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  0-7162
                            --------


                       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 31.

                                TOTAL OF 33 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, 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,  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. At December 31, 1996, the Partnership owned one income-producing
property as described in Item 2 - Property.

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:

The Partnership  determined to evaluate market and other economic  conditions to
establish the optimum time to commence  liquidation of the Partnership's  asset.
However,  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.  In this regard, the Partnership has
placed  Palm Bay  Apartments  on the  market  for sale.  Until  such time as the
Partnership's  asset is liquidated,  the Partnership's  plan of operations is to
preserve or increase the net operating  income of the asset  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  asset.  See Item 7 -  Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations.

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




<PAGE>
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,  are described in Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations. See Item 2 - Property
for discussion of competitive conditions at the Partnership's property.

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 the sale or refinancing of its
property and respond to changing economic and competitive factors.

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  the  property  has  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 $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,
1997, High River has purchased  approximately  11.59% of the  outstanding  Units
pursuant to the tender offers. In addition,  all litigation filed by High River,
Mr. Icahn and his  affiliates  in  connection  with the tender  offers have been
dismissed without prejudice.







<PAGE>
ITEM 2.      PROPERTY
-------      --------

The  following  table sets forth the real estate  assets of the  Partnership  at
December 31, 1996. On October 1, 1996, the Partnership  determined to market for
sale its sole remaining real estate asset,  Palm Bay  Apartments.  Consequently,
the  Partnership's  investment in Palm Bay  Apartments is shown as an asset held
for  sale on the  accompanying  Balance  Sheet  dated  December  31,  1996.  The
buildings  and land on which they are  located are owned by the  Partnership  in
fee,  subject  to a first lien deed of trust as set forth more fully in Item 8 -
Note 5 "Mortgage Note Payable" and Schedule III - "Real Estate  Investments  and
Accumulated  Depreciation."  In the  opinion  of  management,  the  property  is
adequately covered by insurance.

<TABLE>
<CAPTION>
                                            Net Basis                          1996            Date
Property              Description          of Property          Debt       Property Tax      Acquired
--------              -----------          -----------          ----       ------------      --------
<S>                   <C>                  <C>             <C>            <C>                  <C> 
Palm Bay              Apartments
   Orlando, FL        346 units            $  6,253,753    $  2,023,577   $    121,352         6/91
                                            ===========     ============   ===========
</TABLE>

The following  table sets forth the  occupancy  rate and rent per square foot of
the Partnership's property for each of the last five years.

<TABLE>
<CAPTION>
                                        1996           1995            1994           1993          1992
                                    -------------  -------------  --------------  -------------  ----------
<S>                                 <C>            <C>            <C>            <C>             <C>
Palm Bay
   Occupancy Rate............             94%            86%            82%            77%             73%
   Rent Per Square Foot......       $    5.83      $    4.77       $   4.58       $   4.15       $    3.71
</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

The financial performance of Palm Bay Apartments has improved as a result of the
capital renovation program.  Occupancy rates have risen from 63% at the date the
Partnership  repossessed  Palm Bay Apartments in 1992 to 94% at the end of 1996.
Occupancy  rates in the submarket  average 90%.  Rental rates have also improved
due to the renovation program. The renovation program has made the property much
more competitive in its market.  The local area offers diverse  competition from
high quality property to low quality subsidized housing. The property's location
and  townhouse  units  give it a  competitive  edge in the  market.  Conversely,
several of the property's  competitors  offer  tax-subsidized  rental rates.  An
interior  upgrade  program  is  addressing  the dated  appearance  of the units'
interiors so that the property can compete effectively with the newer properties
in the area.


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

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  Schofield,  et al.,
     referenced above.

<PAGE>
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 Schofield, 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 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          1,187 as of January 31, 1997

(C)      No  distributions  were paid to the  partners  in 1996 or 1995.  If the
         Partnership   completes  the  sale  of  Palm  Bay  Apartments,   it  is
         anticipated  that the General Partner would take the necessary steps to
         wind-up the  Partnership's  affairs,  including the distribution of all
         remaining  Partnership  cash  reserves  to  the  partners,  except  for
         sufficient  cash  reserves to pay the  Partnership's  final  winding-up
         expenses.  See  Item  7  -  Management's  Discussion  and  Analysis  of
         Financial  Condition and Results of Operations  for a discussion of the
         likelihood  that  the  Partnership  will  resume  distributions  to the
         partners.





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

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

<TABLE>
<CAPTION>
Statements of                                               Years Ended December 31,
Operations                              1996           1995            1994           1993           1992
------------------                  -------------  -------------  --------------  -------------  -------------
<S>                                 <C>            <C>            <C>             <C>            <C>          
Rental revenue...............       $   1,688,524  $  1,376,148   $  1,475,264    $  1,894,385   $   1,815,723
Gain on sale of
   real estate...............                   -              -         574,701              -              -
Total revenue................           1,715,535      1,439,428       2,095,660      1,908,162      1,870,452
Write-down for
   permanent impairment
   of real estate............                   -              -               -      2,700,000              -
Net income (loss)............             104,539       (285,886)        433,544     (3,102,551)      (816,851)

Net income (loss) per
   limited partnership unit..       $        7.60  $      (20.79) $        48.52  $     (224.90) $      (59.21)
                                     ============   ============   =============   ============   ============


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

Real estate
   investments, net............     $           -  $   6,335,493  $    6,239,081 $    5,814,474  $   11,528,672
Assets held for sale...........         6,253,753              -               -      3,209,269               -
Total assets...................         6,957,388      6,993,903       7,516,368      9,405,117      12,665,342
Mortgage notes payable.........         2,023,577      2,161,204       2,287,341      4,523,714       4,738,775
Partners' equity...............         4,819,521      4,714,982       5,000,868      4,567,324       7,669,875
</TABLE>

See Item 7 -  Management's  Discussion  and Analysis of Financial  Condition and
Results of  Operations.  The Partnership sold Pacesetter Apartments on March 17,
1994.

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

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

The  Partnership  reported 1996 net income of $104,539,  an increase of $390,425
from  the  $285,886  loss  incurred  by the  Partnership  in 1995.  The  capital
improvement  program begun shortly after the  Partnership  repossessed  Palm Bay
Apartments has allowed the Partnership to first,  improve the physical condition
of Palm Bay Apartments;  second, improve the tenant profile of the property; and
finally,  improve the occupancy  rate at Palm Bay  Apartments.  These steps have
increased  net rental  revenue,  and have  decreased  the  Partnership's  rental
expenses.

<PAGE>
Since the sale of  Pacesetter  Apartments  on March 17,  1994,  the focus of the
Partnership's  efforts have been directed to the renovation  program at Palm Bay
Apartments (formerly known as Greentree  Apartments).  For the three year period
ending  December 31, 1996,  the  Partnership  has completed  capital  renovation
projects  totaling  $1,300,937.  Occupancy  rates have improved from 63% shortly
after the  Partnership  repossessed  Palm Bay  Apartments,  to 94% at the end of
1996. On October 1, 1996, the General  Partner  decided to begin  marketing Palm
Bay  Apartments  for  sale.  The  sale  of  Palm  Bay  Apartments,  if it can be
successfully  accomplished,  would  eliminate  the need to refinance  Palm Bay's
mortgage  note that  matures on June 1,  1997.  As the  Partnership's  last real
estate  asset,  a sale of Palm Bay  Apartments  would also begin the  process of
dissolving the Partnership and, after  establishing  reserves for  contingencies
and winding-up expenses, distributing all remaining funds to the partners.

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

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 have
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 has 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  gives
management more  flexibility in scheduling work orders for repairs  requested by
tenants and thereby helps 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  are  based  on  a
percentage of rental receipts of the property.

<PAGE>
The 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  will decrease 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 have  replaced  older  assets  that needed  repairs.
Furthermore,  raising the occupancy  rate, and improving both the tenant profile
and tenant turnover have decreased  make-ready  costs  associated with releasing
apartments units to new tenants.

Improved  occupancy means that more tenants are paying for electricity for their
individual units. Otherwise, the Partnership bears 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 is due to a reduced level
of overhead expenses charged to the Partnership by affiliates.

1995 compared to 1994:

Revenue:

Rental  revenues  for 1995  decreased  $99,116  or 6.7%  compared  to 1994.  The
decrease was principally due to the sale of Pacesetter Apartments in March 1994.
Rental  revenue  from  Palm  Bay  Apartments  increased  $54,794  or  4.1%.  The
Partnership was able to increase both occupancy and base rental rates due to the
major capital improvements undertaken at Palm Bay Apartments. The occupancy rate
at December 31, 1995 was 86%, up from 82% at December 31, 1994. The  Partnership
increased rental rates at Palm Bay Apartments an average of 2.9% in 1995.

Revenues  for 1994 also  included the  $574,701  gain on the sale of  Pacesetter
Apartments.

Expenses:

Partnership  expenses  increased  $63,198  or  3.8% in 1995  compared  to  1994.
However, after excluding expenses pertaining to Pacesetter Apartments,  expenses
increased  $238,253 or 18% in 1995  compared to 1994.  Increased  expenses  were
concentrated in depreciation,  repair and maintenance, other property operating,
and general and administrative.





<PAGE>
The largest increase, on both an absolute and percentage basis, was the increase
in depreciation  expense.  Depreciation expense at Palm Bay Apartments increased
$121,331 or 54% in 1995 compared to 1994. The increase in  depreciation  expense
was due to the  continued  investment  of  Partnership  resources  into  capital
improvements.   During  1995,  the  Partnership  invested  $440,906  in  capital
improvements.  These capital  improvements are generally being  depreciated over
lives ranging from five to ten years.

Repairs and maintenance expenses at Palm Bay increased $54,740 or 19% in 1995 as
compared to 1994. The increased  level of repairs and  maintenance  expenses are
attributable to costs incurred  preparing  vacant units for rental.  Repairs and
maintenance  expenses were expected to increase until Palm Bay's  occupancy rate
stabilized.

Other  property  operating   expenses   increased   substantially  at  Palm  Bay
Apartments.  Efforts to refurbish down units and intensive  leasing activity had
increased a number of expense  categories to unusually high levels.  The General
Partner  anticipated that these expenses would decrease after the restored units
have been leased.  The increase in other property operating expenses at Palm Bay
Apartments totaled $61,564 or 47%.

Property  management fees - affiliates at Palm Bay Apartments  increased $14,390
or 22% in 1995 compared to 1994. An increase in rental receipts, upon which such
fees are based,  and the increase in the management fee percentage to 6% from 5%
(effective January 1, 1995) were the reasons for the increase.

General and  administrative for 1995 increased $34,678 or 116% compared to 1994.
The Partnership incurred $44,554 of costs during 1995 relating to the evaluation
and dissemination of information regarding an unsolicited tender offer.

General  and  administrative  -  affiliates  increased  $14,312  or 22% in  1995
compared  to 1994.  Reimbursements  to  affiliates  are  based,  in  part,  on a
declining number of properties managed by affiliates of the General Partner.

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

The  Partnership  generated  $407,530  from  operating  activities  in 1996,  an
increase of $379,459 from the $28,071 provided by operating  activities in 1995.
Cash paid to affiliates in 1995 included an $81,000 brokerage  commission on the
sale of Pacesetter Apartments that was incurred in 1994 but not paid until 1995.

The Partnership used its cash reserves to fund $212,261 of capital  improvements
to Palm Bay  Apartments  during 1996.  An  additional  $137,627 was expended for
mortgage note  principal  payments.  These  payments will gradually pay down the
mortgage note balance  until June 1997,  when the Palm Bay mortgage note matures
and a balloon payment of approximately $1,975,000 will be due.

During the three year period ended December 31, 1996, the  Partnership  reported
net income of $252,197. Cash provided by operations during the three year period
totaled  $597,964.  The Partnership has used cash from operations as well as its
cash  reserves  and the sale of  Pacesetter  Apartments  to fund $1.3 million of
capital improvements at the Palm Bay Apartments during the last three years. The
sale of Pacesetter Apartments  simultaneously provided a substantial addition to
the  Partnership's  cash reserves and removed a substantial drain on Partnership
resources.



<PAGE>
Due to the sale of  Pacesetter  Apartments,  the  Partnership  entered 1996 with
adequate cash reserves.  A substantial  portion of the proceeds from the sale of
Pacesetter  Apartments  has been  invested in capital  improvements  at Palm Bay
Apartments.  The Partnership has budgeted  $157,000 of capital  improvements for
1997 in addition  to the $1.3  million of capital  improvements  made during the
three year period ended December 31, 1996. The capital  improvements at Palm Bay
Apartments  were necessary to allow the property to increase its rental revenues
and remain competitive in the Orlando sub-market where the property is located.

Short-term Liquidity:

The Partnership's mortgage note, secured by Palm Bay Apartments, matures on June
1, 1997.  The  Partnership  does not have  adequate  cash reserves to retire the
mortgage  note.  The  Partnership  intends to resolve the impending  maturity by
selling Palm Bay  Apartments.  Should the Partnership be unable to sell Palm Bay
Apartments for an amount sufficient to retire the mortgage note, the Partnership
would pursue other financing options,  such as attempting to extend the maturity
date,  modify the mortgage  note,  or refinance the mortgage  note.  The General
Partner does not, however,  anticipate unusual  difficulties in selling Palm Bay
Apartments.

At  December  31,  1996,  the  Partnership   held  $581,031  of  cash  and  cash
equivalents, up $57,642 from the balance at the end of 1995. The General Partner
anticipates  that cash generated  from  operations in 1997 will be sufficient to
pay the Partnership's  operating  expenses,  monthly debt service payments until
the mortgage note maturity,  and budgeted capital improvements.  The Partnership
will use its cash reserves to fund any  shortfall if operating  cash flow should
prove insufficient to meet all the Partnership's expected  expenditures.  Except
for the pending  maturity of the Palm Bay  mortgage  note,  the General  Partner
considers the Partnership's  cash reserves  adequate for anticipated  operations
for 1997.

Long-term Liquidity:

While the present outlook for the Partnership's  liquidity is favorable,  market
conditions  may change and  property  operations  may  deteriorate.  The General
Partner expects that the capital  improvements at Palm Bay Apartments will yield
improved cash flow from  operations in 1997.  Furthermore,  the  Partnership has
budgeted  an  additional  $157,000  of  capital  improvements  for 1997.  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 property.

Effective October 1, 1996, the General Partner placed Palm Bay Apartments on the
market for sale.  The  General  Partner  estimates  that such a sale would yield
proceeds to the Partnership in excess of the amount needed to retire the current
mortgage note.  However,  there can be no guarantee that the Partnership will be
able to  obtain  such  liquidation  on  terms  or in  amounts  favorable  to the
Partnership, or that the cash proceeds from such sale could be timed to coincide
with the liquidity needs of the Partnership.

Distributions:

Distributions  to partners have been suspended as part of the General  Partner's
policy of maintaining adequate cash reserves. Distributions to Unit holders will
remain  suspended  until  such time as Palm Bay is sold and the  Partnership  is
liquidated.  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 Unit holders.
<PAGE>

ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------      -------------------------------------------
<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                      Number
                                                                                                      ------
<S>                                                                                                      <C>
INDEX TO FINANCIAL STATEMENTS

Financial Statements:

   Report of Independent Public Accountants.......................................                       13

   Balance Sheets at December 31, 1996 and 1995...................................                       14

   Statements of Operations for each of the three years in the period
      ended December 31, 1996.....................................................                       15

   Statements of Partners' Equity for each of the three years in the
      period ended December 31, 1996..............................................                       16

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

   Notes to Financial Statements..................................................                       19

   Financial Statement Schedule:

      Schedule III - Real Estate Investment and Accumulated
         Depreciation.............................................................                       26

</TABLE>

All other schedules are omitted because they are not applicable or the financial
information  required  is  included  in the  financial  statements  or the notes
thereto.
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
McNeil Pacific Investors Fund 1972:

We have audited the accompanying balance sheets of McNeil Pacific Investors Fund
1972 (a California  limited  partnership)  as of December 31, 1996 and 1995, and
the related  statements of operations,  partners' equity 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.

As further discussed in Notes 4 and 5 to the financial statements, on October 1,
1996,  the  Partnership  placed Palm Bay Apartments on the market for sale based
upon  favorable  market  conditions and the June 1997 maturity of the property's
mortgage  note  payable.  Should  the  Partnership  be  unable  to sell Palm Bay
Apartments  for an amount  sufficient to retire the mortgage  note payable,  the
Partnership  would  pursue  other  financing  options.  As Palm  Bay  Apartments
represents  substantially all of the assets of the Partnership,  consummation of
any sale is subject to the  satisfaction  of certain  conditions,  including the
approval  of the  limited  partners.  If the  sale of  Palm  Bay  Apartments  is
consummated, the Partnership's general partner will commence the dissolution and
termination of the Partnership.  The accompanying  financial statements have not
been prepared on the  liquidation  basis of accounting,  as the sale of Palm Bay
Apartments is subject to limited partner approval.

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 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 a 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 PACIFIC INVESTORS FUND 1972

                                 BALANCE SHEETS


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

Real estate investment:

   Land.....................................................           $             -      $    2,336,000
   Buildings and improvements...............................                         -           5,010,483
                                                                        --------------       -------------
                                                                                     -           7,346,483
   Less:  Accumulated depreciation..........................                         -          (1,010,990)
                                                                        --------------       -------------
                                                                                     -           6,335,493

Asset held for sale                                                          6,253,753                   -

Cash and cash equivalents...................................                   581,031             523,389
Cash segregated for security deposits.......................                    57,204              43,885
Accounts receivable.........................................                     4,147               3,849
Prepaid expenses and other assets...........................                    23,694              23,220
Escrow deposits.............................................                    33,232              49,353
Deferred borrowing costs, net of accumulated
   amortization of $47,607 and $37,220 at
   December 31, 1996 and 1995, respectively.................                     4,327              14,714
                                                                        --------------        ------------

                                                                       $     6,957,388       $   6,993,903
                                                                        ==============        ============

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

Mortgage note payable.......................................           $     2,023,577       $   2,161,204
Accounts payable............................................                         -              20,363
Accrued interest............................................                    14,755              10,076
Other accrued expenses......................................                    24,346              24,853
Payable to affiliates - General Partner.....................                    17,108              15,227
Security deposits and deferred rental revenue...............                    58,081              47,198
                                                                        --------------       -------------
                                                                             2,137,867           2,278,921
                                                                        --------------       -------------

Partners' equity:
   Limited  partners - 15,000 limited partnership units
     authorized; 13,752.5 limited partnership units issued
     and outstanding at December 31, 1996 and 1995..........                 4,509,577           4,405,038
   General Partner..........................................                   309,944             309,944
                                                                        --------------       -------------
                                                                             4,819,521           4,714,982
                                                                        --------------       -------------

                                                                       $     6,957,388      $    6,993,903
                                                                        ==============       =============
</TABLE>

                 See accompanying notes to financial statements.
<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                            For the Years Ended December 31,
                                                   ----------------------------------------------------
                                                        1996               1995               1994
                                                   --------------     --------------    ---------------  
<S>                                                <C>                <C>               <C>            
Revenue:
   Rental revenue..........................        $    1,688,524     $    1,376,148    $     1,475,264
   Interest and other revenue..............                27,011             63,280             45,695
   Gain on sale of real estate.............                     -                  -            574,701
                                                    -------------      -------------     --------------
     Total revenue.........................             1,715,535          1,439,428          2,095,660
                                                    -------------      -------------     --------------

Expenses:
   Interest................................               198,739            198,948            249,827
   Depreciation............................               294,001            344,494            257,825
   Property taxes..........................               121,352            101,961            123,227
   Personnel expenses......................               263,324            242,331            293,231
   Repairs and maintenance.................               311,527            345,524            316,627
   Property management fees -
     affiliates............................                99,681             79,474             72,765
   Utilities...............................                65,901             81,054             86,617
   Other property operating expenses.......               133,627            186,282            165,741
   General and administrative..............                76,907             64,649             29,971
   General and administrative -
     affiliates............................                45,937             80,597             66,285
                                                    -------------      -------------     --------------
     Total expenses........................             1,610,996          1,725,314          1,662,116
                                                    -------------      -------------     --------------

Net income (loss)..........................        $      104,539     $     (285,886)   $       433,544
                                                    =============      =============     ==============

Net income (loss) allocated to
   limited partners........................        $      104,539     $     (285,886)   $       667,558
Net loss allocated to General Partner......                     -                  -           (234,014)
                                                    -------------      -------------     --------------

Net income (loss)..........................        $      104,539     $     (285,886)   $       433,544
                                                    =============      =============     ==============

Net income (loss) per limited
   partnership unit........................        $         7.60     $       (20.79)   $         48.52
                                                    =============      =============     ==============
</TABLE>

                 See accompanying notes to financial statements.

<PAGE>

                       McNEIL PACIFIC INVESTORS FUND 1972

                         STATEMENTS OF PARTNERS' EQUITY

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

<TABLE>
<CAPTION>

                                                                                                     Total
                                                    General                  Limited               Partners'
                                                    Partner                 Partners                Equity
                                                 ----------------        ---------------       ---------------
<S>                                              <C>                     <C>                   <C>            
Balance at December 31, 1993..............       $       543,958         $     4,023,366       $     4,567,324

Net income (loss).........................              (234,014)                667,558               433,544
                                                  --------------          --------------        --------------

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
                                                  ==============          ==============        ==============

</TABLE>
                 See accompanying notes to financial statements.
<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972

                            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..............        $    1,682,397     $    1,333,612    $     1,466,270
   Cash paid to suppliers..................              (869,237)          (909,351)          (923,620)
   Cash paid to affiliates.................              (143,737)          (238,173)           (63,881)
   Interest received.......................                27,011             63,280             45,695
   Interest paid...........................              (183,673)          (195,164)          (255,305)
   Property taxes paid.....................              (105,231)           (26,133)          (106,796)
                                                    -------------      -------------     --------------
Net cash provided by operating
    activities.............................               407,530             28,071            162,363
                                                    -------------      -------------     --------------

Cash flows from investing activities:
   Additions to real estate
     investments...........................              (212,261)          (440,906)          (647,770)
   Proceeds from sale of real estate
     investment............................                     -                  -          3,749,308
                                                    -------------      -------------     --------------
Net cash provided by (used in)
    investing activities...................              (212,261)          (440,906)         3,101,538
                                                    -------------      -------------     --------------

Cash flows from financing activities:
   Principal payments on mortgage
     notes payable.........................              (137,627)          (126,137)          (142,238)
   Repayment of advances from
     affiliates............................                     -                  -            (50,000)
   Retirement of mortgage note
     payable...............................                     -                  -         (2,094,135)
                                                    -------------      -------------     --------------
Net cash used in financing activities......              (137,627)          (126,137)        (2,286,373)
                                                    -------------      -------------     --------------

Net increase (decrease) in cash and
     cash equivalents......................                57,642           (538,972)           977,528

Cash and cash equivalents at
     beginning of year.....................               523,389          1,062,361             84,833
                                                    -------------      -------------     --------------

Cash and cash equivalents at end
     of year...............................        $      581,031     $      523,389    $     1,062,361
                                                    =============      =============     ==============
</TABLE>


                 See accompanying notes to financial statements.
<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972

                            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)..........................        $      104,539     $     (285,886)   $       433,544
                                                    -------------      -------------     --------------

Adjustments to reconcile net income
   (loss) to net cash provided by
   operating activities:
   Depreciation............................               294,001            344,494            257,825
   Amortization of deferred borrowing
     costs.................................                10,387             10,387             10,387
   Gain on sale of real estate.............                     -                  -           (574,701)
   Changes in assets and liabilities:
     Cash segregated for security
       deposits............................               (13,319)            (7,576)            15,264
     Accounts receivable...................                  (298)              (108)             4,408
     Prepaid expenses and other
       assets..............................                  (474)             1,374             29,469
     Escrow deposits.......................                16,121             75,828             22,087
     Accounts payable......................               (20,363)           (10,965)           (92,800)
     Accrued property taxes................                     -                  -             (5,656)
     Accrued interest......................                 4,679             (6,603)           (15,865)
     Other accrued expenses................                  (507)           (13,832)            12,227
     Payable to affiliates - General
       Partner.............................                 1,881            (78,102)            75,169
     Security deposits and deferred
       rental revenue......................                10,883               (940)            (8,995)
                                                    -------------      -------------     --------------

         Total adjustments.................               302,991            313,957           (271,181)
                                                    -------------      -------------     --------------

Net cash provided by operating
   activities..............................        $      407,530     $       28,071    $       162,363
                                                    =============      =============     ==============

</TABLE>

                 See accompanying notes to financial statements.
<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 1996


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 is engaged in real estate  activities,  including the ownership,
operation and management of residential rental 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 a liquidation  of
the  Partnership's  asset  in  accordance  with  the  terms  of the  Partnership
Agreement.  At December 31, 1996,  the  Partnership  owned one  income-producing
property as described in Note 4 - Real Estate Investment.

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.

Real Estate Investment
----------------------

The real estate  investment is generally stated at the lower of depreciated cost
or fair value.  The real estate  investment is reviewed for impairment  whenever
events or changes in circumstances  indicate that its carrying amount 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.





<PAGE>
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.

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.

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 an escrow  account in accordance  with
terms of the Palm Bay mortgage  note.  This escrow  account is controlled by the
mortgagee and is 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 are  capitalized  and  amortized  using a method that
approximates 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  leases its property under short-term  operating  leases.  Lease
terms generally are less than one year in duration. Rental revenue is recognized
as earned.






<PAGE>
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  Pacesetter  Apartments  was
allocated  to the General  Partner in 1982 based upon a 1982 sales  contract for
Pacesetter  Apartments.  An  adjustment  was made in 1994 to adjust  the  amount
allocated  to  the  General  Partner  based  on  the  1994  sale  of  Pacesetter
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 1996, 1995 and 1994 have been made
in accordance with these provisions.

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 following order:

(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.

No distributions were paid to the partners during 1996, 1995 or 1994.

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 1996 and 1995, and 13,757.5 Units  outstanding in
1994.


<PAGE>
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.  No partnership  management
fees were incurred during 1996, 1995 or 1994.

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.  Prior to
January 1, 1995, the  Partnership  paid property  management fees equal to 5% of
gross rental receipts.

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  accrued an
$81,000  sales  commission  in  connection  with  the  1994  sale of  Pacesetter
Apartments. The sales commission was paid in 1995.

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................................       $      99,681      $       79,474      $       72,765
Charged to general and   
   administrative - affiliates:
   Partnership administration................              45,937              80,597              66,285
Charged to gain on sale
   of real estate:
   Brokerage commission......................                   -                   -              81,000
                                                     ------------       -------------       -------------

                                                    $     145,618      $      160,071      $      220,050
                                                     ============       =============       =============
</TABLE>

Payable to  affiliates - General  Partner at December 31, 1996 and 1995 consists
of property management fees and reimbursable  administrative  costs. All amounts
are due and payable from current operations.








<PAGE>
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 financial  reporting  purposes
exceeded the net assets and  liabilities for tax purposes by $1,981,839 in 1996,
$1,948,374 in 1995 and $1,973,149 in 1994.

NOTE 4 - REAL ESTATE INVESTMENT
-------------------------------

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  has  classified  its  investment  in  Palm  Bay
Apartments  as an asset held for sale on the  accompanying  Balance  Sheet dated
December 31, 1996 at a net book value of $6,253,753.

The  basis  and  accumulated  depreciation  of  the  Partnership's  real  estate
investment at December 31, 1995, is set forth in the following table:

<TABLE>
<CAPTION>
                                                   Buildings and       Accumulated           Net Book
       1995                         Land           Improvements        Depreciation            Value
       ----                    --------------      ------------        ------------       ------------
<S>                            <C>             <C>                 <C>                 <C>            
Palm Bay Apartments
   Orlando, FL                 $   2,336,000   $      5,010,483    $      (1,010,990)  $     6,335,493
                                ============    ===============     ================    ==============
</TABLE>

The results of  operations  for the asset held for sale at December 31, 1996 are
$194,195,  $(210,240)  and  $(26,866)  for 1996,  1995 and  1994,  respectively.
Results of operations are operating  revenues less operating  expenses including
depreciation and interest expense.


<PAGE>
NOTE 5 - MORTGAGE NOTE PAYABLE
------------------------------

The following table sets forth the  Partnership's  mortgage note at December 31,
1996  and  1995.  The  mortgage  note is  secured  by Palm Bay  Apartments,  the
Partnership's only real estate asset.

<TABLE>
<CAPTION>
                           Mortgage         Annual          Monthly
                             Lien          Interest        Payments/                   December 31,
Property                 Position (a)       Rates %      Maturity Date             1996                1995
--------                 ------------       -------    ------------------     ---------------     -------------
<S>                                         <C>        <C>       <C>          <C>                <C>           
Palm Bay                 First              8.750      $26,775   06/97(b)     $    2,023,577     $    2,161,204
                                                                               =============      =============
</TABLE>

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

(b)     The Palm  Bay   mortgage  note  matures  in  June 1997.  At that time, a
        balloon  payment of  $1,974,969  will be due.

Based on borrowing rates  currently  available to the Partnership for a mortgage
loan with similar terms and average  maturities,  the fair value of the mortgage
note payable was  approximately  $1,945,000  and $2,102,000 at December 31, 1996
and 1995, respectively.

As indicated  above,  the mortgage note is secured by Palm Bay Apartments and is
due and payable on June 1, 1997.  The General  Partner  intends to sell Palm Bay
Apartments  and use the  related  sales  proceeds  to retire the  mortgage  note
payable.  Should the  Partnership  be unable to sell Palm Bay  Apartments for an
amount  sufficient to retire the mortgage note payable,  the  Partnership  would
pursue  other  financing  options.  If  the  sale  of  Palm  Bay  Apartments  is
consummated,  the General  Partner will commence the dissolution and termination
of the Partnership. The accompanying financial statements have not been prepared
on the  liquidation  basis of accounting,  as the sale of Palm Bay Apartments is
subject to limited partner approval.


<PAGE>

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

On March 17, 1994, the Partnership sold its investment in Pacesetter  Apartments
to an  unaffiliated  buyer for a cash sales price of  $4,050,000.  Cash proceeds
from this transaction, as well as the gain on sale are detailed below.

                                                 Gain on Sale      Cash Proceeds
                                                 --------------    -------------

   Sales price...........................        $   4,050,000     $  4,050,000
   Selling costs.........................             (300,692)        (300,692)
   Basis of real estate sold.............           (3,174,607)
                                                  ------------

   Gain on sale..........................        $     574,701
                                                  ============
   Proceeds from sale of real estate.....                             3,749,308
   Retirement of mortgage note...........                            (2,094,135)
                                                                     ----------

   Net cash proceeds.....................                           $ 1,655,173
                                                                     ==========

NOTE 7 - LEGAL PROCEEDINGS
--------------------------

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.
<PAGE>
     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.

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  Schofield,  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 Schofield, 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.





<PAGE>
     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.

     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.

NOTE 8 - PRO FORMA DISCLOSURE (UNAUDITED)
-----------------------------------------

The following  unaudited pro forma  information  for the year ended December 31,
1994  reflects the results of operations  of the  Partnership  as if the sale of
Pacesetter  Apartments  had occurred as of January 1, 1994.  The  unaudited  pro
forma  information  is not  necessarily  indicative of the results of operations
that  actually  would have occurred or those which might be expected to occur in
the future.

  Total revenues............................     $   1,287,125
  Net loss..................................           (77,885)
  Net loss per limited partnership unit.....             (5.66)




<PAGE>

                       McNEIL PACIFIC INVESTORS FUND 1972
                                  SCHEDULE III
              REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1996

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

Palm Bay Apartments
   Orlando, FL            $ 2,023,577
                           ==========
</TABLE>


(b)  The  asset  held for sale is stated  at 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 the asset is placed on the
     market for sale.



                     See accompanying notes to Schedule III.
<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972
                                  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>        
Asset Held for Sale:

Palm Bay Apartments
   Orlando, FL                                                       $ 6,253,753
                                                                      ==========
</TABLE>


(a)  For Federal income tax purposes,  the properties are depreciated over lives
     ranging from 7-27.5 years using ACRS or MACRS  methods.  The aggregate cost
     of  real  estate   investments   for  Federal   income  tax   purposes  was
     approximately  $8,537,646 and  accumulated  depreciation  was $1,328,120 at
     December 31, 1996.




                     See accompanying notes to Schedule III.

<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972
                                  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>  
Asset Held for Sale:

Palm Bay Apartments
   Orlando, FL                  1974                        06/91

</TABLE>




                     See accompanying notes to Schedule III.


<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972

                              NOTES TO SCHEDULE III

               REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION


A  summary  of  activity  for the  Partnership's  real  estate  investments  and
accumulated depreciation for the years ended December 31, 1996, 1995 and 1994 is
as follows:

<TABLE>
<CAPTION>
                                                            For the Years Ended December 31,
                                                   ----------------------------------------------------
                                                        1996               1995               1994
                                                   --------------     --------------    ---------------
<S>                                                <C>                <C>               <C>            
Real estate investments:

Balance at beginning of year...............        $    7,346,483     $    6,905,577    $     6,257,807

Improvements...............................               137,450            440,906            647,770

Reclassification to asset held
   for sale................................            (7,483,933)                 -                  -
                                                    --------------     -------------     --------------

Balance at end of year.....................        $            -     $    7,346,483    $     6,905,577
                                                    =============      =============     ==============


Accumulated depreciation:

Balance at beginning of year...............        $    1,010,990     $      666,496    $       443,333

Depreciation...............................               294,001            344,494            223,163

Reclassification to asset held
   for sale................................            (1,304,991)                 -                  -
                                                    --------------     -------------     --------------

Balance at end of year.....................        $            -     $    1,010,990    $       666,496
                                                    =============      =============     ==============


Assets Held for Sale:

Balance at beginning of year...............        $            -     $            -    $     3,209,269

Depreciation...............................                     -                  -            (34,662)

Reclassification from real estate
   investments, net........................             6,178,942                  -                  -

Improvements...............................                74,811                  -                  -

Sale of real estate........................                     -                  -         (3,174,607)
                                                    -------------      -------------     --------------

Balance at end of year.....................        $    6,253,753     $            -    $             -
                                                    =============      =============     ==============

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

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

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

No direct  compensation  was paid or payable by the  Partnership to directors or
officers  (since it does not have any  directors or officers) for the year ended
December  31,  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% 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, 1997.


<PAGE>
         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, 1997.

         3.   High   River  Limited  Partnership,  100  S. Bedford  Road,  Mount
              Kisco,  New York,  10549,  owns 1,594 (11.6%) of the Partnership's
              Units as of January 31, 1997.

(B)      Security ownership of management.

         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.  No partnership  management
fees were incurred for the year ended December 31, 1996.

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, 1996,  the  Partnership
incurred $145,618 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. During 1995, the Partnership paid an $81,000
commission to the General Partner in connection with the 1994 sale of Pacesetter
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.

(A)           Exhibits

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

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

              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.

              10.2                    Property  Management  Agreement,  dated as
                                      of October 1, 1993, between McNeil Pacific
                                      Investors Fund 1972 and McNeil Real Estate
                                      Management, Inc. (1)

              10.3                    Revolving  Credit  Agreement, dated August
                                      6, 1991 between McNeil Partners,  L.P. and
                                      McNeil Pacific Investors Fund 1972. (1)

              10.4                    Amendment   of      Property    Management
                                      Agreement,  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)


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

              11.                     Statement  regarding  computation   of Net
                                      Income 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, 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 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 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)