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

                                  FORM 10-K405

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

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

                                       OR

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

     For the transition period from ______________ to_____________

     Commission file number  0-7162
                           ---------


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


         California                                94-6279375
--------------------------------------------------------------------------------
(State or other jurisdiction of                   (I.R.S. Employer
incorporation or organization)                     Identification No.)


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


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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months,  and (2) has been subject to such filing  requirements
for the past 90 days. Yes X No___

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

13,702.5 of the  registrant's  13,752.5  limited  partnership  units are held by
non-affiliates  of this registrant.  The aggregate market value of units held by
non-affiliates  is not determinable  since there is no public trading market for
limited  partnership  units  and  transfers  of units  are  subject  to  certain
restrictions.

Documents Incorporated by Reference:        See Item 14, page 27.


                                TOTAL OF 29 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, 1998.

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 was engaged in real estate activities,  including the ownership,
operation and management of residential rental real estate and other real estate
related assets. On September 30, 1997, the Partnership sold its last real estate
asset, Palm Bay Apartments. The Partnership is in the process of liquidating its
assets,  satisfying its remaining creditors, and terminating its operations.  At
December 31, 1998, the Partnership did not own any income-producing properties.

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

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

Business Plan:

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

Forward-Looking Information:

Within this document,  certain  statements  are made as to expected  Partnership
developments,  including the ultimate termination of the Partnership's business,
satisfaction  of the  Partnership's  creditors,  and  distributions  to  limited
partners.  All of these statements are forward-looking  statements made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These  statements are not historical and involve risks and  uncertainties.
The Partnership's  actual financial condition,  results of operations,  and cash
flows for future  periods may differ  materially due to several  factors.  These
factors include,  but are not limited to, the outcome of litigation in which the
Partnership is a defendant.





<PAGE>
Environmental Matters:

The environmental  laws of the Federal government and of certain state and local
governments  impose  liability  on current  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.

Under such  environmental  laws, a current or previous owner or operator of real
estate may be required to  investigate  and clean up certain  hazardous or toxic
substances and may be held liable to a governmental  entity or third parties for
property damage and for investigation and cleanup costs incurred by such parties
in connection with the  contamination  whether or not the owner or operator knew
of, or was responsible for, the contamination.  In addition,  some environmental
laws  create a lien on the  contaminated  site in favor  of the  government  for
damages and costs it incurs in connection with the  contamination.  The presence
of contamination or the failure to remediate contaminations may adversely affect
the  owner's  ability to sell or lease real  estate or to borrow  using the real
estate as collateral. The owner or operator of a site may be liable under common
law to third  parties for  damages and  injuries  resulting  from  environmental
contamination  emanating from the site.  Such costs or liabilities  could exceed
the value of the affected real estate.

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

Other Information:

In August 1995, High River Limited  Partnership,  a Delaware limited partnership
controlled by Carl C. Icahn ("High River") made an  unsolicited  tender offer to
purchase from holders of Units up to approximately  45% of the outstanding Units
of the  Partnership  for a purchase  price of $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 February 1,
1999,  High River has purchased  approximately  11.7% of the  outstanding  Units
pursuant to the tender offers. In addition,  all litigation filed by High River,
Mr. Icahn and his  affiliates  in  connection  with the tender  offers have been
dismissed without prejudice.







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

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

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

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

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

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

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

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

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

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

For 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         1,165 as of February 1, 1999

(C)      In  December  1997,  the  Partnership  distributed  $4,772,400  to  its
         partners.  No  distributions  were  made in 1998 or 1996.  See Item 7 -
         Management's Discussion and Analysis of Financial Condition and Results
         of  Operations  for a  discussion  of the  Partnership's  plan to pay a
         liquidating distribution to the partners.


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

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

<TABLE>
<CAPTION>
Statements of                                                     Years Ended December 31,
Operations                                 1998              1997           1996            1995            1994
------------------                      ----------       -----------     -----------    ------------     -----------

<S>                                     <C>              <C>             <C>            <C>              <C>        
Rental revenue .....................    $      --        $ 1,350,389     $ 1,688,524    $  1,376,148     $ 1,475,264
Gain on sale of
   real estate .....................           --            151,141              --              --         574,701
Total revenue ......................       20,070          1,585,977       1,715,535       1,439,428       2,095,660
Net income (loss) ..................      (33,429)           367,198         104,539        (285,886)        433,544

Net income (loss) per
   limited partnership unit.........    $   (2.43)       $     17.81     $      7.60    $     (20.79)    $     48.52
                                        =========        ===========     ===========    ============     ===========

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


                                                                       As of December 31,
Balance Sheets                             1998               1997            1996           1995           1994
--------------                          ---------        ---------     -----------    -----------     -----------
Real estate investment, net ........    $      --        $      --     $       --     $ 6,335,493     $ 6,239,081
Asset held for sale ................           --               --      6,253,753              --              --
Total assets .......................       397,954         451,506      6,957,388       6,993,903       7,516,368
Mortgage notes payable .............            --              --      2,023,577       2,161,204       2,287,341
Partners' equity ...................       380,890         414,319      4,819,521       4,714,982       5,000,868
</TABLE>


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

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

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

On September 30, 1997, the Partnership sold its last real estate asset, Palm Bay
Apartments.  Proceeds from the sale were distributed to the partners in December
1997. As of the end of 1998, the Partnership's sole remaining asset consisted of
$397,954 of cash and cash  equivalents.  At the end of 1998,  the  Partnership's
liabilities consisted of $17,064 of accrued expenses,  $12,362 of which were due
to affiliates of the General Partner.
<PAGE>
The  Partnership  remains  subject to litigation as discussed in Item 3 - "Legal
Proceedings."  The General  Partner intends to use the  Partnership's  remaining
funds  for the  payment  of costs  associated  with the  litigation.  After  the
remaining  litigation is either adjudicated or otherwise settled,  and all legal
and other costs have been provided for,  remaining  Partnership  funds,  if any,
will be distributed to the partners.

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

1998 compared to 1997:

Revenue:

Due to the sale of the  Partnership's  last property on September 30, 1997,  the
Partnership  earned no rental  revenue  for the year ended  December  31,  1998.
Similarly, no gain on sale of real estate was recorded during 1998.

Interest revenue  decreased 76% to $20,070 for the year ended December 31, 1998.
Interest  revenue  decreased after the Partnership  distributed most of its cash
reserves to its partners in December 1997.

Expenses:

The Partnership incurred a total of $11,114 of residual expenses related to Palm
Bay Apartments during the year ended December 31, 1998.

General and administrative expenses decreased 48% to $45,935 in 1998 as compared
to 1997.  The  Partnership  continues to incur costs  related to the  litigation
discussed below. However, the amount of  litigation-related  costs decreased for
the twelve month period ended December 31, 1998, as compared to 1997.

General and  administrative  expenses paid to affiliates  during 1998 reflects a
$3,550  refund from  affiliates.  General and  administrative  expenses for 1997
exceeded the limit equal to 2% of the  Partnership's  assets  established by the
Amended Partnership  Agreement.  Consequently,  in the first quarter of 1998 the
Partnership received a refund from an affiliate.

1997 compared to 1996:

Revenue:

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

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



<PAGE>

Expenses:

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

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

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

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

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

The  Partnership  used $53,552 in operating  activities  in 1998, as compared to
providing  $261,558 from  operating  activities in 1997.  The September 30, 1997
sale of Palm Bay Apartments,  the Partnership's last real estate asset, accounts
for the decrease.  The Partnership  realized $4,549,786 of cash from the sale of
Palm Bay  Apartments,  after  retirement of the Palm Bay mortgage note. The cash
realized from the sale of Palm Bay Apartments,  as well as some cash reserves of
the Partnership, were distributed to the partners in December 1997.

Short-term Liquidity:

At  December  31,  1998,  the  Partnership   held  $397,954  of  cash  and  cash
equivalents.  The Partnership owns no other assets.  The Partnership  intends to
use its  remaining  funds  to pay the  remaining  accrued  expenses  owed by the
Partnership,  in the amount of  $17,064  as of  December  31,  1998,  to pay all
remaining  expenses  connected with the termination of the  Partnership,  and to
provide  a  contingency  reserve  to  pay  all  costs  associated  with  ongoing
litigation  involving the  Partnership  as a defendant.  After all expenses have
been provided for, and the litigation is resolved through either adjudication or
settlement,  any remaining Partnership funds will be distributed to the partners
in  accordance  with terms of the  Partnership  Agreement.  The General  Partner
considers the current balance of cash and cash  equivalents  adequate for all of
these purposes.




<PAGE>
Long-term Liquidity:

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

Distributions:

In December 1997, the Partnership distributed $4,772,400 to its partners.

No  distributions  were paid to the partners  during 1998.  Distribution  of the
remaining cash reserves of the Partnership will be made from any remaining funds
of the  Partnership  after all  liabilities of the  Partnership  have been paid,
including costs associated with terminating the Partnership's affairs, and costs
associated with adjudicating or settling  litigation in which the Partnership is
involved.

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

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

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

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

Cost
----

The cost of IT  upgrades is not  expected  to be  material  to the  Partnership.
Because all the IT systems have been  upgraded  over the last three  years,  all
such systems were  compliant,  or made compliant at no additional  cost by third
party vendors.

Risks
-----

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





<PAGE>
Contingency plans
-----------------

Management  is  developing  contingency  plans to  address  potential  year 2000
non-compliance of IT. Management believes that alternative systems are available
that could be utilized to minimize  such  impact.  Management  will assess these
risks and develop plans to mitigate possible failures by June, 1999.

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

Not Applicable.



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

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

Financial Statements:

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

   Statements of Net Assets in Liquidation as of
      December 31, 1998 and 1997..................................................                       12

   Statement of Changes in Net Assets in Liquidation for the year
      ended December 31, 1997.....................................................                       13

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

   Statements of Partners' Equity for each of the two years in the
      period ended December 31, 1997..............................................                       16

   Statements of Cash Flows for each of the two years in the period
      ended December 31, 1997.....................................................                       17

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

</TABLE>


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

<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
McNeil Pacific Investors Fund 1972:

We have audited the  accompanying  statements  of net assets in  liquidation  of
McNeil Pacific  Investors  Fund 1972 (a California  limited  partnership)  as of
December 31, 1998 and 1997,  and the related  statement of changes in net assets
in  liquidation  for the year ended  December  31, 1998.  In  addition,  we have
audited the statements of operations,  partners'  equity and cash flows for each
of the two  years  in the  period  ended  December  31,  1997.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

As described in Note 1 to the financial statements, on August 12, 1997, the sale
of Palm Bay Apartments and the dissolution of the Partnership were approved at a
meeting of the limited  partners.  After the September 30, 1997 sale of Palm Bay
Apartments, the General Partner commenced the dissolution and termination of the
Partnership. As a result, the Partnership has changed its basis of accounting as
of and for the periods  subsequent to December 31, 1997, from the  going-concern
basis to the liquidation basis. Accordingly, the carrying value of the remaining
assets as of December 31, 1998, are presented at estimated realizable values and
all liabilities are presented at estimated settlement amounts.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the net assets in liquidation of McNeil Pacific Investors
Fund 1972 as of  December  31,  1998 and 1997,  the changes in its net assets in
liquidation  for the year  ended  December  31,  1998,  and the  results  of its
operations  and its cash  flows  for each of the two years in the  period  ended
December 31, 1997, in conformity with generally accepted  accounting  principles
applied on the bases described in the preceding paragraph.


/s/  Arthur Andersen LLP


Dallas, Texas
   March 19, 1999



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

                     STATEMENTS OF NET ASSETS IN LIQUIDATION


<TABLE>
<CAPTION>
                                                                           December 31,
                                                                    ------------------------
                                                                      1998            1997
                                                                    --------        --------
ASSETS
------

<S>                                                                 <C>             <C>     
Cash and cash equivalents ..................................        $397,954        $451,506
                                                                    --------        --------

                                                                    $397,954        $451,506
                                                                    ========        ========


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

Other accrued expenses .....................................        $  4,702        $ 19,702
Payable to affiliates - General Partner ....................          12,362          17,485
                                                                    --------        --------
                                                                      17,064          37,187
                                                                    --------        --------

Partners' equity (Net assets in liquidation):
   Limited partners - 15,000 limited partnership units
     authorized; 13,752.5 limited partnership units
     issued and outstanding ................................         380,890         414,319
   General Partner .........................................              --              --
                                                                    --------        --------
                                                                     380,890         414,319
                                                                    --------        --------
                                                                    $397,954        $451,506
                                                                    ========        ========

</TABLE>

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

                STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION


                                                             December 31,
                                                                 1998
                                                             -------------

Revenue:
     Interest and other revenue....................          $     20,070
                                                             ------------

Expenses:
   Personnel expenses..............................                    73
   Repairs and maintenance.........................                 9,537
   Other property operating expenses...............                 1,504
   General and administrative......................                45,935
   General and administrative - affiliates.........                (3,550)
                                                              -----------
     Total expenses................................                53,499
                                                              -----------

Net decrease in net assets in liquidation..........               (33,429)

   Net assets in liquidation at beginning of year..               414,319
                                                              -----------

   Net assets in liquidation at end of year........           $   380,890
                                                              ===========

Net decrease in net assets in liquidation
   per limited partnership unit....................           $      2.43
                                                              ===========


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

                            STATEMENTS OF OPERATIONS


                                                For the Years Ended December 31,
                                                   1997               1996
                                                 -----------       ----------
Revenue:
   Rental revenue ..........................     $1,350,389        $1,688,524
   Interest and other revenue ..............         84,447            27,011
   Gain on sale of real estate .............        151,141                --
                                                 ----------        ----------
     Total revenue .........................      1,585,977         1,715,535
                                                 ----------        ----------

Expenses:
   Interest ................................        133,196           198,739
   Depreciation ............................             --           294,001
   Property taxes ..........................         90,765           121,352
   Personnel expenses ......................        245,872           263,324
   Repairs and maintenance .................        312,631           311,527
   Property management fees -
     affiliates ............................         80,160            99,681
   Utilities ...............................         53,794            65,901
   Other property operating expenses........        126,264           133,627
   General and administrative ..............         87,971            76,907
   General and administrative -
     affiliates ............................         88,126            45,937
                                                 ----------        ----------
     Total expenses ........................      1,218,779         1,610,996
                                                 ----------        ----------

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

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

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

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

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


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

                         STATEMENTS OF PARTNERS' EQUITY

                 For the Years Ended December 31, 1997 and 1996


<TABLE>
<CAPTION>
                                                                                      Total
                                            General              Limited            Partners'
                                            Partner             Partners             Equity
                                           -----------         -----------         -----------
<S>                                        <C>                 <C>                 <C>        
Balance at December 31, 1995.......        $   309,944         $ 4,405,038         $ 4,714,982

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

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

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

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

Balance at December 31, 1997 ......        $        --         $   414,319         $   414,319
                                           ===========         ===========         ===========
</TABLE>



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

                            STATEMENTS OF CASH FLOWS

                Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>

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

Cash flows from operating activities:
<S>                                                 <C>                 <C>        
   Cash received from tenants ..............        $ 1,350,036         $ 1,682,397
   Cash paid to suppliers ..................           (803,859)           (869,237)
   Cash paid to affiliates .................           (167,909)           (143,737)
   Interest received .......................             84,447              27,011
   Interest paid ...........................           (143,624)           (183,673)
   Property taxes paid .....................            (57,533)           (105,231)
                                                    -----------         -----------
Net cash provided by
    operating activities ...................            261,558             407,530
                                                    -----------         -----------

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

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

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

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

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


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

                            STATEMENTS OF CASH FLOWS

              Reconciliation of Net Income to Net Cash Provided by
                              Operating Activities


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

Net income ................................     $ 367,198         $ 104,539
                                                ---------         ---------

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

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

Net cash provided by
   operating activities ...................     $ 261,558         $ 407,530
                                                =========         =========




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

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 1998


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

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

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

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

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

At a meeting of the limited  partners on August 12, 1997,  the limited  partners
approved the sale of Palm Bay Apartments and the dissolution of the Partnership.
After the September 30, 1997 sale of Palm Bay  Apartments,  the General  Partner
commenced the  dissolution and  termination of the  Partnership.  The assets and
liabilities  in the  accompanying  statements  of net assets in  liquidation  at
December 31, 1998 and 1997 are valued at their estimated  realizable  values and
estimated settlement amounts, respectively. The Partnership is in the process of
liquidating  its  assets,  satisfying  all  creditors  and  claims  against  the
Partnership,  distributing its remaining assets to its partners, and terminating
its existence.

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

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

<PAGE>
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.

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

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

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

No provision for Federal  income taxes is necessary in the financial  statements
of the  Partnership  because,  as a  partnership,  it is not  subject to Federal
income tax and the tax effect of its activities accrues to the partners.

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

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

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

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

(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,

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

In December 1997, the Partnership  distributed $4,772,400 to its partners.  This
distribution  includes $4,549,786 of net cash proceeds from the sale of Palm Bay
Apartments,   as  well  as  $222,614  of  cash  reserves  of  the   Partnership.
Distribution of the remaining cash reserves of the Partnership will be made from
any remaining funds of the Partnership  after all liabilities of the Partnership
have been paid,  including costs associated with  terminating the  Partnership's
affairs,  and costs associated with adjudicating or settling litigation in which
the Partnership is involved.  No distributions  were paid to the partners during
1998 or 1996.

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 1998, 1997, and 1996.

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

The General Partner is entitled to receive a partnership management fee equal to
9.5% of  distributions  of cash from  operations  when  distributable  cash from
operations is distributed to the limited  partners.  The Partnership  incurred a
partnership  management fee of $23,368 in 1997. No partnership  management  fees
were incurred during 1998 or 1996.

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

The  Partnership  reimburses  McREMI  for  its  costs,  including  overhead,  of
administering the  Partnership's  affairs.  In 1998, the Partnership  received a
$3,550 refund from McREMI for overpayments of reimbursable costs the Partnership
paid in 1997.

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


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

<TABLE>
<CAPTION>
                                                             For the Years Ended December 31,
                                                      --------------------------------------------
                                                        1998               1997            1996
                                                      ----------        ---------        ---------
Property management fees -
<S>                                                   <C>               <C>              <C>      
   affiliates ................................        $      --         $  80,160        $  99,681
Charged to general and administrative -
   affiliates:
   Partnership administration ................           (3,550)           64,758           45,937
Charged to general and administrative -
   affiliates:
   Partnership management fee ................               --            23,368               --
Charged to gain on sale of real estate:
   Sales commission ..........................               --           137,000               --
                                                      ---------         ---------        ---------

                                                      $  (3,550)        $ 305,286        $ 145,618
                                                      =========         =========        =========

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

Payable to  affiliates - General  Partner at December 31, 1998 and 1997 consists
of reimbursable administrative costs.

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

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

The  Partnership's  net assets and liabilities for tax purposes exceeded the net
assets and liabilities for financial  reporting  purposes by $36,732 in 1998 and
$24,758 in 1997.  The  Partnership's  net assets and  liabilities  for financial
reporting  purposes  exceeded the net assets and liabilities for tax purposes by
$1,981,839 in 1996.


<PAGE>
NOTE 4 - SALE OF REAL ESTATE
----------------------------

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

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

<S>                                                               <C>                    <C>              
       Sales price........................................        $      6,849,500       $       6,849,500
       Selling costs......................................                (374,785)               (374,785)
       Basis of real estate sold..........................              (6,323,574)
                                                                   ---------------

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

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

       Net cash proceeds..................................                                $      4,549,786
                                                                                           ===============
</TABLE>

NOTE 5 - LEGAL PROCEEDINGS
--------------------------

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

The action involves  purported  class and derivative  actions brought by limited
partners  of each  of the  limited  partnerships  that  were  named  as  nominal
defendants as listed above (the  "Partnerships").  Plaintiffs allege that McNeil
Investors, Inc., its affiliate McNeil Real Estate Management,  Inc. and three of
their senior officers and/or directors (collectively, the "Defendants") breached
their  fiduciary  duties and certain  obligations  under the respective  Amended
Partnership  Agreement.  Plaintiffs  allege that  Defendants  have rendered such
Units highly illiquid and  artificially  depressed the prices that are available
for Units on the resale market.  Plaintiffs also allege that Defendants  engaged



<PAGE>
in a course of conduct to prevent the  acquisition  of Units by an  affiliate of
Carl  Icahn  by  disseminating  purportedly  false,  misleading  and  inadequate
information.  Plaintiffs  further allege that Defendants  acted to advance their
own personal  interests at the expense of the Partnerships'  public unit holders
by failing to sell Partnership  properties and failing to make  distributions to
unitholders.

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

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

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

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

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

None.



<PAGE>
                                    PART III

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

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

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

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

Carole J. McNeil               55       Mrs. McNeil is Co-Chairman, with husband
Co-Chairman of the                      Robert A. McNeil,  of McNeil  Investors,
Board                                   Inc.  Mrs.  McNeil has  twenty  years of
                                        real estate experience, most recently as
                                        a private investor from 1986 to 1993. In
                                        1982, she founded Ivory & Associates,  a
                                        commercial real estate brokerage firm in
                                        San  Francisco,  CA. Prior to that,  she
                                        was a commercial  real estate  associate
                                        with the Madison Company and, earlier, a
                                        commercial  sales  associate and analyst
                                        with   Marcus  and   Millichap   in  San
                                        Francisco.    In   1978,   Mrs.   McNeil
                                        established   Escrow  Training  Centers,
                                        California's first accredited commercial
                                        training   program  for  title   company
                                        escrow  officers and real estate  agents
                                        needing  college  credits to qualify for
                                        brokerage  licenses.  She  began in real
                                        estate as Manager and Marketing Director
                                        of Title  Insurance  and  Trust in Marin
                                        County,  CA. Mrs.  McNeil  serves on the
                                        International  Board of Directors of the
                                        Salk Institute.
<PAGE>
Ron K. Taylor                  41       Mr.  Taylor is the  President  and Chief
President and Chief                     Executive  Officer of McNeil Real Estate
Executive Officer                       Management  which is an affiliate of the
                                        General Partner.  Mr. Taylor has been in
                                        this capacity  since the  resignation of
                                        Donald K. Reed on March 4,  1997.  Prior
                                        to       assuming       his      current
                                        responsibilities, Mr. Taylor served as a
                                        Senior  Vice  President  of McREMI.  Mr.
                                        Taylor has been in this  capacity  since
                                        McREMI  commenced  operations  in  1991.
                                        Prior  to  joining  McREMI,  Mr.  Taylor
                                        served as an  Executive  Vice  President
                                        for  a   national   syndication/property
                                        management  firm. In this capacity,  Mr.
                                        Taylor  had the  responsibility  for the
                                        management  and leasing of a  21,000,000
                                        square  foot   portfolio  of  commercial
                                        properties. Mr. Taylor has been actively
                                        involved  in the  real  estate  industry
                                        since 1983.

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

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

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

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

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 February 1, 1999.


<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 February 1, 1999.

         3.   High  River  Limited   Partnership,  100  S. Bedford  Road,  Mount
              Kisco,  New York,  10549,  owns 1,606 (11.7%) of the Partnership's
              Units as of February 1, 1999.

(B)      Security ownership of management.

         As of  February  1, 1999,  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 during 1998.

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. No property management fees were incurred during 1998.

See  Item 1 -  Business,  Item  7 -  Management's  Discussion  and  Analysis  of
Financial  Condition  and  Results  of  Operations,  and  Item  8  -  Note  2  -
"Transactions with Affiliates."


<PAGE>
                                     PART IV

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

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

(A)           Exhibits
              --------

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

              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)

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

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


<PAGE>
                           (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, 1998.

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


<PAGE>
                       McNEIL PACIFIC INVESTORS FUND 1972
                              A Limited Partnership

                                 SIGNATURE PAGE


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


                           McNEIL PACIFIC INVESTORS FUND 1972


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

                                By: McNeil Investors, Inc., General Partner



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


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




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




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