties as part of an auction  process and
until early March 1999 was conducting  discussions with one bidder in an attempt
to reach a definitive  agreement  with respect to a sale  transaction.  In early
March 1999, because the Partnership had been unable to conclude negotiations for
a transaction with such bidder, the Partnership  terminated such discussions and
commenced   discussions   with  respect  to  a  sale  transaction  with  another
well-financed  bidder who had been  involved in the  original  auction  process.
During  the last full  week of  March,  the  Partnership  entered  into a 45 day
exclusivity  agreement with such party.  It is possible that the General Partner
and its  affiliates  will receive  non-cash  consideration  for their  ownership
interests in  connection  with any such  transaction.  There can be no assurance
regarding whether any such agreement will be reached nor the terms thereof.




<PAGE>
Income Allocations and Distributions:

Terms  of  the  Amended   Partnership   Agreement  specify  that  income  before
depreciation  is allocated  to the General  Partner to the extent of MID paid in
cash. Depreciation is allocated in the ratio of 95:5 to the limited partners and
the General Partner,  respectively.  Therefore, for the years ended December 31,
1998,   1997  and  1996,  net  income  of  $3,898,   $706,613  and   $1,161,697,
respectively,  was  allocated  to the  General  Partner.  The  limited  partners
received  allocations of net income of $74,070 and $270,649 and an allocation of
net loss of  $1,455,679  for the years ended  December 31, 1998,  1997 and 1996,
respectively.

The Partnership distributed $2,300,008 and $2,749,992 to the limited partners in
1998 and 1997,  respectively.  Approximately $2,042,000 of the 1997 distribution
represented proceeds from the sale of Westridge  Apartments.  The rest of 1997's
distribution,  and 1998's  distribution  represented  distributions of cash flow
from operations and from cash reserves of the Partnership.  During the last week
of March 1999, the Partnership distributed approximately $749,000 to the limited
partners of record as of March 1, 1999.  The General  Partner  will  continue to
monitor  the cash  reserves  and working  capital  needs of the  Partnership  to
determine when cash flows will support  additional  distributions to the limited
partners.

The  Partnership  paid $903,815 and $1,370,360 of MID to the General  Partner in
1997 and 1996,  respectively.  No MID payments were paid to the General  Partner
during 1998. The General Partner has elected to defer payment of  administrative
reimbursements  and MID so that the  Partnership  can pay  distributions  to the
limited partners.

YEAR 2000 DISCLOSURE
--------------------

State of readiness
------------------

The year 2000 problem is the result of computer programs being written using two
digits rather than four to define the  applicable  year.  Any programs that have
time-sensitive  software may recognize a date using "00" as the year 1900 rather
than  the  year  2000.   This  could   result  in  major   systems   failure  or
miscalculations.

Management has assessed its  information  technology  ("IT")  infrastructure  to
identify  any systems  that could be affected by the year 2000  problem.  The IT
used by the  Partnership  for  financial  reporting and  significant  accounting
functions was made year 2000 compliant  during recent systems  conversions.  The
software  utilized for these  functions  are licensed by third party vendors who
have warranted that their systems are year 2000 compliant.

Management  is  in  the  process  of  evaluating  the  mechanical  and  embedded
technological systems at the various properties.  Management has inventoried all
such systems and queried suppliers,  vendors and manufacturers to determine year
2000 compliance. Management will complete assessment of findings by May 1, 1999.
In  circumstances  of  non-compliance  management  will work with the  vendor to
remedy the  problem or seek  alternative  suppliers  who will be in  compliance.
Management believes that the remediation of any outstanding year 2000 conversion
issues  will  not  have a  material  or  adverse  effect  on  the  Partnership's
operations. However, no estimates can be made as to the potential adverse impact
resulting  from the failure of third party  service  providers and vendors to be
year 2000 compliant.
<PAGE>
Cost
----

The cost of IT and  embedded  technology  systems  testing  and  upgrades is not
expected to be material to the Partnership. Because all the IT systems have been
upgraded  over the last three years,  all such systems were  compliant,  or made
compliant at no additional cost by third party vendors.  Management  anticipates
the costs of assessing,  testing, and if necessary replacing embedded technology
components will be less than $50,000.  Such costs will be funded from operations
of the Partnership.

Risks
-----

Ultimately,  the potential impact of the year 2000 issue will depend not only on
the corrective measures the Partnership undertakes, but also on the way in which
the year 2000 issue is  addressed  by  government  agencies  and  entities  that
provide services or supplies to the  Partnership.  Management has not determined
the most likely worst case scenario to the  Partnership.  As management  studies
the findings of its property  systems  assessment and testing,  management  will
develop  a better  understanding  of what  would  be the  worst  case  scenario.
Management  believes  that  progress  on all  areas is  proceeding  and that the
Partnership  will  experience  no  adverse  effect  as a result of the year 2000
issue. However, there is no assurance that this will be the case.

Contingency plans
-----------------

Management  is  developing  contingency  plans to  address  potential  year 2000
non-compliance of IT and embedded technology  systems.  Management believes that
failure of any IT system could have an adverse  impact on  operations.  However,
management  believes  that  alternative  systems  are  available  that  could be
utilized to minimize  such impact.  Management  believes that any failure in the
embedded  technology  systems  could have an adverse  impact on that  property's
performance.  Management  will assess these risks and develop  plans to mitigate
possible failures by June, 1999.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------- ----------------------------------------------------------

Not Applicable.




<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------  -------------------------------------------

<TABLE>
<CAPTION>

                                                                                                      Page
                                                                                                      Number

INDEX TO FINANCIAL STATEMENTS

Financial Statements:

<S>                                                                                                      <C>
   Report of Independent Public Accountants.......................................                       20

   Balance Sheets at December 31, 1998 and 1997...................................                       21

   Statements of Operations for each of the three years in the period
      ended December 31, 1998.....................................................                       22

   Statements of Partners' Deficit for each of the three years in the
      period ended December 31, 1998..............................................                       23

   Statements of Cash Flows for each of the three years in the
      period ended December 31, 1998..............................................                       24

   Notes to Financial Statements..................................................                       26

   Financial Statement Schedule:

      Schedule III - Real Estate Investments and Accumulated
         Depreciation.............................................................                       37

</TABLE>



All other schedules are omitted because they are not applicable or the financial
information  required  is  included  in the  financial  statements  or the notes
thereto.


<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Partners of
McNeil Real Estate Fund IX, Ltd.:


We have audited the  accompanying  balance sheets of McNeil Real Estate Fund IX,
Ltd. (a California  limited  partnership)  as of December 31, 1998 and 1997, and
the related statements of operations,  partners' deficit and cash flows for each
of the three  years in the period  ended  December  31,  1998.  These  financial
statements  and the  schedule  referred to below are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of McNeil Real Estate Fund IX,
Ltd. as of December 31, 1998 and 1997, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements  taken as a whole.  The  schedule  listed  in the index to
financial  statements is presented for purposes of complying with the Securities
and  Exchange  Commission's  rules  and  is not  part  of  the  basic  financial
statements.  This schedule has been subjected to the auditing procedures applied
in our audits of the basic  financial  statements  and, in our  opinion,  fairly
states in all material  respects  the  financial  data  required to be set forth
therein in relation to the basic financial statements taken as a whole.


/s/  Arthur Andersen LLP


Dallas, Texas
    March 19, 1999



<PAGE>
                        McNEIL REAL ESTATE FUND IX, LTD.

                                 BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                          December 31,
                                                                ---------------------------------
                                                                     1998               1997
                                                                -------------       -------------
ASSETS
------

Real estate investments:
<S>                                                             <C>                  <C>         
   Land ................................................        $  6,074,303         $  6,074,303
   Buildings and improvements ..........................          78,522,699           76,812,085
                                                                ------------         ------------
                                                                  84,597,002           82,886,388
   Less:  Accumulated depreciation .....................         (53,347,242)         (49,466,952)
                                                                ------------         ------------
                                                                  31,249,760           33,419,436

Asset held for sale ....................................           3,140,461            3,009,553

Cash and cash equivalents ..............................           3,166,577            3,330,836
Cash segregated for security deposits ..................             627,813              622,602
Cash restricted for mortgage payments ..................             545,624                   --
Accounts receivable ....................................              46,633               92,135
Prepaid expenses and other assets ......................             150,907              181,856
Escrow deposits ........................................           1,126,898            1,663,701
Deferred borrowing costs, net of accumulated
   amortization of $899,576 and $1,144,486 at
   December 31, 1998 and 1997, respectively ............           1,318,633            1,731,025
                                                                ------------         ------------

                                                                $ 41,373,306         $ 44,051,144
                                                                ============         ============

LIABILITIES AND PARTNERS' DEFICIT
---------------------------------

Mortgage notes payable, net ............................        $ 49,189,188         $ 49,745,307
Accounts payable .......................................                 110               99,710
Accrued interest .......................................             333,927              361,422
Accrued property taxes .................................             989,317            1,136,213
Other accrued expenses .................................             357,506              251,555
Payable to affiliates - General Partner ................           2,042,507              591,289
Security deposits and deferred rental revenue ..........             585,356              603,703
                                                                ------------         ------------
                                                                  53,497,911           52,789,199
                                                                ------------         ------------

Partners' deficit:
   Limited partners - 110,200 limited partnership
     units authorized, 110,170 limited partnership
     units issued and outstanding ......................          (7,734,963)          (5,509,025)
   General Partner .....................................          (4,389,642)          (3,229,030)
                                                                ------------         ------------
                                                                 (12,124,605)          (8,738,055)
                                                                ------------         ------------
                                                                $ 41,373,306         $ 44,051,144
                                                                ============         ============
</TABLE>

                 See accompanying notes to financial statements.
<PAGE>
                        McNEIL REAL ESTATE FUND IX, LTD.

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                             For the Years Ended December 31,
                                                   -----------------------------------------------------
                                                       1998                 1997               1996
                                                   ------------         ------------        ------------
Revenue:
<S>                                                <C>                  <C>                 <C>         
   Rental revenue .........................        $ 20,638,884         $ 19,947,518        $ 19,732,110
   Interest ...............................             179,709              194,375             232,840
   Gain on involuntary conversion .........                  --              474,376                  --
                                                   ------------         ------------        ------------
     Total revenue ........................          20,818,593           20,616,269          19,964,950
                                                   ------------         ------------        ------------

Expenses:
   Interest ...............................           4,513,501            4,776,243           4,796,060
   Depreciation ...........................           3,880,290            3,944,030           4,173,260
   Property taxes .........................           1,499,694            1,489,209           1,392,027
   Personnel expenses .....................           2,714,327            2,419,481           2,437,597
   Repairs and maintenance ................           2,757,251            2,697,986           2,621,322
   Property management fees -
     affiliates ...........................           1,022,893              992,361             978,168
   Utilities ..............................           1,592,482            1,630,672           1,634,169
   Other property operating expenses ......           1,081,446            1,069,019           1,130,177
   General and administrative .............             778,596              166,130             338,298
   General and administrative -
     affiliates ...........................             494,910              453,876             537,697
   Loss on sale of real estate ............                  --                   --             220,157
                                                   ------------         ------------        ------------
     Total expenses .......................          20,335,390           19,639,007          20,258,932
                                                   ------------         ------------        ------------

Income (loss) before extraordinary
   item ...................................             483,203              977,262            (293,983)
Extraordinary item ........................            (405,235)                  --                  --
                                                   ------------         ------------        ------------

Net income (loss) .........................        $     77,968         $    977,262        $   (293,982)
                                                   ============         ============        ============

Net income (loss) allocated to limited
   partners ...............................        $     74,070         $    270,649        $ (1,455,679)
Net income allocated to the
   General Partner ........................               3,898              706,613           1,161,697
                                                   ------------         ------------        ------------

Net income (loss) .........................        $     77,968         $    977,262        $   (293,982)
                                                   ============         ============        ============

Net income (loss) per limited
   partnership unit:
   Income (loss) before extraordinary
     item .................................        $       4.17         $       2.46        $     (13.21)
   Extraordinary item .....................               (3.50)                  --                  --
                                                   ------------         ------------        ------------

   Net income (loss) per limited
     partnership unit .....................        $        .67         $       2.46        $     (13.21)
                                                   ============         ============        ============

Distributions per limited partnership
   unit ...................................        $      20.88         $      24.96        $         --
                                                   ============         ============        ============
</TABLE>

                 See accompanying notes to financial statements.
<PAGE>
                        McNEIL REAL ESTATE FUND IX, LTD.

                         STATEMENTS OF PARTNERS' DEFICIT

              For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                                                                             Total
                                                  General                Limited           Partners'
                                                  Partner               Partners            Deficit
                                                -------------        -------------        -------------
<S>                                             <C>                  <C>                  <C>          
Balance at December 31, 1995 ...........        $ (2,826,757)        $ (1,574,003)        $ (4,400,760)

Net income (loss) ......................           1,161,697           (1,455,679)            (293,982)

Management Incentive Distribution.......          (1,133,561)                  --           (1,133,561)
                                                ------------         ------------         ------------

Balance at December 31, 1996 ...........          (2,798,621)          (3,029,682)          (5,828,303)

Net income .............................             706,613              270,649              977,262

Management Incentive Distribution ......          (1,137,022)                  --           (1,137,022)

Distributions to limited partners ......                  --           (2,749,992)          (2,749,992)
                                                ------------         ------------         ------------

Balance at December 31, 1997 ...........          (3,229,030)          (5,509,025)          (8,738,055)

Net income .............................               3,898               74,070               77,968

Management Incentive Distribution ......          (1,164,510)                  --           (1,164,510)

Distributions to limited partners ......                  --           (2,300,008)          (2,300,008)
                                                ------------         ------------         ------------

Balance at December 31, 1998 ...........        $ (4,389,642)        $ (7,734,963)        $(12,124,605)
                                                ============         ============         ============

</TABLE>



                 See accompanying notes to financial statements.
<PAGE>
                        McNEIL REAL ESTATE FUND IX, LTD.

                            STATEMENTS OF CASH FLOWS

                Increase (Decrease) in Cash and Cash Equivalents


<TABLE>
<CAPTION>
                                                               For the Years Ended December 31,
                                                    -------------------------------------------------------
                                                         1998                 1997                1996
                                                    -------------        -------------        -------------

Cash flows from operating activities:
<S>                                                 <C>                  <C>                  <C>         
   Cash received from tenants ..............        $ 20,654,298         $ 19,915,413         $ 19,717,808
   Cash paid to suppliers ..................          (8,682,398)          (7,954,190)          (8,488,048)
   Cash paid to affiliates .................          (1,231,095)          (1,367,871)          (1,507,719)
   Interest received .......................             179,709              194,375              232,840
   Interest paid ...........................          (4,298,253)          (4,485,836)          (4,557,296)
   Property taxes paid and escrowed ........          (1,307,661)          (1,446,817)          (1,349,638)
                                                    ------------         ------------         ------------
Net cash provided by operating
   activities ..............................           5,314,600            4,855,074            4,047,947
                                                    ------------         ------------         ------------

Cash flows from investing activities:
   Additions to real estate
     investments ...........................          (1,841,522)          (2,064,414)          (2,398,428)
   Insurance proceeds for fire and
     hail damage ...........................                  --              546,069                   --
   Proceeds from sale of real estate .......                  --                   --            2,042,384
   Mortgage note receivable ................                  --            1,550,000           (1,550,000)
                                                    ------------         ------------         ------------
Net cash provided by (used in)
   investing activities ....................          (1,841,522)              31,655           (1,906,044)
                                                    ------------         ------------         ------------

Cash flows from financing activities:
   Principal payments on mortgage
     notes payable .........................            (800,763)            (903,607)            (829,604)
   Cash restricted for mortgage
     payments ..............................            (545,624)                  --                   --
   Net proceeds from refinancing of
     mortgage notes payable ................             198,107                   --                   --
   Additions to deferred borrowing
     costs .................................            (189,049)                  --                   --
   Management Incentive Distribution .......                  --             (903,815)          (1,370,360)
   Distributions to limited partners .......          (2,300,008)          (2,749,992)                  --
                                                    ------------         ------------         ------------
Net cash used in financing
   activities ..............................          (3,637,337)          (4,557,414)          (2,199,964)
                                                    ------------         ------------         ------------

Net increase (decrease) in cash
   and cash equivalents ....................            (164,259)             329,315              (58,061)

Cash and cash equivalents at
   beginning of year .......................           3,330,836            3,001,521            3,059,582
                                                    ------------         ------------         ------------

Cash and cash equivalents at end
   of year .................................        $  3,166,577         $  3,330,836         $  3,001,521
                                                    ============         ============         ============
</TABLE>

See  discussion  of  noncash  investing  and  financing  activities  in Note 2 -
"Transactions  with  Affiliates"  and Note 7 -  "Refinancing  of Mortgage  Notes
Payable."
                 See accompanying notes to financial statements.
<PAGE>

                        McNEIL REAL ESTATE FUND IX, LTD.

                            STATEMENTS OF CASH FLOWS

                     Reconciliation of Net Income (Loss) to
                    Net Cash Provided by Operating Activities
<TABLE>
<CAPTION>

                                                              For the Years Ended December 31,
                                                    ----------------------------------------------------
                                                        1998                1997                1996
                                                    -----------         -----------         ------------

<S>                                                 <C>                 <C>                 <C>         
Net income (loss) ..........................        $    77,968         $   977,262         $  (293,982)
                                                    -----------         -----------         -----------

Adjustments to reconcile net income
   (loss) to net cash provided by
   operating activities:
   Depreciation ............................          3,880,290           3,944,030           4,173,260
   Amortization of discounts on
     mortgage notes payable ................             46,537              48,908              38,788
   Amortization of deferred borrowing
     costs .................................            196,206             248,633             206,160
   Extraordinary item ......................            405,235                  --                  --
   Gain on involuntary conversion ..........                 --            (474,376)                 --
   Loss on sale of real estate .............                 --                  --             220,157
   Changes in assets and liabilities:
     Cash segregated for security
       deposits ............................             (5,211)            (50,853)            (37,140)
     Accounts receivable ...................             45,502             (32,264)             54,496
     Insurance proceeds receivable .........                 --              16,491                  --
     Prepaid expenses and other
       assets ..............................             30,949              32,641               9,462
     Escrow deposits .......................            536,803            (262,053)             16,741
     Accounts payable ......................            (99,600)             99,710            (266,777)
     Accrued interest ......................            (27,495)             (7,134)             (6,184)
     Accrued property taxes ................           (146,896)            208,110             (34,148)
     Other accrued expenses ................            105,951             (19,672)            (34,795)
     Payable to affiliates - General
       Partner .............................            286,708              78,366               8,146
     Security deposits and deferred
       rental revenue ......................            (18,347)             47,275              (6,237)
                                                    -----------         -----------         -----------

         Total adjustments .................          5,236,632           3,877,812           4,341,929
                                                    -----------         -----------         -----------

Net cash provided by operating
     activities ............................        $ 5,314,600         $ 4,855,074         $ 4,047,947
                                                    ===========         ===========         ===========
</TABLE>


                 See accompanying notes to financial statements.
<PAGE>

                        McNEIL REAL ESTATE FUND IX, LTD.

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 1998


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------

Organization
------------

McNeil Real Estate Fund IX, Ltd.  (the  "Partnership")  was  organized on May 1,
1978 as a limited  partnership  under the provisions of the  California  Uniform
Limited  Partnership  Act.  The  general  partner of the  Partnership  is McNeil
Partners  L.P. (the  "General  Partner"),  a Delaware  limited  partnership,  an
affiliate of Robert A.  McNeil.  The  Partnership  is governed by an amended and
restated partnership agreement dated November 12, 1991, as amended (the "Amended
Partnership Agreement"). The principal place of business for the Partnership and
the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240.

The Partnership is engaged in real estate  activities,  including the ownership,
operation  and  management  of  residential  real  estate and other real  estate
related assets. At December 31, 1998, the Partnership owned 13  income-producing
properties as described in Note 4 - "Real Estate Investments."

As previously announced, the Partnership has retained PaineWebber,  Incorporated
("PaineWebber")  as its exclusive  financial advisor to explore  alternatives to
maximize  the  value  of  the  Partnership,  including,  without  limitation,  a
transaction  in which  limited  partnership  interests  in the  Partnership  are
converted into cash. The Partnership,  through  PaineWebber,  provided financial
and other  information to interested  parties as part of an auction  process and
until early March 1999 was conducting  discussions with one bidder in an attempt
to reach a definitive  agreement  with respect to a sale  transaction.  In early
March 1999, because the Partnership had been unable to conclude negotiations for
a transaction with such bidder, the Partnership  terminated such discussions and
commenced   discussions   with  respect  to  a  sale  transaction  with  another
well-financed  bidder who had been  involved in the  original  auction  process.
During  the last full  week of  March,  the  Partnership  entered  into a 45 day
exclusivity  agreement with such party.  It is possible that the General Partner
and its  affiliates  will receive  non-cash  consideration  for their  ownership
interests in  connection  with any such  transaction.  There can be no assurance
regarding whether any such agreement will be reached nor the terms thereof.

Basis of Presentation
---------------------

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles ("GAAP").  The preparation of financial
statements in conformity  with GAAP  requires  management to make  estimates and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.



<PAGE>
The  Partnership's  financial  statements  include  the  accounts  of  the  tier
partnerships listed on the next page for the years ended December 31, 1998, 1997
and 1996.  These single asset tier  partnerships  were formed to accommodate the
refinancings  of  the  related   properties.   The  ownership  interest  of  the
Partnership and the General Partner in each tier  partnership is detailed below.
The Partnership retains effective control of each tier partnership.  The General
Partner's  minority  interest is not presented  because it is either negative or
immaterial.

<TABLE>
<CAPTION>
                                                                   % of Ownership Interest
   Tier Partnership                                             Partnership   General Partner
   ----------------                                             -----------   ---------------
   Limited partnerships:
<S>                                                                <C>             <C> 
  Cherry Hills Fund IX Limited Partnership (a) ............        100%            -
  Forest Park Fund IX Associates Limited Partnership.......         99             1%
  Lantern Tree Fund IX Limited Partnership (a) ............        100             -
  Meridian West Fund IX Limited Partnership (a) ...........        100             -
  Pennbrook Fund IX Associates, L.P. ......................         99             1
  Rockborough Fund IX Limited Partnership (a) .............        100             -
  Rolling Hills Fund IX Associates, L.P. ..................         99             1
  Williamsburg Fund IX Limited Partnership (a) ............        100             -

General partnerships:
  Berkley Hills Associates ................................         99             1
  Ruskin Place Fund IX Associates .........................         99             1
  Sherwood Forest Fund IX Associates ......................         99             1
</TABLE>

(a) The general partner of these  partnerships  is a corporation  whose stock is
100% owned by the Partnership.

Adoption of Recent Accounting Pronouncements
--------------------------------------------

The Partnership has adopted Statement of Financial Accounting Standards No. 131,
"Disclosures  About  Segments of an Enterprise  and Related  Information  ("SFAS
131"). SFAS 131 requires an enterprise to report financial information about its
reportable operating segments, which are defined as components of a business for
which  separate  financial  information  is  evaluated  regularly  by the  chief
decision  maker  in  allocating   resources  and  assessing   performance.   The
Partnership  does not  prepare  such  information  for  internal  use,  since it
analyzes  the   performance  of  and  allocates   resources  for  each  property
individually.  The Partnership's  management has determined that it operates one
line of business and it would be  impracticable  to report segment  information.
Therefore, the adoption of SFAS 131 has no impact on the Partnership's financial
statements.



<PAGE>
Real Estate Investments
-----------------------

Real estate investments are generally stated at the lower of depreciated cost or
fair value. Real estate investments are reviewed for impairment  whenever events
or changes in  circumstances  indicate  that their  carrying  amounts may not be
recoverable in accordance with Statement of Financial  Accounting  Standards No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed Of". When the carrying value of a property exceeds the sum
of all estimated  future cash flows, an impairment  loss is recognized.  At such
time,  a  write-down  is  recorded  to reduce the basis of the  property  to its
estimated fair value.

Improvements and betterments are capitalized and expensed  through  depreciation
charges. Repairs and maintenance are charged to operations as incurred.

Asset Held for Sale
-------------------

The asset held for sale is stated at the lower of depreciated cost or fair value
less costs to sell.  Depreciation ceased at the time the asset was placed on the
market for sale.

Depreciation
------------

Buildings and improvements are depreciated using the  straight-line  method over
the estimated useful lives of the assets, ranging from 3 to 32 years.

Cash and Cash Equivalents
-------------------------

Cash  and  cash  equivalents  include  cash on hand  and  cash on  deposit  with
financial  institutions  with  original  maturities  of  three  months  or less.
Carrying amounts for cash and cash equivalents approximate fair value.

Escrow Deposits
---------------

The  Partnership is required to maintain  escrow accounts in accordance with the
terms of various  mortgage  agreements.  These escrow accounts are controlled by
the  mortgagee  and are used for payment of property  taxes,  hazard  insurance,
capital improvements and/or property  replacements.  Carrying amounts for escrow
deposits approximate fair value.

Deferred Borrowing Costs
------------------------

Loan fees and other related costs incurred to obtain long-term financing on real
property are  capitalized  and amortized  using a method that  approximates  the
effective  interest method over the terms of the related mortgage notes payable.
Amortization of deferred  borrowing costs is included in interest expense on the
Statements of Operations.






<PAGE>
Discounts on Mortgage Notes Payable
-----------------------------------

Discounts on mortgage  notes payable are amortized  over the remaining  terms of
the related mortgage notes using the effective interest method.  Amortization of
discounts  on mortgage  notes  payable is  included  in interest  expense on the
Statements of Operations.

Rental Revenue
--------------

The Partnership leases its properties under short-term  operating leases.  Lease
terms generally are less than one year in duration. Rental revenue is recognized
as earned.

Income Taxes
------------

No provision for Federal  income taxes is necessary in the financial  statements
of the  Partnership  because,  as a  partnership,  it is not  subject to Federal
income tax and the tax effect of its  activities  accrues to the  partners.  See
Note 3 - "Taxable Income (Loss)."

Allocation of Net Income and Net Loss
-------------------------------------

The Amended  Partnership  Agreement  provides  for net income or net loss of the
Partnership for both financial statement and income tax reporting purposes to be
allocated as indicated below. For allocation  purposes,  net income and net loss
of the Partnership are determined prior to deductions for depreciation.

(a)     First,  5% of all deductions for  depreciation shall be allocated to the
        General  Partner,  and 95% of all deductions for depreciation shall   be
        allocated to the limited partners;

(b)     then,  an  amount  of net  income  equal  to the  cumulative  amount  of
        Management  Incentive  Distribution  ("MID") paid to the General Partner
        for  which  no  income  has  previously  been  allocated  (see  Note 2 -
        "Transactions  with  Affiliates")  shall  be  allocated  to the  General
        Partner;  however,  if all or a portion of the MID  consists  of limited
        partnership  units  ("Units"),  the amount of net income so allocated to
        the  General  Partner  shall be equal to the amount of cash the  General
        Partner would have otherwise received;

(c)     then, any remaining net income shall be allocated to the General Partner
        and to the  limited  partners  so that the total  amount  of net  income
        allocated to the General  Partner  pursuant to  paragraph  (b) above and
        this  paragraph  (c),  and to the  limited  partners  pursuant  to  this
        paragraph  (c),  shall be in the ratio of 5% to the General  Partner and
        95% to the limited partners.

(d)     Net  loss  shall be allocated 95% percent to the limited partners and 5%
        to the General Partner.






<PAGE>
Federal  income tax law provides  that the  allocation of loss to a partner will
not be  recognized  unless the  allocation  is in  accordance  with a  partner's
interest in the partnership or the allocation has substantial  economic  effect.
Internal  Revenue  Code Section  704(b) and  accompanying  Treasury  Regulations
establish  criteria for  allocations of Partnership  deductions  attributable to
debt. The  Partnership's  tax allocations for 1998, 1997 and 1996 have been made
in accordance with these provisions.

Distributions
-------------

Pursuant to the Amended Partnership  Agreement and at the sole discretion of the
General  Partner,  distributions  during  each  taxable  year  shall  be made as
follows:

(a)  first, to the General Partner, an amount equal to the MID; and

(b)  any remaining distributable cash, as defined, shall be distributed 100%  to
     the limited partners.

The Partnership  paid  distributions of $2,300,008 and $2,749,992 to the limited
partners  in 1998 and  1997,  respectively.  No  distributions  were paid to the
limited  partners in 1996.  The  Partnership  paid or accrued  distributions  of
$1,164,510, $1,137,022 and $1,133,561 for the benefit of the General Partner for
the  years  ended  December  31,  1998,  1997  and  1996,  respectively.   These
distributions  are the MID pursuant to the Amended  Partnership  Agreement.  The
General  Partner has waived the collection  terms of  reimbursable  expenses and
MID, and has elected for the  Partnership to pay limited  partner  distributions
before the  payment of such  amounts.  During the last week of March  1999,  the
Partnership distributed  approximately $749,000 to limited partners of record as
of March 1, 1999.

Net Income (Loss) Per Limited Partnership Unit
----------------------------------------------

Net income  (loss) per limited  partnership  unit is  computed  by dividing  net
income (loss)  allocated to the limited  partners by the weighted average number
of Units  outstanding.  Per Unit  information has been computed based on 110,170
Units outstanding in 1998, 1997 and 1996.

NOTE 2 - TRANSACTIONS WITH AFFILIATES
-------------------------------------

The  Partnership  pays property  management fees equal to 5% of the gross rental
receipts of the Partnership's properties to McNeil Real Estate Management,  Inc.
("McREMI"),  an  affiliate  of  the  General  Partner,  for  providing  property
management and leasing services for the Partnership's properties.

The  Partnership  reimburses  McREMI  for  its  costs,  including  overhead,  of
administering the Partnership's affairs.


<PAGE>
Under terms of the Amended  Partnership  Agreement,  the Partnership is paying a
MID to the General Partner.  The maximum MID is calculated as 1% of the tangible
asset value of the Partnership.  Tangible asset value is determined by using the
greater of (i) an amount  calculated by applying a capitalization  rate of 9% to
the annualized net operating  income of each property or (ii) a value of $10,000
per apartment unit to arrive at the property  tangible asset value. The property
tangible  asset  value  is then  added to the book  value  of all  other  assets
excluding  intangible  items.  The maximum MID  percentage  decreases to .75% in
2000, .50% in 2001 and .25% thereafter.

The MID will be paid to the  extent of the  lesser of the  Partnership's  excess
cash flow as defined,  or net  operating  income,  as defined (the  "Entitlement
Amount"),  and may be paid (i) in cash, unless there is insufficient cash to pay
the  distribution  in which event any unpaid  portion not taken in Units will be
deferred and is payable,  without interest, from the first available cash and/or
(ii) in Units.  A maximum of 50% of the MID may be paid in Units.  The number of
Units  issued in payment  of the MID is based on the  greater of $50 per Unit or
the net tangible asset value, as defined,  per Unit. During 1998, 1997 and 1996,
no Units were issued as payment for the MID.

During  1991,  the  Partnership  amended  its  capitalization  policy  and began
capitalizing  certain costs of improvements  and betterments that under policies
of  prior  management  had been  expensed  when  incurred.  The  purpose  of the
amendment was to more properly recognize items which were capital in nature. The
effect of the amendment  standing alone was evaluated at the time the change was
made and  determined  not to be  material  to the  financial  statements  of the
Partnership  in 1991,  nor was it expected  to be  material in any future  year.
However,  the amendment  can have a material  effect on the  calculation  of the
Entitlement   Amount  which  determines  the  amount  of  MID  earned.   Capital
improvements  are  excluded  from cash flow,  as defined.  The  majority of base
period cash flow was measured under the previous  capitalization  policy,  while
incentive  period cash flow is determined  using the amended  policy.  Under the
amended  policy,  more  items  are  capitalized,  and cash flow  increases.  The
amendment of the  capitalization  policy did not  materially  affect the MID for
1998, 1997 or 1996 because the Entitlement  Amount was sufficient to pay the MID
notwithstanding the amendment to the capitalization policy.

Any  amount of the MID which is paid to the  General  Partner  in Units  will be
treated as if cash is distributed to the General Partner and is then contributed
to the Partnership by the General Partner. The MID represents a return of equity
to the General Partner for increasing cash flow, as defined,  and accordingly is
treated as a distribution.


<PAGE>
Compensation and  reimbursements  paid or accrued for the benefit of the General
Partner or its affiliates are as follows:

<TABLE>
<CAPTION>
                                                           For the Years Ended December 31,
                                                   ----------------------------------------------
                                                      1998              1997               1996
                                                   ----------        ----------        ----------

Property management fees -
<S>                                                <C>               <C>               <C>       
   affiliates .............................        $1,022,893        $  992,361        $  978,168
Charged to general and
   administrative - affiliates:
   Partnership administration .............           494,910           453,876           537,697
                                                   ----------        ----------        ----------

                                                   $1,517,803        $1,446,237        $1,515,865
                                                   ==========        ==========        ==========

Charged to General Partner's deficit:
   Management Incentive Distribution ......        $1,164,510        $1,137,022        $1,133,561
                                                   ==========        ==========        ==========
</TABLE>

Payable to  affiliates - General  Partner at December  31,  1998,  1997 and 1996
consists of MID,  reimbursable costs and property  management fees which are due
and  payable  from  current  operations.  The  General  Partner  has  waived the
collection  terms of MID and  reimbursable  expenses,  and has  elected  for the
Partnership  to pay  limited  partner  distributions  before the payment of such
amounts.

NOTE 3 - TAXABLE INCOME (LOSS)
------------------------------

McNeil Real Estate Fund IX, Ltd. is a partnership  and is not subject to Federal
and state income taxes.  Accordingly,  no  recognition  has been given to income
taxes in the  accompanying  financial  statements of the  Partnership  since the
income or loss of the  Partnership  is to be  included in the tax returns of the
individual  partners.  The  tax  returns  of  the  Partnership  are  subject  to
examination by Federal and state taxing authorities. If such examinations result
in  adjustments  to  distributive  shares of  taxable  income  or loss,  the tax
liability of the partners could be adjusted accordingly.

The  Partnership's  net assets and liabilities for tax purposes exceeded the net
assets and  liabilities  for financial  reporting  purposes by of $12,087,333 in
1998, $10,256,886 in 1997 and $9,965,434 in 1996.


<PAGE>
NOTE 4 - REAL ESTATE INVESTMENTS
--------------------------------

The  basis  and  accumulated  depreciation  of  the  Partnership's  real  estate
investments at December 31, 1998 and 1997 are set forth in the following tables:

<TABLE>
<CAPTION>
                                                   Buildings and         Accumulated          Net Book
       1998                         Land           Improvements         Depreciation            Value
       ----                    --------------     ---------------    -----------------    ---------------
Berkley Hills
<S>                            <C>                <C>                <C>                  <C>            
   Madison, TN                 $      246,988     $     6,311,660    $     (4,628,546)    $     1,930,102
Cherry Hills
   Wichita, KS                        514,205           9,237,103          (5,843,388)          3,907,920
Forest Park Village
   Columbus, OH                       716,395           9,708,790          (7,088,248)          3,336,937
Heather Square
   Dallas, TX                         853,746           7,667,049          (4,937,122)          3,583,673
Lantern Tree
   Omaha, NE                          217,809           3,497,514          (2,445,041)          1,270,282
Meridian West,
   Puyallup, WA                       253,167           5,044,312          (3,227,660)          2,069,819
Pennbrook
   Dallas, TX                         692,515           6,391,245          (4,218,187)          2,865,573
Rockborough
   Addison, TX                        427,932           3,993,552          (2,444,677)          1,976,807
Rolling Hills
   Louisville, KY                     557,249           9,232,101          (6,591,268)          3,198,082
Ruskin Place
   Lincoln, NE                        920,061           5,539,926          (3,794,395)          2,665,592
Westgate
   Lansing, MI                        390,482           6,483,030          (4,452,733)          2,420,779
Williamsburg,
   Shreveport, LA                     283,754           5,416,417          (3,675,977)          2,024,194
                                -------------       -------------       -------------       -------------
                               $    6,074,303      $   78,522,699      $  (53,347,242)     $   31,249,760
                                =============       =============       =============       =============

                                                   Buildings and        Accumulated           Net Book
       1997                          Land           Improvements        Depreciation            Value
       ----                    --------------      --------------     ----------------    ---------------

Berkley Hills                  $      246,988      $    6,220,925     $    (4,288,137)    $     2,179,776
Cherry Hills                          514,205           9,077,853          (5,446,503)          4,145,555
Forest Park Village                   716,395           9,476,403          (6,534,031)          3,658,767
Heather Square                        853,746           7,532,362          (4,589,173)          3,796,935
Lantern Tree                          217,809           3,419,718          (2,273,390)          1,364,137
Meridian West                         253,167           4,935,765          (3,017,699)          2,171,233
Pennbrook                             692,515           6,277,433          (3,923,455)          3,046,493
Rockborough                           427,932           3,894,836          (2,251,909)          2,070,859
Rolling Hills                         557,249           9,010,108          (6,062,834)          3,504,523
Ruskin Place                          920,061           5,296,955          (3,508,282)          2,708,734
Westgate                              390,482           6,341,774          (4,148,250)          2,584,006
Williamsburg                          283,754           5,327,953          (3,423,289)          2,188,418
                                -------------       -------------       -------------       -------------
                               $    6,074,303      $   76,812,085      $  (49,466,952)     $   33,419,436
                                =============       =============       =============       =============
</TABLE>
<PAGE>
On August 1, 1997, the General Partner placed Sheraton Hills Apartments, located
in Nashville,  Tennessee,  on the market for sale.  Accordingly,  Sheraton Hills
Apartments is classified as an asset held for sale on the  accompanying  Balance
Sheets.  The net book value of Sheraton  Hills  Apartments  was  $3,140,461  and
3,009,553 at December 31, 1998 and 1997, respectively.

The results of operations for Sheraton Hills  Apartments are $557,955,  $797,974
and $146,983 for 1998,  1997 and 1996,  respectively.  Results of operations are
operating  revenues  including  gain on involuntary  conversion,  less operating
expenses including depreciation and interest expense.

NOTE 5 - MORTGAGE NOTES PAYABLE
--------------------------------

The table below sets forth the  mortgage  notes  payable of the  Partnership  at
December  31,  1998 and 1997.  All  mortgage  notes are  secured by real  estate
investments.

<TABLE>
<CAPTION>
                           Mortgage           Annual           Monthly
                             Lien            Interest         Payments/                  December 31,
Property                 Position (a)         Rates %     Maturity Date (h)         1998               1997
--------                 ------------         -------     -----------------   ---------------     --------------

<S>                      <C>                  <C>          <C>       <C>      <C>                 <C>           
Berkley Hills            First                8.750        $26,005   12/23    $     3,163,101     $    3,196,776
                                                                                -------------      -------------

Cherry Hills (c)         First                8.150         39,353   07/03          4,459,799          4,563,841
                         Discount (b)                                                 (73,545)           (87,777)
                                                                                -------------      -------------
                                                                                    4,386,254          4,476,064
                                                                                -------------      -------------

Forest Park Village(d)   First                 (d)           (d)     03/01          5,925,000                  -
                         First                9.125         59,732                          -          5,861,401
                                                                                -------------      -------------
                                                                                    5,925,000          5,861,401
                                                                                -------------      -------------

Heather Square           First                9.625         38,250   03/09          2,983,359          3,146,577
                                                                                -------------      -------------

Lantern Tree (c)         First                8.150         20,416   07/03          2,313,727          2,367,704
                         Discount (b)                                                 (38,190)           (45,580)
                                                                                -------------      -------------
                                                                                    2,275,537          2,322,124
                                                                                -------------      -------------

Meridian West (c)        First                8.150         28,471   07/03          3,226,564          3,301,837
                         Discount (b)                                                 (53,257)           (63,003)
                                                                                -------------      -------------
                                                                                    3,173,307          3,238,834
                                                                                -------------      -------------
</TABLE>



<PAGE>
<TABLE>
<CAPTION>


                           Mortgage           Annual           Monthly
                             Lien            Interest         Payments/                December 31,
Property                 Position (a)         Rates %     Maturity Date (h)         1998                1997
--------                 ------------         -------     -----------------   ---------------      -------------
<S>                      <C>                  <C>           <C>      <C>            <C>                <C>      
Pennbrook (e)            First                9.450         27,209   02/00          3,099,899          3,131,813
                                                                                -------------      -------------

Rockborough (c)          First                8.150         18,789   07/03          2,129,352          2,179,027
                         Discount (b)                                                 (35,134)           (41,934)
                                                                                -------------      -------------
                                                                                    2,094,218          2,137,093
                                                                                -------------      -------------

Rolling Hills (f)        First                 (f)           (f)     09/01          6,650,000                  -
                         First                9.250         55,389                          -          6,584,044
                                                                                -------------      -------------
                                                                                    6,650,000          6,584,044
                                                                                -------------      -------------

Ruskin Place             First                8.750         36,348   10/24          4,460,660          4,504,429
                                                                                -------------      -------------

Sheraton Hills (g)       First                6.900         17,844   11/01          2,702,620          2,747,663
                                                                                -------------      -------------

Westgate                 First                8.000         44,114   09/23          5,697,461          5,767,941
                                                                                -------------      -------------

Williamsburg (c)         First                8.150         23,128   07/03          2,621,019          2,682,164
                         Discount (b)                                                 (43,247)           (51,616)
                                                                                -------------      -------------
                                                                                    2,577,772          2,630,548
                                                                                -------------      -------------

                                                       Total                  $    49,189,188     $   49,745,307
                                                                                =============      =============
</TABLE>

(a)  The debt is non-recourse to the Partnership.

(b)   Mortgage discounts are based on an effective interest rate of 8.62%.

(c)  Financing for the mortgage  notes  referenced  above was obtained under the
     terms  of  a  Real  Estate  Mortgage  Investment  Conduit  financing.   The
     referenced mortgage notes are  cross-collateralized.  Principal prepayments
     made  before  July 2000 are  subject  to a Yield  Maintenance  Premium,  as
     defined.  Additionally, the Partnership must pay a release payment equal to
     25% of the prepaid balance that will be applied to the remaining referenced
     mortgage notes.





<PAGE>
(d)  On March 20,  1998,  the  Partnership  refinanced  the Forest Park  Village
     mortgage  note.  The new mortgage  note bears  interest at a variable  rate
     equal to 1.75%  plus the  London  Interbank  Offered  Rate  ("LIBOR").  The
     interest  rate is adjusted  every three  months.  Terms of the note require
     monthly interest-only debt service payments, plus annual principal payments
     equal to 5% of the outstanding principal balance. At December 31, 1998, the
     interest rate of the mortgage note was 6.97%.  See Note 7 - "Refinancing of
     Mortgage Notes Payable."

(e)  The  Pennbrook  mortgage  note  matures on  February  1, 2000.  The General
     Partner  is  exploring  financing  alternatives  to resolve  the  impending
     maturity of the mortgage note.

(f)  Effective  August 31, 1998,  the  Partnership  refinanced the Rolling Hills
     mortgage  note.  The new mortgage  note bears  interest at a variable  rate
     equal to 1.75% plus the LIBOR.  The interest  rate is adjusted  every three
     months.  Terms of the  note  require  monthly  interest-only  debt  service
     payments,  plus annual  principal  payments equal to 5% of the  outstanding
     principal balance.  At December 31, 1998, the interest rate of the mortgage
     note was 7.00%. See Note 7 - "Refinancing of Mortgage Notes Payable."

(g)  Effective  September  1,  1998,  the  Partnership  and the  Sheraton  Hills
     mortgage  note holder  modified and extended  the Sheraton  Hills  mortgage
     note. See Note 7 - "Refinancing of Mortgage Notes Payable."

(h)  Balloon payments on the Partnership's mortgage notes are due as follows:

<TABLE>
<CAPTION>
                      Property                                        Balloon Payment        Date
                      --------                                        ---------------        ----
<S>                                                                     <C>                  <C>  
                  Pennbrook...............................             $ 3,059,000           02/00
                  Forest Park Village.....................               5,347,000           03/01
                  Rolling Hills...........................               6,002,000           09/01
                  Sheraton Hills..........................               2,616,000           11/01
                  Cherry Hills............................               3,875,000           07/03
                  Lantern Tree............................               2,010,000           07/03
                  Meridian West...........................               2,804,000           07/03
                  Rockborough.............................               1,850,000           07/03
                  Williamsburg............................               2,278,000           07/03

Scheduled  principal  maturities of the mortgage  notes  payable under  existing
agreements, before consideration of discounts of $243,373, are shown below.

                  1999....................................             $ 1,406,054
                  2000....................................               4,470,108
                  2001....................................              14,839,224
                  2002....................................                 922,427
                  2003....................................              13,545,503
                  Thereafter..............................              14,249,245
                                                                        ----------
                                                                       $49,432,561
                                                                        ==========
</TABLE>




<PAGE>
Based on borrowing  rates  currently  available to the  Partnership for mortgage
loans with similar terms and average maturities,  the fair value of the mortgage
notes payable was approximately $49,923,000 and $52,907,000 at December 31, 1998
and 1997, respectively.

NOTE 6 - SALE OF REAL ESTATE
----------------------------

On July 30, 1996, the Partnership  sold Westridge  Apartments to an unaffiliated
purchaser for a purchase price of $2,110,500.  The Partnership agreed to finance
a portion of the sales price by  accepting  a  short-term,  $1,550,000  purchase
money mortgage  note. The mortgage note accrued  interest at 10.0% per annum and
required  monthly  interest-only  payments.  On February 5, 1997,  the purchaser
repaid the $1,550,000  mortgage note to the Partnership.  Cash proceeds from the
sale, as well as the loss on sale of Westridge Apartments, are presented below.

<TABLE>
<CAPTION>
                                                                     Loss on Sale            Cash Proceeds
                                                                   ----------------         ---------------

<S>                                                                <C>                      <C>           
       Cash sales price...................................         $     2,110,500          $    2,110,500
       Selling costs......................................                 (68,116)                (68,116)
       Basis of real estate sold..........................              (2,262,541)
                                                                     -------------

       Loss on sale of real estate........................         $      (220,157)
                                                                    ==============

       Net cash proceeds received in 1996.................                                        (492,384)
                                                                                             -------------

       Net cash proceeds received in 1997.................                                  $    1,550,000
                                                                                             =============
</TABLE>

NOTE 7 - REFINANCING OF MORTGAGE NOTES PAYABLE
----------------------------------------------

On March 20, 1998, the Partnership  refinanced the Forest Park Village  mortgage
note. The new mortgage  note, in the amount of  $5,925,000,  bears interest at a
variable  rate equal to 1.75% plus the LIBOR per annum.  The new  mortgage  note
requires  monthly  interest-only  debt  service  payments  and annual  principal
payments equal to 5% of the outstanding  principal balance of the note. Terms of
the new mortgage note require the Partnership to deposit funds into a restricted
cash account on a quarterly  basis. The restricted funds will be used to pay the
annual  principal  payment and are  included in "cash  restricted  for  mortgage
payments"  on the Balance  Sheets.  The new  mortgage  note matures on March 20,
2001. Proceeds from the refinancing of the Forest Park Village mortgage note are
as follows:

       New mortgage note..................................        $ 5,925,000
       Existing debt retired..............................         (5,830,964)
                                                                   ----------

       Cash proceeds from refinancing.....................        $    94,036
                                                                   ==========

<PAGE>
The Partnership  incurred $82,148 of deferred borrowing costs in connection with
the refinancing of the Forest Park Village mortgage note.

On August 31, 1998, the Partnership  refinanced the Rolling Hills mortgage note.
The new mortgage note, in the amount of $6,650,000, bears interest at a variable
rate equal to 1.75% plus the LIBOR per annum.  The new  mortgage  note  requires
monthly  interest-only debt service payments and annual principal payments equal
to 5% of the  outstanding  principal  balance  of the  note.  Terms  of the  new
mortgage note require the  Partnership  to deposit funds into a restricted  cash
account  on a  quarterly  basis.  The  restricted  funds will be used to pay the
annual  principal  payment and are  included in "cash  restricted  for  mortgage
payments" on the Balance  Sheets.  The new mortgage note matures on September 1,
2001.  Proceeds from the  refinancing  of the Rolling Hills mortgage note are as
follows:

       New mortgage note..................................         $ 6,650,000
       Existing debt retired..............................          (6,545,929)
                                                                    ----------

       Cash proceeds from refinancing.....................         $   104,071
                                                                    ==========

The Partnership  incurred $77,366 of deferred borrowing costs in connection with
the refinancing of the Rolling Hills mortgage note.

In connection  with the  refinancing  of the Rolling Hills  mortgage  note,  the
Partnership  wrote off the  balance  of  unamortized  deferred  borrowing  costs
associated  with the  prior  mortgage  note.  The  write-off,  in the  amount of
$405,235,  is reported as the extraordinary item on the Partnership's  Statement
of Operations for the year ended December 31, 1998.

On  September 1, 1998,  the  Partnership  and the holder of the  Sheraton  Hills
mortgage note agreed to modify the terms of the Sheraton  Hills  mortgage  note.
The  interest  rate was changed from a variable  rate to a 6.9% fixed rate.  The
monthly debt service  payments  were changed from a variable  amount to $17,844.
The  maturity  date of the mortgage  note was extended to November 1, 2001.  The
Partnership  incurred $29,535 of deferred borrowing costs in connection with the
modification.

NOTE 8 - GAIN ON INVOLUNTARY CONVERSIONS
----------------------------------------

On April 24,  1996, a fire damaged 12 units at Sheraton  Hills  Apartments.  The
cost to repair the fire damage was $562,560,  of which, the Partnership received
$546,069 in insurance reimbursements. The Partnership recognized a $474,376 gain
on  involuntary  conversion  equal to the insurance  proceeds  received less the
adjusted  basis of the  property  damaged by the fire.  The gain on  involuntary
conversion  was  recognized in 1997 when the insurance  proceeds were  received.
Reconstruction  of the damaged units was  completed  during the third quarter of
1996.









<PAGE>
NOTE 9 - LEGAL PROCEEDINGS
--------------------------

The Partnership is not party to, nor are any of the Partnership's properties the
subject of, any material pending legal proceedings, other than ordinary, routine
litigation incidental to the Partnership's business, except for the following:

James F.  Schofield,  Gerald C. Gillett,  Donna S. Gillett,  Jeffrey  Homburger,
Elizabeth Jung,  Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P.,
McNeil Investors,  Inc., McNeil Real Estate Management,  Inc., Robert A. McNeil,
Carole J. McNeil,  McNeil Pacific  Investors Fund 1972, Ltd., McNeil Real Estate
Fund IX,  Ltd.,  McNeil Real  Estate  Fund X, Ltd.,  McNeil Real Estate Fund XI,
Ltd.,  McNeil  Real Estate Fund XII,  Ltd.,  McNeil Real Estate Fund XIV,  Ltd.,
McNeil Real Estate Fund XV, Ltd.,  McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXI, L.P.,  McNeil Real Estate Fund XXII,  L.P.,  McNeil Real Estate
Fund XXIII,  L.P.,  McNeil Real Estate Fund XXIV, L.P.,  McNeil Real Estate Fund
XXV,  L.P.,  McNeil  Real Estate  Fund XXVI,  L.P.,  and McNeil Real Estate Fund
XXVII,  L.P., Hearth Hollow  Associates,  McNeil Midwest  Properties I, L.P. and
Regency North Associates,  L.P., - Superior Court of the State of California for
the  County of Los  Angeles,  Case No.  BC133799  (Class and  Derivative  Action
Complaint).

The action involves  purported  class and derivative  actions brought by limited
partners  of each  of the  limited  partnerships  that  were  named  as  nominal
defendants as listed above (the  "Partnerships").  Plaintiffs allege that McNeil
Investors, Inc., its affiliate McNeil Real Estate Management,  Inc. and three of
their senior officers and/or directors (collectively, the "Defendants") breached
their  fiduciary  duties and certain  obligations  under the respective  Amended
Partnership  Agreement.  Plaintiffs  allege that  Defendants  have rendered such
Units highly illiquid and  artificially  depressed the prices that are available
for Units on the resale market.  Plaintiffs also allege that Defendants  engaged
in a course of conduct to prevent the  acquisition  of Units by an  affiliate of
Carl  Icahn  by  disseminating  purportedly  false,  misleading  and  inadequate
information.  Plaintiffs  further allege that Defendants  acted to advance their
own personal  interests at the expense of the Partnerships'  public unit holders
by failing to sell Partnership  properties and failing to make  distributions to
unitholders.

On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint.
Plaintiffs  are suing for breach of  fiduciary  duty,  breach of contract and an
accounting,  alleging,  among other things, that the management fees paid to the
McNeil affiliates over the last six years are excessive,  that these fees should
be reduced retroactively and that the respective Amended Partnership  Agreements
governing the Partnerships are invalid.

Defendants  filed a demurrer to the  consolidated  and amended  complaint  and a
motion to strike on February 14, 1997,  seeking to dismiss the  consolidated and
amended complaint in all respects.  A hearing on Defendant's demurrer and motion
to strike  was held on May 5,  1997.  The Court  granted  Defendants'  demurrer,
dismissing  the  consolidated  and  amended  complaint  with leave to amend.  On
October  31,  1997,  the  Plaintiffs  filed a second  consolidated  and  amended
complaint. The case was stayed pending settlement discussions.  A Stipulation of
Settlement dated September 15, 1998 has been signed by the parties.  Preliminary
Court  approval was received on October 6, 1998. A hearing for Final Approval of
Settlement, initially scheduled for December 17, 1998, has been continued to May
25, 1999.


<PAGE>
Because McNeil Real Estate Fund XXIII,  L.P., Hearth Hollow  Associates,  McNeil
Midwest  Properties I, L.P. and Regency North Associates,  L.P. would be part of
the  transaction  contemplated  in the settlement  and Plaintiffs  claim that an
effort should be made to sell the McNeil Partnerships,  Plaintiffs have included
allegations with respect to McNeil Real Estate Fund XXIII,  L.P.,  Hearth Hollow
Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P.
in the third consolidated and amended complaint.

Plaintiff's  counsel  intends  to seek an  order  awarding  attorney's  fees and
reimbursements  of their  out-of-pocket  expenses.  The  amount of such award is
undeterminable  until  final  approval  is  received  from the  court.  Fees and
expenses shall be allocated amongst the Partnerships on a pro rata basis,  based
upon  tangible  asset value of each such  partnership,  less total  liabilities,
calculated in accordance with the Amended Partnership Agreements for the quarter
most recently ended.

NOTE 10 - COMMITMENTS AND CONTINGENCIES
---------------------------------------

Environmental laws create potential liabilities that may affect property owners.
The environmental  laws of Federal and certain state  governments,  for example,
impose liability on current and certain past owners of property from which there
is a release  or threat of  release  of  hazardous  substances.  This  liability
includes costs of investigation and remediation of the hazardous  substances and
natural resource  damages.  Liability for costs of investigation and remediation
is strict and may be imposed  irrespective  of whether the property owner was at
fault,  although  there are a number of  defenses.  Both  governments  and third
parties may seek recoveries under these laws.

Third parties also may seek  recovery  under the common law for damages to their
property  or person,  against  owners of  property  from which  there has been a
release of hazardous and other substances.

The presence of  contamination  or the failure to remediate  contaminations  may
adversely  affect the owner's  ability to sell or lease real estate or to borrow
using the real estate as collateral.

Various  buildings at properties do or may contain  building  materials that are
the subject of various  regulatory  programs  intended to protect  human health.
Such building materials include,  for example,  asbestos,  lead-based paint, and
lead plumbing components.  The Company has implemented programs to deal with the
presence  of those  materials,  which  include,  as  appropriate,  reduction  of
potential  exposure  situations.  The Company does not believe that the costs of
such programs are likely to have a material adverse effect. Failure to implement
such programs can result in regulatory  violations or liability claims resulting
from alleged exposure to such materials.

In connection with the proposed sale transaction as more fully described in Note
1 -  "Organization  and Summary of  Significant  Accounting  Policies",  Phase I
environmental  site  assessments  have been completed for each property owned by
the Partnership. Such environmental assessments performed on the properties have
not revealed any  environmental  liability that the  Partnership  believes would
have a material adverse effect on the Partnership's business, assets, or results
of  operations.  The  Partnership  has not  been  notified  by any  governmental
authority of any non-compliance, liability or other claim in connection with any
of its  properties.  There can be no  assurances,  however,  that  environmental
liabilities  have  not  developed  since  such  environmental  assessments  were
prepared,  or that future uses or  conditions  (including,  without  limitation,
changes in applicable  environmental  laws and  regulations)  will not result in
imposition of environmental liability.
<PAGE>
                        McNEIL REAL ESTATE FUND IX, LTD.
                                  SCHEDULE III
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1998

<TABLE>
<CAPTION>
                                                                                                       Costs
                                                      Initial Cost (b)             Cumulative       Capitalized
                                Related                       Buildings and      Write-down for     Subsequent
Description              Encumbrances (b)        Land         Improvements         Impairment      To Acquisition
-----------              ----------------        ----         -------------      --------------    ---------------
APARTMENTS:

Real Estate Investments:

Berkley Hills
<S>                        <C>               <C>               <C>                <C>              <C>          
   Madison, TN             $    3,163,101    $      246,988    $    4,779,121     $          -     $   1,532,539

Cherry Hills
   Wichita, KS                  4,386,254           514,205         7,373,589                -         1,863,514

Forest Park Village
   Columbus, OH                 5,925,000           716,395         7,095,131                -         2,613,659

Heather Square
   Dallas, TX                   2,983,359           853,746         6,087,281                -         1,579,768

Lantern Tree
   Omaha, NE                    2,275,537           217,809         2,467,872                -         1,029,642

Meridian West
   Puyallup, WA                 3,173,307           253,167         3,787,807                -         1,256,505

Pennbrook
   Dallas, TX                   3,099,899           692,515         4,708,479                -         1,682,766

Rockborough
   Addison, TX                  2,094,218           427,932         2,924,451                -         1,069,101

Rolling Hills
   Louisville, KY               6,650,000           557,249         6,156,595                -         3,075,506

Ruskin Place
   Lincoln, NE                  4,460,660           899,372         3,792,676                -         1,767,939

Westgate
   Lansing, MI                  5,697,461           390,482         4,963,710                -         1,519,320

Williamsburg
   Shreveport, LA               2,577,772           283,754         4,203,172                -         1,213,245
                           --------------    --------------    --------------     ------------     -------------

                          $    46,486,568   $     6,053,614   $    58,339,884    $           -    $   20,203,504
                           ==============    ==============    ==============     ============     =============

Asset Held for Sale (c):

Sheraton Hills
   Nashville, TN          $    2,702,620
                           =============

</TABLE>
                     See accompanying notes to Schedule III.


<PAGE>

                        McNEIL REAL ESTATE FUND IX, LTD.
                                  SCHEDULE III
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1998

<TABLE>
<CAPTION>
                                            Gross Amount at
                                     Which Carried at Close of Period                    Accumulated
                                                 Buildings and                          Depreciation
Description                      Land            Improvements          Total (a)      and Amortization
-----------                      ----            -------------         ---------      ----------------
APARTMENTS:

Real Estate Investments:

Berkley Hills
<S>                           <C>                <C>              <C>                <C>             
   Madison, TX                $      246,988     $    6,311,660   $      6,558,648   $    (4,628,546)

Cherry Hills
   Wichita, KS                       514,205          9,237,103          9,751,308        (5,843,388)

Forest Park Village
   Columbus, OH                      716,395          9,708,790         10,425,185        (7,088,248)

Heather Square
   Dallas, TX                        853,746          7,667,049          8,520,795        (4,937,122)

Lantern Tree
   Omaha, NE                         217,809          3,497,514          3,715,323        (2,445,041)

Meridian West
   Puyallup, WA                      253,167          5,044,312          5,297,479        (3,227,660)

Pennbrook
   Dallas, TX                        692,515          6,391,245          7,083,760        (4,218,187)

Rockborough
   Addison, TX                       427,932          3,993,552          4,421,484        (2,444,677)

Rolling Hills
   Louisville, KY                    557,249          9,232,101          9,789,350        (6,591,268)

Ruskin Place
   Lincoln, NE                       920,061          5,539,926          6,459,987        (3,794,395)

Westgate
   Lansing, MI                       390,482          6,483,030          6,873,512        (4,452,733)

Williamsburg
   Shreveport, LA                    283,754          5,416,417          5,700,171        (3,675,977)
                              --------------     --------------   ----------------     -------------

                             $     6,074,303    $    78,522,699  $      84,597,002    $  (53,347,242)
                              ==============     ==============   ================     =============

Asset Held for Sale (c):

Sheraton Hills
   Nashville, TN                                                 $       3,140,461
                                                                  ================

</TABLE>

                     See accompanying notes to Schedule III


<PAGE>
                        McNEIL REAL ESTATE FUND IX, LTD.
                                  SCHEDULE III
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1998


<TABLE>
<CAPTION>

                                 Date of                    Date                 Depreciable
Description                   Construction                Acquired              lives (years)
-----------                   ------------                --------              -------------
APARTMENTS:

Real Estate Investments:

Berkley Hills
<S>                             <C>                         <C>                     <C> 
   Madison, TN                  1970                        06/79                   3-25

Cherry Hills
   Wichita, KS                  1974                        06/80                   3-32

Forest Park Village
   Columbus, OH                 1970                        12/79                   3-25

Heather Square
   Dallas, TX                   1978                        10/79                   3-32

Lantern Tree
   Omaha, NE                    1974                        07/79                   3-28

Meridian West
   Puyallup, WA                 1977                        01/80                   3-31

Pennbrook
   Dallas, TX                   1978                        01/80                   3-31

Rockborough
   Addison, TX                  1978                        01/80                   3-31

Rolling Hills
   Louisville, KY               1974                        09/79                   3-27

Ruskin Place
   Lincoln, NE                  1973                        12/79                   3-27

Westgate
   Lansing, MI                  1974                        12/79                   3-28

Williamsburg
   Shreveport, LA               1975                        12/79                   3-28

Asset Held for Sale (c):

Sheraton Hills
   Nashville, TN                1971                        06/79

</TABLE>

                     See accompanying notes to Schedule III.


<PAGE>

                        McNEIL REAL ESTATE FUND IX, LTD.
                                  SCHEDULE III
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1998


(a)  For Federal income tax purposes,  the properties are depreciated over lives
     ranging from 5-27.5 years using ACRS or MACRS  methods.  The aggregate cost
     of real estate  investments for Federal income tax purposes was $94,313,115
     and accumulated depreciation was $57,699,982 at December 31, 1998.

(b)  The initial cost and encumbrances  reflect the present value of future loan
     payments  discounted,  if  appropriate,  at a  rate  estimated  to  be  the
     prevailing interest rate at the date of acquisition or refinancing.

(c)  The asset held for sale is carried at the lower of depreciated cost or fair
     value less costs to sell. Historical cost, net of accumulated  depreciation
     and  cumulative  write-downs,  becomes the new cost basis when the asset is
     classified  as "Asset Held for Sale."  Depreciation  ceases at the time the
     asset is placed on the market for sale.

<PAGE>
                        McNEIL REAL ESTATE FUND IX, LTD.

                              Notes to Schedule III

              Real Estate Investments and Accumulated Depreciation


A  summary  of  activity  for the  Partnership's  real  estate  investments  and
accumulated depreciation is as follows:

<TABLE>
<CAPTION>
                                                                For the Years Ended December 31,  
                                                     -----------------------------------------------------
                                                         1998                1997                 1996
                                                     ------------        ------------         ------------
Real estate investments:

<S>                                                  <C>                 <C>                  <C>         
Balance at beginning of year ................        $ 82,886,388        $ 88,037,151         $ 90,563,393

Improvements ................................           1,710,614           2,064,414            2,398,428

Assets replaced .............................                  --                  --             (277,307)

Reclassification of asset held for salexxxxxx                  --          (7,215,177)                  --

Sale of real estate .........................                  --                  --           (4,647,363)
                                                     ------------        ------------         ------------

Balance at end of year ......................        $ 84,597,002        $ 82,886,388         $ 88,037,151
                                                     ============        ============         ============



Accumulated depreciation:

Balance at beginning of year ................        $ 49,466,952        $ 49,728,546         $ 48,129,231

Depreciation ................................           3,880,290           3,944,030            4,173,260

Assets replaced .............................                  --                  --             (189,123)

Reclassification of asset held for sale .....                  --          (4,205,624)                  --

Sale of real estate .........................                  --                  --           (2,384,822)
                                                     ------------        ------------         ------------

Balance at end of year ......................        $ 53,347,242        $ 49,466,952         $ 49,728,546
                                                     ============        ============         ============


Asset Held for Sale:

Balance at beginning of year ................        $  3,009,553        $         --         $         --

Reclassification of asset held for sale .....                  --           3,009,553                   --

Improvements ................................             130,908                  --                   --
                                                     ------------        ------------         ------------

Balance at end of year ......................        $  3,140,461        $  3,009,553         $         --
                                                     ============        ============         ============
</TABLE>




<PAGE>
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-------   ---------------------------------------------------------------
          FINANCIAL DISCLOSURE
          --------------------

None.


                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------   --------------------------------------------------

Neither the  Partnership  nor the General Partner has any directors or executive
officers.  The names and ages of, as well as the positions held by, the officers
and  directors of McNeil  Investors,  Inc.,  the general  partner of the General
Partner, are as follows:

                                       Other Principal Occupations and Other
Name and Position             Age      Directorships During the Past 5 Years
-----------------             ---      -------------------------------------

Robert A. McNeil,              78       Mr.  McNeil  is also  Chairman  of   the
Chairman of the                         Board and Director of McNeil Real Estate
Board and Director                      Management,  Inc. ("McREMI") which is an
                                        affiliate of the General Partner. He has
                                        held the foregoing  positions  since the
                                        formation  of such  entity in 1990.  Mr.
                                        McNeil  received  his B.A.  degree  from
                                        Stanford  University  in  1942  and  his
                                        L.L.B.  degree from  Stanford Law School
                                        in 1948. He is a member of the State Bar
                                        of  California  and has been involved in
                                        real  estate  financing  since  the late
                                        1940's and in real estate  acquisitions,
                                        syndications  and   dispositions   since
                                        1960. From 1986 until active  operations
                                        of  McREMI  and  McNeil  Partners,  L.P.
                                        began in February 1991, Mr. McNeil was a
                                        private investor. Mr. McNeil is a member
                                        of the International  Board of Directors
                                        of the Salk  Institute,  which  promotes
                                        research in improvements in health care.

Carole J. McNeil               55       Mrs. McNeil is Co-Chairman, with husband
Co-Chairman of the                      Robert A. McNeil,  of McNeil  Investors,
Board                                   Inc.  Mrs.  McNeil has  twenty  years of
                                        real estate experience, most recently as
                                        a private investor from 1986 to 1993. In
                                        1982, she founded Ivory & Associates,  a
                                        commercial real estate brokerage firm in
                                        San  Francisco,  CA. Prior to that,  she
                                        was a commercial  real estate  associate
                                        with the Madison Company and, earlier, a
                                        commercial  sales  associate and analyst
                                        with   Marcus  and   Millichap   in  San
                                        Francisco.    In   1978,   Mrs.   McNeil
                                        established   Escrow  Training  Centers,
                                        California's first accredited commercial
                                        training   program  for  title   company
                                        escrow  officers and real estate  agents
                                        needing  college  credits to qualify for
                                        brokerage  licenses.  She  began in real
                                        estate as Manager and Marketing Director
                                        of Title  Insurance  and  Trust in Marin
                                        County,  CA. Mrs.  McNeil  serves on the
                                        International  Board of Directors of the
                                        Salk Institute.


<PAGE>
                                       Other Principal Occupations and Other
Name and Position             Age      Directorships During the Past 5 Years
-----------------             ---      -------------------------------------

Ron K. Taylor                  41       Mr.  Taylor is the  President  and Chief
President and Chief                     Executive  Officer of McNeil Real Estate
Executive Officer                       Management  which is an affiliate of the
                                        General Partner.  Mr. Taylor has been in
                                        this capacity  since the  resignation of
                                        Donald K. Reed on March 4,  1997.  Prior
                                        to       assuming       his      current
                                        responsibilities, Mr. Taylor served as a
                                        Senior  Vice  President  of McREMI.  Mr.
                                        Taylor has been in this  capacity  since
                                        McREMI  commenced  operations  in  1991.
                                        Prior  to  joining  McREMI,  Mr.  Taylor
                                        served as an  Executive  Vice  President
                                        for  a   national   syndication/property
                                        management  firm. In this capacity,  Mr.
                                        Taylor  had the  responsibility  for the
                                        management  and leasing of a  21,000,000
                                        square  foot   portfolio  of  commercial
                                        properties. Mr. Taylor has been actively
                                        involved  in the  real  estate  industry
                                        since 1983.

Each director  shall serve until his successor  shall have been duly elected and
qualified.

ITEM 11.  EXECUTIVE COMPENSATION
--------  ----------------------

No direct  compensation  was paid or payable by the  Partnership to directors or
officers  (since it does not have any  directors or officers) for the year ended
December  31,  1998,  nor was any  direct  compensation  paid or  payable by the
Partnership  to  directors  or officers  of the  general  partner of the General
Partner for the year ended  December 31, 1998. The  Partnership  has no plans to
pay any such remuneration to any directors or officers of the general partner of
the General Partner in the future.

See Item 13 - Certain  Relationships  and  Related  Transactions  for amounts of
compensation and  reimbursements  paid by the Partnership to the General Partner
and its affiliates.


<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------- --------------------------------------------------------------

(A)     Security ownership of certain beneficial owners.

        No individual or group, as defined by Section 13(d)(3) of the Securities
        Exchange Act of 1934,  known to the Partnership is the beneficial  owner
        of more  than 5% of the  Partnership's  securities,  except  as noted in
        below:

        1.    A  group  of  limited   partnerships   affiliated  with  Liquidity
              Financial Corporation,  all of whose outstanding stock is owned by
              Richard G.  Wollack and Brent R.  Donaldson,  2200 Powell  Street,
              Suite 700, Emeryville,  California,  94608, collectively own 6,389
              Units (5.8%) as of February 1, 1999.

        2.    High River  Limited  Partnership,  100 S. Bedford    Road,   Mount
              Kisco,   New   York, 10549, owns   15,616   Units (14.2%)  as   of
              February 1, 1999.

(B)     Security ownership of management.

        The  General  Partner  and the  officers  and  directors  of its general
        partner, collectively, own 5,715 Units (5.2%) as of February 1, 1999.

(C)     Change in control.

        None.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------     ----------------------------------------------

Under the terms of the Amended Partnership Agreement,  the Partnership is paying
the MID to the  General  Partner.  The maximum  MID is  calculated  as 1% of the
tangible asset value of the  Partnership.  Tangible asset value is determined by
using the greater of (i) an amount calculated by applying a capitalization  rate
of 9% to the annualized net operating income of each property or (ii) a value of
$10,000 per apartment unit to arrive at the property  tangible asset value.  The
property  tangible  asset  value is then  added to the book  value of all  other
assets excluding  intangible items. The maximum MID percentage decreases to .75%
in 2000, .50% in 2001 and .25% thereafter.

The MID will be paid to the lesser of the  Partnership's  excess  cash flow,  as
defined, or net operating income (the "Entitlement  Amount"), and may be paid in
(i) cash, unless there is insufficient  cash to pay the  distribution,  in which
event any unpaid  portion  not taken in Units will be  deferred  and is payable,
without interest,  from the first available cash and/or (ii) in Units. A maximum
of 50% of the MID may be paid in Units. The number of Units issued in payment of
the MID is based on the greater of $50 per Unit or the net tangible asset value,
as defined, per Unit. For the year ended December 31, 1998, the Partnership paid
or accrued MID for the General Partner in the amount of $1,164,510.

The  Partnership  pays  property  management  fees  equal to 5% of gross  rental
receipts  of the  Partnership's  properties  to McREMI  for  providing  property
management  and  leasing  services  for  the   Partnership's   properties.   The
Partnership   reimburses   McREMI  for  its  costs,   including   overhead,   of
administering the Partnership's  affairs.  For the year ended December 31, 1998,
the   Partnership   incurred   $1,517,803  of  property   management   fees  and
reimbursements.
<PAGE>
See  Item 1 -  Business,  Item  7 -  Management's  Discussion  and  Analysis  of
Financial  Condition  and  Results  of  Operations,  and  Item  8  -  Note  2  -
"Transactions with Affiliates."

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
--------  ---------------------------------------------------------------

See accompanying Index to Financial  Statements at Item 8 - Financial Statements
and Supplementary Data.

(A) The  following  exhibits are  incorporated  by reference and are an integral
part of this Form 10-K.

        Exhibits

              Exhibit
              Number              Description
              ---------           -----------

               3.                 Limited  Partnership  Agreement  (Incorporated
                                  by reference to the Annual Report on Form 10-K
                                  for the fiscal year ended September 30, 1987).

               3.1                Amended    and  Restated  Limited  Partnership
                                  Agreement     dated    November    12,    1991
                                  (Incorporated  by reference  to the  Quarterly
                                  Report on Form 10-Q for the quarter year ended
                                  September 30, 1991).

               3.2                Amendment  No. 1 to the  Amended and  Restated
                                  Partnership  Agreement  of McNeil  Real Estate
                                  Fund IX,  Ltd.,  dated to be  effective  as of
                                  July 31, 1993. (5)

               3.3                Amendment  No. 2 to the  Amended and  Restated
                                  Partnership  Agreement  of McNeil  Real Estate
                                  Fund IX, Ltd., dated March 28, 1994. (5)

              10.2                Mortgage  Note,   dated     August  11,  1988,
                                  between Sherwood Forest Fund IX Associates and
                                  American Mortgages, Inc. (1)

              10.3                Assignment  and  Assumption  Agreement,  dated
                                  as  of  November  12,  1991,  between  Pacific
                                  Investors  Corporation  and  McNeil  Partners,
                                  L.P.   regarding   Sherwood   Forest  Fund  IX
                                  Associates. (2)

              10.4                Assignment and  Assumption  Agreement,   dated
                                  as  of  November  12,  1991,  between  Pacific
                                  Investors  Corporation  and  McNeil  Partners,
                                  L.P. regarding Berkley Hills Associates. (2)





<PAGE>
              Exhibit
              Number              Description
              ---------           -----------

              10.5                Assignment and   Assumption  Agreement,  dated
                                  as  of  November  12,  1991,  between  Pacific
                                  Investors  Corporation  and  McNeil  Partners,
                                  L.P.    regarding   Ruskin   Place   Fund   IX
                                  Associates. (2)

              10.6                Assignment and  Assumption  Agreement,   dated
                                  as of November 12, 1991, between Rolling Hills
                                  Apartment  Corp.  and  McNeil  Partners,  L.P.
                                  regarding  Rolling  Hills Fund IX  Associates,
                                  L.P. (2)

              10.7                Assignment  and  Assumption  Agreement,  dated
                                  as  of  November  12,  1991,  between  Pacific
                                  Investors  Corporation,  Robert A.  McNeil and
                                  McNeil  Partners,  L.P.  regarding McNeil Real
                                  Estate Fund IX, Ltd. (2)

              10.8                Termination  Agreement,  dated as of  November
                                  12,  1991,   between   Ruskin  Place  Fund  IX
                                  Associates and McNeil Real Estate  Management,
                                  Inc. (2)

              10.9                Termination  Agreement,  dated as  of November
                                  12,  1991,   between  Rolling  Hills  Fund  IX
                                  Associates,   L.P.   and  McNeil  Real  Estate
                                  Management, Inc. (2).

              10.10               Termination  Agreement,  dated  as of November
                                  12,  1991,  between  Sherwood  Forest  Fund IX
                                  Associates and McNeil Real Estate  Management,
                                  Inc. (2)

              10.11               Termination  Agreement,  dated as of  November
                                  12, 1991, between Berkley Hills Associates and
                                  McNeil Real Estate Management, Inc. (2)

              10.12               Property  Management  Agreement,  dated  as of
                                  November 12, 1991,  between McNeil Real Estate
                                  Fund  IX,   Ltd.   and  McNeil   Real   Estate
                                  Management, Inc. (2)

              10.13               Property  Management  Agreement,  dated as  of
                                  November 12, 1991,  between  Ruskin Place Fund
                                  IX   Associates   and   McNeil   Real   Estate
                                  Management, Inc. (2)

              10.14               Property  Management  Agreement,  dated as  of
                                  November 12, 1991,  between Rolling Hills Fund
                                  IX  Associates,  L.P.  and McNeil  Real Estate
                                  Management, Inc. (2)




<PAGE>
              10.15               Property  Management  Agreement,  dated as  of
                                  November 12,  1991,  between  Sherwood  Forest
                                  Fund  IX  Associates,  L.P.  and  McNeil  Real
                                  Estate Management, Inc. (2)

              10.16               Property  Management  Agreement,  dated as  of
                                  November  12,  1991,   between  Berkley  Hills
                                  Associates and McNeil Real Estate  Management,
                                  Inc. (2)

              10.17               Asset  Management  Agreement,  dated   as   of
                                  November 12, 1991,  between McNeil Real Estate
                                  Fund IX, Ltd. and McNeil Partners, L.P. (2)

              10.18               Amendment  of  Property  Management  Agreement
                                  dated March 5, 1993  between  the  Partnership
                                  and McNeil Real Estate Management, Inc. (3)

              10.19               Property  management  agreement,  dated  as of
                                  January 28, 1993,  between  Pennbrook Fund IX,
                                  L.P. and McNeil Real Estate  Management,  Inc.
                                  (3)

              10.20               Amendment  of  Property  Management  Agreement
                                  dated March 5, 1993 between  Pennbrook Fund IX
                                  Associates,   L.P.   and  McNeil  Real  Estate
                                  Management, Inc. (3)

              10.21               Loan  Agreement  dated June 24,  1993  between
                                  Lexington  Mortgage  Company  and McNeil  Real
                                  Estate Fund IX, Ltd., et. al. (4)

              10.22               Master Property Management  Agreement,   dated
                                  as of  June  24,  1993,  between  McNeil  Real
                                  Estate Management, Inc. and McNeil Real Estate
                                  Fund IX, Ltd. (5)

              10.23               Mortgage  Note,   dated  September  28,  1989,
                                  between  Ruskin Place Fund IX  Associates  and
                                  American Mortgages, Inc. (6)

              10.24               Modification  of Mortgage  Note,  dated   July
                                  28,  1994,   between   Ruskin  Place  Fund  IX
                                  Associates and American Mortgages, Inc. (6)

              10.25               Deed of Trust Note,  dated  November 3,  1988,
                                  between Berkley Hills  Associates and American
                                  Mortgages, Inc. (6)


<PAGE>
              Exhibit
              Number              Description
              -------             -----------

              10.26               Modification  of Deed of    Trust Note,  dated
                                  July   28,   1994,   between   Berkley   Hills
                                  Associates and American Mortgages, Inc. (6)

              10.28               Promissory     Note, dated   February 5, 1979,
                                  between Summers-The Heather Apartments Company
                                  and The Mutual Benefit Life Insurance Company.
                                  (6)

              10.29               Promissory  Note,  dated    September 2, 1988,
                                  between  McNeil Real Estate Fund IX, Ltd.  and
                                  FNB Mortgage Corp. (6)

              10.30               Multifamily  Note, dated     January 29, 1993,
                                  between Pennbrook Fund IX Associates, L.P. and
                                  Washington Mortgage Financial Group, Ltd. (6)

              10.31               Modification  of Mortgage  Note,  dated   June
                                  30,  1993,  between  Sherwood  Forest  Fund IX
                                  Associates and American Mortgages, Inc. (6)

              10.32               Promissory  Note,  dated    March    20, 1998,
                                  between Forest Park Fund IX Associates Limited
                                  Partnership and NationsBank of Texas, N.A.

              10.33               Promissory  Note,   dated   August  31,  1998,
                                  between Rolling Hills Fund IX Associates, L.P.
                                  and NationsBank, N.A.

              11.                 Statement regarding  computation of net income
                                  (loss) per limited  partnership unit (see Item
                                  8 - Note 1 to Financial Statements).


<PAGE>
              22.                 Following is   a  list  of subsidiaries of the
                                  Partnership:

<TABLE>
<CAPTION>
                                                                                            Names Under
                                                                    Jurisdiction            Which It Is
                                  Name of Subsidiary              of Incorporation         Doing Business
                                  ------------------              ----------------         --------------

                                  <S>                              <C>                         <C> 
                                  Berkley Hills Associates         Tennessee                    None

                                  Cherry Hills Fund IX
                                  Limited Partnership              Delaware                     None

                                  Forest Park Fund IX
                                  Associates Limited
                                  Partnership                      Ohio                         None

                                  Lantern Tree Fund IX
                                  Limited PartnershipDelaware      None

                                  Meridian West Fund IX
                                  Limited PartnershipDelaware      None

                                  Pennbrook Fund IX
                                  Associates, L.P.                 Texas                        None

                                  Rockborough Fund IX
                                  Limited Partnership              Delaware                     None

                                  Rolling Hills Fund IX
                                  Associates, L.P.                 Kentucky                     None

                                  Ruskin Place
                                  Fund IX Associates               Nebraska                     None

                                  Sherwood Forest
                                  Fund IX Associates               Michigan                     None

                                  Williamsburg Fund IX
                                  Limited Partnership              Delaware                     None
</TABLE>

              The Partnership has omitted  instruments with respect to long-term
              debt  where  the  total  amount  of  the   securities   authorized
              thereunder  does  not  exceed  10%  of  the  total  assets  of the
              Partnership. The Partnership agrees to furnish a copy of each such
              instrument to the Commission upon request.

        (1)   Incorporated  by  reference  to the Annual  Report of McNeil  Real
              Estate Fund IX, Ltd. (File No. 0-9026) on Form 10-K for the period
              ended December 31, 1990, as filed with the Securities and Exchange
              Commission on March 29, 1991.


<PAGE>
        (2)   Incorporated  by  reference  to the Annual  Report of McNeil  Real
              Estate  Fund IX,  Ltd.  (File  No.  0-9026),  on Form 10-K for the
              period ended  December 31, 1991, as filed with the  Securities and
              Exchange Commission on March 30, 1992.

        (3)   Incorporated  by  reference  to the Annual  Report of McNeil  Real
              Estate  Fund IX,  Ltd.  (File  No.  0-9026),  on Form 10-K for the
              period ended  December 31, 1992, as filed with the  Securities and
              Exchange Commission on March 30, 1993.

        (4)   Incorporated  by  reference  to the Annual  Report of McNeil  Real
              Estate  Fund XI,  Ltd.  (File  No.  0-9783),  on Form 10-K for the
              period ended  December 31, 1993, as filed with the  Securities and
              Exchange Commission on March 30, 1994.

        (5)   Incorporated  by  reference  to the Annual  Report of McNeil  Real
              Estate  Fund IX,  Ltd.  (File  No.  0-9026),  on Form 10-K for the
              period ended  December 31, 1993, as filed with the  Securities and
              Exchange Commission on March 30, 1994.

        (6)   Incorporated  by  reference  to the Annual  Report of McNeil  Real
              Estate  Fund IX,  Ltd.  (File  No.  0-9026),  on Form 10-K for the
              period ended  December 31, 1994, as filed with the  Securities and
              Exchange Commission on March 30, 1995.

        27.   Financial Data Schedule for the year ended December 31, 1998.

(B)  Reports on Form 8-K.  There  were no  reports on Form 8-K filed  during the
quarter ended December 31, 1998.


<PAGE>
                        McNEIL REAL ESTATE FUND IX, LTD.
                              A Limited Partnership

                                 SIGNATURE PAGE


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


                               McNEIL REAL ESTATE FUND IX, LTD.


                               By:  McNeil Partners, L.P., General Partner

                                    By: McNeil Investors, Inc., General Partner



March 31, 1999                      By: /s/  Robert A. McNeil
--------------                         ---------------------------------------
Date                                    Robert A. McNeil
                                        Chairman of the Board and Director
                                        (Principal Executive Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.


March 31, 1999                      By: /s/  Ron K. Taylor
--------------                         ---------------------------------------
Date                                    Ron K. Taylor
                                        President and Director of McNeil
                                          Investors, Inc.
                                        (Principal Financial Officer)




March 31, 1999                      By: /s/  Brandon K. Flaming
--------------                         ---------------------------------------
Date                                    Brandon K. Flaming
                                        Vice President of McNeil 
                                          Investors, Inc.
                                        (Principal Accounting Officer)