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

FORM 10-K405

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

For the fiscal year ended December 31, 1997
------------------------------------------------

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

For the transition period from ______________ to_____________

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

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

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

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

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
--- ---

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

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

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

TOTAL OF 28 PAGES

PART I

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

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

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

On March 8, 1972, a Registration Statement on Form S-11 was declared effective
by the Securities and Exchange Commission whereby the Partnership offered for
sale $15,000,000 of limited partnership units ("Units"). The Units represent
equity interests in the Partnership and entitle the holders thereof to
participate in certain allocations and distributions of the Partnership. The
sale of Units closed on April 30, 1973 with 13,795 Units sold for gross proceeds
of $13,795,000 to the Partnership, including 50 Units purchased by the original
general partners. 37.5 and 5 Units were relinquished in 1994 and 1995,
respectively, leaving 13,752.5 Units outstanding at December 31, 1997.

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

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

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

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

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

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

General:

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

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

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

Business Plan:

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

Forward-Looking Information:

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

Environmental Matters:

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

Other Information:

In August 1995, High River Limited Partnership, a Delaware limited partnership
controlled by Carl C. Icahn ("High River") made an unsolicited tender offer to
purchase from holders of Units up to approximately 45% of the outstanding Units
of the Partnership for a purchase price of $110 per Unit. In September 1996,
High River made another unsolicited tender offer to purchase any and all of the
outstanding Units of the Partnership for a purchase price of $224.50 per Unit.
In addition, High River made unsolicited tender offers for certain other
partnerships controlled by the General Partner. The Partnership made no
recommendation to the limited partners concerning the tender offers made with
respect to the Partnership. The General Partner believes that as of January 31,
1998, High River has purchased approximately 11.7% of the outstanding Units
pursuant to the tender offers. In addition, all litigation filed by High River,
Mr. Icahn and his affiliates in connection with the tender offers have been
dismissed without prejudice.

ITEM 2. PROPERTY
- ------- --------

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

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

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

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

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

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

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

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

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

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

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

PART II

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

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

(B) Title of Class Number of Record Unit Holders

Limited partnership units 1,165 as of January 31, 1998

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

ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------

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

Statements of Years Ended December 31,
Operations 1997 1996 1995 1994 1993
- ------------------ ------------- ------------- -------------- ------------- -------------

Rental revenue............... $ 1,350,389 $ 1,688,524 $ 1,376,148 $ 1,475,264 $ 1,894,385
Gain on sale of
real estate............... 151,141 - - 574,701 -
Total revenue................ 1,585,977 1,715,535 1,439,428 2,095,660 1,908,162
Write-down for impairment
of real estate............ - - - - 2,700,000
Net income (loss)............ 367,198 104,539 (285,886) 433,544 (3,102,551)

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

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

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

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

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

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

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

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

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

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

1997 compared to 1996:

Revenue:

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

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

Expenses:

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

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

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

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

1996 compared to 1995:

Revenue:

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

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

Expenses:

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

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

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

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

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

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

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

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

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

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

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

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

Short-term Liquidity:

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

Long-term Liquidity:

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

Distributions:

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

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

Page
Number
------
INDEX TO FINANCIAL STATEMENTS
- -----------------------------

Financial Statements:

Report of Independent Public Accountants....................................... 11

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

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

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

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

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

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

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

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Partners of
McNeil Pacific Investors Fund 1972:

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

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

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

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

/s/ Arthur Andersen LLP

Dallas, Texas
March 20, 1998

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

STATEMENT OF NET ASSETS IN LIQUIDATION

December 31,
1997
------------

ASSETS
- ------

Cash and cash equivalents.............................................. $ 451,506
------------

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

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

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

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

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

See accompanying notes to financial statements.

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

BALANCE SHEET

December 31,
1996
-------------
ASSETS
- -------

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

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

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

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

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

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

See accompanying notes to financial statements

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 1995
-------------- -------------- --------------

Revenue:
Rental revenue.......................... $ 1,350,389 $ 1,688,524 $ 1,376,148
Interest and other revenue.............. 84,447 27,011 63,280
Gain on sale of real estate............. 151,141 - -
------------- ------------- --------------
Total revenue......................... 1,585,977 1,715,535 1,439,428
------------- ------------- --------------

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

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

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

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

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

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

See accompanying notes to financial statements.

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

STATEMENTS OF PARTNERS' EQUITY

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

Total
General Limited Partners'
Partner Partners Equity
-------------- -------------- --------------

Balance at December 31, 1994.............. $ 309,944 $ 4,690,924 $ 5,000,868

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

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

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

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

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

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

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

See accompanying notes to financial statements.

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

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

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

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

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

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

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

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

See accompanying notes to financial statements.

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

STATEMENTS OF CASH FLOWS

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

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

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

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

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

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

See accompanying notes to financial statements.

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

NOTES TO FINANCIAL STATEMENTS

December 31, 1997

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Federal income tax law provides that the allocation of loss to a partner will
not be recognized unless the allocation is in accordance with a partner's
interest in the partnership or the allocation has substantial economic effect.
Internal Revenue Code Section 704(b) and accompanying Treasury Regulations
establish criteria for allocations of Partnership deductions attributable to
debt. The Partnership's tax allocations for 1997, 1996 and 1995 have been made
in accordance with these provisions.

Distributions
- -------------
At the discretion of the General Partner, distributions to partners are paid
from operations of the Partnership's property, from the sale or refinancing of
the property, or from cash maintained as working capital reserves.
Cash from operations is distributed 100% to the limited partners.

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

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

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

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

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

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

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

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

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

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

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

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

Property management fees -
affiliates................................ $ 80,160 $ 99,681 $ 79,474
Charged to general and administrative -
affiliates:
Partnership administration................ 64,758 45,937 80,597
Charged to general and administrative -
affiliates:
Partnership management fee................ 23,368 - -
Charged to gain on sale of real estate:
Sales commission.......................... 137,000 - -
------------- ------------- -------------

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

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

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

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

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

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

NOTE 4 - ASSET HELD FOR SALE
- ----------------------------

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

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

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

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

Mortgage Annual Monthly
Lien Interest Payments/ December 31,
Property Position (a) Rates % Maturity Date 1997 1996
- -------- ------------ ------- ------------------ --------------- -------------

Palm Bay First 8.750 $26,775 06/97 $ - $ 2,023,577
============= ============

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

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

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

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

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

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

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

Carole J. McNeil 54 Mrs. McNeil is Co-Chairman, with
Co-Chairman of the husband Robert A. McNeil, of McNeil
Board Investors, Inc. Mrs. McNeil has twenty
years of real estate experience, most
recently as a private investor from 1986
to 1993. In 1982, she founded Ivory &
Associates, a commercial real estate
brokerage firm in San Francisco, CA.
Prior to that, she was a commercial real
estate associate with the Madison
Company and, earlier, a commercial sales
associate and analyst with Marcus and
Millichap in San Francisco. In 1978,
Mrs. McNeil established Escrow Training
Centers, California's first accredited
commercial training program for title
company escrow officers and real estate
agents needing college credits to
qualify for brokerage licenses. She
began in real estate as Manager and
Marketing Director of Title Insurance
and Trust in Marin County, CA. Mrs.
McNeil serves on the International Board
of Directors of the Salk Institute.

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

Ron K. Taylor 40 Mr. Taylor is the President and Chief
President and Chief Executive Officer of McNeil Real Estate
Executive Officer Management which is an affiliate of the
General Partner. Mr. Taylor has been in
this capacity since the resignation of
Donald K. Reed on March 4, 1997. Prior
to assuming his current
responsibilities, Mr. Taylor served as a
Senior Vice President of McREMI. Mr.
Taylor has been in this capacity since
McREMI commenced operations in 1991.
Prior to joining McREMI, Mr. Taylor
served as an Executive Vice President
for a national syndication/property
management firm. In this capacity, Mr.
Taylor had the responsibility for the
management and leasing of a 21,000,000
square foot portfolio of commercial
properties. Mr. Taylor has been actively
involved in the real estate industry
since 1983.

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

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

No direct compensation was paid or payable by the Partnership to directors or
officers (since it does not have any directors or officers) for the year ended
December 31, 1997, nor was any direct compensation paid or payable by the
Partnership to directors or officers of the general partner of the General
Partner for the year ended December 31, 1997. The Partnership has no plans to
pay any such remuneration to any directors or officers of the general partner of
the General Partner in the future.

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

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

(A) Security ownership of certain beneficial owners.

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

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

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

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

(B) Security ownership of management.

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

None.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

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

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

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)

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

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

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

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

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

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

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

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

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

McNEIL PACIFIC INVESTORS FUND 1972
A Limited Partnership

SIGNATURE PAGE

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

McNEIL PACIFIC INVESTORS FUND 1972

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

By: McNeil Investors, Inc., General Partner

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

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

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

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