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, 1997
                                ------------------------------------------------

                                       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  0-7162
                           ---------


                       McNEIL PACIFIC INVESTORS FUND 1972
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         California                       94-6279375
--------------------------------------------------------------------------------
(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 ]

13,702.5 of the  registrant's  13,752.5  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 27.

                                TOTAL OF 28 PAGES
<PAGE>
                                     PART I

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

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

McNeil Pacific Investors Fund 1972 (the  "Partnership") was organized  September
30, 1971 as a limited  partnership  under  provisions of the California  Uniform
Limited  Partnership  Act.  The  general  partner of the  Partnership  is McNeil
Partners,  L.P. (the "General  Partner"),  a Delaware  limited  partnership,  an
affiliate of Robert A. McNeil  ("McNeil").  The General Partner was elected at a
meeting of limited  partners on March 30, 1992, at which time the  Partnership's
restated  certificate  and agreement of limited  partnership  (the  "Partnership
Agreement") was amended.  Prior to March 30, 1992, Pacific Investors Corporation
(the  "Corporate  General  Partner"),  an  affiliate  of  Southmark  Corporation
("Southmark"),  and McNeil were the general  partners  of the  Partnership.  The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 600, LB70, Dallas, Texas, 75240.

On March 8, 1972, a Registration  Statement on Form S-11 was declared  effective
by the Securities and Exchange  Commission  whereby the Partnership  offered for
sale $15,000,000 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 April 30, 1973 with 13,795 Units sold for gross proceeds
of $13,795,000 to the Partnership,  including 50 Units purchased by the original
general  partners.  37.5  and 5  Units  were  relinquished  in  1994  and  1995,
respectively, leaving 13,752.5 Units outstanding at December 31, 1997.

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,  including  Southmark's  interest in the Corporate  General
Partner, were sold or liquidated for the benefit of creditors.

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

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




<PAGE>
On March 30,  1992,  the  limited  partners  approved a proposal  to (i) replace
McNeil and the Corporate  General Partner as general partners of the Partnership
with the General Partner, and (ii) amend the Partnership Agreement to (a) extend
the term of the Partnership from December 31, 1992, until December 31, 2002, (b)
provide for a limitation on  administrative  operating  expenses  equal to 2% of
tangible asset value, as defined,  and (c) provide for the  establishment  of an
oversight committee that will review and report on the Partnership's  compliance
with the 2% limitation on administrative operating expenses.

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

General:

The Partnership is engaged in real estate  activities,  including the ownership,
operation and management of residential rental real estate and other real estate
related assets. On September 30, 1997, the Partnership sold its last real estate
asset, Palm Bay Apartments. The Partnership is in the process of liquidating its
assets,  satisfying its remaining creditors, and terminating its operations.  At
December 31, 1997, the Partnership did not own any income-producing properties.

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

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

Business Plan:

Pursuant to its plan to liquidate its remaining properties, the Partnership sold
its last real estate asset,  Palm Bay  Apartments,  on September  30, 1997.  The
Partnership  is currently in the process of liquidating  its assets,  satisfying
all  remaining  creditors,  and  terminating  its  operations.   See  Item  7  -
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations.

Forward-Looking Information:

Within this document,  certain  statements  are made as to expected  Partnership
developments,  including the ultimate termination of the Partnership's business,
satisfaction  of the  Partnership's  creditors,  and  distributions  to  limited
partners.  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 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 outcome of litigation in which the
Partnership is a defendant.





<PAGE>
Environmental Matters:

The environmental  laws of the Federal government and of certain state and local
governments  impose  liability  on current  and former  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  properties in
which it formerly had an ownership  interest have such  environmental  problems.
The Partnership has no knowledge of any pending claims or proceedings  regarding
such environmental problems.

Other Information:

In August 1995, High River Limited  Partnership,  a Delaware limited partnership
controlled by Carl C. Icahn ("High River") made an  unsolicited  tender offer to
purchase from holders of Units up to approximately  45% of the outstanding Units
of the  Partnership  for a purchase  price of $110 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 $224.50 per Unit.
In  addition,  High River made  unsolicited  tender  offers  for  certain  other
partnerships  controlled  by  the  General  Partner.  The  Partnership  made  no
recommendation  to the limited  partners  concerning the tender offers made with
respect to the Partnership.  The General Partner believes that as of January 31,
1998,  High River has purchased  approximately  11.7% 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.  PROPERTY
-------  --------

The Partnership's last remaining property,  Palm Bay Apartments,  was sold to an
unaffiliated purchaser on September 30, 1997.

ITEM 3.  LEGAL PROCEEDINGS
-------  -----------------

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

James F.  Schofield,  Gerald C. Gillett,  Donna S. Gillett,  Jeffrey  Homburger,
Elizabeth Jung,  Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P.,
McNeil Investors,  Inc., McNeil Real Estate Management,  Inc., Robert A. McNeil,
Carole J. McNeil,  McNeil Pacific  Investors Fund 1972, Ltd., McNeil Real Estate
Fund IX,  Ltd.,  McNeil Real  Estate  Fund X, Ltd.,  McNeil Real Estate Fund XI,
Ltd.,  McNeil  Real Estate Fund XII,  Ltd.,  McNeil Real Estate Fund XIV,  Ltd.,
McNeil Real Estate Fund XV, Ltd.,  McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXI, L.P.,  McNeil Real Estate Fund XXII,  L.P.,  McNeil Real Estate
Fund 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).





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

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

Defendants  filed a demurrer to the  consolidated  and amended  complaint  and a
motion to strike on February 14, 1997,  seeking to dismiss the  consolidated and
amended complaint in all respects.  A hearing on Defendant's demurrer and motion
to strike  was held on May 5,  1997.  The Court  granted  Defendants'  demurrer,
dismissing  the  consolidated  and  amended  complaint  with leave to amend.  On
October  31,  1997,  the  Plaintiffs  filed a second  consolidated  and  amended
complaint.  Defendants  must  move,  answer or  otherwise  respond to the second
consolidated and amended complaint by June 30, 1998.

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

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

On August 12, 1997, at a special meeting of limited partners,  the Partnership's
limited  partners  approved a proposal  to amend the  Restated  Certificate  and
Agreement of Limited  Partnership to authorize the General  Partner to sell Palm
Bay  Apartments.  The proposal was approved by 9,038.92  affirmative  votes.  15
votes against the proposal were cast.

At the August  12,  1997  special  meeting,  limited  partners  also  approved a
proposal to authorize  the General  Partner to liquidate the  Partnership.  This
second proposal was approved by 9,038.92 affirmative votes. 15 votes against the
proposal were cast.












<PAGE>
                                     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            1,165 as of January 31, 1998

(C)      In  December  1997,  the  Partnership  distributed  $4,772,400  to  its
         partners.  No  distributions  were  made in 1996 or 1995.  See Item 7 -
         Management's Discussion and Analysis of Financial Condition and Results
         of  Operations  for a  discussion  of the  Partnership's  plan to pay a
         liquidating distribution to the 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  -  Financial
Statements and Supplementary Data.

<TABLE>
<CAPTION>
Statements of                                                Years Ended December 31,
Operations                              1997           1996            1995           1994           1993
------------------                  -------------  -------------  --------------  -------------  -------------
<S>                                 <C>             <C>             <C>            <C>            <C>
Rental revenue...............       $   1,350,389   $  1,688,524    $  1,376,148   $  1,475,264   $  1,894,385
Gain on sale of
   real estate...............             151,141              -               -        574,701              -
Total revenue................           1,585,977      1,715,535       1,439,428      2,095,660      1,908,162
Write-down for impairment
   of real estate............                   -              -               -              -      2,700,000
Net income (loss)............             367,198        104,539        (285,886)       433,544     (3,102,551)

Net income (loss) per
   limited partnership unit..       $       17.81  $        7.60    $     (20.79)  $      48.52   $    (224.90)
                                     ============   ============     ===========    ===========    ===========

Distributions per limited
   partnership unit..........       $      315.59  $           -    $          -   $          -   $          -
                                     ============   ============     ===========    ===========    ===========

                                                                     As of December 31,
Balance Sheets                          1997           1996            1995           1994           1993
--------------                      -------------  -------------  --------------  -------------  --------------

Real estate investment, net....     $           -  $           -  $    6,335,493 $    6,239,081  $    5,814,474
Assets held for sale...........                 -      6,253,753               -              -       3,209,269
Total assets...................           451,506      6,957,388       6,993,903      7,516,368       9,405,117
Mortgage notes payable.........                 -      2,023,577       2,161,204      2,287,341       4,523,714
Partners' equity...............           414,319      4,819,521       4,714,982      5,000,868       4,567,324

</TABLE>


<PAGE>
See Item 7 -  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations. The Partnership sold Palm Bay Apartments on September 30,
1997. Pacesetter Apartments was sold on March 17, 1994.

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

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

On September 30, 1997, the Partnership sold its last real estate asset, Palm Bay
Apartments.  Proceeds from the sale were distributed to the partners in December
1997. As of the end of 1997, the Partnership's sole remaining asset consisted of
$451,506 of cash and cash  equivalents.  At the end of 1997,  the  Partnership's
liabilities consisted of $37,187 of accrued expenses,  $17,485 of which were due
to affiliates of the General Partner.

The  Partnership  remains  subject to litigation as discussed in Item 3 - "Legal
Proceedings."  The General  Partner intends to use the  Partnership's  remaining
funds  for the  payment  of costs  associated  with the  litigation.  After  the
remaining  litigation is either adjudicated or otherwise settled,  and all legal
and other costs have been provided for,  remaining  Partnership  funds,  if any,
will be distributed to the partners.

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

1997 compared to 1996:

Revenue:

Rental  revenue  decreased  $338,135 or 20% in 1997 as compared to 1996.  Rental
revenue  decreased due to the  September  30, 1997 sale of Palm Bay  Apartments.
Prior to the sale,  rental revenues from Palm Bay Apartments were up 7.7% due to
an improving  occupancy rate. Vacancy losses for the period from January 1, 1997
through the date of sale decreased 11.9% as compared to the same period of 1996,
while other rental discounts and concessions had decreased 77%.

The Partnership reported a $151,141 gain on the sale of Palm Bay Apartments.  No
such gain was realized in 1996.  Proceeds  from the sale of Palm Bay  Apartments
were invested in interest-bearing cash accounts.  As a result,  interest revenue
increased to $84,447 for 1997 as compared to $27,011 of interest earned in 1996.

Expenses:

Expenses  decreased  $392,217  or 24% for 1997 as  compared  to 1996.  Interest,
property taxes,  personnel  expenses,  property  management fees,  utilities and
other  operating  expenses all  decreased as a result of the  September 30, 1997
sale of Palm Bay Apartments.

Repairs  and  maintenance,  however,  increased  despite  the  sale of Palm  Bay
Apartments.  Repairs and maintenance increased $1,104 to $312,631.  Expenditures
for replacement of floor covering and appliances,  due to their magnitude,  were
capitalized in 1996. Such  expenditures  did not qualify for  capitalization  in
1997 and were, as a consequence, expensed.


<PAGE>
General and administrative  expenses increased $11,064 or 14.4% in 1997 compared
to 1996.  Beginning in 1997,  investor  services were provided by an independent
contractor  instead  of by  affiliates  of the  General  Partner.  $8,971 of the
increase in general  and  administrative  expenses  is due to investor  services
costs.

General and  administrative  expenses  paid to affiliates  increased  $42,189 to
$88,126  in 1997 as  compared  to  $45,937  in 1996.  Included  in  general  and
administrative  expenses  paid to affiliates  for 1997 is a $23,368  partnership
management fee.  Partnership  management fees are equal to 9.5% of distributions
of cash from operations paid to the limited  partners.  No such fee was incurred
in 1996.  Partnership  administrative  fees also  increased  because of expenses
incurred  as the  Partnership  begins  to wind  up its  business  affairs.  Such
increases  were  partially  offset by decreased  costs for investor  services as
explained in the preceding paragraph.

1996 compared to 1995:

Revenue:

Rental revenue  increased  $312,376 or 23% in 1996 compared to 1995. Base rental
rates were increased 1.7% at Palm Bay Apartments during 1996.  However,  most of
the  increased  rental  revenue  came from  improved  occupancy  at the  Orlando
property.  The  capital  improvement  program  and other  management  strategies
successfully  improved the tenant  profile,  increased  base rental  rates,  and
raised the occupancy rate to acceptable levels.

Interest revenue decreased 57% because the Partnership did not have as much cash
and cash  equivalents  invested in interest bearing accounts in 1996 compared to
1995.

Expenses:

Partnership  expenses  decreased  $114,318  or 6.7% in 1996  compared  to  1995.
Increased  expenses were  concentrated  in property taxes,  personnel  expenses,
property  management  fees, and general and  administrative  expenses.  However,
these increases were more than offset by decreases in depreciation,  repairs and
maintenance,   utilities,  and  general  and  administrative  expenses  paid  to
affiliates.

Property taxes increased 19% due to an increased  assessed valuation of Palm Bay
Apartments.  Prior to 1994, the assessed  value of Palm Bay Apartments  remained
relatively  low as a result of the deferred  maintenance  at the  property.  The
extensive  capital  renovation  program  enhanced  the value of the property and
raised its assessed value for property tax purposes.

Personnel  expenses  increased  $20,993 or 8.7% in 1996  compared  to 1995.  The
Partnership  increased   maintenance  staffing  at  Palm  Bay  Apartments.   The
additional staffing enabled the property to assume some of the maintenance tasks
formerly  done  by  outside  contractors.  The  additional  staffing  also  gave
management more  flexibility in scheduling work orders for repairs  requested by
tenants and thereby helped to improve relations with the property's tenants.

Property management fees-affiliates increased $20,207 or 25% in 1996 compared to
1995. The increase in net rental  revenue of Palm Bay  Apartments  also caused a
corresponding  increase  in  property  management  fees  that  were  based  on a
percentage of rental receipts of the property.


<PAGE>
The 1996 increase in occupancy at Palm Bay Apartments allowed the Partnership to
reduce expenditures for advertising and referral or locator fees.  Improving the
tenant  profile  generally  decreases  the  amount  of bad debts  incurred  by a
property.  These  factors  led to a $52,655 or 28%  decrease  in other  property
operating expenses.

General and  administrative  expense increased $12,258 or 19.0% in 1996 compared
to 1995. Most of the increase was due to increased  expenditures incurred during
1996 to respond to and disseminate information about an unsolicited tender offer
for the Partnership's Units.

Depreciation  expense  decreased  $50,493 or 14.7% in 1996 compared to 1995. The
Partnership ceased  depreciating its investment in Palm Bay Apartments after the
October  1, 1996  decision  to market the  property  for sale.  Otherwise,  1996
depreciation  charges would have increased  approximately  15% over depreciation
charges incurred in 1995.

Repairs and maintenance  expense  decreased  $33,997 or 9.8% in 1996 compared to
1995. New capital assets replaced older assets that needed repairs. Furthermore,
raising the occupancy  rate,  and improving  both the tenant  profile and tenant
turnover decreased  make-ready costs associated with releasing  apartments units
to new tenants.

Improved occupancy meant that more tenants were paying for electricity for their
individual units. Otherwise,  the Partnership bore the cost of keeping utilities
turned on in vacant  units.  This  factor led to a $15,153 or 18.7%  decrease in
utility expenses for the Partnership.

Finally,  general  and  administrative  expenses  paid to  affiliates  decreased
$34,660 or 43% in 1996  compared  to 1995.  This  decrease  was due to a reduced
level of overhead expenses charged to the Partnership by affiliates.

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

The Partnership  generated cash of $261,558 from operating activities in 1997, a
decrease from the $407,530  generated  from  operating  activities in 1996.  The
September  30, 1997 sale of Palm Bay  Apartments,  the  Partnership's  last real
estate asset, accounts for the decrease.  The Partnership realized $4,549,786 of
cash  from the sale of Palm Bay  Apartments,  after  retirement  of the Palm Bay
mortgage note. The cash realized from the sale of Palm Bay  Apartments,  as well
as some cash reserves of the  Partnership,  were  distributed to the partners in
December 1997.

Short-term Liquidity:

At  December  31,  1997,  the  Partnership   held  $451,506  of  cash  and  cash
equivalents.  The Partnership owns no other assets.  The Partnership  intends to
use its  remaining  funds  to pay the  remaining  accrued  expenses  owed by the
Partnership,  in the amount of  $37,187  as of  December  31,  1997,  to pay all
remaining  expenses  connected with the termination of the  Partnership,  and to
provide  a  contingency  reserve  to  pay  all  costs  associated  with  ongoing
litigation  involving the  Partnership  as a defendant.  After all expenses have
been provided for, and the litigation is resolved through either adjudication or
settlement,  all remaining Partnership funds will be distributed to the partners
in  accordance  with terms of the  Partnership  Agreement.  The General  Partner
considers the current balance of cash and cash  equivalents  adequate for all of
these purposes.

<PAGE>
Long-term Liquidity:

Because the  Partnership  is  terminating  its affairs,  long-term  liquidity no
longer remains as an issue for the Partnership.

Distributions:

In December 1997, the Partnership  distributed $4,772,400 to its partners.  This
distribution  includes $4,549,786 of net cash proceeds from the sale of Palm Bay
Apartments,   as  well  as  $222,614  of  cash  reserves  of  the   Partnership.
Distribution of the remaining cash reserves of the Partnership will be made from
any remaining funds of the Partnership  after all liabilities of the Partnership
have been paid,  including costs associated with  terminating the  Partnership's
affairs,  and costs associated with adjudicating or settling litigation in which
the Partnership is involved.



<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------  -------------------------------------------


<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                      Number
                                                                                                      ------
INDEX TO FINANCIAL STATEMENTS
-----------------------------

Financial Statements:

<S>                                                                                                      <C>
   Report of Independent Public Accountants.......................................                       11

   Statement of Net Assets in Liquidation at December 31, 1997....................                       12

   Balance Sheet at December 31, 1996.............................................                       13

   Statements of Operations for each of the three years in the period
      ended December 31, 1997.....................................................                       14

   Statements of Partners' Equity for each of the three years in the
      period ended December 31, 1997..............................................                       15

   Statements of Cash Flows for each of the three years in the period
      ended December 31, 1997.....................................................                       16

   Notes to Financial Statements..................................................                       18

</TABLE>



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


<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
McNeil Pacific Investors Fund 1972:

We have audited the accompanying  balance sheet of McNeil Pacific Investors Fund
1972 (a California limited partnership) as of December 31, 1996, and the related
statements of operations,  partners' equity and cash flows for each of the three
years in the period ended  December 31, 1997.  In addition,  we have audited the
statement of net assets in liquidation as of December 31, 1997.  These financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements 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.

As described in Note 6 to the financial statements, on August 12, 1997, the sale
of Palm Bay Apartments and the dissolution of the Partnership were approved at a
meeting of the limited  partners.  After the September 30, 1997 sale of Palm Bay
Apartments, the General Partner commenced the dissolution and termination of the
Partnership. As a result, the Partnership has changed its basis of accounting as
of and for the periods  subsequent to December 31, 1997, from the  going-concern
basis to the liquidation basis. Accordingly, the carrying value of the remaining
assets as of December 31, 1997, are presented at estimated realizable values and
all liabilities are presented at estimated settlement amounts.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of McNeil Pacific Investors Fund
1972 as of December 31,  1996,  and the results of its  operations  and its cash
flows for each of the three years in the period ended December 31, 1997, and its
net assets in liquidation as of December 31, 1997, in conformity  with generally
accepted  accounting  principles applied on the bases described in the preceding
paragraph.


/s/  Arthur Andersen LLP


Dallas, Texas
   March 20, 1998

<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972
        (a California limited partnership in the process of liquidation)

                     STATEMENT OF NET ASSETS IN LIQUIDATION


<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                                        1997
                                                                                    ------------

ASSETS
------
<S>                                                                                 <C>
Cash and cash equivalents..............................................             $     451,506
                                                                                     ------------

                                                                                    $     451,506
                                                                                     ============


LIABILITIES AND PARTNERS' EQUITY
--------------------------------

Other accrued expenses.................................................             $      19,702
Payable to affiliates - General Partner................................                    17,485
                                                                                     ------------
                                                                                           37,187

Partners' equity:
   Limited  partners - 15,000 limited  partnership  units  authorized;
     13,752.5 limited partnership units
     issued and outstanding............................................                   414,319
   General Partner.....................................................                         -
                                                                                     ------------
                                                                                          414,319
                                                                                     ------------

                                                                                   $     451,506
                                                                                     ============
</TABLE>

                 See accompanying notes to financial statements.

<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972
        (a California limited partnership in the process of liquidation)

                                  BALANCE SHEET


<TABLE>
<CAPTION>
                                                                                     December 31,
                                                                                        1996
                                                                                    -------------
ASSETS
-------
<S>                                                                                 <C>
Asset held for sale....................................................             $   6,253,753
Cash and cash equivalents..............................................                   581,031
Cash segregated for security deposits..................................                    57,204
Accounts receivable....................................................                     4,147
Prepaid expenses and other assets......................................                    23,694
Escrow deposits........................................................                    33,232
Deferred borrowing costs, net of accumulated
   amortization of $47,607.............................................                     4,327
                                                                                     ------------

                                                                                    $   6,957,388
                                                                                     ============


LIABILITIES AND PARTNERS' EQUITY
--------------------------------

Mortgage note payable..................................................             $   2,023,577
Accrued interest.......................................................                    14,755
Other accrued expenses.................................................                    24,346
Payable to affiliates - General Partner................................                    17,108
Security deposits and deferred rental revenue..........................                    58,081
                                                                                     ------------
                                                                                        2,137,867

Partners' equity:
   Limited partners - 15,000 limited partnership units authorized;
     13,752.5 limited partnership units issued and outstanding.........                 4,509,577
   General Partner.....................................................                   309,944
                                                                                     ------------
                                                                                        4,819,521

                                                                                     ------------
                                                                                    $   6,957,388
                                                                                     ============

</TABLE>


                 See accompanying notes to financial statements

<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972
        (a California limited partnership in the process of liquidation)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                              For the Years Ended December 31,
                                                   ---------------------------------------------------
                                                       1997               1996               1995
                                                   --------------     --------------    --------------
<S>                                                <C>                <C>               <C>
Revenue:
   Rental revenue..........................        $    1,350,389     $    1,688,524    $     1,376,148
   Interest and other revenue..............                84,447             27,011             63,280
   Gain on sale of real estate.............               151,141                  -                  -
                                                    -------------      -------------     --------------
     Total revenue.........................             1,585,977          1,715,535          1,439,428
                                                    -------------      -------------     --------------

Expenses:
   Interest................................               133,196            198,739            198,948
   Depreciation............................                     -            294,001            344,494
   Property taxes..........................                90,765            121,352            101,961
   Personnel expenses......................               245,872            263,324            242,331
   Repairs and maintenance.................               312,631            311,527            345,524
   Property management fees -
     affiliates............................                80,160             99,681             79,474
   Utilities...............................                53,794             65,901             81,054
   Other property operating expenses.......               126,264            133,627            186,282
   General and administrative..............                87,971             76,907             64,649
   General and administrative -
     affiliates............................                88,126             45,937             80,597
                                                    -------------      -------------     --------------
     Total expenses........................             1,218,779          1,610,996          1,725,314
                                                    -------------      -------------     --------------

Net income (loss)..........................        $      367,198     $      104,539    $     (285,886)
                                                    =============      =============     =============

Net income (loss) allocated to
   limited partners........................        $      244,912     $      104,539    $      (285,886)
Net income allocated to General
   Partner.................................               122,286                  -                  -
                                                    -------------      -------------     --------------

Net income (loss)..........................        $      367,198     $      104,539    $      (285,886)
                                                    =============      =============     ==============

Net income (loss) per limited
   partnership unit........................        $        17.81     $         7.60    $        (20.79)
                                                    =============      =============     ==============

Distributions per limited partnership
   unit....................................        $       315.59     $            -    $             -
                                                    =============      =============     ==============
</TABLE>

                 See accompanying notes to financial statements.

<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972
        (a California limited partnership in the process of liquidation)

                         STATEMENTS OF PARTNERS' EQUITY

              For the Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                                                      Total
                                                     General                  Limited               Partners'
                                                     Partner                 Partners                Equity
                                                  --------------          --------------        --------------
<S>                                              <C>                     <C>                   <C>
Balance at December 31, 1994..............       $       309,944         $     4,690,924       $     5,000,868

Net loss..................................                     -                (285,886)             (285,886)
                                                  --------------          --------------        --------------

Balance at December 31, 1995..............               309,944               4,405,038             4,714,982

Net income................................                     -                 104,539               104,539
                                                  --------------          --------------        --------------

Balance at December 31, 1996..............               309,944               4,509,577             4,819,521

Net income................................               122,286                 244,912               367,198

Distributions to partners.................              (432,230)             (4,340,170)           (4,772,400)
                                                  --------------          --------------        --------------

Balance at December 31, 1997..............       $             -         $       414,319       $       414,319
                                                  ==============          ==============        ==============

</TABLE>
                 See accompanying notes to financial statements.

<PAGE>

                       McNEIL PACIFIC INVESTORS FUND 1972
        (a California limited partnership in the process of liquidation)

                            STATEMENTS OF CASH FLOWS

                Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>
                                                            For the Years Ended December 31,
                                                    ---------------------------------------------------
                                                         1997               1996               1995
                                                    -------------      -------------     --------------
<S>                                                <C>                <C>               <C>
Cash flows from operating activities:
   Cash received from tenants..............        $    1,350,036     $    1,682,397    $     1,333,612
   Cash paid to suppliers..................              (803,859)          (869,237)          (909,351)
   Cash paid to affiliates.................              (167,909)          (143,737)          (238,173)
   Interest received.......................                84,447             27,011             63,280
   Interest paid...........................              (143,624)          (183,673)          (195,164)
   Property taxes paid.....................               (57,533)          (105,231)           (26,133)
                                                    -------------      -------------     --------------
Net cash provided by operating
    activities.............................               261,558            407,530             28,071
                                                    -------------      -------------     --------------

Cash flows from investing activities:
   Additions to real estate
     investments...........................               (69,821)          (212,261)          (440,906)
   Proceeds from sale of real estate
     investment............................             6,474,715                  -                  -
                                                    -------------      -------------     --------------
Net cash provided by (used in)
    investing activities...................             6,404,894           (212,261)          (440,906)
                                                    -------------      -------------     --------------

Cash flows from financing activities:
   Principal payments on mortgage
     notes payable.........................               (98,648)          (137,627)          (126,137)
   Retirement of mortgage note
     payable...............................            (1,924,929)                 -                  -
   Distributions to partners...............            (4,772,400)                 -                  -
                                                    -------------      -------------     --------------
Net cash used in financing activities......            (6,795,977)          (137,627)          (126,137)
                                                    -------------      -------------     --------------

Net increase (decrease) in cash and
     cash equivalents......................              (129,525)            57,642           (538,972)

Cash and cash equivalents at
     beginning of year.....................               581,031            523,389          1,062,361
                                                    -------------      -------------     --------------

Cash and cash equivalents at end
     of year...............................        $      451,506     $      581,031    $       523,389
                                                    =============      =============     ==============
</TABLE>


                 See accompanying notes to financial statements.

<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972
        (a California limited partnership in the process of liquidation)

                            STATEMENTS OF CASH FLOWS

           Reconciliation of Net Income (Loss) to Net Cash Provided by
                              Operating Activities


<TABLE>
<CAPTION>
                                                              For the Years Ended December 31,
                                                   ----------------------------------------------------
                                                        1997               1996               1995
                                                   --------------     --------------     --------------
<S>                                                <C>                <C>                <C>
Net income (loss)..........................        $      367,198     $      104,539    $      (285,886)
                                                    -------------      -------------     --------------

Adjustments to reconcile net income
   (loss) to net cash provided by
   operating activities:
   Depreciation............................                     -            294,001            344,494
   Amortization of deferred borrowing
     costs.................................                 4,327             10,387             10,387
   Gain on sale of real estate.............              (151,141)                 -                  -
   Changes in assets and liabilities:
     Cash segregated for security
       deposits............................                57,204            (13,319)            (7,576)
     Accounts receivable...................                 4,147               (298)              (108)
     Prepaid expenses and other
       assets..............................                23,694               (474)             1,374
     Escrow deposits.......................                33,232             16,121             75,828
     Accounts payable......................                     -            (20,363)           (10,965)
     Accrued interest......................               (14,755)             4,679             (6,603)
     Other accrued expenses................                (4,644)              (507)           (13,832)
     Payable to affiliates - General
       Partner.............................                   377              1,881            (78,102)
     Security deposits and deferred
       rental revenue......................               (58,081)            10,883               (940)
                                                    -------------      -------------     --------------

         Total adjustments.................              (105,640)           302,991            313,957
                                                    -------------      -------------     --------------

Net cash provided by operating
   activities..............................        $      261,558     $      407,530    $        28,071
                                                    =============      =============     ==============
</TABLE>


                 See accompanying notes to financial statements.
<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972
        (a California limited partnership in the process of liquidation)

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 1997


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

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

McNeil Pacific Investors Fund 1972 (the  "Partnership") was organized  September
30, 1971 as a limited  partnership  under  provisions of the California  Uniform
Limited  Partnership  Act.  The  general  partner of the  Partnership  is McNeil
Partners,  L.P. (the "General  Partner"),  a Delaware  limited  partnership,  an
affiliate of Robert A. McNeil  ("McNeil").  The General Partner was elected at a
meeting of limited  partners on March 30, 1992, at which time the  Partnership's
restated  certificate  and agreement of limited  partnership  (the  "Partnership
Agreement") was amended. Prior to March 30, 1992, Pacific Investors Corporation,
an affiliate of Southmark  Corporation,  and McNeil were the general partners of
the  Partnership.  The principal  place of business for the  Partnership and the
General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240.

The Partnership sold Palm Bay Apartments,  the Partnership's sole remaining real
estate asset, on September 30, 1997.

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

At a meeting of the limited  partners on August 12, 1997,  the limited  partners
approved the sale of Palm Bay Apartments and the dissolution of the Partnership.
After the September 30, 1997 sale of Palm Bay  Apartments,  the General  Partner
commenced the  dissolution and  termination of the  Partnership.  The assets and
liabilities  in the  accompanying  statement  of net  assets in  liquidation  at
December 31, 1997 are valued at their estimated  realizable values and estimated
settlement  amounts,   respectively.  The  Partnership  is  in  the  process  of
liquidating  its  assets,  satisfying  all  creditors  and  claims  against  the
Partnership,  distributing its remaining assets to its partners, and terminating
its existence.

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

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

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

Buildings and improvements were depreciated using the straight-line  method over
the estimated useful lives of the assets, which ranged from 2 to 25 years.




<PAGE>
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  was required to maintain an escrow account in accordance  with
terms of the Palm Bay mortgage  note.  This escrow account was controlled by the
mortgagee  and was used for  payment of  property  taxes.  Carrying  amounts for
escrow deposits approximate fair value.

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

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

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

The Partnership  leased its property under short-term  operating  leases.  Lease
terms  generally  were  less  than  one year in  duration.  Rental  revenue  was
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.

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

The Partnership  Agreement provides that income will be allocated to the General
Partner  to the  extent of  distributions  to the  General  Partner of cash from
sales, refinancings,  or from working capital reserves. All remaining net income
and all losses are allocated 100% to the limited partners.

An estimated  gain on the ultimate  disposition of Palm Bay  Apartments,  in the
amount of $309,944,  was  allocated to the General  Partner in 1983 based upon a
1983 sales contract for Palm Bay  Apartments.  An adjustment was made in 1997 to
adjust the amount  allocated  to the General  Partner  based on the 1997 sale of
Palm Bay Apartments.

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 1997, 1996 and 1995 have been made
in accordance with these provisions.
<PAGE>
Distributions
-------------
At the  discretion of the General  Partner,  distributions  to partners are paid
from operations of the Partnership's  property,  from the sale or refinancing of
the property, or from cash maintained as working capital reserves.
Cash from operations is distributed 100% to the limited partners.

Distributions  of cash from sales and refinancings and cash from working capital
reserves are made in the order shown on the following page:

(a)     First to the  limited  partners  in an  amount,  when added to all prior
        distributions  to the limited  partners of  disposition  proceeds,  that
        equals  109.6% of the  portion  of net  offering  proceeds  invested  in
        property sold; then,

(b)     of the remaining balance, 90.5% to the limited partners and 9.5% to  the
        General Partner.

In December 1997, the Partnership  distributed $4,772,400 to its partners.  This
distribution  includes $4,549,786 of net cash proceeds from the sale of Palm Bay
Apartments,   as  well  as  $222,614  of  cash  reserves  of  the   Partnership.
Distribution of the remaining cash reserves of the Partnership will be made from
any remaining funds of the Partnership  after all liabilities of the Partnership
have been paid,  including costs associated with  terminating the  Partnership's
affairs,  and costs associated with adjudicating or settling litigation in which
the Partnership is involved.  No distributions  were paid to the partners during
1996 or 1995.

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

Net income (loss) per limited partnership unit ("Units") is computed by dividing
net income  (loss)  allocated to the limited  partners by the  weighted  average
number of Units  outstanding.  Per Unit  information  has been computed based on
13,752.5 Units outstanding in 1997, 1996, and 1995.

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

The General Partner is entitled to receive a partnership management fee equal to
9.5% of  distributions  of cash from  operations  when  distributable  cash from
operations is distributed to the limited  partners.  The Partnership  incurred a
partnership  management fee of $23,368 in 1997. No partnership  management  fees
were incurred during 1996 or 1995.

The  Partnership  pays property  management fees equal to 6% of the gross rental
receipts of the Partnership's properties to McNeil Real Estate Management,  Inc.
("McREMI"),  an  affiliate  of  the  General  Partner,  for  providing  property
management and leasing services for the Partnership's properties.

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

The General  Partner is entitled to receive a sales  commission as  compensation
for selling Partnership property equal to the lesser of 4% of the sales price of
the  property  sold or the  customary  fee  charged by  independent  real estate
brokers  in the area where the  property  is  located.  The  Partnership  paid a
$137,000 sales  commission to the General Partner in connection with the sale of
Palm Bay Apartments.
<PAGE>

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

<TABLE>
<CAPTION>
                                                              For the Years Ended December 31,
                                                   ------------------------------------------------------
                                                        1997                1996                1995
                                                   --------------      --------------      --------------
<S>                                                <C>                 <C>                 <C>
Property management fees -
   affiliates................................      $       80,160      $       99,681      $       79,474
Charged to general and administrative -
   affiliates:
   Partnership administration................              64,758              45,937              80,597
Charged to general and administrative -
   affiliates:
   Partnership management fee................              23,368                   -                   -
Charged to gain on sale of real estate:
   Sales commission..........................             137,000                   -                   -
                                                    -------------       -------------       -------------

                                                   $      305,286      $      145,618      $      160,071
                                                    =============       =============       =============

Charged to General Partner's equity:
   Distribution of cash from sales...........      $      432,230      $            -      $            -
                                                    =============       =============       =============

</TABLE>
Payable to  affiliates  - General  Partner at  December  31,  1997  consists  of
reimbursable  administrative  costs.  Payable to affiliates - General Partner at
December  31,  1996  consisted  of  property  management  fees and  reimbursable
administrative costs.

NOTE 3 - TAXABLE INCOME
-----------------------

McNeil  Pacific  Investors  Fund 1972 is a  partnership  and is not  subject  to
Federal and state income taxes.  Accordingly,  no recognition  has been given to
income taxes in the accompanying  financial  statements of the Partnership since
the income or loss of the  Partnership  is to be  included in the tax returns of
the  individual  partners.  The tax  returns of the  Partnership  are subject to
examination by Federal and state taxing authorities. If such examinations result
in  adjustments  to  distributive  shares of  taxable  income  or loss,  the tax
liability of the partners could be adjusted accordingly.

The  Partnership's  net assets and liabilities for tax purposes exceeded the net
assets and liabilities for financial  reporting purposes by $24,758 in 1997. The
Partnership's  net assets  and  liabilities  for  financial  reporting  purposes
exceeded the net assets and  liabilities  for tax purposes by $1,981,839 in 1996
and $1,948,374 in 1995.






<PAGE>
NOTE 4 - ASSET HELD FOR SALE
----------------------------

On October 1, 1996, the General  Partner  determined  that the market timing was
right for placing the  Partnership's  sole remaining real estate asset, Palm Bay
Apartments,  on the market for sale.  This  decision was based both on favorable
market  conditions  and the June 1997  maturity of the Palm Bay  mortgage  note.
Consequently,  the Partnership  classified its investment in Palm Bay Apartments
as an asset held for sale on the December  31, 1996 Balance  Sheet at a net book
value of $6,253,753.

On  September  30,  1997,  the  Partnership  sold  Palm  Bay  Apartments  to  an
unaffiliated buyer.

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

The following table sets forth the  Partnership's  mortgage note at December 31,
1997 and 1996. The mortgage note was secured by Palm Bay Apartments.

<TABLE>
<CAPTION>
                           Mortgage         Annual          Monthly
                             Lien          Interest        Payments/                   December 31,
Property                 Position (a)       Rates %      Maturity Date             1997             1996
--------                 ------------       -------    ------------------     ---------------   -------------
<S>                      <C>                <C>        <C>         <C>        <C>               <C>
Palm Bay                 First              8.750      $26,775     06/97      $            -    $   2,023,577
                                                                               =============     ============
</TABLE>

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


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

On  September  30,  1997,  the  Partnership  sold  its  investment  in Palm  Bay
Apartments to an unaffiliated  buyer for a cash sales price of $6,849,500.  Cash
proceeds from this transaction, as well as the gain on sale are detailed below.

<TABLE>
<CAPTION>
                                                                   Gain on Sale           Cash Proceeds
                                                                  ----------------        ----------------
<S>                                                               <C>                     <C>
       Sales price........................................        $      6,849,500        $     6,849,500
       Selling costs......................................                (374,785)              (374,785)
       Basis of real estate sold..........................              (6,323,574)
                                                                   ---------------

       Gain on sale.......................................        $        151,141
                                                                   ===============          --------------

       Proceeds from sale of real estate..................                                       6,474,715
       Retirement of mortgage note........................                                      (1,924,929)
                                                                                            --------------

       Net cash proceeds..................................                                 $     4,549,786
                                                                                            ==============
</TABLE>
<PAGE>
NOTE 7 - LEGAL PROCEEDINGS
--------------------------

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

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

Defendants  filed a demurrer to the  consolidated  and amended  complaint  and a
motion to strike on February 14, 1997,  seeking to dismiss the  consolidated and
amended complaint in all respects.  A hearing on Defendant's demurrer and motion
to strike  was held on May 5,  1997.  The Court  granted  Defendants'  demurrer,
dismissing  the  consolidated  and  amended  complaint  with leave to amend.  On
October  31,  1997,  the  Plaintiffs  filed a second  consolidated  and  amended
complaint.  Defendants  must  move,  answer or  otherwise  respond to the second
consolidated and amended complaint by June 30, 1998.



<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:

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

<S>                            <C>      <C>
Robert A. McNeil,              77       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               54       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.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                        Other Principal Occupations and Other
Name and Position             Age       Directorships During the Past 5 Years
-----------------             ---       -------------------------------------
<S>                            <C>      <C>
Ron K. Taylor                  40       Mr.  Taylor is the  President  and Chief
President and Chief                     Executive  Officer of McNeil Real Estate
Executive Officer                       Management  which is an affiliate of the
                                        General Partner.  Mr. Taylor has been in
                                        this capacity  since the  resignation of
                                        Donald K. Reed on March 4,  1997.  Prior
                                        to       assuming       his      current
                                        responsibilities, Mr. Taylor served as a
                                        Senior  Vice  President  of McREMI.  Mr.
                                        Taylor has been in this  capacity  since
                                        McREMI  commenced  operations  in  1991.
                                        Prior  to  joining  McREMI,  Mr.  Taylor
                                        served as an  Executive  Vice  President
                                        for  a   national   syndication/property
                                        management  firm. In this capacity,  Mr.
                                        Taylor  had the  responsibility  for the
                                        management  and leasing of a  21,000,000
                                        square  foot   portfolio  of  commercial
                                        properties. Mr. Taylor has been actively
                                        involved  in the  real  estate  industry
                                        since 1983.
</TABLE>
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,  1997,  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, 1997. The  Partnership  has no plans to
pay any such remuneration to any directors or officers of the general partner of
the General Partner in the future.

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


<PAGE>

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

(A)      Security ownership of certain beneficial owners.

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

         1.   The General  Conference  Corporation  of Seventh  Day  Adventists,
              12501 Old Columbia Pike, Silver Spring, Maryland,  20904, owns 950
              (6.9%) of the Partnership's Units as of January 31, 1998.

         2.   A group of ten  limited  partnerships  affiliated  with  Liquidity
              Financial Corporation,  all of whose outstanding stock is owned by
              Richard G.  Wollack and Brent R.  Donaldson,  2200 Powell  Street,
              Suite 700,  Emeryville,  California,  94608,  collectively own 825
              (6.0%) of the Partnership's Units as of January 31, 1998.

         3.   High   River  Limited  Partnership,  100  S. Bedford  Road,  Mount
              Kisco,  New York,  10549,  owns 1,606 (11.7%) of the Partnership's
              Units as of January 31, 1998.

(B)      Security ownership of management.

         As of January 31,  1998,  the  General  Partner  and the  officers  and
         directors of its general partner  collectively  own 50 Units,  which is
         less than 1% of Units outstanding.

(C)      Change in control.

         None.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The General Partner is entitled to receive a partnership management fee equal to
9.5% of  distributions  of cash from  operations  when  distributable  cash from
operations is  distributed to the limited  partners.  The  Partnership  incurred
partnership management fees of $23,368 in 1997.

The  Partnership  pays  property  management  fees  equal to 6% of gross  rental
receipts  of  the  Partnership's  property  to  McREMI  for  providing  property
management and leasing services for the Partnership's  property. The Partnership
reimburses  McREMI for its  costs,  including  overhead,  of  administering  the
Partnership's  affairs.  For the year ended December 31, 1997,  the  Partnership
incurred $144,918 of property management fees and reimbursements.

The General  Partner is entitled to receive a sales  commission as  compensation
for selling Partnership property equal to the lesser of 4% of the sales price of
the property  sold or the customary  fee charged by  independent  brokers in the
area where the property is located.  The Partnership paid an $137,000 commission
to the General Partner in connection with the 1997 sale of Palm Bay Apartments.

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."

<PAGE>
                                     PART IV

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

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

(A)           Exhibits

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

<TABLE>
<CAPTION>
              Exhibit
              Number                  Description
              --------                -----------

              <S>                     <C>
              3.1                     Restated  Certificate  and    Agreement of
                                      Limited  Partnership  dated as of March 8,
                                      1972.  Incorporated  by  reference  to the
                                      Annual Report of McNeil Pacific  Investors
                                      Fund  1972 on  Form  10-K  for the  period
                                      ended December 31, 1990, as filed with the
                                      Securities  and  Exchange   Commission  on
                                      March 29, 1991.

              3.2                     Amendment  to  Restated  Certificate   and
                                      Agreement of Limited  Partnership dated as
                                      of March 30, 1992. (1)

              10.1                    Mortgage   Note,   dated  March  9,  1975,
                                      between McNeil Pacific Investors Fund 1972
                                      and John Hancock Life  Insurance  Company.
                                      Incorporated  by  reference  to the Annual
                                      Report of McNeil  Pacific  Investors  Fund
                                      1972 (Commission  file number 0-7162),  on
                                      Form 10-K for the  period  ended  December
                                      31, 1991, as filed with the Securities and
                                      Exchange Commission on March 30, 1992.

              10.4                    Amendment of  Property   Management Agree-
                                      ment,  dated  January  1,  1995,   between
                                      McNeil  Pacific  Investors  Fund  1972 and
                                      McNeil Real Estate Management, Inc. (2)

              10.5                    Modification  Agreement,  dated  effective
                                      June 1, 1992,  between M R Partners,  Inc.
                                      and John  Hancock  Mutual  Life  Insurance
                                      Company. (2)

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
              Exhibit
              Number                  Description
              --------                -----------
              <S>                     <C>
              11.                     Statement regarding   computation  of  net
                                      income (loss) per limited partnership unit
                                      (see Note 1 to Financial Statements).

                           (1)        Incorporated  by  reference  to the Annual
                                      Report of McNeil  Pacific  Investors  Fund
                                      1972 (Commission  file number 0-7162),  on
                                      Form 10-K for the  period  ended  December
                                      31, 1993, as filed with the Securities and
                                      Exchange Commission on March 30, 1994.

                           (2)        Incorporated  by  reference  to the Annual
                                      Report of McNeil  Pacific  Investors  Fund
                                      1972 (Commission  file number 0-7162),  on
                                      Form 10-K for the  period  ended  December
                                      31, 1994, as filed with the Securities and
                                      Exchange Commission on March 30, 1995.

              27.                     Financial Data Schedule for the year ended
                                      December 31, 1997.

</TABLE>
(B)    Reports on    Form 8-K. On   October 15,  1997, the  Partnership  filed a
       Current Report on Form  8-K  reporting  the sale of Palm Bay   Apartments
       for $6,850,000.

<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972
                              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 PACIFIC INVESTORS FUND 1972


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

                                  By: McNeil Investors, Inc., General Partner



March 31, 1998                    By:  /s/  Robert A. McNeil
--------------                         -----------------------------------------
Date                                   Robert A. McNeil
                                       Chairman of the Board and Director
                                       (Principal Executive Officer)


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




March 31, 1998                    By:  /s/  Ron K. Taylor
--------------                         -----------------------------------------
Date                                   Ron K. Taylor
                                       President and Director of McNeil
                                         Investors, Inc.
                                       (Principal Financial Officer)




March 31, 1998                    By:  /s/  Brandon K. Flaming
--------------                         -----------------------------------------
Date                                   Brandon K. Flaming
                                       Vice President of McNeil Investors, Inc.
                                       (Principal Accounting Officer)