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, 1996
                              --------------------------------------------------

                                       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  0-9783
                            -------


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


         California                             94-2669577
--------------------------------------------------------------------------------
(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 ]

159,500  of the  registrant's  159,813  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 35

                                TOTAL OF 38 PAGES
<PAGE>
                                     PART I
ITEM 1.      BUSINESS
-------      --------

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

McNeil Real Estate Fund XI, Ltd. (the  "Partnership") was organized June 2, 1980
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  ("McNeil").  The  Partnership  is governed by an amended and restated
partnership  agreement of limited  partnership  dated August 6, 1991, as amended
(the  "Amended  Partnership  Agreement").  Prior  to  August  6,  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 June 2, 1980 (the "Original Partnership Agreement") as amended
August 29, 1980. The principal place of business for the Partnership and for the
General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240.

On  September  18,  1980,  a  Registration  Statement  on Form S-11 was declared
effective by the  Securities  and Exchange  Commission  whereby the  Partnership
offered for sale $80,000,000 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 June 1, 1981,  with 160,000  Units sold at $500 each, or
gross  proceeds of  $80,000,000 to the  Partnership.  In addition,  the original
general partners  purchased a total of 140 Units for $70,000.  In 1993, 61 Units
were relinquished. An additional 162 and 104 Units were relinquished in 1994 and
1995, respectively, leaving 159,813 Units outstanding as of December 31, 1996.

SOUTHMARK BANKRUPTCY AND CHANGE IN GENERAL PARTNER
--------------------------------------------------

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;  (c) McNeil Real Estate
Management,  Inc.  ("McREMI"),  an  affiliate  of  McNeil,  acquired  the assets
relating to the property management and partnership  administrative  business of




<PAGE>
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;  and (d) the General Partner purchased
the  short-term,  unsecured  loan  owing  from the  Partnership  to a  Southmark
affiliate in the amount of $2,645,950. The unsecured loan has now been settled.

On August 6,  1991,  the  limited  partners  approved a  restructuring  proposal
providing 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 alters 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 the MID, see Item 13 - Certain  Relationships  and
Related Transactions.

Settlement of Claims:

During 1990,  the  Partnership  filed claims in the Southmark  bankruptcy in the
amount of $1,180,040.  McNeil also filed claims on behalf of the  Partnership in
an  indeterminate  amount,  some of which  overlapped  in whole or in part  with
claims  filed  by the  Partnership.  No  claims  were  filed  by  McNeil  or the
Partnership on behalf of individual limited partners.

In July 1991, the United States  Bankruptcy  Court for the Northern  District of
Texas,  Dallas Division,  approved an agreement whereby the Partnership  settled
its claims against Southmark.  Under the settlement  agreement,  an affiliate of
McNeil  agreed  to waive on a  dollar-for-dollar  basis an  amount  equal to the
settled claims against affiliate advances owed by the Partnership, which at June
30, 1991, were in excess of the amount of the claim.  The reduction of affiliate
advances  resulted  in an  extraordinary  gain  on  extinguishment  of  debt  of
$1,180,040 in 1991.

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,   1996,   the   Partnership   owned  eight
income-producing properties as described in Item 2 - Properties.

The  Partnership  does not directly  employ any  personnel.  The  Partnership is
managed by the General Partner,  and, in accordance with the Amended Partnership
Agreement,  the  Partnership  reimburses  affiliates of the General  Partner for
certain cost incurred by affiliates  of the General  Partner in connection  with
the  management  of  the  Partnership's   business.  See  Item  8  -  Note  2  -
"Transactions with Affiliates."



<PAGE>
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.

Business Plan:

The Partnership  determined to evaluate market and other economic  conditions to
establish  the  optimum  time  to  commence  an  orderly   liquidation   of  the
Partnership's  assets in  accordance  with the terms of the Amended  Partnership
Agreement.  Taking such conditions as well as other pertinent  information  into
account,  the Partnership has determined to begin orderly liquidation of all its
assets.  Although there can be no assurance as to the timing of the  liquidation
due to real estate  market  conditions,  the general  difficulty of disposing of
real estate,  and other general  economic  factors,  it is anticipated that such
liquidation  would result in the  dissolution of the  Partnership  followed by a
liquidating  distribution to Unit holders by December 2001. In this regard,  the
Partnership has placed Rock Creek on the market for sale. Until such time as the
Partnership's assets are liquidated,  the Partnership's plan of operations is to
preserve or increase the net operating  income of its assets whenever  possible,
while at the same time making whatever capital expenditures are reasonable under
the   circumstances   in  order  to  preserve  and  enhance  the  value  of  the
Partnership's assets.

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   foreclosures  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  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, 1996.  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>
Other Information:

The environmental  laws of the federal government and of certain state and local
governments  impose  liability  on current  property  owners for the clean-up of
hazardous and toxic substances discharged on the property. This liability may be
imposed  without  regard  to the  timing,  cause or person  responsible  for the
release of such substances onto the property.  The Partnership  could be subject
to such liability in the event that it owns properties having such environmental
problems.  The Partnership has no knowledge of any pending claims or proceedings
regarding such environmental problems.

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 $63 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 $104.50 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
January  31,  1997,  High  River  has  purchased  approximately  11.28%  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.

ITEM 2.     PROPERTIES
-------     ----------

The  following  table sets forth the real  estate  investment  portfolio  of the
Partnership  at December 31, 1996.  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"  and Item 8 - Note 6 - "Mortgage  Note Payable -  Affiliate."  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                              1996             Date
Property              Description           of Property           Debt          Property Tax      Acquired
--------              -----------           -----------           ----          ------------      --------
<S>                   <C>                 <C>                <C>                <C>                 <C> 
Acacia Lakes (1)      Apartments
Mesa, AZ              576 units           $    6,259,077     $   8,858,883      $    100,672        5/81

Gentle Gale (2)       Apartments
Galveston, TX         133 units                1,783,909         2,586,599            82,981        5/81

Knollwood (3)         Apartments
Kansas City, MO       315 units                3,114,676         4,427,873            73,195        5/81

The Park (4)          Apartments
Joplin, MO            192 units                1,326,778         2,588,973            20,597        3/81

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                            Net Basis                              1996             Date
Property              Description           of Property           Debt          Property Tax      Acquired
--------              -----------           -----------           ----          ------------      --------
<S>                   <C>                 <C>                <C>                <C>                 <C> 
Sun Valley (5)        Apartments
Charlotte, NC         311 units                4,432,035         6,521,362            97,834        8/81

Villa Del Rio (6)     Apartments
Jacksonville, FL      444 units                4,290,290         5,542,714           185,320        5/81

The Village (7)       Apartments
Gresham, OR           152 units                1,785,489         2,588,971            70,393        5/81
                                           -------------     -------------       -----------
                                          $   22,992,254    $   33,115,375      $    630,992
                                           =============     =============       ===========
Asset held for sale:

Rock Creek            Apartments
Beaverton, OR         388 units           $    4,203,597    $    6,139,670      $    156,873        2/81
                                           =============     =============       ===========
-----------------------------------------
Total:    Apartments  -  2,511 units
</TABLE>

(1)    Acacia  Lakes  Apartments  is  owned  by  Acacia  Lakes  Fund XI  Limited
       Partnership  which is  wholly-owned  by the  Partnership  and the General
       Partner.

(2)    Gentle  Gale  Apartments  is  owned  by  Gentle   Gale  Fund  XI  Limited
       Partnership  which is  wholly-owned  by the  Partnership.

(3)    Knollwood Apartments is owned by Knollwood Fund XI Associates,  a general
       partnership,  which is  wholly-owned  by the  Partnership and the General
       Partner.

(4)    The Park  Apartments is owned by The Park Fund XI  Associates,  a general
       partnership,  which is  wholly-owned  by the  Partnership and the General
       Partner.

(5)    Sun  Valley  Apartments  is owned by Sun  Valley  Fund XI  Associates,  a
       general  partnership,  which is  wholly-owned  by the Partnership and the
       General Partner.

(6)    Villa  Del  Rio  Apartments  is  owned  by  Villa Del Rio Fund XI Limited
       Partnership which is wholly-owned by the Partnership.

(7)    The Village  Apartments  is owned by Village Fund XI Associates  which is
       wholly-owned by the Partnership and the General Partner.








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

<TABLE>
<CAPTION>
                                        1996           1995            1994           1993          1992
                                    -------------  -------------  --------------  -------------  ----------
<S>                                 <C>            <C>            <C>             <C>            <C>
Acacia Lakes
   Occupancy Rate............             94%             96%            97%            98%             96%
   Rent Per Square Foot......       $    7.73      $     7.44     $     6.64      $    5.94      $     5.16

Gentle Gale
   Occupancy Rate............             90%             88%            93%            98%            100%
   Rent Per Square Foot......       $    7.78      $     7.86     $     7.83      $    7.70      $     7.25

Knollwood
   Occupancy Rate............             96%             96%            93%            98%             95%
   Rent Per Square Foot......       $    5.72      $     5.53     $     5.17      $    4.77      $     4.56

The Park
   Occupancy Rate............             94%             90%            91%            93%             96%
   Rent Per Square Foot......       $    6.25      $     6.18     $     6.23      $    5.98      $     5.46

Rock Creek
   Occupancy Rate............             95%             99%            94%            98%             96%
   Rent Per Square Foot......       $    8.27      $     7.91     $     7.54      $    7.25      $     6.94

Sun Valley
   Occupancy Rate............             96%             97%            97%            87%             91%
   Rent Per Square Foot......       $    7.40      $     7.12     $     6.51      $    5.81      $     5.78

Villa Del Rio
   Occupancy Rate............             96%            100%            98%            92%             88%
   Rent Per Square Foot......       $    5.67      $     5.46     $     4.98      $    4.87      $     4.49

The Village
   Occupancy Rate............             96%            100%           100%            97%             98%
   Rent Per Square Foot......       $    8.27      $     7.96     $     7.76      $    7.52      $     7.03

</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's operations
divided by the leasable square footage of the property.

Competitive Conditions at Properties

Due to a  substantial  investment  of  capital  since  1992,  Acacia  Lakes  has
increased  its rent per square foot by 50% over the last five years.  Currently,
the property is mirroring the average market rate of 94%. Rental rates at Acacia
Lakes are averaging $.71 per square foot,  while many  competitors are averaging
$.68 per square foot.






<PAGE>
Gentle Gale is located in Galveston, Texas, where the local economy is dependent
upon the University of Texas Medical Branch and tourism. Over the last few years
the economy has been  sluggish  and this has been  reflected  in the drop in the
occupancy  rates at the property  from 1992 to 1995.  Gentle Gale  experienced a
slight  increase in its  occupancy  rate and is  currently  at 90%.  Gentle Gale
competes  with  properties  that are newer and offer  better  amenity  packages.
During the fourth  quarter of 1996,  an  additional  177 units were added to the
already soft market.  The  property  has been  upgrading  the units and offering
rental discounts to remain competitive in the market.

Knollwood finished 1996 just above the average market occupancy rate of 94%. The
current  rental rates per square foot are between $.54 and $.58 for  Knollwood's
townhouses and one and two bedroom apartments,  while the market rate per square
foot is between $.38 and $.57.  Capital  improvements are planned to improve the
curb appeal and upgrade the  apartments  to take  advantage of the strong market
conditions.

The Park is the  largest  apartment  community  in  Joplin,  Missouri  where the
market's average  occupancy rate is 95%. The local economy is expected to remain
stable;  however,  over the last  three  years the  market  has  experienced  an
increase of 45% in available  units.  The new units are entering the marketplace
at $.44 per square foot while The Park is  averaging  $.54 per square  foot.  To
remain competitive in the market, The Park has discounted rents.

Rock Creek is located in a strong rental market where the average occupancy rate
is 95% and the rent per square foot averages  $.72.  Over the past few years the
property has been  upgrading the interiors of the units as well as improving the
outside  appearance  with  landscaping  and a renovation  of the  clubhouse  and
office.  These  enhancements  allowed the  property to remain  competitive  with
rental rates per square foot  averaging  $.71.  An  additional  3,300 units were
built  in  the  market  during  1996  with  an  additional   2,091  units  under
construction  in 1997.  The economy is  continuing  to grow;  however,  with the
additional units scheduled in 1997, the market is expected to soften.

Strong market conditions are beginning to stimulate new developments in the area
surrounding  Sun  Valley.  Currently,  4,071 units are under  construction  with
numerous other projects in the planning  stages.  These new units may soften the
market during 1997. With the capital  improvements made at the property over the
last few years,  the property has been able to stay  competitive  with the newer
properties.  Sun Valley finished 1996 above the market average occupancy rate of
92%.

Villa Del Rio's  occupancy rate has increased by 8% since 1992 and finished 1996
above the market average of 94%. The overall occupancy rate for Jacksonville has
remained  strong.  The city experienced its highest level of new construction of
apartment communities since 1986. During 1996, 3,000 units were added. These new
units will have no adverse  effect on the  property.  Villa Del Rio's  advantage
over its competitors is design and layout of the property.  All units are single
story apartments and the property is spread over 25 acres.

The Village  finished the year slightly above the market  occupancy rate of 95%.
The Portland apartment market saw its second year of expansion. There were 8,158
units under  construction  through 1996. This new  construction has softened the
market with higher vacancies and rental concessions.  The market rental rate per
square foot is $.69 while the rental  rate at The  Village is $.72.  The Village
should remain competitive in the marketplace.



<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:

1)   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 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., et al. - 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 fourteen  limited  partnerships  that were
     named as nominal  defendants as listed above (as defined in this Section 1,
     the  "Partnerships").  Plaintiffs allege that McNeil  Investors,  Inc., its
     affiliate  McNeil Real Estate  Management,  Inc.  and three of their senior
     officers and/or directors (as defined in this Section 1, 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.  On January 7, 1997,  the Court ordered  consolidation  with three
     other similar actions listed below.

     The  Partnerships  filed a demurrer to the complaint and a motion to strike
     on February 14, 1997, seeking to dismiss the complaint in all respects. The
     demurrer  is  pending.  The  Partnerships  deny that  there is any merit to
     Plaintiff's allegations and intend to vigorously defend this action.







<PAGE>
2)   Alfred Napoletano v. McNeil Partners, L.P., McNeil Investors,  Inc., Robert
     A. McNeil,  Carole J. McNeil,  McNeil Pacific  Investors  Fund 1972,  Ltd.,
     McNeil Real Estate Fund V, Ltd.,  McNeil Real Estate Fund IX, Ltd.,  McNeil
     Real Estate Fund X, Ltd.,  McNeil  Real Estate Fund XI,  Ltd.,  McNeil Real
     Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
     Fund XX, L.P.,  McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
     XXV,  L.P.  -  Superior  Court of the  State of  California,  County of Los
     Angeles,  Case No. BC133849 (Class Action  Complaint).  On January 7, 1997,
     this  action  was  consolidated  by court  order with  Scholfield,  et al.,
     referenced above.

3)   Warren Heller v. McNeil Partners,  L.P., McNeil Investors,  Inc., Robert A.
     McNeil,  Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil
     Real Estate Fund V, Ltd.,  McNeil  Real Estate Fund IX,  Ltd.,  McNeil Real
     Estate Fund X, Ltd.,  McNeil Real Estate Fund XI, Ltd.,  McNeil Real Estate
     Fund XIV, Ltd.,  McNeil Real Estate Fund XV, Ltd.,  McNeil Real Estate Fund
     XX, L.P.,  McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV,
     L.P. - Superior  Court of the State of  California,  County of Los Angeles,
     Case No. BC133957 (Class Action Complaint). On January 7, 1997, this action
     was consolidated by court order with Scholfield, et al., referenced above.

4)   Robert Lewis v. McNeil  Partners,  L.P.,  McNeil  Investors,  Inc.,  Robert
     A. McNeil et al. - In the District  Court of Dallas County,  Texas,  A-14th
     Judicial  District,  Cause No. 95-08535 (Class Action) - Plaintiff,  Robert
     Lewis, is a limited partner with McNeil Pacific  Investors Fund 1972, Ltd.,
     McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd.

     On  April  11,  1996,  the  action  was  dismissed   without  prejudice  in
     anticipation  of  consolidation  with other  class  action  complaints.  On
     January  7,  1997,  this  action  was  consolidated  by  court  order  with
     Schofield, et al., referenced above.

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           8,139 as of January 31, 1997







<PAGE>
 (C)     No distributions were made to the limited partners during 1996 or 1995.
         The Partnership accrued  distributions of $902,697 and $871,503 for the
         benefit of the General  Partner for the years ended  December  31, 1996
         and 1995, respectively. Total distributions of $2,445,033 remain unpaid
         at December 31, 1996. These distributions relate to the MID pursuant to
         the Amended Partnership Agreement.  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
         distributions  and the  likelihood  that  they will be  resumed  to the
         limited partners.

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.


<TABLE>
<CAPTION>

Statements of                                               Years Ended December 31,
Operations                              1996           1995            1994           1993           1992
------------------                  -------------  -------------  --------------  -------------  -------------
<S>                                 <C>            <C>            <C>             <C>            <C>          
Rental revenue.................     $  14,855,652  $  14,304,055  $   13,313,091  $  12,527,359  $  11,621,595
Total revenue..................        15,582,063     14,451,813      13,425,413     12,757,233     11,970,421
Income (loss) before
 extraordinary items...........         1,592,611        307,243        (193,822)    (1,038,150)    (1,316,607)
Extraordinary items............                 -              -               -       (521,380)        86,660
Net income (loss)..............         1,592,611        307,243        (193,822)    (1,559,530)    (1,229,947)

Net income (loss)
per limited partnership unit:
Income (loss) before
 extraordinary items...........     $        5.03  $        1.83  $        (3.98) $       (6.16) $       (7.81)
Extraordinary items............                 -              -               -          (3.22)           .51
                                     ------------   ------------   -------------   ------------   ------------
Net income (loss)..............     $        5.03  $        1.83  $        (3.98) $       (9.38) $       (7.30)
                                     ===========    ============   ============    ============   ============

                                                            As of December 31,
Balance Sheets                          1996           1995            1994           1993           1992
--------------                      -------------  -------------  --------------  -------------  -------------

Real estate investments, net...    $   22,992,254  $  27,251,831  $   27,916,213 $   28,103,619  $  28,192,464
Asset held for sale............         4,203,597              -               -              -              -
Total assets...................        32,592,153     32,508,764      33,355,998     34,963,327     31,779,500
Mortgage notes payable, net....        39,255,045     39,684,440      40,090,432     40,463,926     33,292,396
Partners' deficit..............       (10,633,464)   (11,323,378)    (10,759,568)    (9,796,298)    (7,611,239)
</TABLE>

See Item 7 -  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations.




<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.  As of December 31, 1996,  the
Partnership  owned  eight  apartment   properties.   All  of  the  Partnership's
properties are subject to mortgage notes.

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

1996 compared to 1995

Revenue:

Total Partnership revenues for 1996 increased by $1,130,250 or 8% as compared to
1995. Rental revenue  increased  $551,597 or 4%, while interest income decreased
$20,206. In 1996, the Partnership recognized a gain on involuntary conversion of
$598,859 as a result of a fire and hail damage at Knollwood Apartments.

Rental revenue for 1996 was  $14,855,652  as compared to  $14,304,055  for 1995.
This  increase of  $551,597 is due to an increase in the rental  rates at all of
the Partnership's properties, offset by decreases in the occupancy rates at five
of the eight Partnership's properties.

Expenses:

Total Partnership expenses decreased by $155,118 for the year ended December 31,
1996 as compared to 1995.  Decreases in other  property  operating  expenses and
general and  administrative - affiliates were offset by increases in repairs and
maintenance and general and administrative expenses.

Repairs and  maintenance  expense  increased  by $203,664 or 12% compared to the
same period in 1995.  The  increase  can be  attributed  to increases in service
expenses and the replacement of carpeting.  Carpet  replacements of $282,252 for
five of the Partnership's eight properties, which met the Partnership's criteria
for capitalization based in 1995, were expensed in 1996.

Other property  operating expense for the year ended December 31, 1996 decreased
by  $124,026 or 14% as compared to 1995.  This  decrease is  primarily  due to a
decrease in hazard insurance, with additional decreases in training and seminars
and bad debts in 1996.

General and administrative  expenses increased $38,744 or 10% as compared to the
same period in 1995. The increase is due to costs incurred,  by the Partnership,
to evaluate and disseminate  information  regarding an unsolicited tender offer.
See Item 1 - Business.

General and  administrative - affiliates  expenses  decreased $119,084 or 26% as
compared to the same periods last year. This decrease is due to the reduction of
overhead expenses allocable to the Partnership.



<PAGE>
1995 compared to 1994

Revenue:

Total Partnership revenues for 1995 increased by $1,026,400 or 8% as compared to
1994. Rental revenue and interest income increased $990,964 or 7% and $63,545 or
75%,  respectively.  In 1994, the  Partnership  recognized a gain on involuntary
conversion of $28,109 as a result of a fire at Sun Valley in 1993.

Rental revenue for 1995 was  $14,304,055  as compared to  $13,313,091  for 1994.
This  increase of $990,964 is due to an increase in the rental rates at seven of
the Partnership's eight properties and increases in the occupancy rates at three
of the  Partnership's  properties.  Of the three  properties that experienced an
increase in their occupancy  rate, Rock Creek showed the largest  increase of 5%
from 94% at December 31, 1994 to 99% at December 31, 1995.  This increase can be
attributed  to the capital  improvements  made at the property over the last two
years.

Expenses:

Total  Partnership  expenses  increased  by  $525,335  or 4% for the year  ended
December 31, 1995 as compared to 1994.

Depreciation  expense increased $142,940 or 6% in 1995 as compared to 1994. This
increase is due to capital improvements made at the properties. During 1995, the
Partnership made $1,820,043 in capital improvements.

Property taxes decreased $98,679 or 11% in 1995 as compared to 1994. This is due
to an decrease in the estimated tax  liability at Gentle Gale,  Knollwood,  Rock
Creek, Sun Valley and The Park.

Repairs and maintenance increased by $128,072 or 8% in 1995 as compared to 1994.
This   increase  can  be   attributed   to  increases  in  ground   maintenance,
exterminating,  carpet  cleaning and sheet rock  repairs.  Additionally,  carpet
replacements of $66,216 for Villa Del Rio, which met the Partnership's  criteria
for  capitalization  based   on   the   magnitude of  replacements in 1994, were
expensed in 1995.

General  and  administrative  increased  $242,009 or 160% in 1995 as compared to
1994.  This increase was due to costs  incurred by the  Partnership in the third
quarter of 1995 to evaluate and disseminate information regarding an unsolicited
tender offer. See Item 1 - Business.

General  and  administrative  -  affiliates  increased  $30,441 or 7% in 1995 as
compared to 1994.  This is due to an increase in  reimbursements  to  affiliates
because of fewer partnerships over which overhead costs are allocated.

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

At  December 31, 1996, the  Partnership  held  cash  and   cash  equivalents  of
$2,351,879,  up $321,335 as compared to 1995.


<PAGE>
The Partnership has experienced positive cash flow from operations of $8,913,486
for the three years ended  December  31,  1996.  During  1996,  the  Partnership
received a mortgage loan from affiliates of $2,588,971. The Partnership has also
received  $749,014  in  insurance  proceeds.  Over  the  last  three  years  the
Partnership  has  used  cash to fund  $6,441,167  in  additions  to real  estate
investments,  $3,862,902  in  principal  payments,  $140,958  for  additions  to
deferred  borrowing  costs,  $936,377 for the repayment of advances and mortgage
notes from affiliates and $1,467,254 for the payment of the MID.

The Partnership  generated  $3,412,005  through operating  activities in 1996 as
compared to $2,345,896 in 1995.  The increase of $1,066,109 can be attributed to
the increase in tenant receipts as a result of the increased rental rates at all
the  Partnership's  properties  and decreases in the cash paid to affiliates and
property taxes paid.

The Partnership  generated  $2,345,896  through operating  activities in 1995 as
compared to $3,155,585 in 1994.  This decrease can be attributed to the increase
in the cash paid to affiliates for Partnership administrative expenses which had
previously  been  deferred as well as an increase in the cash paid to  suppliers
during 1995.  These cash changes were  somewhat  offset by an increase in tenant
receipts as a result of the increased rental rates at seven of the Partnership's
properties.

The  Partnership has funded  $6,441,167 in additions to real estate  investments
over  the last  three  years.  The  expenditures  are  necessary  to  allow  the
Partnership's   aging  properties  to  maintain  their  appeal  to  current  and
prospective tenants.

Short-term liquidity:

The Partnership expended  considerable  resources during the past three years to
restore its properties to good operating condition. These expenditures have been
necessary  to  maintain  the  competitive  position of the  Partnership's  aging
properties in each of their markets.  The capital  improvements  made during the
past three years have enabled the  Partnership  to increase its rental  revenues
and reduce certain of its repairs and maintenance expenses.  The Partnership has
budgeted an  additional  $1.4 million of capital  improvements  for 1997,  to be
funded from property operations and cash reserves.

At  December  31,  1996,  the  Partnership  held  cash and cash  equivalents  of
$2,351,879.  The General  Partner  considers  this level of cash  reserves to be
adequate  to  meet  the  Partnership's  operating  needs.  The  General  Partner
anticipates continuing MID payments if the Partnership's  properties continue to
perform as projected.  The General Partner believes that  anticipated  operating
results for 1997 will be sufficient to fund the  Partnership's  budgeted capital
improvements  for 1997 and to repay the  current  portion  of the  Partnership's
mortgage notes.

During 1996, the Partnership  was faced with a mortgage  maturity on The Village
totaling approximately  $2,564,000. In November 1996, the Partnership refinanced
the mortgage note with a mortgage loan from affiliates.








<PAGE>
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 $6.44 million of capital
improvements  made by the  Partnership  during the past  three  years will yield
improved cash flow from property  operations in the future. If the Partnership's
cash position  deteriorates,  the General  Partner may elect to defer certain of
the  capital  improvements,  except  where such  improvements  are  expected  to
increase the competitiveness or marketability of the Partnership's properties.

The Partnership  determined to evaluate market and other economic  conditions to
establish  the  optimum  time  to  commence  an  orderly   liquidation   of  the
Partnership's  assets in  accordance  with the terms of the Amended  Partnership
Agreement.  Taking such conditions as well as other pertinent  information  into
account,  the Partnership has determined to begin orderly liquidation of all its
assets.  Although there can be no assurance as to the timing of the  liquidation
due to real estate  market  conditions,  the general  difficulty of disposing of
real estate,  and other general  economic  factors,  it is anticipated that such
liquidation  would result in the  dissolution of the  Partnership  followed by a
liquidating  distribution to Unit holders by December 2001. In this regard,  the
Partnerships has placed Rock Creek on the market for sale.

Income allocation 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 three year period ended
December 31, 1996, $788,575, $15,362 and $442,961,  respectively, were allocated
to the General Partner.  The limited partners received allocations of net income
(loss) of  $804,035,  $291,881  and  $(636,783)  for the three year period ended
December 31, 1996, respectively.

With the exception of the MID,  distributions  to partners  have been  suspended
since 1986 as part of the General Partner's policy of maintaining  adequate cash
reserves.  Distributions  to the limited  partners will remain suspended for the
foreseeable  future.  The  General  Partner  will  continue  to monitor the cash
reserves and working  capital needs of the  Partnership  to determine  when cash
flows will support  distributions  to the limited  partners.  A distribution  of
$902,697  for the MID has been  accrued  by the  Partnership  for the year ended
December 31, 1996 for the General Partner.


<PAGE>
ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>

                                                                                                      Page
                                                                                                      Number

INDEX TO FINANCIAL STATEMENTS

<S>                                                                                                      <C>
Financial Statements:

   Report of Independent Public Accountants.......................................                       15

   Balance Sheets at December 31, 1996 and 1995...................................                       16

   Statements of Operations for each of the three years in the period
      ended December 31, 1996.....................................................                       17

   Statements of Partners' Deficit for each of the three years
      in the period ended December 31, 1996.......................................                       18

   Statements of Cash Flows for each of the three years in the period
      ended December 31, 1996.....................................................                       19

   Notes to Financial Statements..................................................                       21

   Financial Statement Schedule -

      Schedule III - Real Estate Investments and Accumulated
         Depreciation.............................................................                       30

</TABLE>














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


<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


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

We have audited the  accompanying  balance sheets of McNeil Real Estate Fund XI,
Ltd. (a California  limited  partnership)  as of December 31, 1996 and 1995, and
the related statements of operations,  partners' deficit and cash flows for each
of the three  years in the period  ended  December  31,  1996.  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 XI,
Ltd. as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1996, 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 17, 1997



<PAGE>
                        McNEIL REAL ESTATE FUND XI, LTD.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                       -----------------------------------
                                                                            1996                 1995
                                                                       ---------------      --------------
<S>                                                                    <C>                  <C>           
ASSETS
------

Real estate investments:

   Land.....................................................           $     4,572,654      $    5,938,464
   Buildings and improvements...............................                50,600,784          58,408,551
                                                                        --------------       -------------
                                                                            55,173,438          64,347,015
   Less:  Accumulated depreciation..........................               (32,181,184)        (37,095,184)
                                                                        --------------       -------------
                                                                            22,992,254          27,251,831

Asset held for sale.........................................                 4,203,597                   -

Cash and cash equivalents...................................                 2,351,879           2,030,544
Cash segregated for security deposits.......................                   403,949             386,125
Accounts receivable.........................................                   204,542              31,327
Prepaid expenses and other assets...........................                   256,151             276,785
Escrow deposits.............................................                   662,003             904,523
Deferred borrowing costs, net of accumulated
   amortization of $515,702 and $507,241 at
   December 31, 1996 and 1995, respectively.................                 1,517,778           1,627,629
                                                                        --------------       -------------
                                                                       $    32,592,153      $   32,508,764
                                                                        ==============       =============
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------

Mortgage notes payable, net.................................           $    36,666,074      $   39,684,440
Mortgage note payable - affiliate...........................                 2,588,971                   -
Accounts payable............................................                    52,886              62,056
Accrued interest............................................                   295,428             302,329
Accrued expenses............................................                   455,857             456,984
Deferred gain...............................................                   174,656              67,016
Payable to affiliates - General Partner.....................                 2,558,338           2,851,851
Security deposits and deferred rental income................                   433,407             407,466
                                                                        --------------       -------------
                                                                            43,225,617          43,832,142
                                                                        --------------       -------------


Partners' deficit:
     Limited partners - 159,813 limited partnership units 
     issued and outstanding at December 31, 1996
       and 1995.............................................                (4,179,456)         (4,983,492)
     General Partner........................................                (6,454,008)         (6,339,886)
                                                                        --------------       -------------
                                                                           (10,633,464)        (11,323,378)
                                                                        --------------       -------------
                                                                       $    32,592,153      $   32,508,764
                                                                        ==============       =============
</TABLE>

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

                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                          For the Years Ended December 31,
                                                   ----------------------------------------------------
                                                       1996                1995               1994
                                                   --------------     --------------    ---------------
<S>                                                <C>                <C>               <C>            
Revenue:
   Rental revenue..........................        $   14,855,652     $   14,304,055    $    13,313,091
   Interest................................               127,552            147,758             84,213
   Gain on involuntary conversion..........               598,859                  -             28,109
                                                    -------------      -------------     --------------
     Total revenue.........................            15,582,063         14,451,813         13,425,413
                                                    -------------      -------------     --------------

Expenses:
   Interest................................             3,784,555          3,905,403          3,901,700
   Interest - affiliates...................                23,620                  -              3,589
   Depreciation............................             2,372,870          2,484,425          2,341,485
   Property taxes..........................               787,865            799,717            898,396
   Personnel expenses......................             1,716,875          1,722,218          1,741,104
   Repairs and maintenance.................             1,921,900          1,718,236          1,590,164
   Property management fees -
     affiliates............................               734,247            711,435            671,785
   Utilities...............................             1,093,688          1,044,938          1,003,419
   Other property operating expenses.......               775,491            899,517            881,362
   General and administrative..............               432,407            393,663            151,654
   General and administrative -
     affiliates............................               345,934            465,018            434,577
                                                    -------------      -------------     --------------
     Total expenses                                    13,989,452         14,144,570         13,619,235
                                                    -------------      -------------     --------------

Net income (loss)..........................        $    1,592,611     $      307,243    $      (193,822)
                                                    =============      =============     ==============

Net income (loss) allocable to limited
   partners................................        $      804,036     $      291,881    $      (636,783)
Net income allocable to General
   Partner.................................               788,575             15,362            442,961
                                                    -------------      -------------     --------------
Net income (loss)..........................        $    1,592,611     $      307,243    $      (193,822)
                                                    =============      =============     ==============

Net income (loss) per limited partnership 
   unit:
   Net income (loss).......................        $         5.03     $         1.83    $         (3.98)
                                                    =============      =============     ==============
</TABLE>

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

                         STATEMENTS OF PARTNERS' DEFICIT

              For the Years Ended December 31, 1996, 1995 and 1994


<TABLE>
<CAPTION>

                                                                                                   Total
                                                    General                 Limited                Partners'
                                                    Partner                 Partners               Deficit
                                                 ----------------        ----------------      ----------------
<S>                                              <C>                     <C>                   <C>             
Balance at December 31, 1993..............       $    (5,157,708)        $    (4,638,590)      $    (9,796,298)

Net income (loss).........................               442,961                (636,783)             (193,822)

Management Incentive Distribution.........              (769,448)                      -              (769,448)
                                                  --------------          --------------        --------------

Balance at December 31, 1994..............            (5,484,195)             (5,275,373)          (10,759,568)

Net income................................                15,362                 291,881               307,243

Management Incentive Distribution.........              (871,053)                      -              (871,053)
                                                  --------------          --------------        --------------

Balance at December 31, 1995..............            (6,339,886)             (4,983,492)          (11,323,378)

Net income................................               788,575                 804,036             1,592,611

Management Incentive Distribution.........              (902,697)                      -              (902,697)
                                                  --------------          --------------        --------------

Balance at December 31, 1996..............       $    (6,454,008)        $    (4,179,456)      $   (10,633,464)
                                                  ==============          ==============        ==============
</TABLE>





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

                            STATEMENTS OF CASH FLOWS

                Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>
                                                            For the Years Ended December 31,
                                                   -----------------------------------------------------
                                                         1996               1995               1994
                                                   ---------------    ---------------   ----------------
<S>                                                <C>                <C>               <C>            
Cash flows from operating activities:
   Cash received from tenants..............        $   14,877,289     $   14,298,528    $    13,292,954
   Cash paid to suppliers..................            (5,836,491)        (5,477,026)        (5,037,523)
   Cash paid to affiliates.................            (1,369,172)        (2,115,099)          (667,861)
   Interest received.......................               127,552            147,758             84,213
   Interest paid...........................            (3,645,580)        (3,676,175)        (3,839,943)
   Interest paid to affiliates.............               (23,620)                 -             (3,589)
   Property taxes paid.....................              (717,973)          (832,090)          (672,666)
                                                    -------------      -------------     --------------
Net cash provided by operating
   activities..............................             3,412,005          2,345,896          3,155,585
                                                    -------------      -------------     --------------

Cash flows from investing activities:
   Additions to real estate
     investments...........................            (2,467,045)        (1,820,043)        (2,154,079)
   Insurance proceeds from fire............               681,998                  -             28,109
   Insurance proceeds from hail
     damage................................                67,016                  -                  -
                                                    -------------      -------------     --------------
Net cash used in investing activities......            (1,718,031)        (1,820,043)        (2,125,970)
                                                    -------------      -------------     --------------

Cash flows from financing activities:
   Principal payments on mortgage
     notes payable.........................            (3,041,234)          (427,660)          (394,008)
   Deferred borrowing costs paid...........               (13,157)                 -           (127,801)
   Mortgage loan from affiliate............             2,588,971                  -                  -
   Repayment of advances from
     affiliates............................                     -                  -           (936,377)
   Management Incentive Distribution.......              (907,219)                 -           (560,035)
                                                    -------------      -------------     --------------
Net cash used in financing activities......            (1,372,639)          (427,660)        (2,018,221)
                                                    -------------      -------------     --------------

Net increase (decrease) in cash
     and cash equivalents..................               321,335             98,193           (988,606)

Cash and cash equivalents at
     beginning of year.....................             2,030,544          1,932,351          2,920,957
                                                    -------------      -------------     --------------

Cash and cash equivalents at end
     of year...............................        $    2,351,879     $    2,030,544    $     1,932,351
                                                    =============      =============     ==============
</TABLE>

See discussion of noncash investing and financing activities in Notes 6 and 7.


                 See accompanying notes to financial statements.
<PAGE>
                        McNEIL REAL ESTATE FUND XI, 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,
                                                   -----------------------------------------------------
                                                        1996              1995                 1994
                                                   --------------   ----------------      --------------
<S>                                                <C>              <C>                   <C>           
Net income (loss)..........................        $    1,592,611   $        307,243      $    (193,822)
                                                    -------------    ---------------       ------------

Adjustments to reconcile net income
   (loss) to net cash provided by
   operating activities:
   Gain on involuntary conversion..........              (598,859)                 -            (28,109)
   Depreciation............................             2,372,870          2,484,425          2,341,485
   Amortization of discounts on
     mortgage notes payable................                22,868             21,668             20,514
   Amortization of deferred borrowing
     costs.................................               123,008            145,498            137,072
   Changes in assets and liabilities:
     Cash segregated for security
       deposits............................               (17,824)           (22,276)           (25,939)
     Accounts receivable...................                 1,441             (6,750)             3,889
     Prepaid expenses and other
       assets..............................                20,634             85,124             60,668
     Escrow deposits.......................               175,504             79,449            422,335
     Accounts payable......................                (9,170)           (50,679)          (112,570)
     Accrued interest......................                (6,901)            62,062            (95,829)
     Accrued expenses......................                (1,127)           138,356            154,930
     Payable to affiliates - General
       Partner.............................              (288,991)          (938,646)           438,501
     Security deposits and deferred
       rental income.......................                25,941             40,422             32,460
                                                    -------------      -------------     --------------

         Total adjustments.................             1,819,394          2,038,653          3,349,407
                                                    -------------      -------------     --------------

Net cash provided by operating
   activities..............................        $    3,412,005     $    2,345,896    $     3,155,585
                                                    =============      =============     ==============
</TABLE>

                 See accompanying notes to financial statements.
<PAGE>

                        McNEIL REAL ESTATE FUND XI, LTD.

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 1996

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

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

McNeil Real Estate Fund XI, Ltd. (the  "Partnership") was organized June 2, 1980
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 of limited  partnership dated August 6, 1991, as amended (the "Amended
Partnership Agreement"). The principal place of business for the Partnership and
for 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.  The  Partnership  has determined to evaluate  market and other
economic  conditions  to  establish  the  optimum  time to  commence  an orderly
liquidation  of the  Partnership's  assets in  accordance  with the terms of the
Amended Partnership Agreement. At December 31, 1996, the Partnership owned eight
income-producing  properties. One of these properties is currently held for sale
as described in Note 4 - Real Estate Investments.

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 following
listed tier  partnerships  for the years ended December 31, 1996, 1995 and 1994.
These single asset tier  partnerships were formed to accommodate the refinancing
of  the  respective  property.  The  Partnership's  and  the  General  Partner's
ownership  interest 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 as it is either negative or immaterial.

                                                  % of Ownership Interest
   Tier Partnership                           Partnership      General Partner
   ----------------                           -----------      ---------------

   Limited Partnerships:
Acacia Lakes Fund XI Limited Partnership          99%              1%
Gentle Gale Fund XI Limited Partnership*         100               -
Villa Del Rio XI Limited Partnership*            100               -
Village Fund XI Associates                        99               1

   General Partnerships:
Knollwood XI Associates                           99               1
The Park Fund XI Associates                       99               1
Sun Valley Fund XI Associates                     99               1

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

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.  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
recoverable amount.

The  Partnership's  method  of  accounting  for real  estate  investments  is 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" ("SFAS 121"),  which the Partnership  adopted effective January 1, 1996. The
adoption  of  SFAS  121 did  not  have a  material  impact  on the  accompanying
financial statements.

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 on this asset ceased at the time it was placed
on the market for sale.





<PAGE>
Depreciation
------------

Buildings and improvements are depreciated using the  straight-line  method over
the estimated useful lives of the assets, ranging from 3 to 40 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  indebtedness  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.

Discounts on Mortgage Notes Payable
-----------------------------------

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

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

The Partnership  leases its residential  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.







<PAGE>
Allocation of Net Income and Net Loss
-------------------------------------

The Amended Partnership Agreement provides for net income 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,  deductions for  depreciation  shall  be  allocated  5%  to  the
         General  Partner and 95% to the limited  partners;

b)       then,  net income in an amount equal to the  cumulative  amount paid to
         the General Partner for the Management Incentive  Distribution ("MID"),
         for which no  previous  income  allocations  have been  made,  shall be
         allocated to the General Partner;  provided,  however, that if all or a
         portion  of  such  payment  consists  of  limited   partnership   units
         ("Units"),  the  amount of net income  allocated  shall be equal to the
         amount of cash the General Partner would have otherwise received; and

c)       then,  any  remaining  net  income  shall  be  allocated to achieve the
         allocation  of  5%  to  the  General  Partner  and  95%  to the limited
         partners.

The Amended  Partnership  Agreement  provides  that net losses,  other than that
arising from a sale or refinancing, shall be allocated 5% to the General Partner
and 95% to the limited partners.

Net  losses arising from a sale  or  refinancing  shall  be  allocated 1% to the
General  Partner and 99% to the limited partners.

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 1996, 1995, and 1994 have been made
in accordance with these provisions.

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

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

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

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

No  distributions  were made to the limited  partners in 1996, 1995 or 1994. The
Partnership  accrued  distributions  of $902,697,  $871,503 and $769,448 for the
benefit of the General  Partner for the years ended December 31, 1996,  1995 and
1994,  respectively.  These  distributions  are the MID  pursuant to the Amended
Partnership Agreement.




<PAGE>
Net Income (Loss) Per Limited Partnership Unit
----------------------------------------------

Net income (loss) per Unit is computed by dividing net income  (loss)  allocated
to the limited partners by the number of Units outstanding. Per Unit information
has been  computed  based on  159,813  Units  outstanding  in 1996 and  1995,and
159,917 Units outstanding in 1994.

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.

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

Under 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.  The maximum MID percentage decreases subsequent
to 1999.  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
for  residential  property 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.

MID will be paid to the extent of 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 per
Unit,  as defined.  No Units were issued in payment of the MID in 1996,  1995 or
1994.

During  1991,  the  Partnership  amended  its  capitalization  policy  and began
capitalizing  certain costs of improvements and betterments which 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
1996,  1995 or 1994 because the  Entitlement  Amount was  sufficient  to pay MID
notwithstanding the amendment to the capitalization policy.





<PAGE>
Any  amount  of the MID that 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.

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,
                                                   ----------------------------------------------------
                                                       1996               1995               1994
                                                   --------------     --------------     --------------
<S>                                                <C>                <C>                <C>           
Property management fees - affiliates......        $      734,247     $     711,435      $      671,785
Interest - affiliates......................                23,620                 -               3,589
Charged to general and
   administrative - affiliates:
   Partnership administration..............               345,934            465,018            434,577
                                                    -------------      -------------      -------------
                                                   $    1,103,801     $    1,176,453     $    1,109,951
                                                    =============      =============      =============
Charged to General Partner's deficit:
   MID.....................................        $      902,697     $      871,053     $      769,448
                                                    =============      =============      =============
</TABLE>

Payable to affiliates - General  Partner at December 31, 1996 and 1995 consisted
primarily of accrued property  management fees, MID and cost  reimbursements and
are due and  payable  from  operations.  The  General  Partner  has  waived  the
collection  terms of the MID until the Partnership has an adequate level of cash
reserves.  In 1996 and 1994, the Partnership  paid $1,467,254 from cash reserves
for the MID.

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

McNeil Real Estate Fund XI, 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 were less than the
net assets and liabilities for financial reporting purposes by $831,834 in 1996,
$62,005 in 1995 and $415,728 in 1994.


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

The  basis  and  accumulated  depreciation  of  the  Partnership's  real  estate
investments at December 31, 1996 and 1995 are set forth in the following tables:

<TABLE>
<CAPTION>
                                                   Buildings and       Accumulated           Net Book
         1996                       Land           Improvements        Depreciation            Value
       --------                --------------      ------------        ------------       ---------------
<S>                            <C>                 <C>                 <C>                 <C>           
Acacia Lakes
   Mesa, AZ                    $    1,953,090      $   13,054,618      $   (8,748,631)     $    6,259,077
Gentle Gale
   Galveston, TX                      450,155           3,685,626          (2,351,872)          1,783,909
Knollwood
   Kansas City, MO                    330,547           7,084,066          (4,299,937)          3,114,676
The Park
   Joplin, MO                         165,329           4,354,026          (3,192,577)          1,326,778
Sun Valley
   Charlotte, NC                      562,797           8,488,851          (4,619,613)          4,432,035
Villa Del Rio
   Jacksonville, FL                   636,634           9,540,354          (5,886,698)          4,290,290
The Village
   Gresham, OR                        474,102           4,393,243          (3,081,856)          1,785,489
                                -------------       -------------       -------------       -------------
                               $    4,572,654      $   50,600,784      $  (32,181,184)     $   22,992,254
                                =============       =============       =============       =============

                                                   Buildings and       Accumulated           Net Book
         1995                       Land           Improvements        Depreciation            Value
       --------                --------------      ------------        ------------       ---------------

Acacia Lakes                   $    1,953,090      $   12,687,204      $   (8,213,224)     $    6,427,070
Gentle Gale                           450,155           3,577,012          (2,167,312)          1,859,855
Knollwood                             330,547           6,423,419          (4,298,156)          2,455,810
The Park                              165,329           4,238,254          (3,069,781)          1,333,802
Rock Creek (a)                      1,365,810           9,663,748          (6,671,446)          4,358,112
Sun Valley                            562,797           8,204,402          (4,282,305)          4,484,894
Villa Del Rio                         636,634           9,261,056          (5,531,458)          4,366,232
The Village                           474,102           4,353,456          (2,861,502)          1,966,056
                                -------------       -------------       -------------       -------------
                               $    5,938,464      $   58,408,551      $  (37,095,184)     $   27,251,831
                                =============       =============       =============       =============
</TABLE>

(a)  Effective October 1, 1996, management placed   Rock   Creek,   located   in
     Beaverton,  OR, on the market for sale.  Therefore,  at December  31, 1996,
     Rock Creek is  classified  as an asset held for sale at a net book value of
     $4,203,597.

The results of operations  for the assets held for sale at December 31, 1996 are
$94,412, $8,533 and $(50,314) for 1996, 1995 and 1994, respectively.  Results of
operations are operating revenues less operating expenses including depreciation
and interest expense.




<PAGE>
The Partnership's real estate properties are encumbered by mortgage indebtedness
as discussed in Notes 5 and 6.

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

The following  table sets forth the mortgage notes payable of the Partnership at
December  31,  1996 and 1995.  All  mortgage  notes are  secured by real  estate
investments or the asset held for sale.

<TABLE>
<CAPTION>

                         Mortgage         Annual       Monthly
                         Lien             Interest     Payments/                       December 31,
Property                 Position    (a)  Rates %      Maturity Date (e)           1996                1995
--------                 ---------------  -------      -----------------      ---------------     --------------
<S>                      <C>                  <C>      <C>           <C>      <C>                <C>            
Acacia Lakes             First                8.700    $   71,069    01/01    $     8,858,883    $     8,937,249
                                                                                -------------     --------------

Gentle Gale (d)          First                8.150        22,327    07/03          2,644,107          2,694,292
                         Discount (b)                                                 (57,508)           (64,784)
                                                                                -------------     --------------
                                                                                    2,586,599          2,629,508
                                                                                -------------     --------------

Knollwood                First                7.750        32,506    05/24          4,427,873          4,472,878
                                                                                -------------     --------------

The Park                 First               10.500        24,021    05/24          2,588,973          2,604,482
                                                                                -------------     --------------

Rock Creek               First               11.875        67,860    02/01          6,139,670          6,224,682
                                                                                -------------     --------------

Sun Valley               First                7.875        48,384    06/24          6,521,362          6,585,644
                                                                                -------------     --------------

Villa Del Rio (d)        First                8.150        47,843    07/03          5,665,944          5,773,484
                         Discount (b)                                                (123,230)          (138,822)
                                                                                -------------     ---------------
                                                                                    5,542,714          5,634,662
                                                                                -------------     --------------

The Village (c)          First               10.875        26,219    11/96                  -          2,595,335
                                                                                -------------     --------------
                                                                              $    36,666,074    $    39,684,440
                                                                                =============     ==============
</TABLE>

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

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

(c)  On  November 25, 1996,  the  Partnership  refinanced  the   mortgage   note
     payable on The Village with a mortgage note from an affiliate.  See Note 6.


<PAGE>
(d)  Financing was obtained under the terms of a Real Estate Mortgage Investment
     Conduit financing.  The mortgage notes payable are cross-collateralized and
     may not be prepaid in whole or part before July 1998. Any prepayments  made
     during the sixth or seventh  loan years are subject to a Yield  Maintenance
     premium,  as  defined.  Additionally,  the  Partnership  must pay a release
     payment  equal to 25% of the prepaid  balance  which will be applied to the
     remaining mortgage notes in the collateral pool.

(e)      Balloon payments on the mortgage notes are due as follows:

           Property                  Balloon Payment          Date
           --------                  ---------------          ----

        Acacia Lakes                  $  8,468,000            01/01
        Rock Creek                       5,704,000            02/01
        Gentle Gale                      2,197,000            07/03
        Villa Del Rio                    4,707,000            07/03

Scheduled principal  maturities of the mortgage notes,  before  consideration of
discounts of $180,738, are as follows:

                                                     Real Estate     Asset Held
                                                     Investments      For Sale
                                                     ------------    -----------

         1997....................................    $    391,901    $    90,029
         1998....................................         425,595        101,322
         1999....................................         462,199        114,030
         2000....................................         501,974        128,333
         2001....................................       8,892,033      5,705,956
         Thereafter..............................      20,033,440              -
                                                      -----------     ----------
          Total..................................    $ 30,707,142    $ 6,139,670
                                                      ===========     ==========

Based on borrowing  rates  currently  available to the  Partnership for mortgage
loans with similar terms and average maturities, the fair value of notes payable
was  approximately  $36,770,000  as of December 31, 1996 and  $40,765,000  as of
December 1995.



<PAGE>
NOTE 6 - MORTGAGE NOTE PAYABLE - AFFILIATE
------------------------------------------

The  following  sets  forth  the  mortgage  note  payable  -  affiliate  of  the
Partnership  at  December 31, 1996.  The mortgage note is secured by real estate
investment.

<TABLE>
<CAPTION>
                         Mortgage         Annual       Monthly
                         Lien             Interest     Payments/              December 31,
Property                 Position    (a)  Rates %      Maturity Date              1996          
--------                 ---------------  -------      -------------------    ------------   
<S>                      <C>                  <C>      <C>           <C>      <C>                  
The Village (b)          First                (c)      Variable      11/99    $ 2,588,971  
                                                                               ==========  
</TABLE>

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

(b)  In October 1996, the  Partnership  obtained a mortgage note commitment from
     an  affiliate  of the General  Partner for an amount up to  $2,588,971.  On
     November 25, 1996,  $2,588,971 was funded to the Partnership to pay off the
     mortgage note on The Village.  The Partnership  incurred deferred borrowing
     costs of  $13,157  for the new  mortgage  note  payable,  and the  deferred
     borrowing costs for the old mortgage note payable were written off.

(c)  The note  requires  monthly  payments of  interest  only equal to the prime
     lending rate plus 1%. At December 31, 1996, the prime rate was 8.25%.

Under the terms of the Amended Partnership Agreement, borrowings from affiliates
approximate fair market value.

NOTE 7 - GAIN ON INVOLUNTARY CONVERSION
---------------------------------------

On January 8, 1996, 23,347 square feet of Knollwood  Apartments was destroyed by
fire causing  $856,654 in damages.  The  Partnership  has  received  $681,998 in
insurance  reimbursements  as of December 31, 1996,  to cover the cost to repair
Knollwood.  Insurance  reimbursements  received  in  excess  of the basis of the
property damaged were recorded as a $531,843 gain on involuntary conversion. The
Partnership will receive an additional $174,656 in insurance reimbursements. The
Partnership  has recorded a deferred  gain and a receivable  from its  insurance
company  for funds  which were not  reimbursed  as of  December  31,  1996.  The
deferred gain will be recognized when the insurance proceeds are received.

In 1994, the  Partnership  received  $67,016 in insurance  proceeds to cover the
cost of repairs  caused by a hail storm in August 1994 at Knollwood  Apartments.
The insurance proceeds were placed in escrow until completion of repairs. During
1996,  the  Partnership  completed the repairs and received the $67,016 that was
held  in  escrow. The Partnership has recorded a $67,016 gain on the involuntary
conversion.


<PAGE>
On March 15, 1993, 8 units at Sun Valley were destroyed by fire causing $317,100
in damages. The Partnership received $277,145 in insurance  reimbursements as of
December 31, 1993, to cover the cost to repair Sun Valley. The property received
an  additional   $28,109  in  insurance   reimbursements   in  1994.   Insurance
reimbursements  received  in excess of the basis of the  property  damaged  were
recorded as a gain on involuntary conversion. The Partnership recorded a gain of
$28,109 1994.

NOTE 8 - 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:

1)   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 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., et al. - 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 fourteen  limited  partnerships  that were
     named as nominal  defendants as listed above (as defined in this Section 1,
     the  "Partnerships").  Plaintiffs allege that McNeil  Investors,  Inc., its
     affiliate  McNeil Real Estate  Management,  Inc.  and three of their senior
     officers and/or directors (as defined in this Section 1, 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.  On January 7, 1997,  the Court ordered  consolidation  with three
     other similar actions listed below.




<PAGE>
     The  Partnerships  filed a demurrer to the complaint and a motion to strike
     on February 14, 1997, seeking to dismiss the complaint in all respects. The
     demurrer  is  pending.  The  Partnerships  deny that  there is any merit to
     Plaintiff's allegations and intend to vigorously defend this action.

2)   Alfred Napoletano v. McNeil Partners, L.P., McNeil Investors,  Inc., Robert
     A. McNeil,  Carole J. McNeil,  McNeil Pacific  Investors  Fund 1972,  Ltd.,
     McNeil Real Estate Fund V, Ltd.,  McNeil Real Estate Fund IX, Ltd.,  McNeil
     Real Estate Fund X, Ltd.,  McNeil  Real Estate Fund XI,  Ltd.,  McNeil Real
     Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate
     Fund XX, L.P.,  McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
     XXV,  L.P.  -  Superior  Court of the  State of  California,  County of Los
     Angeles,  Case No. BC133849 (Class Action  Complaint).  On January 7, 1997,
     this  action  was  consolidated  by court  order with  Scholfield,  et al.,
     referenced above.

3)   Warren Heller v. McNeil Partners,  L.P., McNeil Investors,  Inc., Robert A.
     McNeil,  Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil
     Real Estate Fund V, Ltd.,  McNeil  Real Estate Fund IX,  Ltd.,  McNeil Real
     Estate Fund X, Ltd.,  McNeil Real Estate Fund XI, Ltd.,  McNeil Real Estate
     Fund XIV, Ltd.,  McNeil Real Estate Fund XV, Ltd.,  McNeil Real Estate Fund
     XX, L.P.,  McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV,
     L.P. - Superior  Court of the State of  California,  County of Los Angeles,
     Case No. BC133957 (Class Action Complaint). On January 7, 1997, this action
     was consolidated by court order with Scholfield, et al., referenced above.

4)   Robert Lewis v. McNeil  Partners,  L.P.,  McNeil  Investors,  Inc.,  Robert
     A. McNeil et al. - In the District  Court of Dallas County,  Texas,  A-14th
     Judicial  District,  Cause No. 95-08535 (Class Action) - Plaintiff,  Robert
     Lewis, is a limited partner with McNeil Pacific  Investors Fund 1972, Ltd.,
     McNeil Real Estate Fund X, Ltd. and McNeil Real Estate Fund XV, Ltd.

     On  April  11,  1996,  the  action  was  dismissed   without  prejudice  in
     anticipation  of  consolidation  with other  class  action  complaints.  On
     January  7,  1997,  this  action  was  consolidated  by  court  order  with
     Schofield, et al., referenced above.

5)   McNeil Pacific  Investors Fund 1972, Ltd., McNeil Real Estate Fund V, Ltd.,
     McNeil Real Estate Fund IX, Ltd.,  McNeil Real Estate Fund X, Ltd.,  McNeil
     Real Estate Fund XI, Ltd.,  McNeil Real Estate Fund XIV, Ltd.,  McNeil Real
     Estate Fund XV, Ltd.,  McNeil Real Estate Fund XX, L.P., McNeil Real Estate
     Fund XXIV,  L.P.,  and McNeil  Real  Estate  Fund XXV,  L.P.  v. High River
     Limited Partnership,  Riverdale Investors Corp., Carl C. Icahn, and Unicorn
     Associates  Corporation  - United  States  District  Court for the  Central
     District of California, Case No. 96-5680SVW.

     On August 12,  1996,  High River  Limited  Partnership  (as defined in this
     Section 5, "High River"), a partnership controlled by Carl C. Icahn, sent a
     letter to the  partnerships  referenced above demanding lists of the names,
     current  residences or business  addresses  and certain  other  information
     concerning the unitholders of such partnerships.  On August 19, 1996, these
     partnerships  commenced the above action  seeking,  among other things,  to
     declare that such  partnerships are not required to provide High River with
     a current list of unitholders on the grounds that the defendants  commenced
     a tender  offer in  violation  of the  federal  securities  laws by  filing
     certain Schedule 13D Amendments on August 5, 1996.


<PAGE>

     On October 16, 1996, the presiding judge denied the partnerships'  requests
     for a permanent and  preliminary  injunction to enjoin High River's  tender
     offers and  granted  the  defendants  request  for an order  directing  the
     partnerships  to turn  over  current  lists of  unitholders  to High  River
     forthwith.  On October 24, 1996, the partnerships  delivered the unitholder
     lists to High River.  The judge's  decision  resolved all the issues in the
     action.

<PAGE>

                        McNEIL REAL ESTATE FUND XI, LTD.
                                  SCHEDULE III
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1996

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

Acacia Lakes
   Mesa, AZ                $    8,858,883    $    1,953,090    $   10,784,729     $          -     $   2,269,889

Gentle Gale
   Galveston, TX                2,586,599           450,155         2,925,081          (21,141)          781,686

Knollwood
   Kansas City, MO              4,427,873           330,547         5,122,225                -         1,961,841

The Park
   Joplin, MO                   2,588,973           165,329         3,795,607                -           558,419

Sun Valley
   Charlotte, NC                6,521,362           562,797         7,056,988                -         1,431,863

Villa Del Rio
   Jacksonville, FL             5,542,714           636,634         7,685,383                -         1,854,971

The Village
   Gresham, OR                  2,588,971           474,102         3,372,567                -         1,020,676
                           --------------    --------------    --------------     ------------     -------------

                          $    33,115,375   $     4,572,654   $    40,742,580    $     (21,141)   $    9,879,345
                           ==============    ==============    ==============     ============     =============

Asset Held for Sale:

Rock Creek (c)
   Beaverton, OR          $    6,139,670
                           =============
</TABLE>


(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)  Asset  held for sale is  stated at the  lower of  depreciated  cost or fair
     value less costs to sell.  Depreciation  ceases at the time they are placed
     on the market for sale.



                     See accompanying notes to Schedule III.
<PAGE>
                        McNEIL REAL ESTATE FUND XI, LTD.
                                  SCHEDULE III
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1996

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

Acacia Lakes
   Mesa, AZ                   $    1,953,090     $   13,054,618   $     15,007,708    $   (8,748,631)

Gentle Gale
   Galveston, TX                     450,155          3,685,626          4,135,781        (2,351,872)

Knollwood
   Kansas City, MO                   330,547          7,084,066          7,414,613        (4,299,937)

The Park
   Joplin, MO                        165,329          4,354,026          4,519,355        (3,192,577)

Sun Valley
   Charlotte, NC                     562,797          8,488,851          9,051,648        (4,619,613)

Villa Del Rio
   Jacksonville, FL                  636,634          9,540,354         10,176,988        (5,886,698)

The Village
   Gresham, OR                       474,102          4,393,243          4,867,345        (3,081,856)
                              --------------     --------------   ----------------     -------------
                             $     4,572,654    $    50,600,784  $      55,173,438    $  (32,181,184)
                              ==============     ==============   ================     =============

Asset Held for Sale:

Rock Creek (c)
   Beaverton, OR                                                 $       4,203,597
                                                                  ================
</TABLE>


(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
     approximately  $73,504,874 and accumulated  depreciation was $59,251,834 at
     December 31, 1996.

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



                     See accompanying notes to Schedule III.
<PAGE>
                        McNEIL REAL ESTATE FUND XI, LTD.
                                  SCHEDULE III
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1996


<TABLE>
<CAPTION>
                                 Date of                    Date                Depreciable
Description                   Construction                Acquired              lives (years)
-----------                   ------------                --------              -------------
<S>                             <C>                         <C>                     <C> 
APARTMENTS:

Acacia Lakes
   Mesa, AZ                     1980                        05/81                   3-33

Gentle Gale
   Galveston, TX                1980                        05/81                   3-21

Knollwood
   Kansas City, MO              1970                        05/81                   3-29

The Park
   Joplin, MO                   1977                        03/81                   3-35

Sun Valley
   Charlotte, NC                1980                        08/81                   3-40

Villa Del Rio
   Jacksonville, FL             1976                        05/81                   3-40

The Village
   Gresham, OR                  1974                        05/81                   3-30

Asset Held for Sale:

Rock Creek
   Beaverton, OR                1975                        02/81 

</TABLE>




                     See accompanying notes to Schedule III.

<PAGE>
                        McNEIL REAL ESTATE FUND XI, LTD.

                              Notes to Schedule III

                           Real Estate Investments and
                            Accumulated Depreciation


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

<TABLE>
<CAPTION>
                                                          For the Years Ended December 31,
                                                   ----------------------------------------------------
                                                        1996               1995               1994
                                                   --------------     --------------    ---------------
Real estate investments:
<S>                                                <C>                <C>               <C>            
Balance at beginning of year...............        $   64,347,015     $   62,526,972    $    60,372,893

Improvements...............................             2,391,036          1,820,043          2,154,079

Reclassification to asset held for sale....           (11,110,783)                 -                  -

Replacement of assets......................              (453,830)                 -                  -
                                                    -------------      -------------     --------------

Balance at end of year.....................        $   55,173,438     $   64,347,015    $    62,526,972
                                                    =============      =============     ==============



Accumulated depreciation:

Balance at beginning of year...............        $   37,095,184     $   34,610,759    $    32,269,274

Depreciation...............................             2,372,870          2,484,425          2,341,485

Reclassification to asset held for sale....            (6,983,195)                 -                  -

Replacement of assets......................              (303,675)                 -                  -
                                                    -------------      -------------     --------------

Balance at end of year.....................        $   32,181,184     $   37,095,184    $    34,610,759
                                                    =============      =============     ==============


Asset Held for Sale:

Balance at beginning of year...............        $            -     $            -    $             -

Reclassification to asset held for sale....             4,127,588                  -                  -

Improvements...............................                76,009                  -                  -
                                                    -------------      -------------     --------------

Balance at end of year.....................        $    4,203,597     $            -    $            -
                                                    =============      =============     =============
</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,              76       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               53       Mrs.  McNeil   is  Co-Chairman,     with
Co-Chairman of the                      husband  Robert  A.  McNeil,  of  McNeil
Board                                   Investors,  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                 39        Mr. Taylor is  the  President and  Chief
President and                           Executive  Officer of McNeil Real Estate
Chief 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,  1996,  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, 1996. 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.

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 percent  of the  Partnership's  Units,
         other than High River  Limited  Partnership,  which owns  18,022  Units
         (approximately 11.28% of the outstanding Units) as of January 31, 1997.
         The business  address for High River Limited  Partnership  is 100 South
         Bedford Road, Mount Kisco, New York 10549.



<PAGE>
(B)      Security ownership of management.

         The  General  Partner and the  officers  and  directors  of its general
         partner,  collectively,  own 313 Units which  represent less than 1% of
         the outstanding Units.

(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.  The maximum MID percentage  decreases
subsequent to 1999.  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 for residential property 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.

MID will be paid to the extent of 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.  For the year ended December 31, 1996, the Partnership  paid or accrued
for the General Partner MID in the amount of $902,697.

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.

The  Partnership  pays property  management fees equal to 5% of the gross rental
receipts  of the  Partnership's  properties  to McREMI  for  providing  property
management and leasing  services.  Effective  February 14, 1991, the Partnership
began reimbursing McREMI for its costs, including overhead, of administering the
Partnership's  affairs.  For the year ended December 31, 1996,  the  Partnership
paid  or  accrued  for  McREMI  $1,080,181  in  property   management  fees  and
reimbursements.

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."

In November 1996, the  Partnership  obtained a loan from McNeil Real Estate Fund
XXVII, L.P., an affiliate of the General Partner, totaling $2,588,971.  The note
was secured by The Village and required monthly interest-only  payments equal to
the prime lending rate of Bank of America plus 1% with the principal balance due
November 25, 1999. Total interest expense for this loan was $23,620 for the year
ended December 31, 1996.



<PAGE>
ITEM 14.     EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
-------      -----------------------------------------------------------------

See accompanying index to financial statements at Item 8.

(A)        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 August
                                            6, 1991  (Incorporated  by reference
                                            to the Quarterly Report on Form 10-Q
                                            for  the  quarter   ended  June  30,
                                            1991).

           3.2                              Amendment  No. 1 to the Amended  and
                                            Restated  Partnership  Agreement  of
                                            McNeil Real  Estate  Fund XI,  Ltd.,
                                            dated March 28, 1994. (2)

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

           10.1                             Deed of Trust Note,  dated  April 5,
                                            1989,   between  Knollwood  Fund  XI
                                            Associates  and American  Mortgages,
                                            Inc. (1)

           10.2                             Deed of  Trust  Note,  dated  May 5,
                                            1989,  between  Sun  Valley  Fund XI
                                            Associates  and American  Mortgages,
                                            Inc. (1)

           10.3                             Termination  Agreement,  dated as of
                                            August  6,  1991,  between  The Park
                                            Fund  XI   Associates   and   McNeil
                                            Partners, L.P. regarding McNeil Real
                                            Estate Fund XI, Ltd. (1)

           10.4                             Termination  Agreement,  dated as of
                                            August 6, 1991  between  Sun  Valley
                                            Fund XI  Associates  and McNeil Real
                                            Estate Management, Inc. (1)


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

           10.5                             Termination  Agreement,  dated as of
                                            August 6,  1991,  between  Knollwood
                                            Fund XI  Associates  and McNeil Real
                                            Estate Management, Inc. (1)

           10.6                             Termination  Agreement,  dated as of
                                            August  6,  1991   among   Southmark
                                            Management  Corporation,   Southmark
                                            Commercial    Management    Company,
                                            McNeil Real Estate Fund XI, Ltd. and
                                            McNeil Real Estate Fund XI, Ltd. and
                                            McNeil Real Estate Management,  Inc.
                                            (1)

           10.7                             Property Management Agreement, dated
                                            as of August 6, 1991, between McNeil
                                            Real Estate Fund XI, Ltd. and McNeil
                                            Real Estate Management, Inc. (1)

           10.8                             Property Management Agreement, dated
                                            as  of  August  6,   1991,   between
                                            Knollwood  Fund  XI  Associates  and
                                            McNeil Real Estate Management,  Inc.
                                            (1)

           10.9                             Property Management Agreement, dated
                                            as of August 6,  1991,  between  Sun
                                            Valley Fund XI Associates and McNeil
                                            Real Estate Management, Inc.
                                            (1)

           10.10                            Property Management Agreement, dated
                                            as of  August 6,  1991  between  The
                                            Park Fund XI  Associates  and McNeil
                                            Real Estate Management, Inc. (1)

           10.11                            Revolving  Credit   Agreement  dated
                                            August 6, 1991,  between McNeil Real
                                            Estate  Fund  XI,  Ltd.  and  McNeil
                                            Partners, L.P. (1)

           10.12                            Amendment  of  Property   Management
                                            Agreement,   dated  March  5,  1993,
                                            between  McNeil Real Estate Fund XI,
                                            Ltd.    and   McNeil   Real   Estate
                                            Management,  Inc.  (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, 1992)


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

           10.13                            Loan  Agreement   dated   June   24,
                                            1993,   between  Lexington  Mortgage
                                            Company  and McNeil Real Estate Fund
                                            XI, Ltd. (2)

           10.14                            Master      Property      Management
                                            Agreement,  dated  as  of  June  24,
                                            1993,  between  McNeil  Real  Estate
                                            Management,  Inc.  and  McNeil  Real
                                            Estate Fund XI, Ltd. (2)

           10.15                            Multifamily  Note,  dated   November
                                            1, 1993 between  Value Line Mortgage
                                            Corporation and Acacia Lakes Fund XI
                                            Limited Partnership. (2)

           10.16                            Modification  of Deed of Trust Note,
                                            dated  December  15,  1993,  between
                                            American    Mortgages,    Inc.   and
                                            Knollwood Fund XI Associates. (2)

           10.17                            Modification  of Deed of Trust Note,
                                            dated  December  20,  1993,  between
                                            American  Mortgages,  Inc.  and  Sun
                                            Valley Fund XI Associates. (2)

           10.18                            Deed of Trust Note, dated  April  5,
                                            1989,   between  The  Park  Fund  XI
                                            Associates  and American  Mortgages,
                                            Inc. (3)

           10.19                            Installment   Note,  dated  December
                                            28,  1990,   between  The  State  of
                                            Oregon Public Employees'  Retirement
                                            Fund and McNeil Real Estate Fund XI,
                                            Ltd. (3)

           10.20                            Promissory   Note,   dated  November
                                            25,  1991,  between  Village Fund XI
                                            Associates  Limited  Partnership and
                                            Sun  Life   Insurance   Company   of
                                            America. (3)

           11.                              Statement  regarding  computation of
                                            Net  Income   (Loss)   per   limited
                                            partnership  unit (see Item 8 - Note
                                            1 -  "Organization  and  Summary  of
                                            Significant Accounting Policies).

           22.                              List   of    subsidiaries   of   the
                                            Partnership. (2)




<PAGE>
                           (1)              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, 1991, as filed with the
                                            Securities  and Exchange  Commission
                                            on March 29, 1992.

                           (2)              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.

                           (3)              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, 1995.

           27.                              Financial Data Schedule for the year
                                            ended December 31, 1996.


(B)  Reports on Form 8-K.  There  were no  reports on Form 8-K filed  during the
quarter ended December 31, 1996.


<PAGE>
                        McNEIL REAL ESTATE FUND XI, 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 XI, LTD.

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

                                    By: McNeil Investors, Inc., General Partner



March 28, 1997                          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 28, 1997                          By:  /s/  Ron K. Taylor
--------------                               -----------------------------------
Date                                         Ron K. Taylor
                                             President and Director of McNeil 
                                              Investors, Inc.
                                             (Principal Financial Officer)




March 28, 1997                          By:  /s/  Brandon K. Flaming
--------------                               -----------------------------------
Date                                         Brandon K. Flaming
                                             Vice President of McNeil 
                                              Investors, Inc.
                                             (Principal Accounting Officer)